A lot is always happening. But it seems to me that right now there is an awful lot of things happening.
And by “things” I mean a confluence of possible tipping points or events that happen in cycles with a rhyming tone.
Exuberance in pockets of “markets” - things which humans can trade. Perhaps based on a fundamental truth. Perhaps not. (For most human ideas - for instance money or human law - are based on human belief in it).
But - we have Bitcoin. Then silver. Certain stocks - Gamestop. Now Marijuana companies, in pockets.
We have a change in US presidency. We have China committed to carbon net zero. Japan and many others too. We have China and US fighting for supremacy. We have a possible change in thought on government debt and spending. We have possible changes and accelerations post a COVID world.
We have young-ish companies - now very large and using technologies and models which would have seemed like magic 50 years ago.
Big ones such as Facebook, Amazon, Apple, Microsoft - emerging or emerged ones - like Stripe, Shopify, Adyen and not only in Europe and Asia - note Mercado Libre, note TenCent, Alibaba etc - note Lazada, Shopee - part of Sea group.
Most of you outside of Asia won’t have heard of Shopee. Founded in 2015 in Singapore, in the first 6 months of 2020, their app games had been played over 10 billion times - though on-line shopping is still one of their important offerings.
We have new social networks - Clubhouse, or new-ish - Tik Tok; or new forms, Substacks which re-invent the old forms - blogs/newsletters.
I think a lot is happening.
We are in world of information overload, but it still seems to me there needs to be more people who are trying to put together these happenings but I think it’s likely hard.
So - mostly my reflection this week is on when theory / frameworks, mechanism of change or action can help or not.
Mechanisms of Action and Theory of Change (5 min blog)
In much of science practice, scientists form ideas and models and then test these models in the world. The more credible the model to other thinkers and the more the model can explain empirical results and - even better - predict new results that be tested then the more useful the model and the more weight we can give it in our thinking.
Many models cannot fully explain what we observe in the world.
Many observations have no good models for them.
How should we think about decision making faced with forward looking uncertainties? I argue we should put more weight on when we have plausible models. This is harder in social sciences than physical sciences but still should be considered. That said empirical data can guide where models seem inadequate.
I’m going to think about these cases and what they might say:
Anti-depression drugs and their effectiveness or lack
Germ and virus theory and mask wearing
Fossil Fuel divestment , social political change strategies
Quantitative Easing by central banks
ThenDoBetter grants - catalyzing change
Anti-depression drugs and their effectiveness or lack of.
Prozac, known as fluoxetine, is a serotonin re-uptake inhibitor or SSRI and it was designed as an anti-depression drug based on a model for depression that scientists developed.
The basic model is called the monoamine hypothesis of depression and this theory proposes that patients with depression have depleted concentrations of serotonin, norepinephrine (noradrenaline), and dopamine.
It was conceived due to at least one line of evidence on the effects of reserpine on serotonin and catecholamines. Reserpine, an alkaloid extracted from the Rauwolfia serpentina, was utilized as a treatment for hypertensive vascular disease in the 1950s; however, reserpine was found to precipitate depression in some patients. The depression produced by reserpine was reversed after the treatment was terminated and following either rest or electric shock therapy (Additionally, reserpine was found to produce depressive-like effects in animals). Reserpine was found to inhibit vesicular monoamine transporters, and as a result, depletes brain monoamines (i.e. serotonin and catecholamines), which provided evidence for the role of serotonin, norepinephrine, and dopamine in depression.
Since its original formulation, scientists can see that this hypothesis/model cannot explain many other observations (for instance that healthy patients who deplete monoamines do not become depressed).
Still, SSRIs were invented as the NHS website suggests:
“ It's thought that SSRIs work by increasing serotonin levels in the brain.
Serotonin is a neurotransmitter (a messenger chemical that carries signals between nerve cells in the brain). It's thought to have a good influence on mood, emotion and sleep.
