22 Mental Models from 2022 (Part 1)

Insights from science, history, economics, etc

Hello readers,

It’s that time of the year when people take a step back to “reflect”, but instead end up drinking half a dozen shots of Romanov and jackhammering their brains into oblivion.

Lucky for you, I actually took out a few minutes to reflect and put this juicy article together (mainly because I quit drinking last year).

This piece is an amalgamation of various insights and mental models gleaned through the year as I worked hard on augmenting my learning machine. I’d done a similar piece at the end of 2021 when I was starting this newsletter. It’s not that bad actually- you might want to give it an up and down here.

Where most of these ideas have come from

This year, I’ll be breaking those MMs down into 2 articles. I’ve also linked the detailed articles to the titles in case you want to read any of them in detail.

Here we go:

1. It hardly seems like we’re in control of our actions: There’s an entire stack of forces that are responsible for all our actions, and they originate right from a few seconds before that action to many millennia ago. Every behavior is driven by mental organs that were honed hundreds of thousands of years ago, specific cultural quirks that came up centuries ago (for example- pastoralists had to constantly defend their herds from loot and ended up becoming aggressive), the genes we inherited at the time of birth, and the hormones that were at work a few days ago. It’s a complex cocktail of factors that interact in mysterious ways to produce behaviors- and yet we feel we we consciously made them happen. Even this idea of us being in control might itself be an adaption designed to allow us to feel like we have a sense of agency, without which it’d be hard to survive. But the more one reads about this topic and meditates, the harder it seems to justify that we’re indeed in control.
   
   

2. Alcohol is a tool to solve the cooperation problem: All human societies are built on the foundations of trust. However, we're inherently suspicious by nature and can't really decide whether to trust the people we meet.
   
   But when both parties have alcohol, they're downregulating their brains, taking off their masks, and engaging in mutual vulnerability that ultimately builds trust! That's also why the Persians would come up with policies when all committee members were drunk- to eliminate deception and let all of their *true* selves talk. The story of how alcohol usage helped human societies is a fascinating one, and this idea is merely the tip of the iceberg.
   
   

3. r>g is the source of massive inequality: I recently finished reading ‘Capital in the 21st Century’ by Thomas Piketty and if there’s one central point that this tome harps upon, it’s the fact that a slight imbalance between the rate of return on capital (r) and the growth rate of the economy (g) is the source of drastically rising inequality. Look at it this way- if wages are growing fast, your net worth 10 years later can multiply manifold by your earnings from work, without having to rely on inheritance. But if that growth is very slow, people’s wealth will be dictated by who got a bumper inheritance (aka the lucky bastard) while those who depend solely on income from work will be left behind because capital continues to grow at a faster rate than the economy (and hence, salaries). So if r>g, it’ll continue to widen the gap between the haves and the have-nots, and the diffusion of knowledge and skills is the only way to contain that drift that has already reached untenable levels. This segues well into the next point.
   
   

4. There’s a dark history behind the origin of capitalism: Today, we take the capitalist system and the idea of chasing endless growth for granted. But there's a dark and disturbing story behind it. And it's not the fairytale of rational agents happily trading their way to monetary heaven.
   
   The story begins in Europe, with the elites initiating the violent process of 'enclosure'- cracking down on peasants and privatizing the common lands they lived on. By using violence and murder, they created artificial scarcity and initiated the process of endless capital accumulation- a process that's still going strong and tipping the world into an inegalitatian spiral.
   
   

5. We didn’t evolve to exercise: There is nothing natural about the idea of taking out 30 minutes to purposely put yourself through a physically taxing routine every day. Heck, even the treadmill was initially used as a torture device in Victorian-era Britain!
   
   Workouts are a very recent invention. Early humans didn't need any such ritual to achieve the goal of well-being because everyday life itself was full of physical activity. Back in the day, it was only the kings who could manage to live without working out, unlike today's world where millions are happy to cancel the shit out of their gym subscriptions and opt for the sofa-chips combo.
   
   

6. If you can’t explain it, you haven’t understood it: One of the primary reasons for starting this newsletter was to ensure I write reguarly. Because I invest so much time and energy in reading and learning, it’s essential that I also retain and genuinely understand the things that I’m coming across. And the best method to put one’s understanding to the test is to see if one can write it down and explain a concept in simple words. I’ve realized that the things I have truly understood are the ones I can write about without using the complicated jargon that one finds in monthly business review meetings. But if I lack clarity on a particular topic, I struggle to write about it in a short, simple, and engaging way.
   
