Isn't the better solution to replace the red-light with a roundabout?
So in situations where the consequences are small but the error rate high (lower left quadrant) we empower the decision maker and makes them accountable for their decisions.
I agree with that one! Apparently my red light analogy isn't a great one anyway because in many US states, the red lights flash at night and you can drive through if you like (though I have not seen that in the UK). But yes, if you are bottom-left a roundabout makes sense. In foreign policy, everything is top row however. I need to think of a better analogy ... :)
I was particularly taken by the upfront damage that negative compounding
has. A generally sunnier approach to life is clearly better than the Eeyore “the world is doomed”. It is possibly applicable when talking about climate change and how to address it.
It strikes me that this may be why old, bad habits are so difficult to break. Partly they have become ingrained. But also, assuming a steady % decay over time, the marginal damage done by these habits (in absolute terms) is much lower than it used to be.
Well put, Sam. I would add that there is a context, in which the left side of your negative compounding graph is the correct one: Going into debt -- this is why pay-day loans or buy-now-pay-later schemes can be such a deadly trap, apart from the usually very high interest rates (which only make your Cosmic Principle No 2 even stronger). Happy New Year!
Good point! I didn’t think of that. Although there is nowt wrong with debt per se, so long as ROIC > WACC (or whatever the personal finance equivalent is) and so long as you can support the repayments!
Isn't the better solution to replace the red-light with a roundabout?
So in situations where the consequences are small but the error rate high (lower left quadrant) we empower the decision maker and makes them accountable for their decisions.
I agree with that one! Apparently my red light analogy isn't a great one anyway because in many US states, the red lights flash at night and you can drive through if you like (though I have not seen that in the UK). But yes, if you are bottom-left a roundabout makes sense. In foreign policy, everything is top row however. I need to think of a better analogy ... :)
Good article Sam!
I was particularly taken by the upfront damage that negative compounding
has. A generally sunnier approach to life is clearly better than the Eeyore “the world is doomed”. It is possibly applicable when talking about climate change and how to address it.
It strikes me that this may be why old, bad habits are so difficult to break. Partly they have become ingrained. But also, assuming a steady % decay over time, the marginal damage done by these habits (in absolute terms) is much lower than it used to be.
Well put, Sam. I would add that there is a context, in which the left side of your negative compounding graph is the correct one: Going into debt -- this is why pay-day loans or buy-now-pay-later schemes can be such a deadly trap, apart from the usually very high interest rates (which only make your Cosmic Principle No 2 even stronger). Happy New Year!
Good point! I didn’t think of that. Although there is nowt wrong with debt per se, so long as ROIC > WACC (or whatever the personal finance equivalent is) and so long as you can support the repayments!