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The Pleasure of Finding Things Out: The Best Short Works of Richard P. Feynman by Richard P. Feynman, Jeffrey Robbins
Albert Einstein, Brownian motion, impulse control, index card, John von Neumann, Murray Gell-Mann, pattern recognition, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, the scientific method
FEYNMAN’S MINORITY REPORT TO THE SPACE SHUTTLE CHALLENGER INQUIRY When the Space Shuttle Challenger exploded shortly after its launch on January 28, 1986, six professional astronauts and one school-teacher were tragically killed. The nation was devastated, and NASA was shaken out of its complacency, brought on by years of successful–or at least nonlethal–space missions. A commission was formed, led by Secretary of State William P. Rogers and composed of politicians, astronauts, military men, and one scientist, to investigate the cause of the accident and to recommend steps to prevent such a disaster from ever happening again. The fact that Richard Feynman was that one scientist may have made the difference between answering the question of why the Challenger failed and eternal mystery. Feynman was gutsier than most men, not afraid to jet all over the country to talk to the men on the ground, the engineers who had recognized the fact that propaganda was taking the lead over care and safety in the shuttle program.
For more information, please contact the Special Markets Department at the Perseus Books Group, 11 Cambridge Center, Cambridge, MA 02412, or call (800) 255-1514 or (617) 252-5298, or e-mail firstname.lastname@example.org. 10 9 8 CONTENTS Foreword by Freeman Dyson Editor’s Introduction 1The Pleasure of Finding Things Out 2Computing Machines in the Future 3Los Alamos from Below 4What Is and What Should Be the Role of Scientific Culture in Modern Society 5There’s Plenty of Room at the Bottom 6The Value of Science 7Richard P. Feynman’s Minority Report to the Space Shuttle Challenger Inquiry 8What Is Science? 9The Smartest Man in the World 10Cargo Cult Science: Some Remarks on Science, Pseudoscience, and Learning How to Not Fool Yourself 11It’s as Simple as One, Two, Three 12Richard Feynman Builds a Universe 13The Relation of Science and Religion Acknowledgments Index FOREWORD: THIS SIDE IDOLATRY by Freeman Dyson “I did love the man this side idolatry as much as any,” wrote Elizabethan dramatist Ben Jonson. “The man” was Jonson’s friend and mentor, William Shakespeare.
. _______ *(1906– ) Winner of the 1967 Nobel Prize in Physics for contributions to the theory of nuclear reactions, especially for his discoveries concerning the energy production in stars. Ed. †In 1965, the Nobel Prize for Physics was shared by Richard Feynman, Julian Schwinger, and Sin–Itiro Tomonaga for their fundamental work in quantum electrodynamics, and its deep consequences for the physics of elementary particles. Ed. 2 COMPUTING MACHINES IN THE FUTURE Forty years to the day after the atomic bombing of Nagasaki, Manhattan Project veteran Feynman delivers a talk in Japan, but the topic is a peaceful one, one that still occupies our sharpest minds: the future of the computing machine, including the topic that made Feynman seem a Nostradamus of computer science–the ultimate lower limit to the size of a computer. This chapter may be challenging for some readers; however, it is such an important part of Feynman’s contribution to science that I hope they will take the time to read it, even if they have to skip over some of the more technical spots.
The Meaning of It All by Richard P. Feynman
Feynman wrote The Character of Physical Law and Q.E.D.: The Strange Theory of Light and Matter. He also authored a number of advanced publications that have become classic references and textbooks for researchers and students. Richard Feynman was a constructive public man. His work on the Challenger commission is well known, especially his famous demonstration of the susceptibility of the O-rings to cold, an elegant experiment, which required nothing more than a glass of ice water. Less well known were Dr. Feynman’s efforts on the California State Curriculum Committee in the 1960s where he protested the mediocrity of textbooks. A recital of Richard Feynman's myriad scientific and educational accomplishments cannot adequately capture the essence of the man. As any reader of even his most technical publications knows, Feynman’s lively and multisided personality shines through all his work.
Books published by Basic Books are available at special discounts for bulk purchases in the U.S. by corporations, institutions, and other organizations. For more information, please contact the Special Markets Department at the Perseus Books Group, 11 Cambridge Center, Cambridge, MA 02412, or call (800) 255–1514 or (617) 252–5298, or e-mail email@example.com. 05 06 07 / 10 9 8 7 6 5 4 3 2 1 CONTENTS Publisher’s Note The Uncertainty of Science The Uncertainty of Values This Unscientific Age Index About Richard Feynman PUBLISHER’S NOTE In April 1963, Richard P. Feynman was invited to give a three-night series of lectures at the University of Washington (Seattle) as part of the John Danz Lecture Series. Here is Feynman the man revealing, as only he could, his musings on society, on the conflict between science and religion, on peace and war, on our universal fascination with flying saucers, on faith healing and telepathy, on people’s distrust of politicians—indeed on all the concerns of the modern citizen-scientist.
