0:00:00 - 0:00:21 One topic that I speak about from time to time is complexity and I want to make the case. I mean, this isn't just sort of, uh, a hobby of mine, a hobby topic. It's actually critical to understanding a lot of things including our lives today in our modern world. So I thought it'd be helpful to dive into 0:00:20 - 0:00:41 an example of this from recent headlines. And so I'm gonna build this case around beef, but we're gonna start with some general principles and, and we'll just narrow it in a bit. And so I hope as a result of this presentation, you'll understand a little more clearly why complexity matters and how ill 0:00:41 - 0:01:05 suited most people are to contend with it. So the title of this presentation is Normal Pro Problems are now co, uh, complex and beyond the capacity of normal people to solve. Very important idea. So I'll make a case for this. But first, we need to make the distinction. What's the difference between something 0:01:05 - 0:01:33 that's simple and something that's complex. Well, something that's simple, it's stable, meaning it doesn't change very often or by very much and it has few inputs and outputs. They're also well known. So you could describe this thing in a, in a very simple schematic. You could just sketch it out on a 0:01:33 - 0:00:00 piece of paper. It doesn't matter what we're talking about. You know, if you have a wheel, you wanna make a turn and it's on an axle, what do you do? You just grab it and you spin it and that's the end. You don't need to do any differential equations to figure out how that works. As a normal person. 0:00:00 - 0:02:20 You can turn a wheel right now. Let's talk about a complex problem. So a complex problem, it's unstable. It changes frequently and unpredictably. So not only do you have more changes, but you don't even know the magnitude of what those changes will be and it, it, it could be by a lot, could change by 0:02:19 - 0:02:46 a lot. The inputs and outputs are much more numerous than in a simple situation. And they're only partially known if they're known at all. And this doesn't just mean that the number of inputs and outputs might be unknown. So you might know three of them and you might not be very confident that that's 0:02:46 - 0:03:10 all there are, or there might be 30 of them. And you still have no idea if there are more, you also have no idea how important they are relative to one another. You also don't necessarily know very much about them. So you might say, well, here's an input to this system and we know a little bit about 0:03:10 - 0:03:43 it, but we, we don't really fully understand how this works. And that's sort of the root property of a complex system is it's too large or unknown to be totally understood and predictable d composition of the sy system. And the interrelations of the components within it are just too complicated. So that's 0:03:43 - 0:04:19 your overview of the difference between simple and complex normal people can only solve simple problems. Here's my case for this. The, the the most important argument in this is the fact that normal people seek emotional comfort, not rational optimality, normal people want to feel good. They don't prioritize 0:04:18 - 0:04:46 being good. That might sound like a moral argument and you could take it that way. But that's not what I mean. They don't think in terms of what's the greatest benefit they think in terms of what makes me feel good. That's the normal thing to do. Contrast this with how you feel when you're Optim uh you're 0:04:46 - 0:05:08 optimally operating. So when you're aiming for the greatest benefit, that is a, a mentally and emotionally burdensome path because you will absolutely have to look into the unknown. You're going to have to solve problems, you're gonna have to face things that you don't wanna face that don't make you 0:05:08 - 0:05:40 feel good right now and you're gonna have to grapple with things that, that your weekend and so on. They're hard things and we don't want that by default, people want it easy. Normal people also seek consistency. So they prefer to think of things as stable even when they aren't, they really struggle 0:05:39 - 0:06:03 to comprehend consequences that change over time. And the nail in the coffin here is the fact that most changes are not consistent over time. So even change itself is inconsistent and sometimes it can be so drastic that it approaches something exponential. And if normal people can't handle deviations 0:06:02 - 0:06:28 from how things are right now, even if those changes come consistently, imagine how much they will melt when those changes happen to be exponential. It's just way too much for a normal person to handle normal people seek simplicity. And one aspect of this is that they will forcefully reduce a problem 0:06:27 - 0:06:56 down to AAA ridiculous oversimplification, a single source. Even when there are clearly multiple factors, it's a Multivariate problem. They'll look at something that clearly has multiple inputs and pretend as if just one of those inputs matters, they'll reduce the