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Math Rules Everything Around Me

You probably already know that everything from buildings to films to food is now prescribed by carefully-constructed efficiency-producing calculations, but our algorithms indicated that now was a good time to.hear it again, from ad-man-turned-video...

You probably already know that everything from buildings to films to food is now prescribed by carefully-constructed efficiency-producing calculations, but our algorithms indicated that now was a good time to.hear it again, from ad-man-turned-video-game maker Kevin Slavin, who “shows” an audience at TEDGlobal that nature is also being shaped by numbers.

One of the most disconcerting clues to this trend is the head-spinning business of high frequency algorithmically-driven trading, which accounts for roughly half the daily equity trade volume in the U.S. We’ve explored it, and the supercomputers behind it, previously:

Automated, high-speed trading – made possible in part by a variety of algorithms – opens up exciting, disorienting and potentially perilous prospects: last spring, a mini market "flash crash" resulted in a 600 point plunge on the Dow Jones industrial average in a record 15 minutes. And just because everything is managed by computers and linked by high-speed connections doesn't mean that all computer servers have equal access to the market. A few years ago it was determined that a trading computer's speed was related to its physical distance from the host computer. To level the playing field, the NYSE equalized the lag time to 65 microseconds for all computers. But nuances like these indicate just how vulnerable the system may be, both to human and computer error. Accordingly, secrecy runs high in the high-frequency trading world. "I don't think I've ever been involved in a story so big where so many people don't want to talk to you," said [60 Minutes’ Steve] Croft.

Whether or not high frequency trading is a flash in the pan, the data-driven, feedback-looped life has crept up on us, who are the inheritors of a number of computer age Utopian visions (In his newest documentary, Adam Curtis examines the limits of those visions). The risks of placing faith in numbers aren’t just financial, and they’re not new. In the 1970s, for instance, as Joe Flood argues in his book The Fires, New York City’s use of algorithms to determine which firehouses to shutter left especially vulnerable neighborhoods defenseless against a summer of fatal blazes.

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