Research Associates, 102, 105 Statistical sampling, 84, 89–91 Stupidity, phenomena result of a general, 95 Systems, traffic, 118 Technology applications of, 62 and science, 50 Telekinesis, 68 Telepathy, mental, 71–74 Television advertising in, 85 looker, intelligence of average, 87–88 Testing, nuclear, 106–7 Theories, allowing for alternative, 69 Thoroughness, concept of, 17 Tops, spinning, 24–26 Traffic systems, 118 Troubles and lack of information, 91 Truth of ideas, 21 writing, 56 Uncertainties admission of, 34 dealing with, 66–67, 71 relative certainties out of, 98 remaining, 70–71 of science, 1–28 scientists dealing with, 26–27 of values, 29–57 Uncertainty, 67–68 Universe contemplation of, 39 origins of, 12 Unscientific age, 59–122 Values ethical, 43 moral, 120–21 uncertainty of, 29–57 Venus flying saucers from, 75 Mariner II voyage to, 109–12 Vocabulary, 116 War, dislike of, 32 Water, and deserts, 96 Weight, as not affected by motion, 24 Western civilization, 47 Witch doctors, 114 Words, as meaningless, 20 Writing truth, 56 ABOUT RICHARD FEYNMAN Born in 1918 in Brooklyn, Richard P. Feynman received his Ph.D. from Princeton in 1942. Despite his youth, he played an important part in the Manhattan Project at Los Alamos during World War II. Subsequently, he taught at Cornell and at the California Institute of Technology. In 1965 he received the Nobel Prize in Physics, along with Sin–Itero Tomanaga and Julian Schwinger, for his work in quantum electrodynamics.
Overcomplicated: Technology at the Limits of Comprehension by Samuel Arbesman
3D printing, algorithmic trading, Anton Chekhov, Apple II, Benoit Mandelbrot, citation needed, combinatorial explosion, Danny Hillis, David Brooks, discovery of the americas, en.wikipedia.org, Erik Brynjolfsson, Flash crash, friendly AI, game design, Google X / Alphabet X, Googley, HyperCard, Inbox Zero, Isaac Newton, iterative process, Kevin Kelly, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, mandelbrot fractal, Minecraft, Netflix Prize, Nicholas Carr, Parkinson's law, Ray Kurzweil, recommendation engine, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Second Machine Age, self-driving car, software studies, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, superintelligent machines, Therac-25, Tyler Cowen: Great Stagnation, urban planning, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, Y2K
Chapter 1 WELCOME TO THE ENTANGLEMENT On a winter day early in 1986, less than a month after the Challenger disaster, the famous physicist Richard Feynman spoke during a hearing of the commission investigating what went wrong. Tasked with determining what had caused the space shuttle Challenger to break apart soon after takeoff, and who was to blame, Feynman pulled no punches. He demonstrated how plunging an O-ring—a small piece of rubber used to seal the joints between segments of the shuttle’s solid rocket boosters—into a glass of ice water would cause it to lose its resilience. This small piece of the spacecraft was sensitive to temperature changes, making it unable to provide a firm seal. These O-rings seem to have been responsible for the catastrophe that cost seven crew members their lives.
Will Oremus, “Who Controls Your Facebook Feed,” Slate, January 3, 2016, http://www.slate.stfi.re/articles/technology/cover_story/2016/01/how_facebook_s_news_feed_algorithm_works.html. because of its creation by some perfect, infinite mind: “The worship of the algorithm” is discussed further in Ian Bogost, “The Cathedral of Computation,” The Atlantic, January 15, 2015, http://www.theatlantic.com/technology/archive/2015/01/the-cathedral-of-computation/384300/. CHAPTER 1: WELCOME TO THE ENTANGLEMENT the Challenger disaster: James Gleick, “Richard Feynman Dead at 69; Leading Theoretical Physicist,” The New York Times, February 17, 1988, http://www.nytimes.com/books/97/09/21/reviews/feynman-obit.html. car began accelerating uncontrollably: For further information on “unintended acceleration” in Toyota vehicles, see Ken Bensinger and Jerry Hirsch, “Jury Hits Toyota with $3-million Verdict in Sudden Acceleration Death Case,” Los Angeles Times, October 24, 2013, http://articles.latimes.com/2013/oct/24/autos/la-fi-hy-toyota-sudden-acceleration-verdict-20131024; Ralph Vartabedian and Ken Bensinger, “Runaway Toyota Cases Ignored,” Los Angeles Times, November 8, 2009, http://www.latimes.com/local/la-fi-toyota-recall8-2009nov08-story.html#page=1; Margaret Cronin Fisk, “Toyota Settles Oklahoma Acceleration Case After Verdict,” Bloomberg Business, October 25, 2013, http://www.bloomberg.com/news/articles/2013-10-25/toyota-settles-oklahoma-acceleration-case-after-jury-verdict; Associated Press, “Jury Finds Toyota Liable in Fatal Wreck in Oklahoma,” New York Times, October 25, 2013, http://www.nytimes.com/2013/10/25/business/jury-finds-toyota-liable-in-fatal-wreck-in-oklahoma.html.