whole problem down to one thing. Normal 0:06:55 - 0:07:19 people struggle to think in, in long term consequences. They don't abstract about the future. They don't think what's the, what's the long term effect of this decision? They strongly boost present consequences over future consequences. I talked about how normal people want to feel good, they want to 0:07:19 - 0:07:45 feel good right now. They don't, they don't stretch that out over time and say, well, I'd prefer to feel bad for a moment. Now and feel very good for a longer time later. Normal people don't do that. Normal people are stupid. This is an objective fact, the average IQ is 100 it's falling fast. But half 0:07:44 - 0:08:14 of people are below that, half of people are below that. In fact, to take a half a step back for the sake of, of uh correctness here, the IQ of 100 is not a fixed measure that, that is pinned, it's pegged at the average intelligence. And so it's not that, that the average IQ is falling per se because 0:08:13 - 0:08:34 that 100 will shift around as people get dumber, it will decay. They, they basically, they have to dumb down IQ tests to keep the average at 100. But what I mean is if you take people and put them through an IQ test from 20 years ago, the average score will be less than 100 that score is dropping quickly 0:08:33 - 0:08:59 . But anyway, half of people wherever 100 is half of people are below that by definition, that's how intelligence is distributed normally. And what that means is that more than 25% of people walking around are so dumb. They can't even follow basic instructions. What I mean by it is it's not a choice 0:08:58 - 0:09:23 . They do not have the capacity to do so even if they really wanted to, they could not follow basic instructions. So these people are certainly incapable of solving complex problems, but it's worse than that because as I'm making the point, the number of people who can solve problems, complex problems 0:09:22 - 0:09:53 drops geometrically as the complexity of the problem increases. So it geometrically means that it grows much faster than linearly. So it's not a straight line, it's a curved line that goes upwards. Normal people are not creative. And this is a big problem because in, in a complex situation, there are 0:09:53 - 0:10:18 many changes and sometimes they are big. And so you need to be very creative because the same solutions don't work anymore. It turns out that you can sort people by how many novel approaches to a problem they can generate in a fixed amount of time. And if you're a student of these sorts of things, it's 0:10:18 - 0:10:47 no surprise that the distribution is Pareto meaning that that's the, the exponential that's, that's flipped over the horizontal axis. So, so most people can only enumerate very few novel solutions to problems. And as that number increases the number of solutions that they enumerate in a fixed amount 0:10:47 - 0:11:15 of time. The number of people who can do that drops like a stone, it drops very quickly. Normal people can only operate in concrete terms. They, they can't use fuzzy logic. They, they can't switch freely between precision and fuzziness. They're always in, in math mode which might be surprising because 0:11:15 - 0:11:43 most people hate math, but that's the precision in which they operate. They, they can only think in concrete terms, they can't abstract ideas and apply them at the principal level. They can't navigate between those levels dropping down into the um the realm of of physical articulation. So if you reach 0:11:43 - 0:12:03 out and touch something, it's it's precise, it exists. And most people just can only operate at that level. You see this in the the solutions that they come up with, to problems, their ability to grasp problems, their ability to transfer learning from one situation to another. It's just something that 0:12:03 - 0:12:34 most people really stink at. So again, in conjunction, this is the case that the the number of people who can solve problems drops geometrically as the complexity of the problem increases. So now let's mix in another facet of this situation. The world is getting more complex. Interestingly, the source 0:12:34 - 0:13:03 of this is quite simple. It's because of technology and cheap energy. That's it. So this, this actually reminds me of how fractals work. You can Google it if you're not familiar. But what a fractal is, you'll see all these very beautiful, intricate images with interesting properties. But even if you 0:13:03 - 0:13:28 just simplify that as an interesting piece of art, those fractals are generated with very simple equations, they're short, they're simple. And it's amazing how much complexity can come out of something simple. But that's um that's kind of a meta, a meta thought to all of this, but it is relevant and 0:13:28 - 0:13:52 interesting. So all you need to generate all the complexity we see around us is two things. Technology and fossil fuels. That's the difference between a subsistence farmer, which is basically humanity for all of history. You're on a, a little plot