1. Knowledge
2. Comprehension
3. Application
4. Analysis
5. Synthesis
6. Evaluation

More info here: http://www.esf.edu/erfeg/endreny/courses/LevelsofKnowledge.htm

The short version is that most people never get past level 3. There are a few reasons, but much of the blame lies with parents, schools, institutionalization, and frankly lack of intellectual horsepower. Not everyone can synthesize information on a high level. Very very few people are able to evaluate effectively.

I would also bring up a difference between the scientist, the engineer, and the technologist. The difference between these three roles also speaks to your observations. You uncover information raw, then you synthesize multiple information sources such that it can be used, and finally you evaluate the information and package it for general consumption (ie a product on a self).

For sufficiently large systems the later steps in the process are 1) very complex 2) outside the scope of individuals. One person does not design and build a nuclear reactor; most people can’t even conceptualize a problem that large. The same thing goes for global warming. The average person can not fathom the size of the problem, the complexity of the systems involved, and certainly not the possible solutions. When that happens it is easier to wait for deus ex machina.

To tie this slightly back to investing and finance, the same thing happens with consumers purchasing habits and even central planners trying to “guide” the economy.

Lastly, I think you need to read The Only Three Questions That Count by Ken Fisher. My favorite premise in that book is that the best way to make money in the market is to “fathom the unfathomable.” The end result is that you invest in the index but then make measured bets that stray from the index in response to what you gain looking into the unknown unknown category, or even better what most people think is an unknown unknown but you make it a known known.

“I wanted to burn the Louvre. I’d do the Elgin Marbles with a sledgehammer and wipe my a** with the Mona Lisa.” - Fight Club (More proof that you’re the Tyler Durden of PF, lol. I take it T’s ranting against how society’s fetishization and obsession with preserving the past compromises the well-being of the modern man while distracting him from existentially confronting and improving his own reality)
Another brill FC quote.
“We’re designed to be hunters and we’re in a society of shopping. There’s nothing to kill anymore, there’s nothing to fight, nothing to overcome, nothing to explore. In that societal emasculation this everyman is created.”

It’s chilling how I’m starting to see allusions and metaphors to FI in all of my favorite films; was the desire to be free of “system blindness” the common thread in everything I have admired so far?

Anyway, sorry for the multiple posts! :/

Jacob, I don’t know where you come up with this stuff, but I nearly laughed out a lung. You remind me of the child character from the story The Emperor’s New Clothes, only armed with acerbically funny one-liners.

Btw, you couldn’t be more right about the English/academia “scene.” From my personal experiences, this particular academic sub-culture does have a maddening habit of flaunting the inability and/or indifference to engage with the “real world” (a.k.a. rudely referred to as the vulgar masses) as an alternative status symbol… and yes this attitude does stem directly from the elitist/exclusive institution of Europe’s monasteries. It’s less about educating and preparing someone to later contribute to the world, and more about accumulating archaic (albeit useless=romantic) knowledge which perpetuates this inertia that you speak of. They are fully aware of this, and in fact proudly defend what is re-conceptualized as a rather aristocratic “us vs. them/modernization/egalitarianism” mentality. “Underdog aristocrat” is the most accurate phrase I can think of to describe this stubborn and somewhat irresponsible glorification of inertia and all things deemed as “without use” to society. I haven’t quite made up my mind whether I begrudgingly admire or am outraged by this type of institutional elitism. Perhaps it’s both

I’m not trying to crowbar your blog towards literature, either. But knowledge is a tool, and there are really only three things you can do with a tool. You can identify it, which is what most of school is (memorize this fact, spit it out a little bit later). You can use it, which is what logic and math are all about (here are some rules smart people came up with, apply them to this argument). Or you can take it apart, see how it works, and build a better one. This is the skill required to synthesize, and this is the skill most lacking in schools, because it is much more difficult to teach and measure. Taking apart a piece of art (aesthetically speaking, of course) to see its construction is one way of building this skill, but it will not work for everyone. But if we don’t “throw stuff at the wall to see what sticks,” we’re going to miss some kids. I understand that the English example was just thrown in there to make a different point, but I really think it undermines your premise.

One can’t help but wonder - did my retirement post get your cogs turning? Or is this coincidence? Because certainly the two are related in my head.

At any rate, I prefer to go my own way, but do it “sensibly,” if there is such a thing. For, who is to know whether ANYTHING will be similar (to now) ten years down the road? I think the only reason my retirement plan works is because I haven’t forgotten to enjoy life now. If I were to work without a life for ten years, only to find no retirement to look forward to after those ten years, I’d be screwed out of ten years. BUT - if I work hard and still love my life all over, then if there’s nothing there at the “finish line,” ah, well, and shit - but life’s not wasted in the meantime. Yes?

I do not ever recall “english” classes trying to teach logic, critical thinking, or deductive reasoning. Literature ranks, for me, slightly above watching TV. Yes, it does contain a few profound ideas but it’s nothing that can’t be picked up over a few pages in a history, philosophy, or psychology book. I think literary analysis is best relegated to evening schools of stuff one can do in one’s spare time. In other words. I say one can get a classical education at the public library. For instance, I consider myself fairly well-read, and I think I have read more English literature than one of my family members who is in fact an english major. In that sense, I don’t think the arts are more practical than say a Bachelor in Chess Playing.

Anyway, my point with the above was more to show the inertia in certain parts of the educational system.

Moving on. The solution to the complexity problem is for all the agents to realize that there is no embodied “they” in charge, rather it’s just people filling specialized roles. For instance, the president by himself has little power. It is the people’s belief in the system of government that gives the president power. This is quite different from people believing in an expert making a claim.

However, and I say this without arrogance on my part, but most people do not question the system. They are in fact blind to it. They follow the law because it is the law. Or they do what they do because that’s what they do and what they’ve always done. Meanwhile reality changes but the systems remain in place even though they no longer fit reality e.g. the concrete doric columns in front of brick and mortar banks.

I do not know how to change people. This is why there are two options. Follow the crowd or understand the crowd and try to avoid getting trampled.

A thoughtful, “well-written” post by ERE. ;-\ I’m still chewing on the left quadrants. I’m thinking about the upper left quadrant (unknown-knowns) as top-down, perhaps centralized models of reality. World of applied mathematics, equations and such. Then there is the mystery of the bottom left quadrant (unknown-unknowns). What tools do we have to explore that quadrant? Perhaps the venue for power laws and fat tails, but don’t we still do that top-down if we’re setting the exponents? This quadrant may be an area for the bottom-up, organic discoveries. Building agent-based models and letting them fly, waiting to be surprised so as to condition one’s expectations to surprise in general.

Trying to roll this back to extreme early retirement, the focus would be on building a portfolio bottom-up, finding the components first and building from there. This contradicts the financial advisory suits and academics who wish to employ top-down modern portfolio theory, enforcing diversification and asset allocation. I prefer postmodern portfolio theory: find out what works at the micro-level where the rubber of personal finance hits the road of capitalism, and let the portfolio emerge organically. ;-\