Reputation Markets and Risk

I was chatting with someone recently who was surprised and impressed from his interactions in the not-fully-regulated gray market of health supplements.

The mechanisms by which consumers and producers keep each other honest seemed more sophisticated and effective than in the normal, fully above ground economy.

I suspect the reason has to do with the stakes of the game.

Give a phony review on Amazon, and what’s the worst that can happen?

Have poor customer service or unclear information as an FDA approved, compliant, publicly traded drug company, and consumers just assume they are the ones who lack understanding.

Signals of trustworthiness are complex things. When outsourced to large institutions, especially governments, people get lazier and less scrutinous. Likewise, polite society tends to have relatively small punishments for inaccurate signals. It would seem barbaric, for example, to imprison someone for a false Amazon review.

The cost of this humanitarianism is less reliable signals. In medieval times, people could swear a verbal oath, or appeal to a family name or signet ring and be believed. Those are very easy to fake, but they remained believable because the stakes for faking were absurdly high. No one wants to be put in stocks or beheaded.

This is true in most illegal trades as well. If you’re selling or buying something that could land you in prison if caught, you’ve got to find really robust mechanisms for proving reputation.

I’m guessing this is what my interlocutor bumped up against in the supplement market. Though not as high stakes as something like the market for cocaine, higher stakes than selling gummy bears. Producers and consumers, without recourse to regulatory bodies, courts, or even public opinion, must find reliable ways to signal trustworthiness.

There’s a lot to be learned from higher stakes environments when it comes to reputations.

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Bodily Distractions

I have a very hard time not getting annoyed at my physical body.

I feel a kinship with St. Francis, who called his body “brother ass”.

Injury, illness, hunger, fatigue; these are so inconvenient that my first reaction is irritation. Why is this body so demanding? I’m trying to get stuff done!

I suspect this is one of the attractions of Gnosticism. Let’s just call the body bad and try to escape from it.

But that isn’t right. Christianity offers a bold, difficult, but also comforting picture.

The body is imperfect. You must master it, but not reject it. It is useful and, in its pure state, an imager of God. It’s not in its pure state, but the answer is to allow God to redeem it and to participate in that process. It needn’t be worshipped or rejected.

I’m trying to switch my default reaction from annoyance to thanks when my body impedes my will.

Being both spiritual and material is a blessing. I certainly remember this when eating a good steak or smoking a cigar or enjoying other physical activities (wink wink). I should remember it in the suffering too.

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Eternity

I think everyone believes in eternal life.

Some will say they don’t, and of course I can’t prove otherwise, but the way they live seems to indicate that deep down, eternity is set in their heart.

If you really, fully, confidently believed you were going to cease to exist entirely forever after 80 or so years on this earth, would you put effort into improving yourself? Would any kind of sacrifice make sense? Would the desire for a legacy exist?

Wouldn’t it make the most sense to spend every bit of goodwill, reputation, and social capital accumulated, not to mention physical wealth, by the time you die? Why take it to the grave with you if you could cash it out in your final years of existence and have a better time? Why not steal, lie, cheat, or even kill if it benefited you and you were close enough to the end to evade earthly judgements for these things?

Why would concern for the welfare of your children extend beyond your existence? From your perspective, when you cease to exist the whole world might as well cease to exist.

Yet we are concerned with these things. We don’t live as is we’ll be forever snuffed out upon our death. We live as if all of humanity is in some way our business, and our place in it will always matter.

Probably because it’s true.

But the fact that we don’t live as if we’ll cease to exist doesn’t mean that we do live fully recognizing the weight of eternity.

It seem everyone believes in eternal life, but no one believes in it quite enough.

If we were really, truly aware of our immortal souls, we’d likely spend this 80 or so years differently too.

For one, we’d probably slow down. It’s not a race. We can work on our minds, our health, our character, as we should, but without as much desperation for particular outcomes or attainments. We have eternity to keep improving. The habits themselves become more important that what they produce in the blink of an eye that is earthly life.

Same for bad habits. Sure, we can get away with them and put up with the bad consequences for a few score years, but imagine the compounding effects of those habits over millennia?

When you consider the idea that you have to live with yourself for eternity, it changes what seems important to focus on. The news and trends of the day will pass. But who you are will persist.

This is weighty in some ways, and convicting. But I find on the whole it comes as a relief. I don’t need to strive quite so much to achieve specific outcomes or worry about where I stack up in the eyes of others by the time this body fails me. I have eternity to keep working on the things I’ve started here.

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The Experience Industry

I’ve always hated the, “America used to manufacture things, now it’s just services” sentiment.

For one, because it’s collectivist. Who is “America”? Individuals act, not notions of nations.

Two, because economic value, being subjective, is always the result of human experience. Experiences are not merely material. I may value a memory as much as a physical object.

