Cummings on complexity

One of the more interesting errors people sometimes make is to have a useful insight but draw incorrect inferences from it. So it is with this tweet from Dominic Cummings:

I get all sorts wrong all the time. And i don't *know* if Brexit is good or bad. Unlike remain twitter I think the world is highly complex & rapid error-correction of inevitable constant errors is almost the ultimate value.

It is wholly correct to stress that the world is complex and that errors of planning and policy are therefore inevitable. Politicians and journalists should be more aware of this.

I suspect, however, that Mr Cummings might not have drawn the right inferences from it..

Our reaction to complexity should not be to blunder around with a sledgehammer and then try to absolve ourselves by saying: “who knows what would have happened? Things might have got broken anyway.”

In fact, there’s a longstanding principle which recommends the exact opposite. I’m thinking of Brainard conservatism (pdf). It says that in making policy central bankers should do less than models recommend. Think of adjusting the thermostat in a strange hotel room. You don’t turn it up a lot only then to boil and turn it down a lot: you’ll never get comfortable that way. Instead, you gently tweak the thing and wait and see what happens. Alan Blinder says this idea “was never far from my mind” when he was vice-chair of the Fed in the mid-90s.

As with most general principles, Brainard conservatism isn’t always correct: there are circumstances (pdf) where over-reaction is reasonable. It is, however, a specific application of an idea that surrounds us in business and everyday life – that uncertainty and complexity makes us do less than we otherwise would. We know, for example, that businesses respond to uncertainty (pdf) by reducing capital spending. In a complex world, irreversible investments are risky.

But of course, the Brexit referendum was like an irreversible investment. Whereas voters in general elections can correct their errors by changing their vote a few years later, they cannot do the same with a referendum.

Somebody who truly acknowledged complexity would not, therefore, have wanted a referendum in the first place.

And if they had, they wouldn’t have voted Leave. The effect of doing so was to introduce more complexity into the environment and so depress business investment.

Which is why I say Cummings might have drawn the wrong inference. For me, the existence of complexity was precisely a reason to oppose Brexit. As I wrote at the time:

Brexit is “a very messy prospect, with years and years of negotiation lying ahead in a climate of uncertainty over the outcome”. Such uncertainty could dampen capital spending and investment in exporting activity.

There’s something else. Acknowledging complexity does not mean we should throw our hands up and say we know nothing. Of course, we cannot foretell the future. But we do know a few mechanisms. One of these is that trade frictions with the EU tend to reduce trade which in turn – via several channels - means less productivity. This tells us that Brexit will tend to make us poorer (pdf) over time, relative to what we would otherwise be.

Of course, in a complex world we can’t know how much poorer – and we’ll never know for sure even after the fact. But this poses the question: what plausible offsetting mechanisms are there through which Brexit will enrich us? Despite having years to answer this question, Leavers have so far come up with nothing but smoke.

For me, then, acknowledging complexity is a reason to oppose Brexit. Not, necessarily, in the sense of *knowing* for sure that it’s bad. But rather in the sense of seeing no advantage in adding more uncertainty to an already-complex world.

I suspect that Cummings’ incorrect inferences don’t stop here. It is correct, wise and important to say that “rapid error-correction” is valuable. But how do we achieve this?

It is not by relying upon smart people and superforecasters. Being clever is like having a wank – self-gratifying but of little use to anyone else. Instead, I’d suggest three other things.

First, avoid the obvious errors in the first place. We now have a long inventory of cognitive biases. Much of my day job consists of warning retail investors to be on guard against these. Policy-makers should also be vigilant. But I see little evidence that they are: the most important such bias, says Daniel Kahneman, is over-confidence. How much of this is there in politics?

Secondly (and relatedly) avoid judgment and stick to rules. The investment environment, for example, is tremendously complex. The solution is to stick to a few rules, such as holding tracker funds; avoiding high-fee funds; and reducing exposure when prices fall below a ten-month average. The analogue on politics is to rely upon a few things that you know for sure.