the system’s massive complexity: Essentially, the failure in each of these cases was due to endogenous complexity—the complexity that evolves within a large system—rather than just to any specific exogenous shock. popular narrative of the Challenger: It must be recognized that the Challenger accident was more complicated than the streamlined story we are often told about its cause. For example, engineers involved were aware of “the risk of catastrophic failure” of the space shuttle—though, as the following source notes, they could not pinpoint a specific reason—and objected to its launch. At the time, it seems, the engineers knew that “temperature might be a causal factor,” but were not certain of it. Wade Robison et al., “Representation and Misrepresentation: Tufte and the Morton Thiokol Engineers on the Challenger,” Science and Engineering Ethics 8, no. 1 (2002): 59–81, https://people.rit.edu/wlrgsh/FINRobison.pdf. Further details can also be found in this oral history of the accident, which indicates that engineers seem to have known the cause of the accident and that this information was given to Feynman to highlight in the hearing: Margaret Lazarus Dean, “An Oral History of the Space Shuttle Challenger Disaster,” Popular Mechanics, February, 2016, http://www.popularmechanics.com/space/a18616/an-oral-history-of-the-space-shuttle-challenger-disaster/.
23andMe, Albert Einstein, Alfred Russel Wallace, banking crisis, Barry Marshall: ulcers, Benoit Mandelbrot, Berlin Wall, biofilm, Black Swan, butterfly effect, Cass Sunstein, cloud computing, congestion charging, correlation does not imply causation, Daniel Kahneman / Amos Tversky, dark matter, data acquisition, David Brooks, delayed gratification, Emanuel Derman, epigenetics, Exxon Valdez, Flash crash, Flynn Effect, hive mind, impulse control, information retrieval, Isaac Newton, Jaron Lanier, John von Neumann, Kevin Kelly, mandelbrot fractal, market design, Mars Rover, Marshall McLuhan, microbiome, Murray Gell-Mann, Nicholas Carr, open economy, place-making, placebo effect, pre–internet, QWERTY keyboard, random walk, randomized controlled trial, rent control, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Schrödinger's Cat, security theater, Silicon Valley, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, the scientific method, Thorstein Veblen, Turing complete, Turing machine, Walter Mischel, Whole Earth Catalog
The person who has access to his unconscious processes and mines them without getting mired in them can try new approaches, can begin to see things in new ways, and, perhaps, can achieve mastery of his pursuits. In a word: Relax. It was ARISE that allowed Friedrich August Kekulé to use a daydream about a snake eating its tail as inspiration for his formulation of the structure of the benzene ring. It’s what allowed Richard Feynman to simply drop an O-ring into a glass of ice water, show that when cold the ring loses pliability, and thereby explain the cause of the space shuttle Challenger disaster. Sometimes it takes a genius to see that a fifth-grade science experiment is all that is needed to solve a problem. In another word: Play. Sometimes in order to progress, you need to regress. Sometimes you just have to let go and ARISE. Systemic Equilibrium Matthew Ritchie Artist The second law of thermodynamics, the so-called arrow of time, popularly associated with entropy (and by association, death), is the most widely misunderstood shorthand abstraction in human society today.
Even for those who are online and uncensored, the most valuable information can be hard to find, buried in an unscientific media avalanche. Then there’s what we do with the information we have. The core of a scientific lifestyle is to change your mind when faced with information that disagrees with your views, avoiding intellectual inertia, yet many of us praise leaders who stubbornly stick to their views as “strong.” The great physicist Richard Feynman hailed “distrust of experts” as a cornerstone of science, yet herd mentality and blind faith in authority figures is widespread. Logic forms the basis of scientific reasoning, yet wishful thinking, irrational fears, and other cognitive biases often dominate decisions. What can we do to promote a scientific lifestyle? The obvious answer is to improve education. In some countries, even the most rudimentary education would be a major improvement (less than half of all Pakistanis can read).
A better understanding of the meaning of “probability”—and especially realizing that we don’t need (and never possess) “scientifically proved” facts but only a sufficiently high degree of probability in order to make decisions—would improve everybody’s conceptual toolkit. Uncertainty Lawrence Krauss Physicist, Foundation Professor, and director, Origins Project, Arizona State University; author, Quantum Man: Richard Feynman’s Life in Science The notion of uncertainty is perhaps the least well understood concept in science. In the public parlance, uncertainty is a bad thing, implying a lack of rigor and predictability. The fact that global warming estimates are uncertain, for example, has been used by many to argue against any action at the present time. In fact, however, uncertainty is a central component of what makes science successful.
Leaving Orbit: Notes From the Last Days of American Spaceflight by Margaret Lazarus Dean
affirmative action, Elon Musk, helicopter parent, index card, Mars Rover, New Journalism, operation paperclip, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, sensible shoes, V2 rocket
The cause of the explosion had been the solid rocket boosters, whose faulty design combined with the unseasonably cold weather in Florida to create a catastrophic failure. A picture in the paper showed Richard Feynman, a physicist who had worked on the Manhattan Project, smirking and holding up a piece of O-ring he’d been soaking in ice water to show that it became brittle. Sally Ride, also on the commission along with Neil Armstrong, sat a few seats away, looking pissed. She’d trusted her life to Challenger twice. Only recently, since her death, has it come to light that the key piece of information about the O-rings had been supplied to another member of the commission by Sally Ride herself. The commission’s report also revealed that the crew cabin had remained intact after the explosion, that the astronauts had been alive, though not necessarily awake, for the two minutes and forty-five seconds it took them to fall back to Earth.
