Time to Write My Negative Review of Nate Silver's New Book "On the Edge"!: HOISTED FROM THE ARCHIVES
But I fail to do so. So here is a core dump of my brain on the subject. For me at least, Nate Silver’s gambit to draw direct connections between formal games of chance and large-stakes human gambles in the world fails to illuminate much…
I was going to write a rather negative review of Nate Silver’s brand-new book On the Edge: The Art of Risking Everything. But I have failed. And I am out of time to spend on this.
So I am going to do what David Romer used to warn our students never to do on an exam: I am going to dump core. (Mind you, David Romer used to give students this advice when said students had been at most four years old the last time a computer crashed and the catch-catcher routine thought it would be helpful to then push the entire contents of main memory across a wire at a 300-baud connection and print the whole thing on a teletypewriter.)
So here is my core dump. There are, I think, some very good things in here. But it is not a review. Or even a book reading-launched essay. It is, instead… whatever it is…
Nate Silver Is an Enormous Public Benefactor:
First and most important, Nate Silver is and will always be an enormous public benefactor, if only for having stunningly successfully called bullshit on a deeply broken and mendacious political polling and forecasting industry, and then done something about it. I say this, I say this again. And I say this yet again. And again. Most recently:
Journamalism: Dan Drezner is very smart and very reliable. He writes:
“Dan Drezner: What if October is... Boring?: ‘It’s been a fat-tailed presidential election so far…. An awful lot of Big Events…. Maybe—just maybe—it’s time… to take a breath…. Look at that FiveThirtyEight chart. Even with all of the shocks of August and September, there wasn’t a lot of movement in either direction… <danieldrezner.substack.com/p/what-if-oc…>
Now do not get me wrong. The election is almost certainly not close. If we knew everything about the state of the electorate right now, we would almost surely judge the probabilities as putting it 80% in the bag. But we do not know everything, and in particular we do not know where the systematic polling error lies, and how large it is. But Dan is right. From our ignorant perspective, it is very close to a tossup, and will probably stay that way down to close to the wire.
Nate Silver and Eli McKown-Dawson right now have it thus:
Nate Silver & Eli McKown-Dawson: Silver Bulletin 2024 Presidential Election Forecast: ‘“1:30 p.m., Friday, October 4. Another day… still very little change…. Harris… has a 56 percent chance of winning the election to Trump’s 44 percent chance… [with] a 21 percent chance Harris wins the popular vote but loses the Electoral College… <natesilver.net/p/nate-silver-2024-presi…>”
That is all the time you need to spend on the polls. Maybe come back and revisit <natesilver.net/p/nate-silver-2024-presi…> for five minutes in two weeks, or one week if you have anxiety disorder. Otherwise go do other, productive things…
Plus:
Two Cheers for Nate Silver & Co.: Polls, Predictions, & the Persistent Problem of Political Noise: ‘Nate Silver in his wheelhouse!… I find him—I still find, as I have long found him—an indispensable guide to keeping a sense of proportion in this election fall… If you follow Nate Silver, you find yourself obsessing about election polls. But you will only obsess about election polls for about four minutes a day. That is what it will take you, reading Silver and McKown-Dawson’s daily “Silver Bulletin Presidential Election Forecast”, to learn that there is, essentially, no news but only olds in the polls…. Telling people that almost all of the time the polls are essentially saying very close to the same thing they said yesterday is a valuable service… <https://braddelong.substack.com/p/two-cheers-for-nate-silver-and-co>
And, in addition, Nate Silver’s earlier book The Signal and the Noise was, I thought, brilliant. I am forever deeply in his debt for his making me better-informed and wiser across a whole bunch of different dimensions.
But I—& Some Others—Did Not Much Like His Latest Book, On the Edge:
And yet I did not like Nate Silver’s latest book, On the Edge, much.
Why not?
I think Paul Seabright has the reasons nailed: This, this, this, this, and this!:
Paul Seabright: O Lucky Man!: ‘What poker players do and don’t have in common with plutocrats: Those who hold that their ability to survive to a good age without being eaten by a tiger is down not to their privileged circumstances, but to their remarkable talent for avoiding tigers, suffer from something psychologists call the fundamental attribution error—a category of cognitive bias that attributes the workings of luck to hidden personality traits….
