The Most Underrated Move in Chess

 I by no means have any qualification to assert the truth of the title of this post. I barely even play chess, and really like an angry conservative imagining the bad attitudes of snowflake liberals, I imagine the move that is the subject of this post, is not talked about much by people who are interested in chess.

The move is this, a player reaches out with one hand and topples their king piece so it lays on its side, conceding the match.

That's the move I will be talking about, and I am asserting its applicability to domains outside of chess, most of which chess has little to no applicability for all it is asserted to teach its enthusiasts to think strategically and spawn vacuous statements like 'he is playing chess while you're all playing checkers' etc. 

Beginning with Stein's Law

Stein's law is to me, your classical classical economists kind of law, it basically states that things that can't go on forever must inevitably stop. Unusually for a classical economist kind of thing to say, it kind of argues that the kind of economic activity you want is a sustainable one. Why I characterise it as pretty classical a thing to say, is its non-interventionist vibe, that in my opinion is the kind of classic thing an economist would say, being completely out of touch with reality: 'don't worry everyone, anything doomed to fail, will fail eventually so why stop it?'

Now I am going to apply Stein's law to economic phenomena, first I'll look at National Debt or Sovereign Debt then I'll look at financial bubbles.

When is national debt unsustainable? Consider this a semi-lay opinion, certainly not an expert one, but the intuition that debt becomes unsustainable and therefore the nation will go bankrupt, when national debt hits 100% of GDP or GNP, which is to say, the country has borrowed its entire economic output. I suspect actually that the rational limit is actually much much higher, it would logically be when the service cost (interest payments) of that debt are equal to GDP plus growth, which would mean that basically the entire national output has to be dedicated to interest repayments before it is even accomplished, such that should anything slow that economy in any way, so there is no growth to meet the interest obligations then you've hit the limits of national debt.

Of course, I'm not aware of this ever happening, or ever playing out that way, there's also a degree to which GDP doesn't map to national debt. For example in the Greek sovereign debt crisis, it was the Greek government issued bonds that could not be serviced with the government not bringing in revenue sufficient to pay the bond holders. But GDP and GNP generally include both government and private sector, and so here we begin to see a limit of Stein's law - economic phenomena doesn't simply collapse when it has to, in the case of national debt to reach the theoretical limit, first the government would basically have to change its tax code to capture 100% of present and future GDP which would likely precipitate much of the economy offshoring, or else we are talking about some pretty spectacular government services being available for people to go to work for the sole purpose of paying taxes.

So lets look at a financial bubble - I am partial, or partially sympathetic to anybody who just thinks assett/economic/financial bubbles are not even worth talking about. Its pretty easy to identify a bubble - the price of an asset doesn't make sense. While I say its easy, generally you need to compare it to the riskless rate of return - historically this is a treasury bond in the same currency, though obviously some treasuries are not considered 'riskless', but if a US treasury bond has a 4% yield it doesn't make sense to buy any asset that won't generate at least a 4.01% return on your investment. 

It's pretty easy to find a bunch of shares and other assets that do not generate anything near a 4% return. For example, right now SpaceX trades at a price far above any real revenue it generates, its price is with very little embellishment, based on a sci-fi story written by an amateur author. It's most profitable business activity is commercial launches of rockets to deliver satellites into orbit. This business activity accounts for something like 2% if it's IPO valuation with 98% based on shit that doesn't exist yet, I believe mainly Musk's AI business that is likely competing with Meta as least popular, least used, lowest quality LLM. 

Crypto or NFTs are another, now slightly dated example of a bubble. Bitcoin being the most capitalised in terms of its total conversion value to something like USD, is used less than 2% of the time to purchase goods and services, it is mostly just literally a token people buy and sell in exchange for varying amounts of real or 'fiat' currency that can be used for goods and services. There is a theoretical value for something like Bitcoin being 0, this is based on some kind of real-world value, but it is unlikely that Bitcoin's value in USD is going to hit 0 any time soon. It was well put by Bloomberg journalsit Zeke Faux when he appeared as a guest on Dan Toomey's Good Work episode and here I'm paraphrasing "Is Insane Clown Posse's music good or bad? I would argue it is bad. Am I going to bet that no juggalos turn up to this year's Dark Carnival? No."

If markets were efficient, any time an asset price rises forces the expected ROI below the riskless rate of return, the foolish purchaser should be punished for it. But that rarely happens. Often this is because nobody can agree on what the expected ROI will be, for example, if Neil Degrasse-Tyson, who is a believe an astrophysicist, announced he was joining forces with a bunch of MIT phd's to build a time machine, or faster than light spacecraft, there will probably be some level of differing opinions on whether it is even theoretically possible to build a time-machine. 