Every economic decision is made weighing the value of experiences against the next best option. A well-made shoe that evokes little emotion because the marketing is nonexistent may create less value for me than a lesser shoe with marketing that makes me feel inspired every time I put them on.

There’s nothing scandalous about this. In fact, it’s a wonderful realization. It means you can get a lot of value without always needing tons more physical labor and material.

Creating experiences is always necessary for economic value. Creating material objects is only sometimes required.

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Give Me a Car

Unless it’s walkable, I’ll take my own car over any other form of transportation hands down.

Planes, trains, Ubers and buses are varying degrees of inhumane, stinky, nausea inducing, and soul-sucking.

Yes, you can occasionally have a nice experience, but as a general rule, the more public the transportation the less civilized.

Country road or open highway behind the wheel. Everyone get out of my way.

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Suffering and Independence

One of the hardest things as a parent is to let your kids suffer. But if you don’t, they’ll have a harder time becoming independent.

At each step, letting them work through harder things more and more on their own requires a small death as a parent. One, because you have to resist your instinct to save them. Two, because you can feel little by little them going out on their own; becoming less and less the child under your care and more and more an independent entity.

This is a wonderful development, but you can’t get there without the suffering of letting them suffer.

And maybe the hardest part is that your kids will not understand or appreciate how hard this is for you. In their weaker moments, they may even accuse you of enjoying it.

But parenting means, if nothing else, letting the part of you that wants credit for things die.

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The Weird Distribution of Socialism

The water in French hotels is way hotter than the US.

There seems to be no governor on water heaters like the paternalistic US with its weak water heating thanks to regulatory condescension.

Then again, France is widely considered more socialist than the US. Everyone is always on strike, entitlement is common, taxes are high, and employment laws stifling.

This is why it’s quite hard to compare how free or unfree any two polities are. As a visitor to France, the things that most affect you feel refreshingly more free. Few smoking bans, lax alcohol regulations, and of course truly hot water.

But things that affect a permanent resident get worse.

The US has a bit lower taxes and fewer regulations on business, but a ton of nanny state laws on all the day to day stuff.

It’s hard to predict how government control and redistribution will emerge in each place. I try to not judge too harshly and find and appreciate the freedom in each.

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I Want Details but I Don’t Want to Teach Them

I’ve got a problem when it comes to details.

When I work with teams, details get missed and I get upset. But as I diagnose how it happened, it’s almost always because I was too laissez faire in my management and communication style ahead of time.

I inculcate a bit of a loose ship mentality, but individually I run a very tight ship for myself.

I’m like this at home too. My desk, my office, and things I have total and direct control over are ship shape. But things shared with my kids tend to get messy and make me grumpy.

I am not good at teaching or showing others how to dial in the details. I do it myself, or delegate it, but don’t know how to handle the transitory in-between.

When details get flubbed up by others, it leaves me mad at myself every time. But I still don’t seem to get much better at preventing it.

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Finding Dragons to Slay

Sometimes I’ll start to get grumpy, and wonder where it came from. I get short with my family and generally irritable.

Eventually, I get out of the house (ideally out of the city or even state) to go do something, and realize I just needed a little adventure.

Working from home is great. But if I never go out into the world to fight giants and hunt and find treasure, it wears on me.

The challenge is to find a challenge. Ideally something real, not just manufactured for romance (e.g. a mud race). The real stuff is less glamorous, but if there’s at least some sense of necessity about it, it better scratches the itch.

This week’s dragon is navigating París for work meetings. I don’t care for the city or the tedium of the travel, but that’s all the more reason to be thankful. It’s something I can conquer and come home victorious, with the spoils of war, and find my home once again invigorating and not dulling.

Get out there and slay some beasts and get some scars.

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What You Did Right in Failure

Outcomes don’t perfectly align with inputs. You can have success while doing a lot of things wrong, and you can fail while doing a lot of things right.

You need to get the one big thing right to succeed, and get it wrong to fail, but everything else can be all over the place.

That’s why it’s important not to draw the wrong lessons. If every step taken by an eventually successful venture is retroactively treated like a good step, or every step taken by an eventually failed venture treated like a bad step, you’ll take the wrong lessons.

In a previous company, we got one big thing wrong. We were solving a problem millions of people felt only mildly, with a business model that needed them to feel it strongly. Hundreds felt it strongly, but our model couldn’t succeed with hundreds.

Slogging through the process for three years and trying to crack the code and figure out how to make it work took its toll. As it became clear what was wrong with the company, and that it couldn’t be fixed, the entire operation was tinted with the feeling of failure.

It stung so bad to fail that when I look back on things we did, they all give me a gloomy feeling. I associate all of them with failure. But in reality, many if not most of them were good moves.

We did a lot of things incredibly well. I’m starting to depersonalize now that more time has passed, and it’s enabled me to see lots of things I’d forgotten that we did. Things I can learn from and borrow for my current and future endeavors.