Nate Silver… has written a book arguing not just that some people play better poker than others, but also that they do so because they belong to a special class of people who are, generically, very clever. It’s a very clever book (which would seem to count in favour of his thesis), but also a rather strange one….
On the Edge is really two books…. The first… [of] a little over 200 pages, takes us on a tour of the world of professional gamblers…. This is one of the most gripping accounts I have ever read of a milieu it would bore me rigid to inhabit myself…. Repeated success therefore requires the ability to calculate probabilities accurately, but also the nerve to make large stakes and to absorb potentially heavy losses along the way…. Poker obviously requires acute skills of social perception…. Sports gambling… involves a subtly different set of skills….
There is sense to the claim that successful gamblers in different gambling domains share overlapping inferential talents…. Those who make a living from gambling over long periods are skilled in ways that set them apart from other people… the mindset, lifestyle and other aspects of the personality of those who can reliably assess probabilities to the degree of precision required to outwit each other and the house… more than a whiff of books and films such as The Hustler, The Gambler, Casino, and The Cincinnati Kid….
But things take a stranger turn when Silver starts to write of such people as belonging to a distinct group he terms (for reasons obscure) “the River”, which he calls “a sprawling ecosystem of like-minded people that includes everyone from low-stakes poker pros just trying to grind out a living to crypto kings and venture-capital billionaires”. “Sprawling” seems about right, “like-minded” less so.
What does he mean?
Silver tells us that such people share a “cognitive cluster”… analytical and abstract thinking… proficiency in… “decoupling”… the ability to focus on logic and to block out context… competitive, critical of others, independent-minded (even contrarian) and highly open to risk. Professional gamblers belong… but so do Peter Thiel and Elon Musk, to whom many admiring pages will later be devoted… <https://www.the-tls.co.uk/politics-society/social-cultural-studies/on-the-edge-nate-silver-book-review-paul-seabright>
In addition to Seabright, we also have here a close-to have an ultimate takedown of Nate Silver’s The Edge: The Art of Risking Everything:
David Karpf: ‘Nate is a serious poker player… convinced that poker-thinking explains who has power today, and why. He doesn’t seem to notice that private equity gamblers keep winning b/c they have infinite freerolls. I would strongly recommend reading Dan Davies’s book, The Unaccountability Machine, first. Nate notes that… Americans lost $130 BILLION in casinos, lotteries, and other gambling operations in 2022. He sees this as evidence of (demand-side) increases in risk-taking behavior. But, uh, it’s probably a supply-side phenomenon. We legalized vice. Casinos, DraftKings, etc. And then we encouraged them to market the hell out of vice…. It’s good for the top gamblers, for the same reason retail investors are good for Wall Street…. The middle of the book is just the cringiest bullshit: “13 habits of highly successful risk-takers.” Silver, the statistical wunderkind, picks five big winners and generalizes that their good habits must make them successful. (…I guess successful risk-takers select on the dependent variable!)…<bsky.app/profile/davekarpf.bsky.social/…>
I, like Seabright and Karpf, was also taken aback by the second half of On the Edge.
I was taken aback by Nate Silver’s writing:
The River also has a canon of influences and ideas, from game theory and Nash equilibria to expected value and marginal utility, that underlie almost all of the activities it undertakes…
without any mention or note that all these ideas are a small (but very important!) slice of the core conceptual foundations of a discipline called “economics”, and without apparent knowledge that we have many more tools as well that are very useful for understanding finance, insurance, production, distribution, and allocation.
Silicon-Valley Start-Ups & Wall-Street Risk-Management Are Not Zero-Sum Games:
And I was taken further aback by Silver’s claim that:
blackjack and slots and horse racing and lotteries and poker and sports betting… are fundamentally not that different from trading stock options or crypto tokens, or investing in new tech startups…
Investing in new tech startups is—or is supposed to be—a positive-sum activity in which people coöperate to make something useful and, hopefully, great. The rest are, when we take account of risk, negative-sum activities: someone loses, and someone wins, and with declining marginal utility of wealth the loser loses more than the winner wins, They are thus, fundamentally, parasitic: the way to win is to find people who do not understand the risks they are running, and fleece them.