Some people holding phd's in physics, might be adamant that it simply isn't possible to travel backwards in time, some holders of the same or equivalently relevant phd's may just be crazy, just like it's possible to find a medical expert with a phd that served in a prestigious research lab who will endorse crazy medical quakery. Then there will be experts who will at least allow that based on their impression of Neil, maybe he has figured out something they haven't. Right down to 'the dumb money' people who have no idea about anything and say things like 'bro! in 2030 we'll all be time travelling to 2031!'

Next we have Cassandra

Here is what I learned the hard way. Australian real estate is almost certainly an asset bubble. Some even go so far as to describe it as a ponzi scheme. Uttering such a statement can be frankly shocking to many Australians. I was of this opinion in 2006, two decades later the Australian housing bubble still hasn't popped. I could go figure out exactly when I learned my lesson on this blog, but I probably had the crucial revelation by late 2008, early 2009 after the GFC where Australia almost singularly avoided any correction or rationalization of its housing prices unlike pretty much everywhere else in the world.

The unique problem with asset bubbles being this: If I can't rationally justify why price of Y is X today, then there's no reason why the price of Y would be rational or reasonable tomorrow.

Or more simply put - its almost impossible to predict when someone will stop being stupid or crazy, let alone a lot of people.

Any price in bubble territory, simply cannot be explained, which is not quite true, in the example of Australian house prices, explanations are offered constantly - supply is short of demand, the population is growing faster than the housing supply, too much red tape etc. etc. 

Depressingly often, these explanations have no basis in truth, there are also many explanations that are simply unmentionable domestically - house prices are high because of 'investment', negative gearing, capital gains tax discounts, low holding costs, a lack of attractive investment opportunities in productive sectors, self-managed superannuation policy etc.

Enter Cassandra, the prophetess of Troy cursed by Apollo for rejecting him sexually, who spat in her mouth such that while she had the gift of prophesy nobody would believe her.

This is very often the curse faced by anyone intelligent enough to extrapolate out to Stein's law. In the past decade we've seen a number of non-starters not only start but persist until utterly destitute. Now I want to point out, this is not limited to any particular pole of the political spectrum or any point along it, untenable ideas come from all directions, furthermore if I give a good broad diverse set of examples the odds that one of these ideas being one you yourself are firmly still committed to will go up, but anyway certainly not limited to: Identity politics, crypto, the metaverse, making America great again, antifa, UBI, "AI" etc.

In all cases, a few debbie-downers almost immediately lucidly described the inherit fatal flaws of such ideas, often citing historical precedents that are a matter of public record and even simply pointing out that the thing at hand was so commonly subjectively experienced as shit, that it was almost objectively shit. 

I don't have the time or space to break them down, just let me reassure you that it never takes long when any enthusiast starts promoting an idea, for a decent critic to come along and poke holes in it. 

So let me break this down instead, imagine your whole life every day you have to get up, pack up your camp and walk all day, stopping only to forage and hunt, your tribe hugging to a wall that extends up into the sky such that you can't make out the top of it.

After years of doing this, you finally say "Let's just dig under this wall." and a few of the other youngsters start saying 'yeah, yeah! (s)he's right, I'm tired of just migrating along this wall all our lives, lets tunnel under and see what's on the other side!" and then an older person in the group says 'No, it won't work, look at how high up it goes, all that material puts more and more compressive stress on the material below it, that wall is going to go down into bedrock."

Some of your fellow young ones are persuaded, losing their enthusiasm but you are undeterred. "well okay if it's so deep we can't go under it, then we'll build a ladder and go over it!" and you are pleased to see your friends perk up at the suggestion.

"We could, maybe but look we can't even see the top of that wall, we've never seen the top of it. We'll have to erect a ladder at least 200 maybe 300m tall, it will have to be strong enough to not collapse under its own weight, and we'd have to raise it to the wall, probably by building it in sections from the bottom up, we'd likely run out of food and starve in the process."

"Okay, then if it's so tall we can't get over it, and it's so deep we can't go under it, and obviously it's so wide we can't go round it, then we'll go through it!"

"With what tools? Again not only does a wall that tall have to run deep because of compressive stress, it has to withstand wind on a surface area that large, it's going to be immensely thick. Like digging a mine shaft through solid rock."

And so, I think this is what Cassandras and the public at large often experience as an impasse. People in general don't like Cassandras because they just seem to shit on our ideas, our solutions, our hope, just as the original Cassandra told the hopeful Trojans that if they brought the wooden horse into the city then Troy would fall. Nobody wanted to hear it after 10 long years of war (plus she was cursed to not be believed) but often a Cassandra is not saying that the situation is hopeless, it is only made hopeless if everyone rallies around a course of action doomed to fail.