On the one hand, the loneliness of that final resting place was terrifying to contemplate; on the other, Mailer considered the prospect of the souls rising—as so many who have had near-death experiences describe—rising faster, more cleanly than those earthbound, into a “transpostmortal insertion to the stars.” As with Challenger, an investigation followed. Sally Ride became the only person to serve on the investigation boards for both Challenger and Columbia. As was expected, the Columbia Accident Investigation Board (CAIB, pronounced “cabe” by insiders) found that the immediate cause of the disaster was a chunk of foam falling onto the tiles and that the organizational cause was a pattern of dismissing problems too easily, the “normalization of deviance” as Diane Vaughan put it so memorably in her study of Challenger. When a shuttle flew with a known issue and came back safely, the tendency among managers was to assume that the issue was not in fact a risk, using the previous success as “evidence.” “Try playing Russian roulette that way,” Richard Feynman remarked after Challenger. CAIB found that after a short period of vigilance, the same error of thinking had crept back into NASA decision making.
Mission STS-51L had been plagued by many slips and scrubs, the most frustrating of which had been the day before the launch. A special tool used to close the hatch to the crew compartment had broken off, and technicians had been unable to remove it within the launch window. If Challenger had taken off that day, a day much warmer than the fateful January 28, the rubber O-ring in the right solid rocket booster probably would not have stiffened with cold, and burning gases probably would not have escaped to detonate the external tank. Engineers, already aware of the O-ring problem, might have had a chance to fix it before the next attempt to launch in unusually cold weather. The space shuttle program might have moved forward as was intended, with the Department of Defense continuing to use it to deploy spy satellites. A second launch and landing facility might have been built, as planned, at Vandenberg Air Force Base in California.
Beyond: Our Future in Space by Chris Impey
3D printing, Admiral Zheng, Albert Einstein, Alfred Russel Wallace, Berlin Wall, Buckminster Fuller, butterfly effect, California gold rush, carbon-based life, Colonization of Mars, cosmic abundance, crowdsourcing, cuban missile crisis, dark matter, discovery of DNA, Doomsday Clock, Edward Snowden, Elon Musk, Eratosthenes, Haight Ashbury, Hyperloop, I think there is a world market for maybe five computers, Isaac Newton, Jeff Bezos, John von Neumann, Kickstarter, life extension, Mahatma Gandhi, Mars Rover, mutually assured destruction, Oculus Rift, operation paperclip, out of africa, Peter H. Diamandis: Planetary Resources, phenotype, purchasing power parity, RAND corporation, Ray Kurzweil, RFID, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Search for Extraterrestrial Intelligence, Searching for Interstellar Communications, Silicon Valley, skunkworks, Skype, Stephen Hawking, Steven Pinker, supervolcano, technological singularity, telepresence, telerobotics, the medium is the message, the scientific method, theory of mind, V2 rocket, wikimedia commons, X Prize, Yogi Berra
By the time of its final flight in 2011, the Space Shuttle had served fifteen years longer than the time for which it had been designed. After a call for proposals from museums and public institutions, NASA distributed the four remaining orbiters: original Shuttles Atlantis and Discovery, Challenger’s replacement Endeavor, and an atmospheric test orbiter named Enterprise. Kennedy Space Center, the Smithsonian National Air and Space Museum, the California Science Center, and the Intrepid Sea-Air-Space Museum in New York City were the lucky recipients. 18. After the Challenger disaster, President Reagan formed the Rogers Commission to investigate. In their televised hearings, physicist Richard Feynman had a memorable moment when he dipped an O-ring into a cup of ice water to show how it became less resilient at the low temperatures at the time of launch. He was scathing about the wildly unrealistic estimates of reliability from NASA engineers and the stark failures of NASA management: “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”
The frontier of telepresence is its merger with artificial intelligence, a development foreseen by computer science pioneer Marvin Minsky in 1980.7 A robot doesn’t need to be just a remote extension of a human; it can process information and make its own decisions. This will be exciting, but it will raise fascinating moral and ethical questions, especially if these semiautonomous robots come into contact with each other. Here Come the Bots Richard Feynman was an iconic physicist who won a Nobel Prize for his work in quantum theory. His delight in understanding how nature worked was infectious. In 1959, he wrote an influential essay titled “There’s Plenty of Room at the Bottom,” in which he argued that miniaturization of computers still had a long way to go. He talked about the limits of making machines and computers and realized that there might one day be technologies that could manipulate matter on the scale of individual molecules and atoms.8 That day has finally arrived.
