reflections on recent past
The economics crisis caused me a lot of misery but it has taught me a lot of lessons as well...
During the summer of 2008, I was looking for a financial job in the City of London. I was a recent graduate with no proper experience and the finance world was in flames. Banks were firing people in masses. There was a great deal of uncertainty and pessimism. No one was hiring. I was not getting a reply for my work permit application neither. Even after 10 weeks of waiting, there was still no word from the Home Office. My plan B had failed long time ago and I had no plan C.
It was an emotionally taxing period to say the least. Sooner or later I was forced to go back to my home country. A lot of things happened later on. I ended up returning to academia. The details are not worth going into. Most of them are too personal to disclose here anyway.
What I want to do now is to emphasize the bright side of those painful days. A lot of practical lessons were learned. But even more importantly a lot of intellectual lessons were learned as well.
In some sense I was very lucky. I was eager to learn more about how economies work and there could not be a better time to do this. The whole system was falling apart and the financial world was teetering on verge of collapse. The machine had broken down and all its pieces were lying on the floor. I tried to analyse these pieces one by one. I read as much as I could. I paid special attention to writings by people who had different interpretations of what was going on and had different solutions for getting us out of the mess. While doing so, I discovered some pieces and connections that I thought never exited.
We care about the internal picture of a mechanism only when the mechanism fails. And the desire to fix the mechanism forces us to learn about its nuts and bolts. The intricate details of a company's cost structure matter only when sales fall to unexpectedly low levels. People start to worry about how central banks operate only when the financial system runs out of liquidity. We care about how a home appliance works only when it stops working.
It was an intellectually stimulating period, full of action and surprises. Gradually I developed an interest in complex systems which are amazingly prevalent in nature. These systems are often mathematically indecipherable. It is tough to break down what-is-going-on into smaller, more-easily-digestible pieces. The only legit way of gaining any insight is by conducting simulations. In other words, you learn about the system by trying to re-create a smaller version of it. The word "small" is very important here. While attempting to build a viable replica, you should not trivialize the system. Yes, you can not re-create everything. Therefore you need to use your intuition and select the aspects that are worth replicating. Even after doing that, you will still end up with a computationally very demanding task. You will be drowned in data and will have hard time trying to get a qualitative grasp of things. It will be impossible to come up with a nice analytical description. You will start with a lot of data. You will end up with even more. That is it. Page of ugly codes and lots of data. There is no beauty in it. At least not for me.
I love complex systems. They are fun to watch unfold in real life. But if I want to understand their behaviour, I like using words rather than formulas. Faced with such complexity, having some basic knowledge of mathematics helps. But having more will not put you into a more advantageous position. For example, in business and economics, the most insightful practitioners are often not even mathematically literate.
Pursuing a further degree in economics was never appealing to me. My interest was amateurish perhaps. But I wanted it to stay that way. Trying to break down what is seemingly-irreducibly-complex is a tough job. It also involves a lot of wishful thinking. I am a pessimist by nature. So it would not have worked for me. Never.
Now I am going back to pure mathematics. I will be fooling myself. Yes. There is no wisdom in pure mathematics. In fact, there is no wisdom in ivory towers at all.
To gain wisdom you need to step down into the real world. Too bad that the world is very complex. Too bad that it does not lend itself to analytical thinking... You will just have to get used to it.
I am making a concious choice here. I need a peace of mind and I am ready to sacrifice some wisdom for attaining it. In the land of pure mathematics, I will be living in ignorance. But this ignorance will be a delightful one, as that of an artist.
During the summer of 2008, I was looking for a financial job in the City of London. I was a recent graduate with no proper experience and the finance world was in flames. Banks were firing people in masses. There was a great deal of uncertainty and pessimism. No one was hiring. I was not getting a reply for my work permit application neither. Even after 10 weeks of waiting, there was still no word from the Home Office. My plan B had failed long time ago and I had no plan C.
It was an emotionally taxing period to say the least. Sooner or later I was forced to go back to my home country. A lot of things happened later on. I ended up returning to academia. The details are not worth going into. Most of them are too personal to disclose here anyway.
What I want to do now is to emphasize the bright side of those painful days. A lot of practical lessons were learned. But even more importantly a lot of intellectual lessons were learned as well.
In some sense I was very lucky. I was eager to learn more about how economies work and there could not be a better time to do this. The whole system was falling apart and the financial world was teetering on verge of collapse. The machine had broken down and all its pieces were lying on the floor. I tried to analyse these pieces one by one. I read as much as I could. I paid special attention to writings by people who had different interpretations of what was going on and had different solutions for getting us out of the mess. While doing so, I discovered some pieces and connections that I thought never exited.
We care about the internal picture of a mechanism only when the mechanism fails. And the desire to fix the mechanism forces us to learn about its nuts and bolts. The intricate details of a company's cost structure matter only when sales fall to unexpectedly low levels. People start to worry about how central banks operate only when the financial system runs out of liquidity. We care about how a home appliance works only when it stops working.
It was an intellectually stimulating period, full of action and surprises. Gradually I developed an interest in complex systems which are amazingly prevalent in nature. These systems are often mathematically indecipherable. It is tough to break down what-is-going-on into smaller, more-easily-digestible pieces. The only legit way of gaining any insight is by conducting simulations. In other words, you learn about the system by trying to re-create a smaller version of it. The word "small" is very important here. While attempting to build a viable replica, you should not trivialize the system. Yes, you can not re-create everything. Therefore you need to use your intuition and select the aspects that are worth replicating. Even after doing that, you will still end up with a computationally very demanding task. You will be drowned in data and will have hard time trying to get a qualitative grasp of things. It will be impossible to come up with a nice analytical description. You will start with a lot of data. You will end up with even more. That is it. Page of ugly codes and lots of data. There is no beauty in it. At least not for me.
I love complex systems. They are fun to watch unfold in real life. But if I want to understand their behaviour, I like using words rather than formulas. Faced with such complexity, having some basic knowledge of mathematics helps. But having more will not put you into a more advantageous position. For example, in business and economics, the most insightful practitioners are often not even mathematically literate.
Pursuing a further degree in economics was never appealing to me. My interest was amateurish perhaps. But I wanted it to stay that way. Trying to break down what is seemingly-irreducibly-complex is a tough job. It also involves a lot of wishful thinking. I am a pessimist by nature. So it would not have worked for me. Never.
Now I am going back to pure mathematics. I will be fooling myself. Yes. There is no wisdom in pure mathematics. In fact, there is no wisdom in ivory towers at all.
To gain wisdom you need to step down into the real world. Too bad that the world is very complex. Too bad that it does not lend itself to analytical thinking... You will just have to get used to it.
I am making a concious choice here. I need a peace of mind and I am ready to sacrifice some wisdom for attaining it. In the land of pure mathematics, I will be living in ignorance. But this ignorance will be a delightful one, as that of an artist.