There is a common dopamine thrill in doing this well.
But wouldn’t it be wise to focus not on the dopamine thrill but on the usefulness of the underpinning activity—how those getting the dopamine thrills are fitting into the network web that is the coördination of what we want to be a positive sum productive practice of humanity considered as an anthology intelligence?
There Is a Very Good Book About the Professional Gambler Psyche Trapped Inside On the Edge:
In addition, let me say that I strongly believe that there is a very good little book inside On the Edge waiting to be let out. Plus there is a very good shorter book inside On the Edge whimpering to be let out. Had I been Nate Silver’s editor/publisher, I would have sawn the book down to its first four chapters, the ones on poker and sports betting. I would have put bookend chapters around those four—a new “why poker and sports betting matter as windows into our society” introduction and a “what we learn from them about broader issues of managing risk and dealing with counterparties” conclusion. I would have published it as a short thing to read on airplanes. And then, I think, very good reviews and, hopefully, the money would have rolled in. For the first four chapters truly are, as Paul Seabright writes:
one of the most gripping accounts I have ever read of a milieu… [which] requires the ability to calculate probabilities accurately… nerve… social perception… sports gambling[‘s]… subtly different set of skills…. Those who make a living from gambling over long periods are skilled in ways that set them apart from other people… the mindset, lifestyle and other aspects of the personality of those who can reliably assess probabilities to the degree of precision required to outwit each other and the house…. The Hustler, The Gambler, Casino, and The Cincinnati Kid…
But that is not the book that Nate Silver wrote.
Not “The River”, But Rather: Gamblers, Speculators, Calculators, Customers, Suckers, & Grifters:
To successfully write the book he actually wrote he really needs not to see one type of human inhabiting the enormous space that he calls “The River”, but he badly needs to distinguish between gamblers, speculators, calculators, customers, suckers, and grifters. And he does not. And so the book, after its first four chapters, collapses into what I can only see as lack of coherence and error.
Briefly:
Gamblers—people who feel the thrill of watching the dice fly so much that they do not want to or cannot stay away from it, but who are not addicts: they spend enough of their time in games in which they can on average win, or at least lose so little that they can look back on their time at the table as a worthwhile and enjoyable amusement; moreover, they have enough control over their bets that they keep the risk of their going spectacularly bankrupt at a de minimis level.
Speculators—people who feel the thrill of watching the dice fly that they cannot stay away, and for whom an important part of thrill is betting a large chunk of their bankroll on each cast. Hence almost all of these wind up bankrupt, and out of the game, but there are a few of the supremely lucky who become immensely rich and then, if they are truly lucky, find a large chunk of their wealth ringfenced away from their love of betting it all, double-or-nothing, on the next cast.
Calculators—people who are in the business of being the House, and gain next to no thrill from watching the dice fly, or at least do not let that thrill affect their decisions on whether, when, and on what to bet at all.
Customers—people who have some other reason to gamble because they want to lay off some risk they are already bearing as a result of their trying to do their jobs, and thus are people who, like the gamblers, can validly and justifiably look back on their time at the table as something worthwhile.
Suckers—people who do look back on their time as a table as a shitshow, or who avoid doing so only by engaging in strenuous feats of self-delusion.
Grifters—people who are in the business (a) of finding suckers, and (b) not of calculating odds, but rather of (c) rigging the game so that analysis and calculation is not the point.
Let me expand on all this:
There Is No Such Single Thing as Nate Silver’s “The River”:
First, my six—gamblers, speculators, calculators, customers, suckers, and grifters—are ideal types. They are never, or almost never, found in pure form. Indeed, most calculators, customers—and even grifters—have to spend substantial energy, restraining their love of watching the dice, fly in order to avoid becoming gamblers, and then sliding down into the role of speculators and suckers. As John Maynard Kane’s wrote nearly a century ago of those who have the largest incentives possible to be calculators:
The game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll...