In its early years, it was used for a mixture of scientific and military payloads; in its later years, it was used to complete assembly of the International Space Station. It also served as a reminder of the danger and the high cost of space travel.17 On January 28, 1986, a nationwide TV audience was stunned when the Space Shuttle Challenger broke up and exploded in a clear blue winter sky, just seventy-three seconds after launch. Later investigation showed that a leak from an O-ring seal on one of the solid-fuel boosters had led to extreme aerodynamic stress on the spacecraft as it traveled at twice the speed of sound. Millions of schoolchildren were watching because NASA had selected Christa McAuliffe to be the first teacher in space. Chillingly, the crew cabin was intact as the vehicle broke up, so the seven crew members most likely died from subsequent impact in the ocean (Figure 13).18 The grief was repeated seventeen years later when the Space Shuttle Columbia disintegrated as it reentered the Earth’s atmosphere at twenty times the speed of sound.
The Zenith Angle by Bruce Sterling
airport security, Burning Man, cuban missile crisis, glass ceiling, Grace Hopper, half of the world's population has never made a phone call, Iridium satellite, market bubble, new economy, packet switching, pirate software, profit motive, RFID, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Ronald Reagan, Silicon Valley, Steve Jobs, thinkpad, V2 rocket, Y2K
Such things sometimes happened in real life. For instance: Richard Feynman was just a physicist. But Feynman had dropped a chunk of rubber O-ring into a glass of ice water, and he had shown the whole world, on TV, how a space shuttle could blow up. If Van somehow solved Hickok’s zillion-dollar problem, that would prove that he, Derek Vandeveer, had a top-notch, Richard Feynman kind of class. Van had sacrificed a lot to get his role in public service. He’d given up his happy home, his family life, his civilian career, his peace of mind, and a whole, whole lot of his money. Van wanted to see real results from all that sacrifice. He wanted to do something vital. The KH-13 was probably the grandest and most secret gizmo that the USA possessed. If Van somehow found the KH-13’s busted O-ring, then he would be giving America the ability to photograph the entire planet, in visible and infrared, day and night, digitally, repeatedly, on a three-inch scale.
Usually, they knew very well what they wanted to corrupt, erase, alter, or illicitly copy. So a better security model would not “lock” or “wall away” anything. Instead, it would scan constantly for evil processes inside the machine. It would hunt for bad acts inside the system, in the way that the bloodstream fights germs. This was an exciting new paradigm. It offered fruitful ways forward that resolved a host of the day’s knottiest security challenges. The concept was a generation ahead of its time. Maybe two generations, given the awful state of the computer market. All the more vital, then, that the CCIAB should pioneer a serious breakthrough like that. They could run it within the Vault, an ideal place to start a working demo for a core audience. A streaming distributed supercomputer, on broadband wireless, featuring a pilot, alpha-rollout immune system.
Their scheme was to come up with a small, secret autopilot that could be quietly installed inside jets and then triggered remotely during emergencies. Then the autopilot would guide the plane and its baffled terrorists right back to earth, and the waiting arms of fully informed police. This scheme sounded simple enough, but the devil was in the details. Remote control of flying jets posed many daunting challenges, but one of the worst was the software. Because, if some clever hacker ever took over the control system itself, then all of America’s private jets could be turned instantly into remote-control flying bombs. The AFOXAR guys had done a lot of career work on remote-controlled surveillance drones. They truly got it about air control and avionics problems, but serious network security was beyond their reach.
agricultural Revolution, Anne Wojcicki, Any sufficiently advanced technology is indistinguishable from magic, carbon footprint, Cass Sunstein, clean water, Drosophila, food miles, invention of gunpowder, out of africa, personalized medicine, placebo effect, profit motive, randomized controlled trial, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Ronald Reagan, Simon Singh, Skype, stem cell, Ted Kaczynski, the scientific method, Thomas Malthus, Upton Sinclair, X Prize
By 1986, America had become so confident in its ability to control the rockets we routinely sent into space that on that particular January morning, along with its regular crew, NASA strapped a thirty-seven-year-old high school teacher named Christa McAuliffe from Concord, New Hampshire, onto what essentially was a giant bomb. She was the first participant in the new Teacher in Space program. And the last. The catastrophe was examined in merciless detail at many nationally televised hearings. During the most remarkable of them, Richard Feynman stunned the nation with a simple display of show-and-tell. Feynman, a no-nonsense man and one of the twentieth century’s greatest physicists, dropped a rubber O-ring into a glass of ice water, where it quickly lost resilience and cracked. The ring, used as a flexible buffer, couldn’t take the stress of the cold, and it turned out neither could one just like it on the shuttle booster rocket that unusually icy day in January. Like so many of our technological catastrophes, this was not wholly unforeseen.
In all, the Vitamin Advisor recommended a daily roster of twelve pills, including an antioxidant and multivitamin, each of which is “recommended automatically for everyone as the basic foundation for insurance against nutritional gaps in the diet.” Since, as he points out on the Web site, finding the proper doses can be a “challenge,” Dr. Weil offered to “take out the guesswork” by calculating the size of every pack, which, over the previous ninety seconds, had been customized just for me. That would take care of one challenge; another would be coming up with the $1,836 a year (plus shipping and tax) my new plan would cost. Still, what is worth more than our health? If that was how much it would cost to improve mine, then that was how much I was willing to spend. Also on my list: milk thistle, “for those who drink regularly or have frequent chemical exposure,” neither of which applies to me; ashwagandha, an herb used in ayurvedic medicine to help the body deal with stress and used traditionally as an energy enhancer; cordyceps, a Chinese fungus that for centuries has been “well known” to increase aerobic capacity and alleviate fatigue; and eleuthero, also known as Siberian ginseng, often employed to treat “lethargy, fatigue and low stamina.”