There are, laying among the junk heap of companies that got the one big thing wrong, myriad little things they got brilliantly right just sitting there, unseen and unused by others.

Like an incredible car with a bad engine, those other parts should be repurposed and combined with a good engine, not just ignored in the junkyard.

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Dreams Make Me Grateful

Sometimes I think dreams serve the purpose of making us grateful.

Dreams are certainly more mysterious and complex than just that. I have very little idea what their full purpose or meaning is, but I think at least part of it is to create a renewed perspective on waking life.

The other night I dreamt I had a missing tooth, and then in the dream pulled another tooth out with my bare hands for no reason. I suddenly realized what I’d done, and looked in the mirror to see two of my front teeth gone. I felt horror and disappointment. I didn’t want to smile.

Then I woke up.

I have never been more happy to have teeth.

For the last few days, every time I’ve been in front of the mirror and caught a glimpse of my teeth, a deep relief has come over me and I feel thankful for every one of those pearly whites.

I’ve experienced this in more dramatic ways too. Many dreams where I was on the verge of death before waking, or where I was robbed, or even lost a loved one. The experience of waking and realizing with deep gratitude I still have those things washes over me in a way I don’t think it could by mere thought experiment.

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When Companies Do Stupid Things

I keep seeing more disturbing and funny responses by various AI tools. They betray some kind of hypersensitive constraints programmed in to it, apparently by people who are terrified of it producing anything offensive to anyone. Which as a result, is offending lots of people.

While I, too, find these AI constraints odd and creepy, companies misread their markets and make strange decisions all the time. The solution is either for enough people stop patronizing them or criticize them until they better align to the market, or for people to create competitors to better serve other segments.

Criticism is fine and sometimes spurs broader conversations about implicit and explicit cultural values, but at the end of the day, companies ought to be able to make stupid things.

More dangerous than companies that make stupid things is the notion that companies should be treated as “public utilities”. AI bots, just like heads of lettuce or tennis shoes, are created by companies and given or sold to voluntary users. They don’t have to not be stupid. They don’t have to be reasonable at all.

We can point out the bizarre behavior of these bots, and it is of some benefit to do so, but the best solution is to build a better one.

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We Have No Idea What’s Happened Before

I was reading the new Fenton Wood book last night (I recommend all of his books) and he referred to kids in the ’80s playing war games, with one side dressed up as Nazi soldiers and the other Americans as, “Something you could never do today”.

Then this morning a friend shared a screenshot of someone asking one of the AI tools to generate a picture of a soldier from 1932 Germany, to which it replied ‘no’, and explained that would be too sensitive.

I have no particular interest in Nazi soldiers or militaries in general, but I am fascinated by the concept of suppressing history.

Of course it’s a myth that history has ever been or could ever be some sort of complete and objective picture in the first place. Most things are simply forgotten. I saw a Tweet just the other day where someone was genuinely asking how anyone possibly bought airline tickets before the internet. They had zero knowledge or even ability to guess how humans performed a common task just a few decades ago.

Other things are suppressed by the controlling regime in secret or subtle ways. A little exclusion here, a little shift of focus there. That’s the more common way history gets re-written. Things that have been excluded are denied altogether and called myths, or severely downplayed in importance.

But to just say straight up, “We all know that happened. We all know it was real. We all know many facts about it. But we are not ever going to speak of it or represent it as it was again” is a bit startling.

People like to compare these developments to 1984, but in that story, they would at least try to convince you that they’d ‘always been at war with Eastasia’ when the rewrites happened. It’s different to admit there was a time of peace, but to disallow anyone to talk about it or share artifacts about it.

No, it has not gone that far. One AI tool refusing to render a picture of a German soldier is not a ban on discussion. But the principle behind it – we cannot depict this part of history because it’s offensive – is so broad and sweeping nearly anything could be justified in that way. And it’s contradictory too. Can anyone bad be depicted? Why and under what conditions? When does a person or epoch get considered bad enough to not be depictable?

It’s easy to get near universal agreement that Nazis are bad. But what happens with cases that are not so widely agreed upon? Majority rule? (Didn’t a majority in Germany vote in the Nazis?) A tyranny of experts?

Granted, as far as I know this instance is a privately owned AI company, which as far as I’m concerned can do whatever they like. The ideal way for these matters to be dealt with is freely by myriad individuals and companies in whatever way each deems best, and where the profit and loss signals of the market create a distribution of many solutions for many markets.

I hope that’s how things unfold. I fear they won’t. Not so much because I fear governments will prohibit more and more historical discussion and depiction, more because I fear the eventual reaction to private companies doing it. At some point, people will get fed up and demand laws to prohibit the prohibition, or some strongman to redefine what can be excluded.

I guess it’s oddly reassuring to know history has never been presented in it’s entirety and can’t be. Best is to be aware of this fact and know that it’s always skewed.

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