of land as a family and you're working it with your hands 0:13:51 - 0:14:16 . No machines. That's the difference between that situation and everything we have today. Technology and cheap energy. Now, I could speak about this for a very long time, but I'm just gonna try to keep this short and simple. Ironically what you get with technology and foss and, and, and cheap energy 0:14:16 - 0:14:48 which are cheap energy, fossil fuels. Um w when you mix these together, you get more people. Why many reasons? Prosperity makes it easier to have more Children. It also increases the quality and availability of medical care. So fewer people die and they live for longer and it vastly increases the ease 0:14:47 - 0:15:13 with which those people can be fed, not just availability of food, but it also makes food a lot less expensive. If you look at a historic graph of the percentage of a person's life that was spent just getting food, it used to be closer to 100% and now it's closer to zero. It's almost no time that, that 0:15:13 - 0:15:42 the affluent countries, people in affluent countries spend almost no time acquiring food. All these other things that we do are outside of that technology in fossil fuels, creates worse people. This is an interesting one. What it does is it masks the effects of your choices. And so we talked about how 0:15:41 - 0:16:06 this prosperity it, it, it makes medical care more available. Well, hi, historically, if you gave yourself type two diabetes by overeating, you would die. Nowadays, there are medications for that, there are interventions for that. But in the past, you would just die and you could expand this out and 0:16:05 - 0:16:26 do so in, in talking about many different topics, giving many different examples. But, but that's the principles that the consequences of poor choices are masked by this easy prosperity, whether it comes from yourself. So you can do things in your life to overcome these negative consequences of some 0:16:25 - 0:16:49 poor choices or through other people, which is more often the case. So just at the most basic level, um so many of these insulated consequences come from government intervention. Well, you can't have a government if there's no surplus because you can't tax someone if they don't have a surplus. If you 0:16:48 - 0:17:07 wanna read a very interesting book, it's Called Against the Grain. It, it's actually a history book by an anthropologist. It's a history of agriculture, but it's one of the most fascinating books I've ever read because you, you wouldn't, I I don't know anything about the author except this book that 0:17:07 - 0:17:31 I read that he wrote. Um But he's obviously a genius and to look to see the history of agriculture through his lens is absolutely fascinating. And it will shock you to see how many problems in humanity are due to the plenty that we enjoy in our agricultural practices. So hopefully that baits you enough 0:17:31 - 0:17:51 to go read that book. It's worth your time. It's not though that the, it, it, it, the problem is not limited to insulating these consequences. The, the problem includes the fact that there, there are more of them and that they're worse than before. There are more of them and they're worse than before 0:17:51 - 0:18:19 . So what do I mean by this? Ok. Here's a concrete example CRISPR. It's a, it's AAA gene engineering technology. It is ridiculously inexpensive. And if you have a bachelor's degree in biochemistry, you could probably use it. Ok? I if not less than that. So there are on the earth today over a million 0:18:19 - 0:18:50 people easily who could use this thing. So what is it capable of doing well? Really, really bad things either by accident or on purpose. And so if you tweak some jeans, you could create a super bug, you could, you could do a lot of damage, ok? A lot of damage. That's just one example. Normal people can 0:18:50 - 0:19:15 do worse and worse things today because of technology and cheap energy. Now, you might think with that CRISPR example where, where does cheap energy come in? Well, the fact that someone can afford to buy that today and has the time not just to use it but to gain the training needed to use it. If that 0:19:15 - 0:19:42 person was a surf in a peep boss mog. Peat, moss bog. Sorry, Pete Moss Bog. They'd never acquire the education required to use that machine. The training I should say because, uh it's totally possible to gain an education while being a day laborer. Right? In fact, there's a meme going around th this 0:19:41 - 0:20:06 dovetails into the theme I brought up before, which is that we've made a terrible faustian bargain with the modern world versus the way things used to be. Because um in this meme, there's a picture of a preserved house belonging to a mid medieval surf somewhere in Europe, probably the UK, I don't remember 0:20:05 - 0:20:29 . And by today's standards, it's a mansion, it is an enormous house and that's, it was possible to live that way in that time. We think of these people living in a little hovel and I'm sure there were plenty of those, but there