Some years earlier she had been seriously ill, and she explained how she recovered: by taking dozens of vitamins every day, a practice she has never abandoned. With this woman’s blessing, her daughter, who had just given birth, declined to vaccinate her baby. The woman didn’t actually say, “It’s all a conspiracy,” but she didn’t have to. Denialism couldn’t exist without the common belief that scientists are linked, often with the government, in an intricate web of lies. When evidence becomes too powerful to challenge, collusion provides a perfect explanation. (“What reason could the government have for approving genetically modified foods,” a former leader of the Sierra Club once asked me, “other than to guarantee profits for Monsanto?”) “You have a point,” I told the woman. “I really ought to write a book.” I decided to focus on issues like food, vaccinations, and our politically correct approach to medicine, because in each of those arenas irrational thought and frank denialism have taken firm root.
The Wisdom of Crowds by James Surowiecki
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While the New York Times article on the disaster that appeared the next morning did mention two rumors that had been making the rounds, neither of the rumors implicated Thiokol, and the Times declared, “There are no clues to the cause of the accident.” Regardless, the market was right. Six months after the explosion, the Presidential Commission on the Challenger revealed that the O-ring seals on the booster rockets made by Thiokol—seals that were supposed to prevent hot exhaust gases from escaping—became less resilient in cold weather, creating gaps that allowed the gases to leak out. (The physicist Richard Feynman famously demonstrated this at a congressional hearing by dropping an O-ring in a glass of ice water. When he pulled it out, the drop in temperature had made it brittle.) In the case of the Challenger, the hot gases had escaped and burned into the main fuel tank, causing the cataclysmic explosion. Thiokol was held liable for the accident. The other companies were exonerated.
If you strip the story down to its basics, after all, what happened that January day was this: a large group of individuals (the actual and potential shareholders of Thiokol’s stock, and the stocks of its competitors) was asked a question—“How much less are these four companies worth now that the Challenger has exploded?”—that had an objectively correct answer. Those are conditions under which a crowd’s average estimate—which is, dollar weighted, what a stock price is—is likely to be accurate. Perhaps someone did, in fact, have inside knowledge of what had happened to the O-rings. But even if no one did, it’s plausible that once you aggregated all the bits of information about the explosion that all the traders in the market had in their heads that day, it added up to something close to the truth. As was true of those who helped John Craven find the Scorpion, even if none of the traders was sure that Thiokol was responsible, collectively they were certain it was.
That day, it was just buyers and sellers trying to figure out what happened and getting it right. How did they get it right? That’s the question that Maloney and Mulherin found so vexing. First, they looked at the records of insider trades to see if Thiokol executives, who might have known that their company was responsible, had dumped stock on January 28. They hadn’t. Nor had executives at Thiokol’s competitors, who might have heard about the O-rings and sold Thiokol’s stock short. There was no evidence that anyone had dumped Thiokol stock while buying the stocks of the other three contractors (which would have been the logical trade for someone with inside information). Savvy insiders alone did not cause that first-day drop in Thiokol’s price. It was all those investors—most of them relatively uninformed—who simply refused to buy the stock.
The New Science of Asset Allocation: Risk Management in a Multi-Asset World by Thomas Schneeweis, Garry B. Crowder, Hossein Kazemi
asset allocation, backtesting, Bernie Madoff, Black Swan, capital asset pricing model, collateralized debt obligation, commodity trading advisor, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, fixed income, high net worth, implied volatility, index fund, interest rate swap, invisible hand, market microstructure, merger arbitrage, moral hazard, passive investing, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, risk-adjusted returns, risk/return, Sharpe ratio, short selling, statistical model, systematic trading, technology bubble, the market place, Thomas Kuhn: the structure of scientific revolutions, transaction costs, value at risk, yield curve
He walked up and put his face within inches of the graph. “And from here,” he pointed out, “this graph looks real ugly!” The same could be said for the process of investment and the market in which investment products exist. Moreover, the search costs of finding, monitoring, and assessing risk and return are extensive, continuous, and variable. Richard Feynman of physics fame (remember the O-ring and the Challenger story in which Feynman, instead of a lengthy discussion, simply put the rubber O-ring into a cold class of water, pulled it out, showed how inflexible it was when too cold, and thereby showed how cold temperature made it fail—end of story) has pointed out that what works at the “macro” may not work at the “micro” and that “things on a small scale behave nothing like things on a large scale.” Advances in technology, regulation, and globalization have further increased 246 THE NEW SCIENCE OF ASSET ALLOCATION the pace of change and the need to manage it.