A market in which risk and uncertainty are traded off by gamblers and customers with one another, with the calculators greasing the skids, is a valuable and useful thing. Laying-off risk allows for much more to take place in the way of production, enterprise, and entrepreneurship. Providing arenas for low-stakes thrills at watching the dice fly helps generate a lot of fun, and makes people happy. But when you move from those kinds of gambling markets to others, things get much darker very quickly.
You can argue that speculators occupy a middle ground. They will, overwhelmingly, wind up unhappy: victims of the system, often brutally abused victims, with lives destroyed. But in their unhappiness it may happen that they may do try out possibilities and reveal information about those possibilities and the way the world is that can be very valuable to the rest of us. And a few of them will wind up fabulously rich: those who make the truly insane bets at immense odds that do come in. But it is dangerous for society to lionize such. It is dangerous, not least, because someone who has taken truly insane risks and have them come in is then excellently positioned for a second career as a grifter.
And as for those who make a profession of being grifters—finding suckers, and sheering them? It is a form of theft, of fraud, on a moral basis as any other theft, even if you tell yourself it is otherwise because it is hidden behind a computer screen.
And for the suckers never given an even break? Unless they stop in time, it is a disaster.
Thus when Nate Silver says, as I noted above, that:
activities… [of] capital-G Gambling—like blackjack and slots and horse racing and lotteries and poker and sports betting—are fundamentally not that different from trading stock options or crypto tokens, or investing in new tech startups…
I want to say: yes they are that different. Behind investing in new tech startups are customers whose production, entrepreneurship, and enterprise is enabled by the system—an activity with a very large positive-sum component. Behind trading stock options is, sometimes, also an activity in which the counterparty is a customer who has very good reason to lay off risk, and whose well-being and that of his other counterparties is greatly enhanced thereby. Other times not.
And with blackjack and slots and horse racing and lotteries and sports betting—well, you had better hope that the counterparties to the calculators are simply gamblers, and that there are few grifters in the mix. For when these activities become, as they so often do, the playgrounds of grifters and speculators and suckers, it becomes a real shitshow.
But Nate Silver sees none of this. Instead, he sees only a single type of person inhabiting:
the River… a sprawling ecosystem of like-minded people… from low-stakes poker pros just trying to grind out a living to crypto kings and venture-capital billionaires. It is a way of thinking and a mode of life. People don’t know very much about the River, but they should. Most Riverians aren’t rich and powerful. But rich and powerful people are disproportionately likely to be Riverians…
And, he says:
The River is winning. Silicon Valley and Wall Street are still accumulating more and more wealth. Las Vegas is taking in more and more money. In a world forged not by the toil of human hands but by the computations of machines, those of us who understand the algorithms hold the trump cards…
But which of the six types of people are actually “winning”, how are they doing so, and is it good for us? Silver does not even see that this is a question. And so after chapter 4 the book, in my estimation, goes far off the rails.
Common Habits of Successful & Unsuccessful Risk-Loving Speculators:
There is a chapter called “Halftime: Inspiration: Thirteen Habits of Highly Successful Risk-Takers”—astronaut Kathryn Sullivan, biochemist Katalin Karikó, former NFL player and now sports statistics expert Dave Anderson, Silver Star-winning General H.R. McMaster, and private-equity star Victor Vescevo.: cool under pressure; competitively courageous; seeing through their counterparty’s eyes; oriented in the long-run toward processes; tolerant toward risk; biased toward raising-or-folding; prepared; attentive to the selective details that are important; generalists; comfortable with quantifying odds; independent of mind and purpose; consciously contrarian; thrill-seekers. These are, Silver claims, the characteristics of highly successful risk takers.
But a bunch of them are also characteristic of highly unsuccessful risk takers: being competitively courageous; risk-tolerant; having a raise-or-fold attitude; being independent of mind and purpose; being consciously contrarian; and seeking thrills are, mostly, very good ways to end up broke or worse with very high probability—unless you figure out how to channel your thrill-seeking into an activity in which you are the house, and to find a way to limit your tropism to increase your bets so that when the shit hits the fan, as it almost inevitably will, you can pick yourself up and play another round—at the house.
These habits of stubborn risk-ignoring contrarian thrill-seeking independence with an aversion to the golden mean are things that almost guarantee you will be a speculator.
