Summary The Bernoulli Model re-cognizes the notion of wisdom—and argues that the world is on the cusp of a monumental paradigm shift due to the imminent fall of the authoritian model and the rise of portfolio theory in the practical incarnation of The Bernoulli Model. Average goodness is no longer enough. —Nicholas Berdyaev
The word philosophy comes from ancient Greece and is defined as the love of wisdom. In a recent hockey game between the Calgary Flames and the Edmonton Oilers—the so-called Battle of Alberta—the twenty-one year-old millionaire and Alberta native Mike Comrie appeared to be hit with a high stick by the twenty-three year-old millionaire and Alberta native Derek Morris, thus giving the Oilers a two-minute powerplay. But the replay showed that Comrie had in fact faked being hit. Upon seeing this excellent deception, the venerable Canadian sportscaster Jim Hughson congratulated Comrie for being wise beyond his years. In other words, Hughson had, in no uncertain terms, splained to the children that, in Canada, wisdom and lying are the very same thing.
Bringing Down the Government. The president of the Czech Republic, Václav Havel, once said that corruption begins when people start saying one thing and thinking another. In his essay The Power of the Powerless Havel asserts that people can bring down a totalitarian government nonviolently by simply living in truth. John Maynard Keynes was a British economist whose ideas continue to profoundly influence government policy to this day. Keynes is most noted for the prophecy made in 1930 as he looked beyond the foreboding presence of the looming Great Depression—When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful human qualities into the position of the highest virtues. The love of money as a possession—as distinguished from the love of money as a means to the enjoyments and realities of life—will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair—for foul is useful and fair is not. Avarice, usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.
Playing the Dad Card. Einstein once said that God had punished him for his contempt of authority by making him an authority himself. During the 1960s the American psychologist Stanley Milgram performed a remarkable experiment for testing the obedience to authority of one thousand subjects. An authoritian figure ordered each of the subjects to administer increasingly painful electrical shocks to a learner every time the learner either failed to answer or answered a question incorrectly. The learner, who could be heard and not seen was, in fact, not actually given the shocks. The shocks began at 15 volts and increased in 15-volt increments to 450 volts. In spite of the fact that the learner would scream in pain, beg for mercy, and finally fall silent at 330 volts—two-thirds of the subjects delivered the final punishment of 450 volts.
Romancing the Moon. Wittgenstein once said that philosophy is the battle against the bewitchment of our intelligence by the means of our language. Just as numbers are a useful fiction leading toward eternal verities in mathematics—so too are words the-finger-pointing-at-the-moon when endeavoring to understand ultimate philosophical truths. We could certainly all agree that society would not have come this far without some form of authority to guide it. But the question is—At what point does the authority of government cease to guide us forward and, instead, choose itself over the people? Existentialism is the philosophy which asserts that morality must be determined inwardly rather than from external authority. Consider that the Freudian cognitive model makes the reality-based ego the decisionmaker who must choose between the internal values of the inward self or soul and the external authority of the superego. Gandhi used to speak disparagingly about systems so perfect that no one would have to be good. But the goal is not to make goodness obsolete—but to create systems which align internal and external values.
The Authoritian Model. Einstein once said that there is no more commonplace statement to make than the world in which we live is a four-dimensional spacetime continuum. Consider for a moment that both morality and risk management are similarly exercises in making decisions in the face of uncertainty. From this it follows that we can only know whether decisions are correct or not retrospectively. But the very definition of authority is that it is able to make determinations of right and wrong at any time. And the authoritian strategy is dead simple—bully the ego into making the easy, low-risk, low-reward, short-term decision of obeying authoritarian rules—rather than allowing the ego time to reflect on the values of the soul and possibly make the higher-risk and ontologically higher-reward decision. In essence, the authoritarian model forces us to remain in the three-dimensional world because it can neither feed off us nor control us in the four-dimensional world.
The Markowitz Model. Harry Markowitz developed portfolio theory in 1952 as a way of constructing optimal portfolios that maximize reward for given levels of risk. Markowitz forever linked reward with risk in exactly the same way that Einstein linked space with time in that both the expected outcome and the attendant uncertainty of outcome are required to complete the picture. His approach employs matrix algebra to aggregate risk, and then uses linear programming to determine optimally efficient portfolio allocations. Just as Galileo and Descartes laid down the fundamentals of the modern scientific method for solving problems—so too did Markowitz lay down the fundamentals of the modern scientific method of four-dimensionally bringing together a varied set of uncertain elements. But rather than seeing portfolio theory for the profoundly important roadmap that it is—the individual components of the model have been incessantly and pedantically attacked by PhDs and other authorities—like the legions of PhDs at Enron before the company finally collapsed under the weight of its own PhDness.
The Bernoulli Model. Newton once said that if he had seen further than others, it was because he stood on the shoulders of giants. In 1670 both Newton and Leibnitz formulated versions of calculus—that is, the mathematics of motion. The Bernoulli brothers, John and James, picked up on calculus, spread it through much of Europe, and then set the roadmap for efficiency analysis by finding the curve for which a bead could be slide down in the shortest time. John’s son Daniel set the roadmap for utility theory based on the idea that an asset’s value is determined by the utility it yields rather than its market price. No less than eight Bernoulli’s made significant contributions to mathematics. The Bernoulli Model is founded on the shoulders of giants like Archimedes, Galileo, Descartes, Newton, Leibnitz, Einstein, Markowitz and the Bernoulli’s. It is singularly directed towards establishing balance and harmony for societies and individuals living within societies.
To Infinity and Beyond. The word stochastic comes from ancient Greece and is defined as skillful aiming. The Greek Plato once said that a just society would only be possible once philosophers became kings and kings became philosophers. The Bernoulli Model makes the president the focalpoint—and provides a coherent societal-wide view. It encourages a priori definitions of values, opinions and data specifications so as to facilitate actuarial efficiency—and interactive, nonauthoritian communication between the different levels of government, and between the government and the people. The model’s a priori conception offers expandability along a multitude of dimensions including forecasting, efficiency analysis, utilization and the modeling of uncertain elements—as well as offering full accountability and comparability for all societal institutions. The Bernoulli Model also employs the state-of-the-art, four-moment Camus distribution—which in turn sets the roadmap for the realization of the vast untapped potential of simulation-based optimization.
Conclusion. FS Northrop once said that if one makes a false or superficial beginning, no matter how rigorous the methods that follow, the initial error will never be corrected. It is said that addiction stems from the inability to conceive of the future. Simply put, the addict never knows his own soul. Alberta is the richest province in the richest country in the world—yet a remarkable portion of the provincial revenue comes from video lottery terminal machines—ie. VLT machines. As the wise and venerable premier of Alberta, Ralph Klein, responded when asked the question as to when he would leave government—Once the government is operating like a well-oiled machine.