   Writing is an extension of thinking- and it acts as a very good litmus test to see if you’ve genuinely understood something. This idea takes direct inspiration from the Feynman technique, and from David Deutsch’s “If you can’t code it, you haven’t understood it” principle.
   
   

7. The British took India from the Marathas, not the Mughals: It’s important to dive deep into our past to get an honest picture of where we’ve come from. The deeper I get into this quest, the more I can see how incomplete our history education is. Moreover, our understanding of our own past has been massively distorted in various ways.
   
   Besides falsehoods that have been perpetrated to benefit one political faction or another, so many parts of India’s story have simply been left out of our textbooks and general discourse- either because it got lost in the larger narrative put forth by a group of people or because many historians didn’t really take the pains to translate primary sources and understand every region’s story. One example of our distorted view comes from a simple question that you can ask anyone: “Whom did the British take India from?”. Most would say the Mughals, and that’d be wrong. In fact, the Mughals were reduced to ashes by the time the British dominion properly began, and it was the Marathas who were firmly in the saddle, controlling a major portion of the Indian subcontinent- a territory that ranged from Thanjavur in Tamil Nadu to the very edges of Afghanistan. The story of the Marathas is one that needs to be told, and I’m excited to read a few books on this in 2023.
   
   

8. God, State, Network: What’s the most powerful force in the world? What’s the higher power that people appeal to and place their undying trust in to settle issues and arrive at a consensus? 300 years ago, almost everyone trusted God. Believing in God’s punishment was a good way to ensure moral behavior at scale. Gradually, people started believing in the power of the state and its ability to decide what’s right and wrong, enforce laws and govern everything. People started having full faith in the concept of states.
   
   But today, we’re seeing the crypto-anarchists exit the system and turn to the network as the ultimate source of truth. For them, truth is on-chain, and value is confirmed via decentralized consensus, not some middleman who we need to trust. We’re already more aligned with our online communities vs our physical neighbors. Encryption will soon subvert state violence. As the crypto adoption cycle runs its course and killer use cases onboard the first billion users, we might see the shift from State to Network. And once networks are ubiquitous, the idea of Network States can really take flight. This is a bold hypothesis from Balaji Srinivasan’s new book ‘The Network State’.
   
   

9. It’s hard to imagine our world before modern technology: The world is crazy after penthouses, but that wasn’t the case until a century ago. Top floors were the least sought after property back then, because who’d climb all the way to the top? But that way of thinking has completely changed, all thanks to the brilliant invention of the safety elevator. Just see how one piece of technology (or rather the entire stack which enables the idea of elevators) completely changed what we value and how we live. Without it, high-rises, corporate skyscrapers and rooftop bars would be absolutely impossible. Thinking this way, you can imagine how vastly different the world was before modern technology came in and changed our lives forever. That’s also why if you had to choose between earning 10 Lakh per annum in 1900 and today, you’d most likely choose that income today even though the other option give you the lifestyle of a multi-millionaire back then. That’s because there are so many things that a few hundred rupees can buy today that it just couldn’t back then- 4G data packs, earphones for non-stop music, life-saving antibiotics and what not- stuff that even the kings of those times couldn’t access!
   
   

10. Trees are just like us- active, pulsating, social creatures: We think trees are just lifeless things that sit and do nothing. But that’s far from the truth.

    By looking a little closer, you’d be shocked to know how trees lead miraculously fascinating lives, far from what we can imagine. We can’t relate to them because they operate a time scale vastly slower than ours. Just like us, they develop communistic friendships (successfully, unlike the Soviets), warn each other off against incoming prey, communicate via chemicals and engage in business partnerships with mycelium networks! The jungle is a fascinating world- and it’s only by learning more about the intriguing lives of the inhabitants that we can develop the compassion that’s so critical for preserving our beautiful planet.
    
    

11. Bitcoin as insurance: This one might just trigger a comment section war, but over the year I’ve started seeing Bitcoin more like wealth insurance. That’s exactly what gold is supposed to do- it acts as a hedge against market collapse. Its value goes up when the economy is in the toilet. Bitcoin, though, seems to be an even better hedge against systemic collapse- because you can self-custody big amounts of it digitally unlike gold- which is hard to carry around and keep safely. It has already shown it’s value in countries where the people are suffering from currency devaluations, bank closures, hyperinflation, and de-platforming. That’s where it dervies it’s value from. I explained the idea in this podcast- you can listen to it at around the 47-minute mark (I know, I rambled for a very long time).

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That’s it for today, folks. If you learned something new from this article, share it on that Whatsapp group so you can show everyone what a smartie you are.

Stay tuned for Part 2, and join the email list so you can get it straight to your inbox next week.