And almost all of the speculators are in deep when the shit does hit the fan, as it almost always does.
Silver thus falls into a classic cognitive trap: the tendency to credit personal traits for individual success, rather than taking a market-equilibrium or ecological view in which the most successful are where they are out of being in the right place at the right time—and repeatedly doubling down. Nearly all of those who wind up in the right place at the right time and repeatedly double-down flame out spectacularly. But those who do not wind up superrich or supersuccessful.
You might argue that those wind up in the right place at the right time, repeatedly double-down, and are lucky enough to come through, are important to study because they control enough resources to shake our society to the core. You might argue that those wind up in the right place at the right time, repeatedly double-down, and are lucky enough to come through, are important to study because they are public benefactors—that the spillover benefits from their entrepreneurial vision drive human progress and flourishing forward, even though nearly all who follow that strategy wind up broke and unhappy—I couldah been a contendah—even their judgement is, fact it, not very good. But Nate does not go there.
So what are we supposed to learn from this?
What I learn reinforces my prior knowledge that selecting on the dependent variable is a bad thing to do in an analysis.
The Risk-Calculators, & Others Whom Nate Silver Flattens into His “The River”:
Now there are the other habits of highly successful risk-takers that Silver sets out—those that do not make you a speculator. Except that they are not habits of risk-takers: they are habits of risk-spreaders, of risk-managers, of the calculators. Coolness under pressure, seeing through your counterparty’s eyes, a long-run process orientation, selective attention to detail people who have comfort with quantifying odds—those are not orthogonal to, they are plainly opposite to the competitively courageous, risk-tolerant, raise-or-fold attitude, independent of mind and purpose, and consciously contrarian thrill-seekers. And so when Nate Silver claims that what ties all of the aspects of The River together is a common attitude toward decision-making under uncertainty, I say: no, no, no, no, NO, NO, NO!!!! Gamblers, speculators, calculators, customers, and grifters—and even suckers—may well talk the same game-theory economists’ talk of the world of calculated risk taking, but these five groups do very different things with these talky ideas:
Speculators use it as a psychological crutch to justify what they were going to do anyway.
Grifters use it to clothe their wolfish selves in sheep’s clothing to attract marks.
Customers and calculators use it to communicate and analyze—the purposes for which it was built—and, ideally to minimize and spread risks, for the point for a customer is to minimize and for a calculator to ultimately lay all risk off onto counterparties.
Gamblers use it to (try to) limit their bets to what they can afford to lose.
Suckers use it erroneously to lose everything.
Thus when Silver calls it one single thing, this The River of his:
Upriver… rationalism and effective altruism…. Midriver… people [who] apply the E[xpected ]V[alue] maximizer skill set to make lots of money, such as through venture capital and hedge fund investing…. Downriver… Las Vegas meets New Orleans: lots of tourists and lots of gambling…. The Archipelago… where pretty much anything goes… gray-market off-the-books gambling activity in online poker, sports betting, and cryptocurrency. Sophisticated gamblers know to avoid the Archipelago—but it lies in wait to pick off the weakest of the herd. And yet, the people in the River are my tribe—and I wouldn’t have it any other way…. [People who are] analytical[,] abstract[,] decoupling [issues,] competitive[,] critical[,] independent-minded (contrarian)[,] risk tolerant…
I think he is simply wrong. And that is what sends the book starting with “Halftime” astray. It goes especially astray because it acquires more than a whiff of whatobsequiousness, as Silver runs into various lucky speculator-grifters and they run their con games on him. He is here betrayed by the normal human tendency to genuflect before the rich and powerful, as if their achievements are all about character, rather than the random and contingent effect of taking big risks, for time and chance happeneth to us all, and for the risk-loving rather more time and chance happeneth to them than to the rest of us.
Plus there is his failure to understand how our society works. Again. I stress: Markets of risk-bearing and risk-spreading by calculators meeting customers as their counterparties, greased by the presence of gamblers and even a few speculators, are positive-sum: very valuable resources for our society. The principal thing Silver should do, as he pokes around, is to distinguish between which types are the dominant actors in the arenas he finds himself in:
Are they calculators and customers? Good. It is a positive-sum activity.