After carrying a message, serotonin is usually reabsorbed by the nerve cells (known as "reuptake"). SSRIs work by blocking ("inhibiting") reuptake, meaning more serotonin is available to pass further messages between nearby nerve cells.”
Without going into too much more detail, we know empirically that SSRIs relieve depression in a good number of people and can help prevent relapse. But we also know that they don’t work in a good number of people and that they stop working for a good number of people. And we are not exactly certain why.
There is much we simply do not understand about depression and brain function.
So how does relate to masks?
We have a pretty good theory about how viruses are transmitted. They travel in aerosol droplets from the nose and mouth - from sneezing and coughing and breathing - and they are then breathed in by others. They can also go from nose to hand to someone else’s hand to nose, or from hand to object back to someone else’s hand. Although there is debate as to how long viruses can survive on objects and how easily this transmission occurs.
Scientists have a consensus on this. And so when thinking about mask use to prevent transmission it’s surprising, with hindsight, that this did not feature more prominently.
Of course now we can look back and also note how many Asian countries had mask wearing and how Europe and America seemed initially reluctant. Still, I think it would have been much better if those in policy making or decision making roles could have cast back to whether there was an underlying model for whether mask wearing should work and then assess risk/benefit.
Here the model was and is very useful, but didn’t seem to make an impact.
Central Banks have engaged in what economists call quantitative easing or QE. These are large scale purchases of assets by central banks. Economists are debating as to how QE actually works in the real economy and they are unsure. At least I can say scientists are much more sure on how germ theory works than on how quantitative easing works.
It’s perhaps in the same area of dispute as depression drugs. There’s some empirical evidence but the totality of it cannot be explained by the one model we have. And the three models posed by QE are not universally agreed upon. (FYI - Segmented Market, Preferred Habitat and Signalling theory).
There’s - to my mind - maybe more agreement amongst depression scientists about what can or cannot be explained than there is amongst economists. I note this as important as the Bank of England publishes an in-depth report into QE - https://www.bankofengland.co.uk/independent-evaluation-office/ieo-report-january-2021/ieo-evaluation-of-the-bank-of-englands-approach-to-quantitative-easing
This brings me to fossil fuel divestment strategies and thoughts on activism.
In biology, scientists call the SSRI mechanism a "mechanism of action". It’s how we best think the SSRIs are working biologically.
In social science, scientists often talk about a “theory of change”.
Supposedly a good theory of change needs to be testable. This is in common with good theories of biological mechanisms of action - but are often much harder to assess in social science.
To my mind - a purported biological mechanism of action - such as the SSRI one - has much in common with a theory of change mechanism.
I come across some activists who have not really thought about their theory of change. And if the conversation allows, I will suggest they do think about it. I will often stress I do not know myself what theory of change is correct because many of the social science ones cannot be supported either way by the evidence.
Still - when you think about the theory of change around divesting, as opposed to the theory of change around engagement and persuasion of a company - you end up with very different theories.
This was summarised in Ellen Quigley et al’s report for Cambridge University (H/T Dominic Burke).
The divestment social-political theory of change:
“The political case for divestment rests on expectations that it will accelerate the pace of legislation in favour of an energy transition away from fossil fuels. It does so both through creating a political environment more favourable to legislation and by weakening the political power of the fossil fuel industry.”
This, to use a policy term “moves the Overton window” - this changes the range of policies acceptable to the general public to be enacted by governments.
It’s quite far away from anything involved with investing (although there are separate arguments for financial risks and theories such as influencing cost of capital).
One can argue this makes the movement more of a moral movement - one that you can align with women rights, minority rights, and slavery abolition and perhaps more recently apartheid campaigns.
Using aparthied in South Africa is a complex and interesting parallel. Many factors (some with parallels to engagement and diplomacy and some with parallels to embargoes and divestments) are impossible to disentangle with cause and effect in the outcomes.
As strict financial theorists would argue most fossil fuel financing is not made by trading shares but by primary financial capital raising from bank or government loans or share issuance, and such that trading in secondary equities have limited influence (perhaps by cost of capital although the evidence is weak).
