All posts by S. Manson

Using Thor’s Hammer to smash HFT

This is a great article on not getting screwed by the HFT and dark pools as put into play by the RBC: http://qz.com/138388/how-the-navy-seals-of-trading-are-taking-on-wall-streets-predatory-robots/#/h/24205,1/

“We’re trying to put the greatest number of people on equal footing,” says Katsuyama. “There’s a huge swath of participants that these [950] microseconds is meaningless to but it has huge meaning to a very small group [the HFTs],” he adds. The point is not to prevent HFTs from doing a lot of the things they normally do—such as trading on small differences between a gold exchange-traded fund and gold futures, for example. It’s just to stop the predatory strategies that make them money at the expense of real investors.”

Interesting Article on Bitcoin

Why Bitcoin Matters

Makes some interesting points, some of which being:

-Think about the implications for protest movements. Today protesters want to get on TV so people learn about their cause. Tomorrow they’ll want to get on TV because that’s how they’ll raise money, by literally holding up signs that let people anywhere in the world who sympathize with them send them money on the spot.

– Switching to Bitcoin, which charges no or very low fees, for these remittance payments will therefore raise the quality of life of migrant workers and their families significantly.

Check it out, and share your thoughts.

The Human Use of Human Beings – N. Weiner

Written by Norbert Weiner in the 1950’s, this book is definitely flavored by its time, and is timely in its messages.

Norbert was a child prodigy , brilliant mathematician and philosopher. Looking at the fields of engineering, the study of the nervous system and statistical mechanics, he coined the phrase “cybernetics” to characterize the  “control and communication in the animal and machine”. This idea and many others have become pervasive through the sciences (especially computing and biology). As he sees it, “If the seventeenth and early eighteenth centuries are the age of clocks, and the later eighteenth and nineteenth centuries constitute the age of steam engines, the present time is the age of communication and control”.

For Norbert, technologies were viewed as applied social and moral philosophy. His personal philosophy itself being rooted in existentialism, instead of the formal analytical philosophy of his day. He strongly prized himself on being an independent and knowledgable intellectual, not affiliating with any political, social or philosophical group. He did not accept funds from governments , agencies, corporations or any other groups that would or could compromise his independence and honesty.

As a lifelong obsession, Norbert wished to distinguish human from machine. He recognized the organization of patterns and functions that could be performed by either, but focussed his intention and understanding on the human/machine identity/dichotomy within a humane social philosophy. The obvious questions therefore arose:

1. How is the machine affecting people’s lives?

2. Who reaps those benefits?

I commend Norbert for urging the scientists and engineers of his day to “practice ‘the imaginative forward glance’ so as to attempt assessing the impact of an innovation, even before making it known”. This is valuable for us even today when considering the environmental impacts of our creations, let alone the overall human life impacts as well.

Norbert plainly states “that society can only be understood through a study of the messages and the communication facilities which belong to it; and that in the future development of these messages and communication facilities, messages between man and machines, between machines and man, and between machine and machine, are destined to play an ever increasing part.” “To live effectively is to live with adequate information. Thus, communication and control belong to the essence of man’s inner life, even as they belong to his life in society.”

Comparing “the physical functioning of the living individual and the operation of some of the newer communication machines” he finds that there is a”parallel in their analogous attempts to control entropy” (disorder) through feedback. Feedback being essential  for both human and machine to make effective decisions and ultimately take action. “Certain kinds of machines and some living organisms -particularly the higher living organisms-can, … modify their patterns of behavior on the basis of past experience so as to achieve specific antientropic ends. In these higher forms of communicative organisms the environment, considered as the past experience of the individual, can modify the pattern of behavior into one which in some sense or other will deal more effectively with the future environment.” Only in this way can we create new environments, since absolute repetition is absolutely impossible.

He warns however, that “what many of us fail to realize is that the last four hundred years are a highly special period in the history of the world. The pace at which changes during these years have taken place is unexampled in earlier history, as is the very nature of these changes. This is partly the result of increased communication, but also of an increased mastery over nature which, on a limited planet like the earth, may prove in the long run to be an increased slavery to nature. For the more we get out of the world the less we leave, and in the long run we shall have to pay our debts at a time that may be very inconvenient for our own survival. We are the slaves of our technical improvement…We have modified our environment so radically that we must now modify ourselves in order to exist in this new environment.”

This “new” environment, or in Norbert’s words “second industrial revolution”  or ” new automatic age” in part consists of the transportation of words/messages/information which serve to forward an individual’s power of perception, and in a sense extends one’s physical existence to the whole world. The design of the machines that would help make this “new” environment would be “transferred from the domain of the skilled shop worker to that of the research-laboratary man”. “Invention, under the stimulus of necessity and the unlimited employment of money” would be the “new blood” fueling the research behind them. The employment of these computing machines during this time would be “much faster and more accurate than the human computer” enabling the replacement of humans at certain levels whereby these machines can talk to each other and execute “repetitive tasks”. The benefit being that it “has displaced man and the beast” as a source of physical power, ideally freeing up time to pursue greater interests, but also warns that “the matter of replacing human production by other modes may well be a life-or-death matter”. Under these circumstances, it is logical to see that these new tools will “yield immediate profits, irrespective of what long-time damage they can do” and that any automatic machine that “competes with slave labor…will produce an unemployment situation, in comparison with which the present recession and even the depression of the thirties…”. “Thus the new industrial revolution is a two-edged sword”, whereby the “machine’s danger to society is not from the machine itself but from what man makes of it”. Norbert takes solace in that “the technique of building and employing these machines is still very imperfect” and that “the problems of the stability of prediction remain beyond what we can seriously dream of controlling”.

Norbert saw that during this time “invention is losing its identity as a commodity in the face of the general intellectual structure of emergent inventions”, whereby “information and entropy are not conserved, and are equally unsuited to being commodities”. It is to this last point on information not being a good commodity where we see that Norbert was not able to see beyond the times in which he wrote. It can be agreed that “the matter of time is essential in all estimates of the value of information”, but he was unable to anticipate the increased speed by which it could be acquired, stored, and received, let alone the exponential decrease in cost.

Norbert leaves us with a lingering thought we must all confront, namely that “what is used as an element in a machine, is in fact an element in the machine. Whether we entrust our decisions to machines of metal, or to those machines of flesh and blood which are bureaus and vast laboratories and armies and corporations, we shall never receive the right answers to our questions unless we ask the right questions.”

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