Are they gamblers and speculators? Ok. Close to zero-sum for society as a whole, as long as the thing is not too deranged by the speculators.
Are they grifters searching for suckers—either direct, person-to-person and handshake-to-handshake, or mediated by a computer screen? Bad bad bad bad bad.
Yet this tripartite division is the furthest thing every from Silver’s mind in the second hal of the book.
Objecting to People Who Stand Between You & the Suckers:
Again, I stress: Blackjack and slots and horse racing and lotteries and poker and sports betting and crypto tokens are Gambling-capital-G zero-sum activities. No money is flowing into the system. You do it because (i) you are happy losing (some) money for the thrill of the game, (ii) you are a sucker who does not understand the odds, or (iii) you provide the service of being a house-counterparty to the (i)s and (ii)s. If you are a (iii), sooner-or-later you should wise up to the fact that nearly all of the net money you are making comes from your ability to exploit the (ii)s. Your ethical position is awful. You are in a sad, soul-corrupting business. You should seek enlightenment.
And so I winced at this passage in Silver—who is, remember, an enormous public benefactor, remember, whose portrayal-of-self on the internet I find very engaging, remember, to whom I owe a great deal, and, remember, who wants to be a good man—tremendously depressing:
I’d been a professional poker player for… 2004 and 2007… the… Poker Boom… online poker… Chris Moneymaker, an accountant from Nashville… 2003 World Series of Poker… winning the Main Event for $2.5 million… an archetype for every office drone who wanted to break out of his cubicle and win the big jackpot…. Poker… at night, when your opponents are… drunk, sleep-deprived, or delirious…. I quit my corporate job…. It was a good living…. But… in late 2006, the GOP-led Congress, hungry for a victory with “moral majority” voters ahead of the midterms… passed… the Unlawful Internet Gambling Enforcement Act… choked off payment processors… the shadow of illegality… friction of getting your money in and out, inexperienced new players avoided the games, making them much tougher to beat…. The bill had been tucked into an unrelated [bill] and passed during the last session before Congress recessed…. It was a shifty workaround, and having essentially lost my job, I wanted the people responsible for it to lose their jobs, too. And they did… Representative Jim Leach[‘s] thirty-year tenure in office ended partly because of poker players who had contributed money to his opponent…
In Nate Silver’s mind, Jim Leach of Iowa stole something valuable from him by adding enough frictions to online poker gambling to make “inexperienced new players avoid… the games” thus eliminating the inflow of suckers that kept his business profitable as the current crop of “losing players either went broke, quit, or got better, removing one sucker from the table at a time.”
People of type (i) could and did still play online poker. It was the people of type (ii) whom Jim Leach of Iowa rescued.
And Nate Silver is still furious at Jim Leach today, seventeen years later,
To me, in this episode, Nate Silver comes across as the villainous bandit chief Calvera comes across in The Magnificent Seven:
CALVERA: Suppose I offer you equal shares?
CHRIS: In what?
CALVERA (embracing the village): Everything. To the last grain.
CHICO: And the people in the village—what about them?CALVERA: I leave it to you. Can men of our profession worry about that? If God didn’t want them to be sheared, he wouldn’t have made them sheep.
Not a good look.
But, remember, Nate Silver is an enormous public benefactor, and wants to be a good man.
Is Nate Silver a Tour Guide or a Victim in the Second Half of the Book:
I can now go more quickly. The remaining chapters of the book, after Halftime, the chapters in the “Risk” section, are: 5. Acceleration—Silicon Valley. 6. Illusion—Sam Bankman-Fried. 7. Quantification—Effective Altruism (the good part: mosquito nets) & Will MacAskill & company (the not so good part). Miscalculation—SBF again. ∞. Termination—Open AI. 1776. Foundation— “Ever since 1776, we risk-takers have been winning.” Agency, Plurality, Reciprocity.
In “Acceleration”, Silver hangs out with people who have over the past decade turned themselves into some of the sleaziest and least societally valuable part of Silicon Valley, and buys their snake oil.
In “Illusion” he hangs out with a full-fledged con artist, and gullibly buys his snake oil.