And very few of the intelligent people that suggested very early that raising the salience of race up to more or less an ubiquitous daily topic of conversation would most likely result in a resurgence of racism, I think didn't want progress to be made toward a more egalitarian society. And very few of the intelligent people who pointed out that MAGA would make the modal struggles of United States Citizens harder not better, are firmly wedded to doing nothing about the growing economic inequality that arises naturally from the ordinary operation of neoliberal economic doctrine, just that there was no finish line defined by when America was "great" as a consensus period in history, and that walls both physical and metaphorical in terms of a boarder fence and tariffs were definitely not going to make the US any greater.

It Ends With Keynes

John Maynard Keynes was the remedy to Cassandra's suffering, if indeed Cassandra suffered being denigrated as a madwoman, locked up, sequestered eventually taken as a spoil of war before being murdered alongside her captor all of which, she saw coming and faced with no small portion of dignity.

But Keynes said:

"The markets can remain irrational longer than you can remain solvent"

Which is equipping a Cassandra not just with the gift of prophecy, but the gift of cognitive empathy - perspective taking, which is what Cassandra's need to not be defeated by this world. For me this was the fundamental insight that if I can't use reason to explain the price of a SpaceX share, or a bitcoin, or pets.com, or a beanie baby, or an australian residential property today, then I have no reason to say expect it to crash tomorrow.

Patrick Boyle recently released a video that is good I feel, at diffusing some of the schadenfreude going on about the AI bubble - specifically the many claims of circular financing Nvidea is doing, pointing out that it is not shady accounting but a fairly ordinary practice of lending customers money with which to buy your products, the same thing many consumers do when they sign a two year contract for a new phone or purchase a vehicle on finance.

But specific to something Keynes said was that if you try to 'short' the "AI" companies who the Cassandras have built a pretty rock solid case that the needed revenue (something like figuring out a way to earn more from LLM generative "AI" than all the ad revenue of Alphabet, Meta, X, LinkedIn and Pinterest put together for the entirety of their history, and the increasing evidence base to suggest that as you build more powerful LLMs, costs go up, not down.) you will likely just lose money every time the bubble fails to pop, which could take years.

That may require some modicum of a technical explanation, as did "The Big Short" the movie about the few people who bet on the GFC, against the US economy which at the time was based on ever inflating real estate prices. Shorting something means like if the price of a share is $10 and someone thinks it will go up to $15 and you think its price will go down to like $2, you write up an options contract which says that by so-and-so a date you will sell your share for $8 if you exercise the contract, obliging the other partner to buy your share at that price. You are 'going short' because you make money if someone is obliged to buy something worth $2 for $8 giving you a $6 profit, but you lose money if the price goes up to $15 where you have to sell your shares well below market value giving them a $7 profit.

So say you USED YOUR EYES looking UP FROM YOUR PHONE anywhere in the past 5 years to notice that NOBODY USES CRYPTOCURRENCY AS CURRENCY. That all-caps statement is slightly hyperbolic, I'm sure on occassion people buy things with crypto, things like boats and houses and cars and not with the proceeds from crypto, but like a buyer finds a vendor who is willing to straight up swap a car for some bitcoin, a double coincidence of believers, but what anyone with eyes can notice is that crypto is not used to buy coffee, groceries, petrol, pay utility bills, pay taxes, buy street food, pay rent, pay wages, budget projects, keep accounts, value properties, buy shares etc. 

Right? It was pretty easy to use just basic sense information to see through the hype a long time ago. A fairly average smart person when confronted with the exchange rate between bitcoin and USD was capable of connecting the neurons necessary to point out that just because a bitcoin was valuable did not mean it was going to become a currency, as the same is true of baseball cards and comics. Furthermore, for a good 5 years, you didn't even have to think for yourself, there were plenty of credentialed people who had done the thinking for you, people who looked at crypto, looked at blockchain and could quickly and lucidly explain all the numerous reasons why it was not money. 

What I noticed, was that most of said commentators who looked at crypto and NFTs and said 'this is nothing' NEVER told people to go short on it, which is to say, actually bet on its price (or exchange rate if we want to humour the currency claims) would collapse.