Thus, while we know very few fundamental truths, one, however, that we can collectively agree upon is that the evolution of asset allocation draws upon the aforementioned changes flowing from a dynamic world in which new forms of assets and risk management tools are constantly being created. Relative risks and returns and the ability to monitor and manage the process by which these evolving assets fit into portfolios will change and will be based on currently unknown relationships and information. Certainly today the challenge is greater, not only because we are working in a more dynamic market but the number of investment vehicles available to investors has increased as well. Hopefully, the following chapters will provide some guidance to meet this challenge. WHAT EVERY INVESTOR SHOULD REMEMBER ■ Much of what we do in asset allocation is based on the tradeoffs between the costs and returns of various approaches to return and risk estimation. Choosing among the various courses of action based on those risky alternatives lies at the heart of a wide range of various approaches to asset allocation, including strategic asset management, tactical asset management, and dynamic asset management.
The reader should also be aware that like most things, the ideas expressed in this book are time sensitive. The writing of this book began in the early spring of 2009 and concluded in early 2010. Throughout this period, extreme events have occurred. If history is to be a teacher, we know that the future will provide additional information where many of the thoughts and questions within this book will be challenged as well as proven incorrect. Also, throughout this book the reader has been cautioned to be wary of historical data, historical thoughts, and historical performance. In other words show little fear in puncturing myths and their companions. History rarely repeats itself in the same manner; and one of the failings of modern portfolio design as well as some of the recent academic xviii PREFACE and quantitative research is the presumption that it will.
Inviting Disaster by James R. Chiles
airline deregulation, cuban missile crisis, Exxon Valdez, Maui Hawaii, Milgram experiment, North Sea oil, Piper Alpha, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance
A garden hose left out in winter weather turns as stiff as a pipe regardless of whether it has water in it. During the post-accident investigation, physicist Richard Feynman would demonstrate the principle by dipping a segment of an O-ring into a glass of ice water. In August 1985 top officials from Marshall flew to Utah to talk over the problem with Morton Thiokol management. Roger Boisjoly, a seal engineer with Thiokol, got the assignment to put together a “Seal Task Force” to come up with a quick solution. After three months of work, the R.101 emerged from the shed on October 1, 1930, leaving barely enough time for a departure on October 3. The men were close to frantic by Thomson’s insistence on taking the airship to India and back in time to attend a conference in London on October 20. From Thomson’s view, the Royal Airship Works had already spent two years more than expected to make the airship flightworthy, and now it was time to finish the job, regardless of the setbacks.
For an ordinary pipeline this would have been fine, but not for the high-powered, hot-firing boosters. One challenge was that at each field joint a thin air gap remained between the solid fuel castings in each segment. Without some precautions, flame would fill this gap during a launch and attack the half-inch-thick steel of the booster’s outer casing. To keep the flame at the core of the booster where it belonged, the field joints had heat-resistant putty to close off the gap between the fuel castings, and two rubber O-rings fitted into the rim-and-slot arrangement as a final seal. FIGURE 4: SPACE SHUTTLE CHALLENGER PROBABLE SEQUENCE 1. Cold temperatures before launch reduce sealing ability of O-rings inside Solid Rocket Booster (SRB) field joints. 2. Exhaust gas leaks from aft field joint of right-hand SRB for first three seconds of flight, then stops. 3.
Never bringing the problem directly to the astronauts for their input, never taking the danger seriously enough to stop the program for a proper fix, NASA tried to contain the O-ring crisis by fiddling with small things such as insulating putty and the O-ring testing procedure, not even willing to delay the final launch to wait for warmer weather unless Thiokol came up with something more compelling than its technical judgment. It was the “normalization of deviance,” according to Vaughan. “There is only one driving reason that a potentially dangerous system would be allowed to fly,” wrote chief astronaut John W. Young after the disaster: “launch schedule pressure.” DREAMING GREAT DREAMS The British hydrogen-filled dirigible R.101 and the space shuttle Challenger were both megaprojects born out of great national aspirations. The same high-flying promises it took to get them started forced them to keep going forward, despite specific, written warnings of danger by key technical people.
bioinformatics, British Empire, Claude Shannon: information theory, Daniel Kahneman / Amos Tversky, double helix, Edmond Halley, Fellow of the Royal Society, full text search, Henri Poincaré, Isaac Newton, John Nash: game theory, John von Neumann, linear programming, meta analysis, meta-analysis, Nate Silver, p-value, placebo effect, prediction markets, RAND corporation, recommendation engine, Renaissance Technologies, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Ronald Reagan, speech recognition, statistical model, stochastic process, Thomas Kuhn: the structure of scientific revolutions, traveling salesman, Turing machine, Turing test, uranium enrichment, Yom Kippur War
In the autumn of 1953, when Jay Orear, one of Fermi’s graduate students, was struggling with a problem involving three unknown quantities, Fermi told him to use a simple analytic method that he called Bayes’ theorem and that he had derived from C. F. Gauss. A year later, when Fermi died at the age of 53, Bayes’ rule lost a stellar supporter in the physical sciences. Fermi was not the only important physicist to use Bayesian methods during this period. A few years later, at Cornell University, Richard Feynman suggested using Bayes’ rule to compare contending theories in physics. Feynman would later dramatize a Bayesian study by blaming rigid O-rings for the Challenger shuttle explosion. During this exciting period in 1950s Chicago, Savage and Allen Wallis founded the university’s statistics department, and Savage attracted a number of young stars in the field. Reading widely, Savage discovered the work of Émile Borel, Frank Ramsey, and Bruno de Finetti from the 1920s and 1930s legitimizing the subjectivity in Bayesian methods.