In “Quantification” he spends some time hanging out with the very earnest and valuable people trying to make modern philanthropy more effective with a better benefit-cost ratio—but then he wanders off and, gullibly, buys more snake oil.
In “Miscalculation” he buys yet more snake oil.
And in “Termination” he credulously gulps down snake oil sold by a mixture of grifters and the gullible who imagine that graphs that look exponential for a time will stay so into the indefinite future here.
There is not much to learn in these chapters, for Silver is not a good guide to cryptogrifters or to the Rapture-of-the-Nerds types.
Again I stress: It is a big problem for Nate Silver that he really does not see any difference between “capital-G Gambling—like blackjack and slots and horse racing and lotteries and poker and sports betting… crypto tokens” and “investing in new tech startups”.
But there is a huge difference.
In the first group, the only net source of value to the system are the not-fully-voluntary contributions of the suckers: people who if they understood the odds would understand that this is a game that they really do not want to play. This is a net subtraction from human well-being. If you participate, it requires firmly shutting your eyes and avoiding staring at the obvious if you are to be happy with what you are doing. “Never give a sucker an even break” is indeed an ethos. But, as they say in The Big Lebowski, so is National Socialism.
By contrast, in investing in non-crypto venture-capital startups—or in the stock and bond markets—you are committing resources to something that is supposed to produce goods and services of enduring value that make the counterparties who eventually buy them better off. You are not finding as your major set of counterparties people out of their depth who you are going to make sad. “Long-term greedy” was the Old-School Goldman-Sachs mantra: we will get filthy rich, and our counterparties will do well enough that they will come back to us. This is a net addition to humanity’s power to do and to be.
Yes, there is a “middle ground”—people who lose a little money in Las Vegas but love the entertainment thrill of letting the dice fly, and people who buy and sell options to hedge risks they not-fully-rationally do not want to bear come to mind. But don’t try to convince me that crypto startups are in that “middle ground”: The credibility of claims that Web3 would both be useful and that its use cases would pay handsomely to use legacy tokens sailed long ago.
The book’s closing chapter, “Foundation”, closes with a call to embrace the values of “agency, plurality, reciprocity”—all very good things.
But it begins with a misstep: “Ever since 1776, we risk-takers have been winning.”
No. Ever since 1776, the risk-calculators have been winning. That is a very different thing. And we badly need to hope that they are the ones who keep winning in the future.
By this point, if you have read this far, you really do know—in your bones—that this is not an organized essay. Yet even disorganized as it is, there were two big pieces that did not fit.
Here is the first:
AFTERWARD I: Why Does Nate Silver Think There Is a Single “The River” Here?
Silver, I think, calls The River one single thing because all the pieces of it are truly and deeply opposed to different aspects of a thing that Nate loathes. And it is that shared loathing that makes Nate Silver take The River to be his tribe, because the key fact is loathing for some components of what he calls The Village:
The Village… [of those who are “too political”…. Government… media… academia (although perhaps excluding some of the more quantitative academic fields such as economics)… [with the] distinctly left-of-center politics associated with the Democratic Party. Part of the rub is the personality clash—remember, Riverians love decoupling and Villagers hate it…. I’ve never quite taken to the Village, and I’ve often felt like media coverage of me and FiveThirtyEight was misinformed…. Villagers are coupling when they should be decoupling…. Claims to… expertise are becoming increasingly hard to separate from Democratic political partisanship…. Villagers are too conformist and not aware of the degree to which their views are influenced by confirmation bias and political and social fads…. Villagers are stifling competition by increasingly focusing on equity of outcomes rather than equality of opportunity… too paternalistic, too neurotic, and too risk-averse…. The Village’s attempts at speech regulation are hypocritical and often counterproductive…
But there is no more one single The Village than there is one single The River. For, example, to Nate I am definitely a card-carrying member—more than a member, a chief—of The Village:
academia, check;
left-of-center politics, check;
Democratic Party, check;
believe lots of “decoupling” and siloing of issues is simply stupid—because there are lots of interconnections—check;
claims that Republicanism is the negation of real expertise, of course, for only true morons and shameless grifters could even claim think otherwise given the state of the Republican Party today, check;
don’t think I’m obliged to eat the shit when Elon Musk tries to put true Nazis into my social-media feed, check.