are plenty of those today too. And so the question isn't, you can't judge 0:20:28 - 0:20:55 the success of a period of time by looking at the worst examples, you have to look at the best case, the worst case and the average case and, and look at things in a more sophisticated way, which is perfectly appropriate to this presentation anyway, it's a Faustian bargain and uh it was a very poor one 0:20:54 - 0:21:17 to make. So obviously, systems grow to be more complicated as you feed them. And there are reasons for this that are beyond the scope of the presentation. But essentially what complexity does is it generates a race like a space race. Do you remember that from the Cold War? So when you have two competing 0:21:16 - 0:21:41 entities, two or more, what happens is they have to do more and better than they would if there were no competition. This is true across any situation. It's even true of pigs. If you get a pig, you should get two pigs. Not one because the point of a pig is to grow them to slaughter weight and they will 0:21:41 - 0:22:03 eat much more food when there are two or more of them than they will when there's just one because it creates competition and you can see it, you can see it when you have two pigs. So systems get more complicated because they're competing for resources and then uh with all of this, you get more noise 0:22:02 - 0:22:27 and that's a term that could mean a lot of things to different people and they all apply here, all of them. So that's why the world's getting more complex. Uh I, I'll give you an example of noise though. A very simple example. So when I was in um graduate school, I was already married, but I worked closely 0:22:26 - 0:22:51 with some people who weren't and there was a lot of pressure for them to find a spouse in that environment. And one thing that they told me was that there are a lot of dates happening. But the problem was that, that there were so many options that it was hard to choose just one person and invest in that 0:22:51 - 0:23:14 because you didn't have much confidence that that was the best person that you could choose. And so that's an example of what makes society more complex in terms of noise because you have many more options, right? That's what prosperity gives you options. And that doesn't mean that those are good options 0:23:13 - 0:23:34 . It becomes harder and harder to see what's valuable and what has the greatest value across options. Because for all the reasons we've, we've gone into how do you look at the long term consequences when something's complicated, you can't predict them one because you don't know the system well enough 0:23:33 - 0:23:58 and two because you do know that it changes all the time, right? So that doesn't exactly breed confidence in long term choice making. And if you can't predict the future with any degree of confidence, well, then it doesn't matter what you do, eat, drink and be merry for tomorrow, we die, right? If you 0:23:58 - 0:24:18 can't predict the future, then just do whatever you want. And that should give you chills because guess what the mentality of the youth today is. And, and now you know why, you know, in, in many senses, it's justified because how can they predict the future they've seen so, so much turmoil in what should 0:24:18 - 0:24:41 be foundational things that why would they invest in the future. They can't predict it given the, the frequency and magnitude of changes that have occurred in their lives. There's no point. So now we get into the example of beef. Here's what should be a simple question. Why are beef prices rising so 0:24:41 - 0:25:12 much and so quickly? Here's a graph. So you can see from 2008 until now the price was close to $2 a pound in 2008 on average. And now it's 547 if I can read that correctly. And this is a geometric curve, it's rising faster than linear. So what most people will do is they'll try to oversimplify this down 0:25:12 - 0:25:38 to just one thing and they'll say something like oh greedy ranchers a telltale sign of an oversimplification is it makes the situation emotionally charged, right? So instead of hearing ranchers are raising prices, it's greedy ranchers. Do you see the emotional dog whistle? You can find these in political 0:25:37 - 0:26:00 ads? Any political ad is an emotional dog whistle. That's how they're done today because it, it creates results. Why? Because most people are stupid. Normal people operate in the emotional realm, not the rational realm. So it incentivizes people to create persuasive mechanisms, whether those are ads 0:26:00 - 0:26:20 or something else. If they want you to do something, they have to come to you, they have to speak to you in your language. And if your language is emotional, guess what? You get political attack ads. You know, there's a saying you get the rulers you deserve, that applies to many more things than just 0:26:20 - 0:26:45 rulers. We also get the culture we deserve. And if what we're catering to are imbeciles, then guess what, guess what we're gonna get more of. Right. So anyway, people will, will normal