Luck Rules Our Lives So Why Don't We Teach More About It
Q&A with Nicholas Rush Smith on games and learning
This week, Laurence and I sat down with Nicholas Rush Smith, director of the Master’s Program in International Affairs at The City College of New York and its Graduate Center. We talk about the power of play, dopamine affects the learning cycle, why losing is the best education for winning, and luck and contingency in international relations. This Q&A has been edited for length and clarity.
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Danny Crichton:
Nick, thank you so much for joining us. Last month, you were with us for a Riskgaming session for our China EV game, Powering Up. What happened?
Nick Smith:
Yes, the game covered the changing EV market in China. I played the chairman of the China branch of U.S. General Motors. And basically, I did not do great.
Danny Crichton:
I'm looking at the scores right now. I was like, "One player did not do well." That one was you.
Nick Smith:
Yeah, exactly. Within, I think, two rounds I was down something like a billion dollars. Now, I will say that I made a comeback by partnering with Shanghai Motors. But when you dig yourself a hole that deep to begin with, the mountain to climb out is going to be very, very steep. And I think I made it halfway up.
Danny Crichton:
Yeah, so in scene three, you were negative $1.5 billion cumulative revenue. You had lost money in China, made investments, did not make a return. But then, you had this surge. And I don't know what happened, but in scene five you went from $200 million of cumulative revenue to $5 billion. Was this the round in which you built the relationship with the Shanghai car comedy and turned things around?
Nick Smith:
Yeah. Two things happened. One is that, early in the game, I looked at my win conditions. One for my particular company was to make an investment in China. And so, I thought, you know what? I'm going to try and knock this one out early, and I invested in one of the cities. That turned out to be a really bad strategy.
But part of what the game brought up for me was just how difficult a position U.S. automakers are in. I remember saying at one point to my Shanghai partner, "Look, I'll give you all this IP." And he's like, "Well, what's the IP?" And I was like, "I'll help you make big SUVs. We love it in the United States." And his response was, "Nobody drives SUVs except Americans." I was like, "All right. Well, look, forget the quality of the IP. I've got these tokens and we don't have to specify what they are. Let me just give them to you to help you win and let me back in."
Of course, if this had been more realistic, it would've been a really, really difficult position. My sense is that the Chinese car makers are so far advanced on EV technology, I actually probably should have tried to take some IP from them in the long run to build back in the United States.
Laurence Pevsner:
Yeah, exactly. China gets an advantage when they get IP early from America, right? Earlier on, the United States had more advanced technology chips. Now, the shoe is on the other foot. I mean, this is why Ford's CEO has been on the speaking circuit recently saying, "Why are we so concerned about Huawei and TikTok when we should be concerned about the Chinese car companies?"
Danny Crichton:
In many cases, the best technology for manufacturing is overseas. It's a totally different world. We're not used to this in the United States, where there's a little bit of hubris, a little bit of arrogance from the post World War II era where we were the dominant manufacturing superpower of the world. Today, we increasingly need to take intellectual property from allies. Being able to structure that politically is a key piece. And that is a lesson we don't put in the game.
This gets to our second topic, which is around the pedagogy of these games. For Powering Up, we really focused on the IC to EV transition, so going from internal combustion engines into electric vehicles. As a story, the game is basically that the Americans have had an IC advantage. Chinese car companies don't really have any of the technology. And so, there's this unique IP you can leverage, you can get access to the market. And then, as electric vehicles surge in, China is the one with the intellectual property. You can think of that story as ending in 2022, 2023 as the EVs are booming and the U.S. car companies are getting kicked out of the country.
But what happens next? The answer is probably to build up those joint partnerships going the other direction saying, if you're Ford, you need to go to BYD and say you have the best technology in the world around batteries, around longevity. In some ways, we almost need to copy the tactics that gave China its wealth over the last two decades.
Nick Smith:
Well, part of the challenge with games is precisely that you can't specify every single variable. But in a market, the same is also true. There's an inherent opacity to what the future projects. That's why business is a risky thing.