But stifling competition? Is that what Silver thinks I (and FTC Chief Lina Kahn) are trying to do? Too risk-averse? That depends on the actual calculations, doesn’t it? Too conformist? Conformist to what? Not quantitative? Hah!! I’ll give him biased because of fads and fashions (very hard to guard against). And I will give him what I said at the start—that a great deal of media coverage of Silver and FiveThirtyEight back in The Day was worse than misinformed: it was corrupt and mendacious.
But as Silver has created one single The Village as his adversary, he has to create in his mind’s eye one single The River to give him the comfort of a Tribe-capital-T, and allies. And that, I think, is one of the things that leads him very badly astray in the post-halftime piece of his book.
Here is the second piece that did not fit:
AFTERWARD II: What Is This About a Single “The Village”? Where Does It Come From?:
I do regret that I did find myself thinking that Nate Silver’s new book, On the Edge: The Art of Risking Everything, is profoundly unsatisfactory.
I deeply regret this more because he has gotten so much trashing in the past—and continuing in the present—from the corrupt and the ignorant, many of them ignorant by deliberate acts of will.
I don’t have to dig very deep before a find a truly extraordinary number and volume of false, malicious, and deceptive howls from them, complaining about Nate Silver on this and that:
like Toff’s blaming Silver for the “still more troubling development tied to the advent of the aggregators has been the media’s diminishing role as gatekeepers of opinion data”,
like Haberman’s dismissing Nate Silver’s on-point criticisms of the New York Times as “gratuitous jabs at a former employer”,
like Confessore’s now-very deleted tweets about Silver’s “cheap shots”,
like Timm’s dismissal of Silver as a “Very Online Blowhard”,
like Robinson’s claim that Silver had a “humiliating record”,
and so much much more.
Surely the most ignorant and certainly the most embarrassing to the perpetrator example of simply not doing any real reporting or analysis was Dylan Byers’s claim on October 29, 2012 that:
should… Romney win… it’s difficult to see how people can continue to put faith in the predictions of [a Nate Silver] who has never given that candidate anything higher than a 41 percent chance…
Overwhelmingly, the journalistic-pollster emperor had—and has—no clothes at all: grifters in the business of generating statistical noise and then getting the statistically ignorant to give them money by claiming it is signal.
In pushing back against that, we all owe Nate BigTime. And that is one of the reasons that The Signal & the Noise is still a great book to read.
Plus the tide of bullshit is one principal reason, I think, that Nate is so gullible in the second half of his book. He sees, feels, and smells the bullshit dumped on him. He reïfies it by calling it the product of a single thing he calls The Village. And confronted with this adversary he has to find a Tribe-capital-T of his own. And so he fantasizes his idea of The River into existence.
And, last, let me give Paul Seabright and his review the last word:
AFTERWARD III: Paul Seabright Is Indeed Smart & Incisive:
Paul Seabright: ‘Therein lies the most important difference between such [speculator-grifter] people [in the second half] and the professional gamblers who populate the first half of On the Edge. Professional gamblers are constantly having to correct their methods and their conclusions against an unforgiving daily reality. Crypto kings and venture capital billionaires, in contrast, are continually trying to sell us their wisdom in novel domains, whether it’s by asking us to accept their guesses about the existential risks of artificial intelligence or by accepting the invitation to become vice-president of the US. Such novel domains lack an equivalently rigorous benchmarking against reality. And Nate Silver’s book, which I in many ways like and admire, risks giving unearned credence to this dangerous bait-and-switch…
Actually, I lied: the real last word:
AFTERWARD IV: “& Somewhere in the Darkness…”
“& somewhere in the darkness, the Gambler he broke even…” That Nate Silver fundamentally misunderstands Kenny Rogers’s “The Gambler” as a metaphor for human life—that is, in view of its other problems, relatively small potatoes with respect to his new On the Edge.
But it does rankle.
No, the song would not be improved by changing the line “Know when to run” to “Know when to raise!” That would be a totally different song.