people will try to oversimplify this down to one thing. Maybe it's greedy ranchers, maybe it's something else you get 0:26:45 - 0:27:05 . Oh, Biden, that's the one word answer. I love when, when people take something complex, whether it's a situation or an argument where you're, you're making a point and you, you carefully lay out, say three supporting evidences to your argument and they reply with a one word answer. That's a neon sign 0:27:05 - 0:00:00 that says I'm a retard. That's what that is when someone gives you a one word answer to a sophisticated argument, they are retarded. OK, Biden, inflation, greedy ranchers, right? This is how normal people are gonna react to this. Well, the real situation is Multivariate and it's long term. Ok. Well, 0:00:00 - 0:27:55 we can list off several of these things and there are many more. Let's look at the Russian war. So you got a bunch of people deciding to grind this ax for whatever their reasons are. I'm not talking about the Russians or the Ukrainians. I'm talking about people in the, in the United States. Well, some 0:27:54 - 0:28:23 of the results of this, which they did not think of adequately are that the obviously the regional food exports. Ukraine's the bread basket of the world. The regional food exports have declined during this war. So that, that generates um a multi pronged effect. It's not just that Ukraine's not selling 0:28:23 - 0:28:47 grain. And so then all those farmers are poor now and local people have problems if they're exporting to all these international countries, which they were, those countries still need to feed their people. And so they're going to buy other grain which pushes the price up of grain stocks around the world 0:28:46 - 0:29:12 , including the food that is fed to our cows. Do you see how that works? These are called knock on consequences or second order consequences and normal people don't think about them, right? So these are unintended consequences of something that may have looked good to some people on paper which is getting 0:29:12 - 0:29:36 involved in this war. There's also an embargo on fertilizer. It happens to be the, the place where where most of the world's fertilizer comes from. And again, it's not just AAA a localized effect. If there's a shortage of fertilizer in the world, it means that all remaining fertilizer will become more 0:29:35 - 0:30:04 expensive, which makes all the crops that use fertilizer more expensive, which makes the crops that, that farmers are skipping the fertilizer on more scarce, which makes all crops more expensive. You see how that works. So you've also got fuel prices. Now this is our first example of many which spreads 0:30:04 - 0:30:26 out like a network with its own inputs. And I, I could draw that. I don't know if it makes sense to just hear it. So, when I say things like fuel prices, you should automatically be thinking. Yeah. Well, fuel prices are, are that, that's a system that has many inputs, right. So fuel, yes, higher fuel 0:30:25 - 0:30:51 prices will cause higher cost beef. But where do higher fuel prices come from? You could go to the simple one word, answer inflation. Yes. But what else, what about, here's one that you might not know about unstable federal policy on oil. So when the feds are flip flopping every other day about we're 0:30:51 - 0:31:15 gonna mandate solar power and wind for everything or we're gonna mandate electric cars or we're gonna do this or that or we're revoking existing oil leases. So leases to drill for oil on federal land or we're going to, uh, curtail or tax. Uh, there's been a lot of talk about a windfall tax for oil companies 0:31:14 - 0:31:38 . All of these things make their way to boardrooms of oil companies who those guys make the decision on whether or not to spend more money exploring for more oil, to invest more money in existing sites and so on. It's extremely expensive. It's like a 20 year cycle or something. Um, of when they, they 0:31:38 - 0:31:59 find these sites and develop them, all the people, they have to hire the equipment, they have to, to move the infrastructure, they have to build. It's crazy. It's so complicated and these, uh, these folks who make these willy nilly decisions, it has downstream effects and it, it's not limited to just 0:31:58 - 0:32:21 whether something is opened or closed. It, it shapes the whole future of these companies. Their long term decision making is going to model what they expect the government to do. And so the less predictable the government is, the less they're gonna invest, right? Or the more the more, um, the more reserved 0:32:21 - 0:32:45 they will be. And what does that do? It drives up the price of oil. What about labor costs for the truckers that ship this stuff? What about shutting down pipelines coming out of Alberta that were going to go down to Houston? All of these things have effects. It's a very complicated network of cause 0:32:44 - 0:33:05 and effect. That's just fuel prices. We could do the same about the cost of arable land. So it used to be that farmland was cheap. It's really