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Archive for the ‘Economics’ Category

Economic transcendence and the singularity

The singularity is the time in the future when computer intelligence becomes more capable than human intelligence. By definition, this means that computers would be able to do any work that humans normally do, and robots powered by singularity-level computing power would make human labor superfluous and there would be an infinite amount of goods and services for humans to consume (because robot would build more robots), limited only by the planet’s available resources.

However, economic transcendence could also happen before the singularity happens. Computer automation could still make most human jobs unnecessary even if the computers aren’t more intelligent than humans. For example, self-driving cars will put the 3 million people (1% of the population) who work as drivers out of work, even though the self-driving cars themselves aren’t as smart as humans.

Written by Lion of the Blogosphere

December 12, 2017 at 10:25 AM

The coming economic transcendence

True economic transcendence will happen when robots can do almost any human job plus manufacture other robots. At that point, the amount of things we can produce is only limited by the earth’s existing resources and not human labor.

We are not there yet, but there is clear evidence we are in the transition period between scarcity and economic transcendence.

From a 2009 NY Times article:

With paying jobs so hard to get in this weak market, a lot of college graduates would gladly settle for a nonpaying internship. But even then, they are competing with laid-off employees with far more experience.

So growing numbers of new graduates — or, more often, their parents — are paying thousands of dollars to services that help them land internships.

Call these unpaid internships that you pay for.

Then in 2013, David Brooks wrote, completely unironically:

Thanks to the labor of low-skill immigrants, the cost of food, homes and child care comes down, living standards rise and more women can afford to work outside the home.

The point of the above quote is that now, working is something people do if they can afford it, instead of the older viewpoint that working is something people do because they haven’t inherited enough money to live a life of leisure.

In 2014, an influential Atlantic article recommended that to make yourself happier you should “buy experiences, not things.” Apparently, things have become so commonplace and cheap, there is no longer any joy in buying more of them. At least not for the kind of elite person who reads the Atlantic.

Can you imagine any of these things being written a century ago? Not a chance.

Yet economics hasn’t changed at all during the last hundred years. “Economics is sometimes called the study of scarcity because economic activity would not exist if scarcity did not force people to make choices.” We need a whole new field of study to deal with the modern economy where there is only an illusion of scarcity because of cost disease and the dominance of positional goods.

Written by Lion of the Blogosphere

December 9, 2017 at 6:04 PM

Posted in Economics

Secret to success in the arts

https://lareviewofbooks.org/article/the-secret-recipe-for-success-in-the-arts/#!

The woman who wrote this article (and a previous article) has some valuable observations that most people are unaware of (although people who read this blog will not be surprised).

If you meet someone who appears to be “successful” in an artistic field, it’s probably because they have rich parents, or a spouse who makes enough money that they don’t mind that their marriage partner isn’t contributing anything economically to the marriage.

A college degree in art is a pretty crappy deal. After spending $150,000 to $250,000 to get a degree, you wind up making $25,000/year as an artist, if you are lucky.

So in conclusion, does the author recommend that people major in something practical like computer programming or HVAC? Nope, instead she demands that society change its ways so that people who don’t have rich parents can still have a career as artists:

• universal healthcare;
• universal care for children, seniors, and those with special needs;
• free education and vocational programs for all, from preschool through graduate school;
• affordable housing for all;
• redistribution of wealth through taxation, reparations, and universal basic incomes;

Back when I was a libertarian, I would have been outraged. But now that I realize that robots are replacing human workers, and we have a post-scarcity economy, so I just have minor nitpicks. Such as:

Affordable housing: Housing is very affordable if you want to live in a mobile home on the outskirts of a prole city in flyover country. But because there’s a zero sum game of people wanting to live in the most desirable neighborhoods (including artsy neighborhoods like Chelsea or Williamsburg if we are talking about the NYC area), those neighborhoods are never going to be affordable. Someone should establish a mobile home coop for artists in a place like Reno, Nevada.

But since a basic income and free college is definitely not going to happen during the next decade, it would be good advice for young people whose parents aren’t rich to not spend a lot of money for college and to major in something practical. Someone needs to say “sorry, if your parents aren’t rich, then you can’t do something cool and fun with your life.”

Written by Lion of the Blogosphere

December 8, 2017 at 3:46 PM

Make bad neighborhoods better

To follow-up on my post explaining that living in a “good” neighborhood is a positional good. In the previous post, we learned that no amounts of tax cuts or economic growth will make a “good” neighborhood more affordable, because only so many people can afford to live the “good” neighborhoods.

Thus, the best thing to do to improve people’s lives is to forget about tax cuts and economic growth, and instead focus on how to make poor neighborhoods more palatable.

The first thing we need to do is to make poor people behave better so it’s not as bad to live next to them. As red-pilled HBD believers, we understand that the majority of poor people are genetically inferior to their betters on important attributes like intelligence, future-time-orientation, and natural inclination towards peaceful cooperative behavior. But that doesn’t mean that that there is nothing to be done. There has been a massive increase in crime since the 1950s, and that’s because society became more permissive. Society used to understand that poor people lacked the self-control and future-time-orientation of rich people, and thus poor people were kept on a tighter leash, encouraged to believe in religion that set them on the straight and narrow, policed by policemen who had a no-nonsense approach to policing, who could dish out an extrajudicial beating when it was called for.

The second thing we need to do is make schools safe for smarter and better behaved children. This means the smarter and better behaved children are separated from the other children. And the worst-behaved children need to be expelled from regular schools and confined to schools specifically for delinquents.

This is what conservatives should be pushing for to improve the lives of Americans, not tax cuts for the top 1%.

* * *

The point of the schools paragraph is that people believe they need to pay out the wazoo to live in “better” neighborhoods for the sake of their children’s schooling, which really means a school safe from ghetto kids.

