Complex Systems with Patrick McKenzie (patio11)

In this episode, Patrick McKenzie (patio11) and Lars Doucet, the author of Land is a Big Deal, discuss how cities determine your property's value and collect taxes. They explore how assessment offices juggle political pressures, statistical models, and technological tools while trying to maintain equity across millions of properties. They also cover why assessment offices are separate from tax collectors, how property value protests actually work, and why your neighbor's house might be assessed differently than yours.–Full transcript available here: www.complexsystemspodcast.com/property-assessment-lars-doucet/–Sponsors: GiveWell | CheckSupport proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. First-time donors get $100 matched. Go to givewell.org (and type in "Complex Systems" at checkout).Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.–Links:Lars’ book: https://www.landisabigdeal.com/Lars’ blog: https://www.fortressofdoors.com/ Bits about Money: https://www.bitsaboutmoney.com/ –Twitter@larsiusprime@patio11–Timestamps(00:00) Introduction(00:23) How property taxes work (Texas Example)(02:45) The political art of avoiding tax rate blame(05:53) Sources of real estate data(08:08) Historical property assessment(11:04) Statutory guidance vs. Actual practice on market value assessment(14:25) Tax rate strategy and sandbagging(15:17) Assessed value vs market value(16:16) Assessment caps and Prop 13 (18:22) Sponsor: GiveWell | Check(20:27) Data collection in the field(22:54) Data collection methods(25:08) Property valuation: Beyond location and correlative factors(26:52) Depreciation of buildings(27:37) Orthodox view of depreciation(30:53) Real estate cultural differences(33:59) Urban redevelopment and land value(36:59) Small business realities and perceptions(46:19) Property tax protests(50:45) Predictive protests(52:19) Accuracy vs equity testing(58:50) Cook county assessor's office(1:01:11) Lars's background(1:05:38) What is GIS?(1:09:52) Wrap

In this episode, Patrick McKenzie (patio11) offers a reading of his viral essay, "The optimal amount of fraud is non-zero" with extensive live commentary. Patrick examines payment systems, benefits programs, and pandemic-era policies, to uncover how businesses and governments often intentionally accept some level of fraud as a cost of doing business. Reducing fraud to zero would require such restrictive verification that it would severely hamper legitimate commerce and social programs. Using examples from credit card processing to PPP loans, Patrick illustrates how different industries calibrate their tolerance for fraud based on their margins, mission, and societal role.–Full transcript available here: https://www.complexsystemspodcast.com/fraud-choice-patrick-mckenzie–Sponsor: GiveWell | CheckSupport proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. First-time donors get $100 matched. Go to givewell.org (and type in "Complex Systems" at checkout).Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.–Links:Bits about Money, "The optimal amount of fraud is non-zero" https://www.bitsaboutmoney.com/archive/optimal-amount-of-fraud/Bits about Money, "The fraud supply chain" https://www.bitsaboutmoney.com/archive/the-fraud-supply-chain/ Dan Davies on Complex Systems https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9?si=AWkgvWEBSymrQNqpehg5tQ–Twitter:@patio11-Timestamps:(00:00) Intro (00:32) Origins of the essay and Dan Davies' influence(02:16) Fraud is a policy choice(04:56) The unique nature of fraud enforcement (07:54) Who pays for payment fraud?(12:55) Fraud as a necessary business expense(21:13) Sponsors: GiveWell & Check(27:43) Credit reports(29:19) Anti fraud loops used in online commerce(35:38) Different business tolerances for fraud(37:20) High vs low margin fraud strategies(41:40) Fraud in Benefit Systems and Pandemic Programs(43:29) Taxes(45:38) Fraud as an intended component(51:55) Wrap