expensive. Now, I can't remember off the top of my head, but I have looked up the, the average price per acre for farmland and it's another graph that looks a 0:33:05 - 0:33:31 lot like this. It's actually steeper than this if I recall than the beef graph. Ok. So 10 years ago, if a guy like me wanted to get into farming, I could actually get a 2% loan to buy a huge ranch for almost nothing compared to what it costs today. Well, nowadays, the loan's gonna be at, at 7% and the 0:33:31 - 0:33:58 land costs maybe five times what it did 10 years ago, depending on where it is and everything else. Now, when you buy farmland, essentially, so you're gonna have a huge mortgage for a long time and essentially that's a lifetime payoff where like many other businesses your, your entire worth is locked 0:33:58 - 0:34:28 up in that business until it's basically your retirement age. Right? Well, you can never recover the cost of the farmland that you buy today. Think about that, not farming any farm you buy today, you, you can never recover. The cost of this is an earth shattering problem. It is huge. So mix this in with 0:34:28 - 0:34:49 some other things which, which by the way, we're not done discussing all the factors of why that is why that land costs so much now. But these ranchers, their kids don't want to take over the job, they're saying, oh, so I've watched you work 16 hours a day all summer long my whole life. And we never 0:34:49 - 0:35:12 had money for anything because you were making next to nothing. I think I'll just go to the city and try my chances there because all these other jobs have wages that are going through the roof and yours, you pretty much make the same as you always have. And so these, these ranchers are selling their 0:35:12 - 0:35:38 land to developers. Well, what do you think happens to the cost of food as there are fewer and fewer acres to farm. It's just supply and demand. Obviously, the prices go up by a lot. Right. That's what's happening right now. So I do want to dive into because it's the last bullet on this list and we're 0:35:38 - 0:36:02 there. So there's this, there's this trend that has happened over the last 50 years or so and it hasn't been spoken about much, the, the inflation that has happened. Well, let's not call it inflation, the increases that have happened in wages in, um, I guess, workable value. What I mean by that is, is 0:36:01 - 0:36:31 not, let's not talk about dollar amounts, but in terms of real spending, power jobs like tech have exploded in value in the last 50 years. And jobs like H VAC Repairer or Roofer or Rancher are pretty much the same as they've always been comparatively. And so there's been this leading edge of, of inflation 0:36:30 - 0:36:56 in the, in the tech trades in finance that those are pretty much it and a bunch of other jobs in office jobs, a bunch of other jobs have lagged far behind and they tend to be physical jobs. Ok. Well, a lot of the inflation that we're seeing right now is this old inflation finally making its way into 0:36:56 - 0:37:21 the physical labor jobs. And that's bad news because it, that, that correction is not nearly over yet. And this is why when you try to call somebody to come fix something at your house. Now, you probably don't even get a call back and they can name their price. Now, unfortunately, for these tradesmen 0:37:20 - 0:37:43 or whatever they might be. I don't think a rancher is a tradesperson but physical jobs, people, they think that they've got a windfall now. Uh, I was speaking to a small scale builder a year and a half ago and I said, you're not charging enough for these homes you're building. And he kind of laughed 0:37:43 - 0:38:02 at me. He says, well, I'm charging cost plus this enormous percent. And I said, yeah, but you don't understand that you're, you're riding a wave right now and it's not gonna last forever. You're on the leading edge of inflation, but you're charging as if you were on the tail end of it, meaning uh your 0:38:01 - 0:38:19 costs are gonna keep going up really quickly and the demand will eventually crash and then you're gonna be hosed because you didn't, you didn't cut your hay while the sun was shining. I said you should be charging everything your customers are willing to pay and you should raise your prices until they 0:38:19 - 0:38:42 start turning you down. And uh he didn't listen to me. I think he'll regret it. Time will tell. So anyway, back to the cost, the, the causes of the increase in arable land cost. This gets crazy. I've talked before about how the Chinese are buying up all these California homes, which sounds like some 0:38:41 - 0:39:02 conspiracy theory but it's true. It's north of 25% of those purchases are made by, by China or by people from China. And what that's doing is it's artificially keeping those prices very high. The Californians fleeing the state, which there are a lot of them and they tend to be among the more wealthy 0:39:02 - 0:39:25 people there. They should be getting hosed on their houses. No one is moving to California, but instead they sell these houses and