Thus the theory of change for engagement or within system workers is to persuade companies to change models and change strategies and this is more effectively done via share votes and engagement. And it is to invest in primary innovation and primary capital formation for companies making the most positive impact.
Neither theory can easily be proven with the empirical evidence we have. There are some companies that have changed course. Some climate policies have come into place and some evidence that the overton window has moved - although more easily for innovation policy than for carbon taxes, it seems.
But, it does bring me back to which theory of change is more meaningful or more reasonable to you.
I am asked where do I stand. If there’s time I typically outline a number of these arguments for both sides and because it is complex and unproven, I hold the theories of change lightly.
But, my theory of change is that it falls - by a complex dance and a good deal of luck and happenstance - that a number of individuals spark the change that leads to systems altering. These individuals lead others.
And so, this is one of the reasons behind my idea on ThenDoBetter grants. The focus is on individual grant giving with a huge dose of luck and happenstance to people who will make that positive change.
As a coda thought. There are no universal theories of autism. The three main ones (central coherence, theory of mind, executive function) can explain certain aspects of autism but fail in many other aspects. We have (in my view) poor models of autism (although not zero models, thus we can reject “refrigeration” and other catastrophically bad theories) and so we should hold lightly too much strong form advice here.
Blog on Theory of Change.
How effective are anti-depressants:
Brief history of anti-depressants: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4428540/
Theories on QE
I popped along to the annual Devoted and Disgruntled or D and D. This uses an Open Space process which is a participatory form of conference/meeting process and is about theatre. Typically it has been done in person, but this year it moved on line. It worked better than I expected.
I’m still planning a climate/sustainability Unconference this year with Chatham House. Let me know if interested.
➳Where we are on climate. Wallace-Wells (a former?) climate alarmist (now just not as extreme) looks at the evidence that the central case is for 3 deg warming by 2100 (down from 4c but not 2c).
➳One star amazon reviews from the witty Fran Lebowitz (New Yorker). “Welcome Mat (Seventeen Inches by Thirty Inches) I don’t like welcome mats. They set an expectation that a guest in my apartment will actually be welcome. Which isn’t always the case. Instead of “Welcome,” it should say “O.K. Fine. You’re here. I’m here. Let’s get this over with.”
➳How people become resilient (New Yorker, 2016)
➳Prize/grant competition for ideas in elderly care (Responsible Investor)
➳This is the YT video for the Malthus salon with Tyler Cowen, I mentioned in the last letter. Sadly, you can’t see the very entertaining chat. You will have to join in the Interintellect for that.
➳Interstitial times, on the difficulties of endings (autism awareness)
➳Mark Carney on the purpose of markets, financial crisis, COVID and climate.
➳Inside the making of the Facebook supreme court. (New Yorker)
➳Lorenzo Evans: ThenDoBetter Grant winner.
I chat with Rebecca Giggs on her new book looking at humanity through the lens of the whale. There is video and a transcript. Self-recommending.
Thanks for reading. Feel free to forward this letter to anyone you think might be interested in signing up.
Archive and repeat words below. Stay well, Stay safe, Ben
Micro-grants. £10K for positive impact people.
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I’ve re-issued my 2006 play, Yellow Gentlemen (4 stars in Time Out and is one of my more personal works about the night immigrant Tommy Lee is dying). Buy it for laughs on Kindle for the price of a coffee. All profits to charity. I’ve only sold a few copies at the price of a coffee - 1.99.
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“...Through a long-term orientation and stewardship, this is the time for active investment managers to show their worth. It starts with asking the right long-term business questions. Some companies are giving us answers, but are we really listening?”
My full opinion article in the FT. (3 mins, behind paywall, but you get a free article or email me and I can send you a copy)
Find out more about my aphorism book and contact me for a copy.
The move to online dating has potentially empowered women as the cost to ghosting is so low.
Notes from a conversation with former Royal Court Lit. Manager.