Thirdly, we need automatic feedback which corrects errors: this is the great virtue of the market mechanism when it operates properly. Such feedback loops can be imported into policy-making. We know – thanks to the work of Prakash Loungani – that economists cannot forecast recessions: that’s consistent with complexity. Even the best monetary and fiscal policies, therefore, can only repair the damage after the event. What we need instead are powerful automatic stabilisers which include progressive taxes and a strong welfare state.

In the same way, labour market regulations and complicated welfare policies entail all sorts of trade-offs and uncertainties. One answer to such complexity is to pursue a simple alternative. As Dan Davies says: “whatever your favourite social policy might be, full employment is probably the best way to achieve it.”

So, I suspect Cummings has drawn entirely wrong inferences from his premise. But I cannot be harsh on him, because in acknowledging complexity he has made a leap which most of the rest of the political-media class has not. And until they make that leap, the important question of how we cope with complexity will not get the attention it deserves.

Comments

[Phil]

There's a bit of a mismatch between Vote Leave and "rapid error-correction", though, considered as a charge and an exculpation. If you've run an organised campaign to get people to invest in a stock which then crashed, you can't just walk away and say "hey, I read the market wrong all the time, people should maintain a diverse portfolio".

[Dave Timoney]

Cummings seems not to appreciate that there is a structural bias against rapid error-correction in a democracy (it took 41 years to reverse the decision to join the EEC). Or maybe he does but is trying to suppress his epistocratic & authoritarian instincts for public consumption.

[Guano]

In other statements, Cummings appears to be trying to break things and create irreversible change, rather than take decisions that allow for error-correction. He also has a habit of ignoring constraints like treaties or parliament or the attitude of your negotiation partners (ie ignoring the complexities, making lots of optimistic assumptions).

Cummings persuaded people to vote to leave the EU (and then say that means leaving the CU, SM and CJEU) but also claimed that he could force the EU to give us the same benefits without the rules. That failed. The UK did not hold all the cards, and the German car-makers did not force the EU to give the UK the exact same benefits outside the EU institutions as it would have had in it. What does "course-coreection" mean now? What does "course-correction" mean if you jump off a cliff?

Did he want to create a crisis (to stimulate creativity) or did he want a change with a possibility of course-correction?

[rsm]

"The goal of the future is full unemployment, so we can play. That’s why we have to destroy the present politico-economic system." - Arthur C. Clarke

Is a generous, inflation-proofed, money-printed basic income the least violent way of destroying the present politico-economic system?

[Guano]

Cummings and rapid error-correction:-

https://twitter.com/WritesBright/status/1420119837175648263/photo/1

[Scurra]

He's also clearly lying. His consistent goal - from at least the turn of the century - was to increase centralised control in Number Ten (and preferably away from Whitehall) because otherwise the grandiose schemes that he and his coterie envisioned could never work.
So he strongly opposed the initial moves towards English federalism and strongly supported getting out of the EU because both of those things obviously interfered with that goal.

He may well be correct about the problem of complexity - he just thinks that he is smart enough to be able to control it. So far, I think the evidence is somewhat against him.

[Jim]

Mmmm. A bit of post facto rationalisation from dommy?

He got sucked in to the Brexit project as the brainy-boy and in the process got suckered. Too late he realised that 'taking back control' had nothing to do with Europe and the EU and everything to do with the extremely rich taking back control from the plebs. Must gall a bit that a soi disant strategist was out flanked by a few Eton boys. He was useful once, now he can sod off.

All very well to declare 'oh, it was complicated'. That's what we do impact analyses for - you know all that scientific brain stuff. But that did not suit the real plan. So, either he failed to see the real plan or he did see it and went along with it.

Now we plebs are lumbered with Brexit and are headed back to the 1930s - without the prospect of new technologies or a nice winnable little war. What we are going to get is a return of class (money) distinction - just like the 1930s. Thanks dommy.

[rsm]

Didn't the 1930s produce swing music and Social Security? Have we learned by now that we don't need shooting wars to dispense with the scarcity myths that stopped FDR from going bigger on Social Security?

[Nanikore]

"Of course, in a complex world we can’t know how much poorer"

Unfortunately the mainstream (aka neo-classical economists) couldn't draw this inference. So they estimated the cost to each household to the pound.