typically they remain vacant. People from California will tell you this, that houses go up for sale. No one moves in, someone buys it but no one moves in. So they're, they're 0:39:24 - 0:39:45 being propped up and then those people go and raise the cost of living wherever they move because they'll pay very high prices for land or, or property in other places which squishes the people who are already there because now they're getting ridiculously high property tax because their property values 0:39:45 - 0:00:00 went up so high that they'd never be able to afford their own houses today. That's happening all over the place in rural states. It's happening in Idaho, Montana, Wyoming, South Dakota, North Dakota, all these places. So that all has an effect on farmland because the, the farms are now dual purpose. 0:00:00 - 0:40:31 It, it might just be this, this show ranch that some rich person is gonna buy or it might just be developed as a regular old piece of land. And that's happening all over the place it's insane. It's absolutely insane. You've got, I, I'm not gonna go into all the details on all these, but these are all 0:40:30 - 0:40:54 multifaceted inputs, interest rates, inflation, there are many more. OK? This is not a simple problem. And you'd hope that by digging through these things, you know, you take it one step or two steps deeper than a normal person and you'll have much more of the picture. But how do you know when you're 0:40:54 - 0:41:22 done? Because something deep in that chain of factors might actually have an enormous effect, a huge effect. And so you see how fuzzy this is, but so you see how i it's a great way of understanding why there's so much variation in the success levels of people that try to attack and understand these problems 0:41:21 - 0:41:43 . I I in in in many cases, maybe if you go one or two layers deep, you understand enough of the problem to make a way better decision than a normal person. But there will be some cases where you need to go five layers deep and the person who does is really rare and they see something that absolutely 0:41:42 - 0:42:09 changes everything. And so what happens as you start compounding these things is and, and I'm one slide ahead of myself, the outcomes that people encounter become more and more different because their approach is different and it matters complexity gives you a canvas where these these differences become 0:42:09 - 0:42:31 apparent. So we'll get there in a second. I want to go through this rather quickly. But this is an example of how you can differ from a normal person and, and how you address these problems. So again, we're just on the example of beef. The moral of the story is normal. People are gonna do what normal 0:42:30 - 0:42:54 people do. You can't stop that, but you can change how you act one, you can act in a way that's not normal. And two, you can react in a different way because you can, you can very accurately predict what normal people are gonna do. We already described how they are. You use that, you can predict what 0:42:54 - 0:43:14 they're gonna do. So what should you do here? We're gonna use the same things and we're gonna talk about the opposite. So normal people seek emotional comfort, not rational optimality. So what do you do? You can ask why you buy beef from the store in the first place and once you understand your motive 0:43:14 - 0:43:38 , then you can search for better ways to accomplish it. You ask why? And then you ask what? And then you ask, is there a better what to get to that? Why? So if, if the why is you like the taste of beef? Well, you can find another way to get it that's not just paying retail price. If the why is because 0:43:38 - 0:44:00 you need to feed your family, there are other ways to feed your family. You don't just keep doing the same thing because it's what you always did. You have to think about the why and change the what normal people see consistency. You can understand the curves that go up will probably continue to do so 0:43:59 - 0:44:19 and therefore beef will continue to get more expensive. And this will cause you to make your choices differently than if you assume that the prices would remain the same normal. People will look at how the price tag just keeps getting bigger and they will assume that tomorrow is gonna be the same as 0:44:19 - 0:44:43 today, if not better, which is in Isaiah. By the way, it's a property of human nature. It's been around for a long time. It's amazing someone could go and pay $5 more a week every single week for the same thing at the store and just assume it's always gonna be its present price. Normal people seek simplicity 0:44:42 - 0:45:06 but you know that this problem isn't going to go away with stupid simplified policy changes or simple changes to your life. Complex problems require big and often complex solutions. You, you have to look at this and say, man, this is a hairy deal. What am I gonna do? I better do something big or complicated 0:45:05 - 0:45:28 because that's what it's gonna take. Normal people do not think long term you might make a big change. Now, understanding that the cost of beef is gonna continue to increase, I mean, you've seen the graph, right? And the causes aren't changing. It'll probably get worse. In fact, the causes. I mean, there 0:45:28 - 0:45:56 will be more causes that will cause more problems. So, maybe you look at all that and you say, well, it's not worth buying a $200 freezer. 