One of the things I thought was fantastic about the way that you all set up the simulation was that, A, there were these external shocks that would come in that we couldn't predict. And then, B, you kept the precise scoring away from us. So, the tabulations that you all were doing on your computers as we were playing the game, I thought I knew what my win conditions were, but it was clear that there was some other calculation going on in the background that was opaque to us. That strikes me as a fairly good example of how a business leader would have to make sense of a rapidly changing market.
The second thing that games are really useful for from a pedagogical point of view is the emotion that comes with them. And so, when I was playing Patty... I think his name was Patty.
Laurence Pevsner:
Patty Wong, I believe.
Nick Smith:
Patty Wong. Thank you. Who's running the China aspect of U.S. General Motors. I felt pretty invested in Patty by the end of round one. I was reading his little bio, I was like, "Oh, man. This guy seems like he's got the future, but he's got this very difficult set of internal politics that he's going to be dealing with with Detroit." I was quite invested in how Patty, as an individual, was going to fare.
The emotion that comes with that can be incredibly valuable because, while we often talk about games and rational strategies, the fact is that our rational strategies are affected by the emotions that we bring. And in fact, rationality and emotion are deeply connected with one another. And so, after round one, realizing I'm really doing a bad job gave me impetus to pull back both for the company generally, and then for Patty as an individual.
Danny Crichton:
Early on the podcast, I talked to Kelly Clancy, who wrote a book called Playing With Reality: How Games Have Shaped Our World. One of the things she emphasizes is the dopamine loop. That the way we learn is by surprise. We're in the woods, something surprises us, something is dangerous, something is safer. We're hungry, the food works or it doesn't work. We learn from that.
When I look at international relations, international economics business, so much can be textbook or case studies. I'm reading this, I'm like, "Yeah. It makes sense. Okay. Yeah. Facts, everything's logical." And you forget.
When you actually have to play this role and you have to play this character, and then someone backstabs you in scene four. Or, in your case, you got into a rut because you made a decision in the first scene or two and you're like, "Shit. I really screwed up. I needed to turn this boat around immediately." That's a dopamine hit. And it may not be a positive one, but it was an unexpected one. You're not going to forget how you got out of that hump and caught up.
A lot of it is kind of negative, but it's also much more realistic to a competitive market.
Laurence Pevsner:
One of the books the CEO of Osmo, a portfolio company, gave to us was a theory of fun by Raph Koster, a game designer. He argues that the losers tend to learn a lot more than the winners. If you just win, then you're like, "I'm so great, I don't need to learn anything." But if you lose, then that's where the real learning comes in. And that's the whole point of a game simulation environment; this is a place where it's okay to lose. It's okay to be wrong, and you're going to learn from it.
One of his other points is about, in game designer terms, called the skin of a game. What's the story around the game versus the actual function and design and rules? There's a lot of debate in game design about whether the skin matters. But he suggests imagining a game where there's a well, and you, as the player, are trying to fit different sized people into the well. They're bodies, essentially, and you're trying to just make a perfectly neat stack in the well.
It’s a horrific concept, right? You're basically imagining a concentration camp burial or something. But it's also, from a game design perspective, Tetris. And this is one of these things where the skin matters so much. The emotional valence of playing Tetris would be completely different with that sort of skin on top of it.
Nick Smith:
Well, and it's also interesting thinking about the difference between the rule-bound nature of a game and the unbounded nature of play. We often think of games as, well, you play a game. But the reality is that play is a free-form activity that children do without rules or where making up the rules is part of the play. That is slightly different from a game like chess, where the rules are very strongly set.
As you guys are bringing up books, David Graeber's Utopia of Rules has some really interesting reflections on this dynamic, this relationship between relationship rules and play. And he makes an argument that, on the one hand, play is beautifully freeing. But play also has a kind of terrifying quality that leads us to want the rules.