Patrick McKenzie (patio11) is joined by Max Chiswick, a former professional poker player turned AI educator, to explore how poker intersects with decision making. They discuss how the online poker boom created unprecedented opportunities to study decision-making at scale and how computational advances have transformed both the game's theory and practice. They dig into how poker serves as a laboratory for studying decision-making under uncertainty, pattern recognition, and opponent modeling, while also examining the sometimes problematic incentives that emerge in both online gambling and AI development.–Full transcript available here: https://www.complexsystemspodcast.com/ai-poker-max-chiswick/–Sponsor: CheckCheck is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.–Links:Max's website: https://maxchiswick.com/Max's startup for AI and Game Strategy: https://overbet.ai/The Expected Value Foundation & poker camp course: https://expectedvalue.org/Patrick's Bits about Money: https://www.bitsaboutmoney.com/–Twitter:@chisness@patio11-Timestamps:(00:00) Intro(00:26) Max's background and journey into poker(03:45) The credit card rewards game tangent(06:12) Why poker matters: reasoning and decision-making(07:49) The problem areas in the poker AI space(09:38) Poker as an assistive technology for reasoning(10:59) Online poker history(16:14) Understanding multitabling(21:14) Casino economics and gambling regulation(22:55) Sponsor: Check(26:32) PokerStars VIP program and professional incentives(29:47) Playing a million hands in a month(37:26) AI poker history and counterfactual regret minimization(43:35) Poker complexity(45:01) The impact of solvers on modern poker(45:52) Understanding poker game theory and decision trees(49:26) Recent developments in poker AI education(50:27) Teaching programmers to build poker bots(53:05) Wrap –Complex Systems is part of the Turpentine podcast network, the network behind Econ 102 with Noah Smith, The Riff with Byrne Hobart, and Turpentine VC. Turpentine also has a social network for top tech founders: https://www.turpentinenetwork.com/

By popular demand, Patrick McKenzie (patio11) is joined by Byrne Hobart for a 3rd conversation to discuss Byrne’s book "Boom: Bubbles and the End of Stagnation." They explore how periods of irrational market enthusiasm often create lasting value despite their painful endings. Using examples from the 1990s fiber optic boom that enabled modern streaming to today’s AI investment surge, they examine how even when investment manias end badly, they frequently pull forward crucial technological development that benefits society long-term. Byrne and Patrick weave through historical cases like Bell Labs to present day examples in crypto and energy infrastructure, revealing hidden cycles where speculative excess can drive genuine innovation.–Full transcript available here: https://www.complexsystemspodcast.com/episodes/boom-busts-and-long-term-progress-with-byrne-hobart-2/–Sponsor: CheckCheck is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.–Links:Order Byrne Hobart’s book Boom: Bubbles and the End of Stagnation on Stripe Press / Bookshop / Amazon here: https://press.stripe.com/boomThe Diff  https://diff.substack.comCapital Gains  https://capitalgains.thediff.co/The Reckoning by David Halberstam: https://www.amazon.com/Reckoning-David-Halberstam/dp/0380721473Austin Vernon on Fracking, Complex Systems Podcast: https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9?si=CDrPD3nNSP-MUV60qffglg–Twitter:@byrnehobart@patio11-Timestamps:(00:00) Intro(00:25) Discussing the book: Boom, Bubbles, and the End of Stagnation(01:08) Economic growth and productivity(04:42) Technological advancements and corporate R&D(07:31) The role of government and private sector(13:42) Sponsor: Check(14:57) Economic history and industrial evolution(20:12) Japanese industrial planning and efficiency(27:16) The dot-com boom and fiber optic investment(31:21) Bondholders vs. equity investors: A comparative analysis(32:32) Google’s strategic fiber investments(32:56) The evolution of online video and YouTube’s rise(35:22) The dot-com bubble and its aftermath(44:06) The housing bubble(49:39) Financial manias and reflexivity(52:23) The SaaS ecosystem and startup growth(54:58) Stripe and the evolution of online payments(01:00:22) Crypto(01:04:58) The value of currency and crypto(01:06:36) Exchange tokens and financial models(01:08:55) Crypto’s impact on financial systems(01:10:41) The evolution of banking technology(01:13:18) Crypto regulations and financial freedom(01:17:28) Smart contracts and financial innovation(01:26:47) The role of AI in technological advancements(01:29:18) The future of energy: Geothermal and fracking(01:41:39) The journey of writing ‘Boom’(01:42:57) Wrap