250. I think it's a small one at Co Costco $250 freezer to save $20 this week on my beef prices. But here's the lifetime of a freezer. Here's the energy cost. If 0:45:55 - 0:46:20 I put it in a place I have to heat anyway, that'll offset my heating bill. Um, and I'm expecting the prices to go up. So here's how much money I expect to save by doing this. Normal people don't think long term like that. Normal people are stupid. So you shouldn't do what they do. You shouldn't just 0:46:20 - 0:46:39 keep paying more for the same thing. You should think. What can I change? Normal people are not creative. You can enumerate alternative choices. Here's some, this isn't an exhaustive list. You can eat other types of meat. You can eat less meat, you could raise your own meat. You could find someone local 0:46:39 - 0:47:06 who does. You can also wait for sales and stock up if you have a freezer. That's definitely what you should do. Right. Don't fill it, paying the highest price. And this is a nice transition into my final point here. Normal people can only operate in the concrete, you can be flexible. So if you know that 0:47:06 - 0:47:24 meat goes on sale from time to time, even if it only goes on sale every three months or something. Well, wait till it does and then have a freezer ready to go, which you also wait till that's on sale. So, on holidays, for example, the big box stores put their appliances on sale from time to time. Costco 0:47:23 - 0:47:47 has random stuff that's there on sale as far as a freezer or something and then be ready to go and fill that thing with meat. When it's on sale, all of these things, they can get you much closer to what you used to pay for me. Final slide to quote the honorable Secretary of State Hillary Clinton after 0:47:47 - 0:48:08 . Well, she was, she was being grilled for her role in, in this uh disaster in Benghazi where all these people died. She was asked about that and she said, what difference at this point does it make? So that's my question to you or that I expect you to be asking to me, why does any of this matter? Well 0:48:08 - 0:48:30 , one beef actually is a significant expense in the budget of most Americans. So if you could find a way to spend less on it, it's gonna generate some surplus and that's really important because surprises require surplus. That's a point I've, I've made many times and I'll continue to come back to. But 0:48:29 - 0:48:54 this is a specific example to help you wrap your head around some of the ways you can navigate complexity better than you do complex environments, geometrically magnify the difference between outcomes. You take two people, you put them in a subsistence farming situation. There's only so much wheat you 0:48:53 - 0:49:18 can grow on 10 acres with your hands. You give him a little bit of technology, you give him a little bit of energy. The differences increase if you have 10 people working the same, not the same plot, but the same quality of plot, same size, same soil consistency, same rain, all of that. And you give 0:49:18 - 0:49:42 them some technology and some energy. There will be vastly different outcomes in how much grain they harvest and how much wealth they accumulate. There will be a Pareto distribution and the more people you do this with the cleaner the distribution becomes and the more successful the most successful person 0:49:42 - 0:50:04 becomes complexity breeds differences. It accentuates them, it doesn't create them. That's a, that's a misnomer. That's not true that people say the rich get richer and that's a description of outcomes and it is true, but it doesn't tell you why the why is because people are different and the greater 0:50:04 - 0:50:28 the complexity, the more that becomes apparent they don't change, it's just manifested more clearly, the money in their pocket might change. But it's only because they're given an environment where the differences in who they are becomes clear, that's really gonna bother some people. But we, we need 0:50:28 - 0:50:52 to to acknowledge this because it's true and it matters by a lot now you can change as a person, you can and you should. But that's sort of an orthogonal point. The point is we're living in a time when the differences in people will continue to be revealed to be much greater than anyone. Imagines. I've 0:50:52 - 0:51:17 got a caveat here. Anyone but me because I get it and we are so much more different than you think, not me and you per se. But everyone, everyone is so much more different from one another than you realize. So complexity helps us to see that. But it's something that's important to navigate because obviously 0:51:16 - 0:51:20 it's going to determine the quality of your life.