So for example, imagine existing in a world of playful gods. There would be no worse! There'd be no worse world than having a playful god sitting over top of us, precisely because it would be such a god who'd be completely unfettered.
As I was finishing up his book in the last couple of weeks, it made me think about the way in which Ian, your game designer, would bring in these random events at the end of every turn in the EV game. He was a kind of godlike figure who was playing around with us, announcing out of the blue news that would fundamentally reshape the conditions under which we were playing.
And frankly, it had that kind of terrifying god-like quality to it. Every time, he would say, "All right, new news." And honestly, I would shrink in my chair.
Danny Crichton:
As a side note, my favorite part about Utopia of Rules is the post office. I had no idea that in the 1800s, the federal government was essentially the post office. Something like 75, 80% of all federal jobs were the post office masters of all these small cities all across America. If you think about it, it makes sense. The post is the only way to get information from the West Coast to the East Coast. But I was blown away by that.
But I think you're getting at something Kelly was also getting at with her book, which is why do we care about games and chance and gods? She has multiple chapters on that as well. You are in this world that is unstructured, things happen randomly, you're grasping for some sort of metaphor for, what is happening to me? Why did I have all this bad luck?
We, as story creators, are always looking for a way to understand what's happening to us. Chance, probability, dice rolls — those are metaphors for saying, look, every day, sometimes you win, sometimes you lose.
Nick Smith:
Totally. The language of chance is itself a story we tell ourselves about the structure of the market. So, to build on both your points about narrative, part of what I told myself about these cards is, this is really bad luck. But, as you've since explained to me, those were loaded dice. I was assuming that they were fair dice, in part because I had an opaque view of what the structure of the game was. The narrative of bad luck helped me get through it, but it also, in its own way, has the potential to deceive multiple decisions.
Danny Crichton:
I think if you look at the political science literature and the philosophy literature, there's been a growing subfield of “luck studies,” if you will, of people who get lucky in their careers. One of the counterpoints to, say, meritocracy is, well, some people get lucky early on for whatever reason, they have a network effect that grows very early, and without that, they would never have succeeded. There's so much stochastic calculus going on in everyone's lives that you have to have systems to undo that or level the playing field.
I have not seen as much about luck in the international relations field, despite the fact that it feels like luck plays even a larger role there, just given the complexity of the international system. Think of classic chaos theory. It seems like luck emerges from that system much more than even domestic politics.
Nick Smith:
I think the term of art would be contingency. Contingency is certainly something IR theorists have thought an awful lot about. One of my favorite books on this is a book by Christopher Clark on the origins of World War I', called The Sleepwalkers.
One of the things that he argues quite explicitly is, look, you cannot understand the origins of a gigantic event like World War I without understanding both the contingent structure of events and the ways in which people at the time were telling stories about what caused those events. As an example of this, he's got this extraordinary chapter on the assassination of Archduke Franz Ferdinand. Which, I have to admit, prior to reading Clark's book, I didn't realize what a complicated event the actual assassination was.
Ultimately, somebody shoots the Archduke, but instead of going to the hospital he gives a speech. It's amazing. He basically says, "I come here to visit you, people, and this is how you repay me, by shooting at me while injured?" I mean, it's kind of unbelievable. And then, of course, he dies. And talk about contingency. It is bad luck on a certain level, but it's also just a really bad decision to not go to the hospital.
But in the wider world of Europe at the time, this guy's bad contingent decisions very quickly, gets narrativized in this nationalistic framework that Austro-Hungarians, et cetera, have to defend their empire.
To think back to the structure of the game, it's amazing how quickly people come to adopt narrative roles. Like me as Patty, I very quickly decided, "all right. I'm going to be a mover and shaker here." And again, that's a really great part of the learning, is that the emotion drives outcomes.
Danny Crichton:
Well, on that positive note, Nick, thank you so much for joining us.
Nick Smith:
All right. Thank you, guys. Really appreciate it. Thanks so much for having me at the game, and thanks for having me here today. Really, really a pleasure.