Had you done so, you would have spent the last 5 years going broke, even though you are absolutely right and for good reason. Zeke Faux went to crypto conventions as a journalist and met a guy running a crypto bank who said he paid interest on deposits by his clients, but didn't charge any interest on loans to clients, and Zeke was like "that is like a business model for going bankrupt." Literally the best case scenario for that business, is that the owner is running a Ponzi scheme, I jumped the gun, had this owner clarified that the interest he paid was based on the historical deposit value of crypto...no because he has no means of generating income unless he sells other people's crypto, his only bulwark against bankruptcy would be to hold so much crypto himself and counting on it inflating in price faster than the interest rate offered that he could pay off his obligations by liquidating his crypto, by which he is almost certainly ruined by now.

But that gets me back to my point, if you wrote a sequence of short derivitives on bitcoin 5 years ago, you likely would have gone bankrupt well before you got to Oct 4 2025 the all-time high that defines bitcoins collapse from which it has never really recovered, and all but the die-hard juggalos can't find a reason to ever get excited about bitcoin ever again.

Now I said this ends with Keynes, and the point is the futility of trying to profit from being to see something's inevitable failure.

Knocking over your King

I asked my friends who are into games, particularly board games what term they used for the point in a game where the outcome looks inevitable. Like when somebody has a monopoly in Monopoly but the other players aren't bankrupt yet, or in chess when you are at such a disadvantage that the only argument is whether you are 2 or 3 moves from checkmate.

My friends suggested that this section was called 'the endgame' however, I don't think that was what I am trying to describe. For me the operative part of a term like 'endgame' is 'game' as in something is still at stake. Like the many board games, for example 'Trouble' with its pop-o-matic bubble, or Snakes and Ladders which the frightened people of the United States of America call 'Chutes and Ladders' or perhaps it is less so than that they are frightened of snakes so much as too literal minded, but games that have an endgame where a precise dice role is necessary and there is some ambiguity as to whether another player can catch up and overtake.

Of course, the ultimate game for 'endgame' is Tennis, where literally no matter how far a player is behind in games and/or sets and points, to win the game you must win match point and it is mathematically always possible for your opponent to come back from any match point and rob you of victory. It is a sport with infinite deuces and infinite sets (at least until 2019) which means even when you are 2 games down going into the fourth, you could be just 10 hours away from winning 70 sets to 68 in the 5th.

So what I propose instead is 'the epilogue' this is a theoretical and sometimes practical point in a game where the outcome is determined, but the rules technically allow someone to play out turns until the actual final conclusion. At this point though, I would suggest nobody should ever, in ethical game playing be obliged to play out the game for the gratification of the determined victor. Nobody should be obliged to sit around watching some immature moron gloat at how much monopoly money they are stacking up and how soon all of you will be ruined.

This does not, however mean that losers can 'rage quit' a term from online game playing  that may be motivated by various behaviours, but is definitely uncool when motivated by the ego-blow of losing.

But simply knocking over your king and conceding the match, offering a polite handshake I feel is humane and respectable. Now let us conclude by applying this to life.

The thing being that systems tend to fail before they have to fail. Democratic governments get ousted for example, when life gets expensive and not typically when people are actually starving. Steins law may suggest that things that cant go on forever must stop, and perhaps this is a reason not to get all het up and try and coordinate an intervention, but typically I think, uncoordinated interventions precipitate failure before concrete failure.

Soldiers desert the lines, civilians dodge the draft, fragging COs and going AWOL all happen before a battle or war is officially lost. In other words, habit fails before the institution does. 

The import, which makes the checkmate so underrated though, is that you have to zoom out from the chessmatch itself, to the infinite game. Knocking over your king and offerring the concessionary handshake means you may have saved yourself 8 minutes or 15 minutes to go get an icecream. Or maybe watch a rerun of Seinfeld, it is in this sense that by mitigating your loss of precious time, it is an increadibly powerful move. Furthermore, both players profit from the time saved.

As we head to the 2030s we are coming up to being a century removed from when Germany rather than admitting defeat on D-day, instead declared total war, by contrast after Hiroshima and Nagasaki, the Japanese surrendered saving at least hundreds of thousands of lives. 

By contrast, I don't think you need to be a Cassandra, to see that Iran has the United States totally and utterly beat, and had them by the strait of Hormuz months ago. Everything since the initial US attack has been epilogue in that war, yet the decision makers cannot make, day after day, the single most powerful move available to them - to admit defeat. It has been, continues to be, and will be costly and will only grow in cost the longer it remains unresolved. In fact, it is possible that by not conceding defeat after the first two weeks, that the inevitable victor Iran may not have yet realised how much leverage they actually had. 

It's a seperate post, but I feel this is often a vulnerability in those who are victims of grift and scams and Faustian pacts - they do not realise how much they can yet lose. 

So when people will knock over their king is hard to predict, harder to predict than the outcome of a game. Cassandras should relax and get themselves some icecream, sorbet if you must.