Learning from History

This has been a momentous year. Our past pandemics were relatively localised, so we have nothing to compare this to. This is our shared global experience. We have achieved microbial unification.
As we take in the enormous changes happening around us, studying the past can help us. History doesn't repeat, but it rhymes.
Peter D. Kaufman - the CEO of Glenair and the editor of Poor Charlie's Almanack - had some wonderful words on this topic.

Every statistician knows that a large, relevant sample size is their best friend. What are the three largest, most relevant sample sizes for identifying universal principals? Bucket number one is inorganic systems, which are 13.7 billion years in size. It's all the laws of math and physics, the entire physical universe. Bucket number two is organic systems, 3.5 billion years of biology on Earth. And bucket number three is human history, you can pick your own number, I picked 20,000 years of recorded human behavior. Those are the three largest sample sizes we can access and the most relevant.

These ancient repositories of knowledge can provide us insights where recent theories fail. For example, Satoshi Kanazawa's Savanna Principle taps into evolutionary psychology to explain phenomena that game theory and microeconomics cannot. In simple words, our brains evolved to survive our ancestral environment in the Savanna. Many of our fears and emotions come from the way our brain evolved to survive the conditions there, and it can cause quirky results in modern day environments.
A good segue from Kaufman's Buckets are two related phenomena, The Copernician Principle and the Lindy Effect. All of them address something we know and respect intuitively - continuity matters.

The Copernician Principle

The Copernician Principle as expressed by J. Richard Gott III, in his paper titled "Implications of the Copernican principle for our future prospects" is simple:

You are not special.

You are unlikely to be in the first 2.5% of the people or the last 2.5% of the people experiencing a phenomena. He wrote,

The Copernican revolution taught us that it was a mistake to assume, without sufficient reason, that we occupy a privileged position in the Universe. Darwin showed that, in terms of origin, we are not privileged above other species. Our position around an ordinary star in an ordinary galaxy in an ordinary supercluster continues to look less and less special.

If you don't feel too mathematically inclined (or if you don't have access to academic journals,) a New Yorker article about him is a lot more accessible. Oversimplifying Gott's derivation, if all you know is that Homo Sapiens have existed for roughly 200,000 years, you can be reasonably certain that they will continue to exist for another 5000 years (that is 200000/40 years) on the lower end and 8,000,000 years on the upper end (200000*40). Similarly, Nation States have existed for roughly 170 years, so you can reasonably expect them to last for about another  4.25 years (170/40 years) but less than 6800 years (170*40 years).

The Lindy Effect

In a similar fashion, the Lindy Effect gives us a framework to think about continuity. It comes from a 1964 article written by Albert Goldman in The New Republic, where he wrote about comedians who gathered in the famous Lindy's deli in Manhattan.

Lindy's Law states:

The life expectancy of a television comedian is proportional to the total amount of his exposure on the medium

I actually came across the Lindy Effect for the first time while reading Nassim Taleb's work, in which he states:

For the perishable, every additional day in its life translates into a shorter additional life expectancy. For the nonperishable, every additional day may imply a longer life expectancy. ...... So the longer a technology lives, the longer it can be expected to live. If a book has been in print for forty years, I can expect it to be in print for another forty years. But, and that is the main difference, if it survives another decade, then it will be expected to be in print another fifty years. This, simply, as a rule, tells you why things that have been around for a long time are not "aging" like persons, but "aging" in reverse. Every year that passes without extinction doubles the additional life expectancy. This is an indicator of some robustness. The robustness of an item is proportional to its life!

We have examples of ancient enduring technologies all around us, with no signs of abating. The knife, is at least 500,000 years old. The wheel first emerged around Mesopotamia around 6000 years ago. The fidget spinner is no longer trendy.

Benefitting From History

How do we use this knowledge to benefit us? Charlie Munger referred to "the art of stock picking as a subdivision of the art of worldly wisdom", and it's an approach that has worked fantastically for Warren and Charlie.

We can be sure of a few things.

1. People will panic at the first hint of trouble. Whether it's buying up all available toilet paper, or selling off their stock on the day the market crashed. Keep your head while all about you are losing theirs. Like James Grant said in "Minding Mister Market", our progress in science and engineering is cumulative, but in the markets is cyclical.

2. "This time is different" is unlikely to be true. Human nature doesn't change, despite changes in society and technology. Edward Chancellor's wonderful book "Devil Take The Hindmost" chronicles about five centuries of market mania, and how people went about their lives during the boom and bust cycles. Reading about the way Tulips were bid up, and then down in the 1630s wouldn't be out of place in the Dotcom Bubble or the Asset Bubble of 2008. Satoshi Kanazawa's Savanna Principle is very true here.

3. For advice on nutrition and happiness, look at history, not to some influencer du jour. Reading The Bhagavad Gita or Meditations by Marcus Aurelius will provide you a lot more wisdom and insight, than the latest self-help book on NYT's bestseller list. Your health is going to improve significantly not by eating as per the latest fad diet, but by eating fresh, unprocessed food like your grandparents did. Nassim Taleb has some profound advice on that - to not eat what your grandmother wouldn't recognise as food.