Same as ever

Complexity gives a comforting impression of control, while simplicity is hard to distinguish from cluelessness.

What have you experienced that I haven't that makes you believe what you do? And would I think about the world like you do if I experienced what you have?

The idea that what you don't see might refute everything you believe just doesn't occur to us.

Risk

Risk is what's left over after you think you've thought of everything.

Two things can explain something that looks inevitable but wasn't predicted by those who experienced it at the time:

• Either everyone in the past was blinded by delusion.

• Or everyone in the present is fooled by hindsight.

We are crazy to think it's all the former and none of the latter.

Asking what the biggest risks are is like asking what you expect to be surprised about. If you knew what the biggest risk was you would do something about it, and doing something about it would make it less risky. What your imagination can't fathom is the dangerous stuff, and it's why risk can never be mastered.

Invest in preparedness, not in prediction. Leave a bigger room for risk than you think is necessary.

Happiness

Things get better, wealth increases, technology brings new efficiencies, and medicine saves lives. The quality of life goes up. But people's expectations then rise by just as much, if not more, because those improvements also benefit other people around you, whose circumstances you anchor to. Happiness is little changed despite the world improving.

If you only wished to be happy, this could be easily accomplished; but we wish to be happier than other people, and this is always difficult, for we believe others to be happier than they are.

Today's economy is good at generating three things: wealth, the ability to show off wealth, and great envy for other people's wealth.

It's become so much easier in recent decades to look around and say, "I may have more than I used to. But relative to that person over there, I don't feel like I'm doing that great."

Part of that envy is useful, because saying "I want what they have" is such a powerful motivator of progress.

Yet the point stands: We might have higher incomes, more wealth, and bigger homes---but it's all so quickly smothered by inflated expectations.

We spend so much effort trying to improve our income, skills, and ability to forecast the future---all good stuff worthy of our attention. But on the other side there's an almost complete ignorance of expectations, especially managing them with as much effort as we put into changing our circumstances.

Imagine a life where almost everything gets better but you never appreciate it because your expectations rise as fast as your circumstances. It's terrifying, and almost as bad as a world where nothing gets better.

Minsky's seminal theory was called the financial instability hypothesis.

The idea isn't heavy on math and formulas. It describes a psychological process that basically goes like this:

When an economy is stable, people get optimistic.
When people get optimistic, they go into debt.
When they go into debt, the economy becomes unstable.

Minsky's big idea was that stability is destabilizing.

Good news vs bad news

Good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in a blink of an eye.

An important fact that explains a lot of things is that good news takes time but bad news tends to occur instantly.

Growth always fights against competition that slows its rise. New ideas fight for attention, business models fight incumbents, skyscrapers fight gravity. There's always a headwind. But everyone gets out of the way of decline. Some might try to step in and slow the fall, but it doesn't attract masses of outsiders who rush in to push back in the other direction the way progress does.

A lot of progress and good news concerns things that didn't happen, whereas virtually all bad news is about what did occur.