And you haven't mention security - the consequences for losing our influence in Europe for our alliance with the US and the fallout in NI.

If they said

"it is impossible to quantify the consequences for peace and security of the leaving the EU, but they are likely to be significant, especially in the long term"

and then explain what the risks actually were, then Brexit might not have happened.

[ltr]

Of course, we cannot foretell the future. But we do know a few mechanisms. One of these is that trade frictions with the EU tend to reduce trade which in turn – via several channels - means less productivity. This tells us that Brexit will tend to make us poorer over time, relative to what we would otherwise be.

[ Perfect. Of course we will still be threatening China, so nobody ever dares even notice. ]

[Nick Drew]

Does our host also wish to replace the current system with a socialist regime? That might have one or two characteristics in common with 'hard-to-correct-error' Brexit

[ltr]

Has Britain done a tolerable job at containing the coronavirus? I think this question is critically important.

July 30, 2021

Coronavirus

United Kingdom

Cases ( 5,830,774)
Deaths ( 129,583)

Deaths per million ( 1,898)

[Paulc156]

@Nick Drew.
Can we presume you're thinking more of the usual crass Soviet/North Korean variant that tends to serve the status quo advocates as the go to example of 'socialism'. Perish the thought that humanity might conjure up something more efficacious. If it ain't broke...

After all with 0.3% of vaccines going to lower income countries we've demonstrated the value of our current system and climate change has been another big win...

[Guano]

Re Nick Drew yesterday:-

It is odd that supposedly moderate and sensible people were very much against revolutions 40 - 50 years ago, but were in favour of acts like invading Iraq or Brexit (which have a lot of the characteristics of revolutions).

[Nick Drew]

@ Paulc156 & Guano

There's a dialectical trap here. I infer that (e.g.) you both don't like the status quo vis-a-vis capitalism / socialism [to use shorthand]; and our host prefers the old status quo vis-a-vis Brexit

Our host uses a form of conservatism / caution to support his preference: "Don't do Brexit - because it might make things worse; it's not worth the candle". You chaps seem to be implying "Don't stick with capitalism - because the risk of radical change is outweighed by the shortcomings of the status quo; it IS worth the candle". I.e. invoke conservatism when it suits you; reject it when it doesn't.

Why not just say: "I don't like Brexit, so much so that I don't think we should do it" or "I don't like capitalism, so much so that I think we should do something different"? It's close to being a redundant flourish to debate this in terms of 'quantum of risk of change'. Who ever makes that calculation in cold blood?

Footnote: we know that Marxists argue the Revolution only comes when the emiserated workers intuit that ANY POLITICAL CHANGE WHATSOEVER carries less downside than the status quo. That's a rather stern test. Is it ever met? Has it ever been?

[ltr]

Answering my own question, the Tory government has gotten enough people vaccinated that while there are still a high number of new cases daily, the cases are less serious or more easily resolved.

Then I can credit Boris Johnson in this instance, especially so as Keir Starmer never has anything to offer in any instance. Then if Johnson can keep the economy growing, he can be PM indefinitely.

[Blissex]

«Has Britain done a tolerable job at containing the coronavirus? I think this question is critically important.»

Death rates for 100,000 (from Wikipedia) in 3 groups of chosen countries:

* 211.70 Italy, 197.74 Poland, 192.25 United Kingdom, 184.48 United States, 166.01 France, 142.25 Sweden, 127.05 Switzerland, 109.95 Germany, 101.71 Ireland

* 17.63 Finland, 14.85 Norway, 11.92 Cuba, 11.72 Japan, 8.03 Iceland

* 3.20 Thailand, 2.89 China-Taiwan, 0.63 Singapore, 0.53 New Zealand, 0.35 China-mainland, 0.09 Vietnam

There is around 10 times difference with the second group, and 100 times difference with the third group. 10 times or 100 times cannot be dismissed with handwaving.