Because SAC bombers had a monopoly on transporting America’s nuclear arsenal and General LeMay sat at the pinnacle of the world’s military might, RAND’s voice was often influential. By the time Savage visited Santa Monica that summer RAND reports had already challenged some of SAC’s sacred cows. To drop nuclear weapons on Soviet targets, macho air force pilots wanted to fly the new B-52 Strato-fortress jets; RAND recommended fleets of cheaper conventional planes. RAND had also described SAC’s overseas bases for manned bombers as sitting ducks for Soviet attack. A year after Savage’s visit, RAND would challenge Cold War dogma by arguing that victors typically fare better with negotiated settlements than with unconditional surrenders. RAND would even urge counterbalancing LeMay’s B-52s with the navy’s submarine-based missiles. In retaliation, SAC would almost break off relations with RAND on several occasions between Savage’s visit in 1957 and 1961.
During the years when ivory tower theorists thought they had rendered Bayes taboo, it helped start workers’ compensation insurance in the United States; save the Bell Telephone system from the financial panic of 1907; deliver Alfred Dreyfus from a French prison; direct Allied artillery fire and locate German U-boats; and locate earthquake epicenters and deduce (erroneously) that Earth’s core consists of molten iron. Theoretically, Bayes’ rule was verboten. But it could deal with all kinds of data, whether copious or sparse. During the Cold War, Bayes helped find a missing H-bomb and U.S. and Russian submarines; investigate nuclear power plant safety; predict the shuttle Challenger tragedy; demonstrate that smoking causes lung cancer and that high cholesterol causes heart attacks; predict presidential winners on television’s most popular news program, and much more. How could otherwise rational scientists, mathematicians, and statisticians become so obsessed about a theorem that their argument became, as one observer called it, a massive food fight? The answer is simple.
The Year's Best Science Fiction: Twenty-Sixth Annual Collection by Gardner Dozois
augmented reality, clean water, computer age, cosmological constant, David Attenborough, Deng Xiaoping, double helix, financial independence, game design, gravity well, jitney, John Harrison: Longitude, Kuiper Belt, Mahatma Gandhi, Paul Graham, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Search for Extraterrestrial Intelligence, Skype, stem cell, theory of mind, Turing machine, Turing test, urban renewal, Wall-E
She shouldn’t have come, it was a terrible imposition, and anyway there was probably a rule against aides staying in residents’ apartments, what was she thinking— “Let me get blankets and pillow for the sofa,” Dr. Erdmann finally said, in a voice that still sounded odd to Carrie. “It’s fairly comfortable. For a sofa.” SIX Not possible. The most ridiculous coincidence. That was all—coincidence. Simultaneity was not cause-and-effect. Even the dimmest physics undergraduate knew that. In his mind, Henry heard Richard Feynman say about string theory, “I don’t like that they’re not calculating anything. I don’t like that they don’t check their ideas. I don’t like that for anything that disagrees with an experiment, they cook up an explanation. . . . The first principle is that you must not fool yourself—and you are the easiest person to fool.” Henry hadn’t liked Feynman, whom he’d met at conferences at Caltech. A buffoon, with his bongo drums and his practical jokes and his lock-picking.
I watched it go; it was only the third human I’d ever encountered in person, and this was the first time one of them had ever used me directly. The experience left me disconcerted for a couple of milliseconds, then I went back to my shopping. I spotted some aluminum tubing which looked strong enough, and grabbed some of those valves, then linked up to Fat Albert to haggle about the price. He was busy waiting on the human, so I got to deal with a not-too-bright personality fragment. I swapped a box of assorted silicone O-rings for the stuff I wanted. Albert himself came on the link just as we sealed the deal. “Hello, Annie. You’re lucky I was distracted,” he said. “Those valves are overruns from the smelter. I got them as salvage.” “Then you shouldn’t be complaining about what I’m giving you for them. Is the human gone?” “Yes. Plugged a bunch of orders into my mind without so much as asking.” “Me too. What’s it doing here?”
And now the AI is learning to speak to us.” It was a way to resolve a ferocious communications challenge. The Eaglets were sending their message to the whole Galaxy; they knew nothing about the intelligence, cultural development, or even the physical form of their audiences. So they sent an all-purpose artificial mind embedded in the information stream itself, able to learn and start a local dialogue with the receivers. This above all else proved to me how smart the Eaglets must be. It didn’t comfort me at all that some commentators pointed out that this “Hoyle strategy” had been anticipated by some human thinkers; it’s one thing to anticipate, another to build. I wondered if those viruses found it a challenge to dumb down their message for creatures capable of only ninth-order Shannon entropy, as we were.