For me the main differences between the first group and the other 2 are:

* Lower death rates are strongly associated with various variants of test-trace-isolate approaches instead of halfbaked lockdowns,

* Test-trace-isolate is associated with governments that violate reaganism and accept that public health issues need to be solved with funding and organizing a public health project, halfbaked lockdowns are associated with governments believing in "fatalist liberalism" as described in:

https://www.theguardian.com/commentisfree/2021/jul/27/british-government-covid-strategy-virus-incompetence-ignorance-pandemic

As to this I think that the Johnson government, which had started setting up a test-trace-isolate system, did a "rapid error-correction of inevitable constant errors" when they realized that was "collectivist" and un-thatcherite.

[Blissex]

«Then I can credit Boris Johnson in this instance, especially so as Keir Starmer never has anything to offer in any instance.»

You can credit Boris Johnson with achieving a death rate 10 times higher than in Japan, and 100 times higher than in Thailand, and also with destroying a lot of jobs and businesses with (halfbaked) lockdowns, while countries like China-mainland and Thailand have had free social interactions since May 2020 (except for occasional hotspots and briefly), and China-Taiwan never had a national lockdown.

You can also credit loyal complicity about that to Keir Starmer, and to Nicola Sturgeon, whose government in Scotland has achieved the same results, and to most of the "opposition", also loyally complicit with "fatalist liberalism".

You can also credit most of the media with loyal complicity with "fatalist liberalism" even if some, including "The Guardian" and even the BBC, have stepped out of line occasionally and quietly, with little noticed pieces about the enormously better situation in more civilized countries. But even the "fatalist liberalism" article does not make explicit that it has resulted in 100 times higher death rates and large losses in jobs, businesses and GDP.

[Blissex]

«Lower death rates are strongly associated with various variants of test-trace-isolate approaches instead of halfbaked lockdowns,y

This is well illustrated here:

https://www.nature.com/articles/d41586-020-03518-4

But even that article does not date to say that effective test-trace-isolate results in death rates 100 times lower, and even weak approaches result in 10 time lower.

[EUnotCoup]

I think this from Tom Chivers is instructive,

"[Cummings] reads these fascinating, interesting ideas from brilliant people, and takes completely the wrong message from them."
https://unherd.com/2019/08/dominic-cummings-is-no-chicken/

Cummings reads a lot & then namedrops (both people & terms) but never seems to actually understand what he refers to. This is not 'genius' or even intelligent. It's just being a party bore.

Also the engineering tern 'AM/FM' = 'Actual machines' v 'Fucking magic', appears to cover much of what Cummings does.

When engineering Actual Machines, things can be difficult, time consuming & tedious. One must take every step or it won't work.

With Fucking Magic, one just needs a pie-in-the-sky concept & a cool-looking rendering.

That's Cummings. Like a 12-year-old planning a bank heist. So immaturely arrogant that he thinks he can know how all other players will act & react. The videogame version of reality. But then, when everything goes wrong, blames everyone else for not doing EXACTLY what he told them to do.

Cummings' trajectory at No.10 was almost identical to his 'damage, crash & burn' at DfE. He seems incapable of learning.

Some say Cummings is brilliant because he 'won' the ref. But that isn't clever, it's just criminal. That 'Nigerian Prince' pulled tens of millions of quid out of the uk. We don't call him 'brilliant'. We call him a conman, a crook. Cummings is the same.

Please don't forget, it was Cummings who inflicted Herd Immunity by infection on the uk. He got the 'idea' from his libertarian lawyer chum at the Hoover Institute think tank in New York.

Cummings wants sending to the Hague.

[George Carty]

Blissex,

The reason why test-trace-isolate hasn't really worked anywhere in Europe (nothing special about the UK) isn't because of neoliberal economics, but because Europeans aren't comfortable with having the state tracking their every move.

While Aussies and Kiwis are more comfortable with that (for example they require QR code sign-ins not just at pubs and restaurants, but for all business premises and public transport vehicles) they still aren't _that good at it themselves, or else why would they go into snap lockdowns from just a handful of cases?

China and Vietnam are of course totalitarian regimes that don't need to care about what the public thinks, while South Korea and Taiwan are societies militarized by existential threats from totalitarian neighbours (which have included threats of biological attack!) which may have led them to tolerate a level of surveillance that Westerners would never tolerate.

[Blissex]

«The reason why test-trace-isolate hasn't really worked anywhere in Europe (nothing special about the UK) isn't because of neoliberal economics, but because Europeans aren't comfortable with having the state tracking their every move.»

So Finland and Iceland and Norway just don't count?

«China and Vietnam are of course totalitarian regimes that don't need to care about what the public thinks, while South Korea and Taiwan are societies militarized by existential threats from totalitarian neighbours (which have included threats of biological attack!)y

So Thailand and Singapore don't count?

«While Aussies and Kiwis are more comfortable with that»

Are those famously confucian and collectivist cultures?

«they still aren't _that good at it themselves, or else why would they go into snap lockdowns from just a handful of cases?»

Because limited hard lockdowns like in China-mainland. China-Taiwan, etc. are a way to supplement tracing and mass testing when cases become too many for tracing.

When there is a difference in death rates of 100 times or even "just" 10 times it is difficult to make plausible excuses.

BTW I have noticed that in their zealous loyalism "The Guardian" have been reporting with emphasis the "failures" of test-trace-isolate in Australia, China-mainland, New Zealand, Taiwan, Thailand, giving prominence to outbreaks involving for example “75 new coronavirus cases with 53 local transmissions” in China-mainland or "29 local cases, followed by 180 on Saturday, 206 on Sunday, and 333 on Monday" in May 2021, compared with over 24,000 cases per day in the UK. Rah! Rah! for Boris, Keir, Nicola, Ed!

[Blissex]

«Because limited hard lockdowns like in China-mainland. China-Taiwan, etc. are a way to supplement tracing and mass testing when cases become too many for tracing.»

More precisely it is mostly an issue of speed, not merely of "not enough tracers": according to the "Nature" article I mentioned speed is of the essence to catch the first rank of infected because they infect a wider second rank, and it can be effective to just lockdown a suspected areas for a while while taking time to trace every contact.

It is all about managing complexity and fixing things quickly.

[Blissex]

«Europeans aren't comfortable with having the state tracking their every move.»

That is just hypocrisy: in advanced countries the tracking is already done by major tech companies (cellphone, web, telecom, credit card) to a fine degree of resolution, and they surely pass all that, at least "unofficially", to the security services already. A famous tech CEO

https://www.wired.com/1999/01/sun-on-privacy-get-over-it/
Scott McNealy, 1999: “You have zero privacy anyway. Get over it!”

https://twitter.com/nntaleb/status/1186271838386774018
NN Taleb, 2020: “every financial transaction done on Planet Earth since 2005 is traceable (the aftermath of Sep 11). Even if one uses prête-noms. Even if one uses cryptocurrencies, art work, etc. You cannot hide anything anymore.”

https://books.google.de/books?id=FAOYBNVimxMC&pg=PT176
T Benn (UK), 2003: “John Reid, the Leader of the House, had said that rogue elements in the security services had tried to attack the Government, which I think is a silly thing for him to have said, because security services know all about everybody and they would be quite ready to bring out scandal on anyone.”

[ltr]

Blissex offered a brilliantly organized comparison and answer to what has been bothering me through the experience of the coronavirus. Brilliantly done.

As for being a "totalitarian" state, that is precisely what China is not. We really need to understand why China has developed so successfully, and name-calling only makes understanding impossible for the name-caller.

Blissex has done us a remarkable service.

[ltr]

http://www.xinhuanet.com/english/2021-08/02/c_1310102479.htm

August 2, 2021

Over 1.66 bln doses of COVID-19 vaccines administered in China

BEIJING -- More than 1.66 billion doses of COVID-19 vaccines had been administered in China by Sunday, the National Health Commission said Monday.

[ Chinese coronavirus vaccine yearly production capacity is now over 5 billion doses. Along with over 1.669 billion doses of Chinese vaccines administered domestically, another 700 million doses have been distributed internationally. A number of countries are now producing Chinese vaccines from delivered raw materials. ]

[ltr]

August 2, 2021

Coronavirus

United Kingdom

Cases ( 5,902,354)
Deaths ( 129,743)

Deaths per million ( 1,900)

China

Cases ( 93,103)
Deaths ( 4,636)

Deaths per million ( 3)