But right now, this is pie in the sky, because liberals are opposed to making schools better for the smart and well-behaved kids, they believe it’s RACIST to do that (while sending their own kids to private schools).

Written by Lion of the Blogosphere

December 1, 2017 at 9:48 AM

Posted in Economics

Neither a borrower nor a lender be

In Hamlet, Polonius counsels his son:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

“Husbandry” means the management and conservation of resources in general, not the more common modern usage specifically meaning the care, cultivation and breeding of crops. So Polonius means that borrowing harms your ability to take care of your money and property in a prudent manner such that you never fall into the trap of needing to borrow in the first place.

Those who believe in libertarian economics believe that humans are hyper-rational consumers who only spend money after careful consideration that the spending of it increases their utility by an amount greater than what is spent.

But society has always known that the libertarian belief is false. 400 years ago, Polonius knew that his son needed to be trained to have higher future-time orientation, otherwise he’d spend all of his money on hookers and booze and useless trinkets and have nothing left for his future married life. So don’t borrow money you don’t have, and don’t lend money to your friend because that just enables your friend to behave in an imprudent spendthrift manner and furthermore you might not get paid back and may lose a friend trying to get paid back.

Polonius’ advice is badly needed by American proles. According to Google, 40% of Americans have credit card debt, and the average amount of debt is scarily high.

This is where the government should step in. When people act against their own interests, and they lack a wise father like Polonius to set them straight (and the percent of people who even have a father who was married to their mother and helped raise them is shrinking every year), for the good of society the government should step in and prevent people from making bad decisions.

But aided and abetted by Republicans, the government has been doing the opposite by enabling student loans for bogus for-profit colleges. Also, there used to be usury laws to prevent people from being ripped off too badly by unscrupulous lenders, but libertarian types are against those laws because they “interfere with the free market.”

Written by Lion of the Blogosphere

November 30, 2017 at 1:17 PM

Posted in Economics

The positional good of living in a good neighborhood

An unknown commenter writes:

The “nice neighborhoods” with “good schools” are becoming prohibitively expensive for many people, and it’s only going to get worse.

As I’ve stated many times before (and I think Steve Sailer said it first), the worst part about being poor (in modern-day America) is that you are forced to live in the same neighborhood as other poor people, and send your kids to schools full of other poor kids.

Living in a good neighborhood is a positional good. Wikipedia defines a positional good:

Positional goods are goods valued only by how they are distributed among the population, not by how many goods there are in total. For example, getting a college degree is useful in the job market because it helps the new graduate, yet slightly worsens the situation for all others holding that degree as it increases competition from that graduate. That is, the total benefit from all instances of a positional good is zero-sum, neither increasing nor decreasing.

Our value-transference economy is based primarily on positional goods, but too many are still stuck in 19th century economic thinking. “Economic growth” and tax cuts are of no benefit to people who can’t afford to move to “good” neighborhoods, such things just increases everyone’s nominal wealth and the cost of the “good” neighborhood goes up proportionally and remains just as unaffordable as it was before.

* * *

In fact, I would say that the cost of desirable positional goods have been increasing faster than the rate of inflation and faster than the rate of growth of the median person’s income. This is a consequence of the top 1% (and other topmost percents) getting a larger share of the wealth, which they then use to buy up the best positional goods for not only themselves, but also for their children.

Republican tax cuts for the top 1% will only make things WORSE (except for those already in the top 1% or who have parents in the top 1% who give them financial support).

Written by Lion of the Blogosphere

November 29, 2017 at 11:54 AM

Posted in Economics

Something I once wrote about Microsoft

Microsoft dominates software, but it’s hard to see what value Microsoft actually created. The company only exists because IBM made a really dumb decision to give Microsoft ownership of the operating system instead of developing it in-house or with consultants who signed contracts giving all intellectual property rights to IBM. This is not a mistake that any big company will ever make again, I guarantee you that.

Nearly everything Microsoft sells has been copied or purchased from other business entities. The idea for Windows was copied from Apple and Xerox. Excel was copied from Lotus which was copied from Visicalc. Microsoft is able to dominate all application software because they dominate the operating system, and Microsoft dominates the operating system because Microsoft was first, and Microsoft was first because IBM was stupid and because Bill Gates’ mother knew some top executives at IBM. If anything, Microsoft has actually destroyed value by using its dominant marketing position to make its own software the standard, even though a lot of their software sucked in comparison to their competitors. I call this value creation suppression.

Written by Lion of the Blogosphere

November 22, 2017 at 2:53 PM

Posted in Economics, Technology

No one can earn 50 million dollars honestly

William Jennings Bryan allegedly said “No one can earn a million dollars honestly.” (I was unable to discover when, exactly, he said it and in what context.)

That quote needs to be seriously updated for inflation and overall increase in wages since the time when he was alive. So let’s call it 50 million dollars.

I agree in the sense that the only way to earn that much money is through value transference rather than by the more honest value creation. Also, I think it’s rather rare that someone could earn so much wealth while playing by all the rules or by being a nice guy.

Which is why I support higher taxes on the rich, it’s just taking away money they aren’t morally entitled to in the first place.

William Jennings Bryan, a Nebraskan, represented the America of Trump supporters: economically struggling whites. Back then, blacks voted Republican. Trump has disappointed those who hoped he would be like a William Jennings Bryan. He’s pushing through standard Republican tax-breaks-for-the-rich legislation.

Steve Bannon, on the other hand, is a true populist.

Written by Lion of the Blogosphere

October 9, 2017 at 9:20 AM

Posted in Economics

The Jones Act

I think the Jones Act is very unfair to Puerto Rico, Hawaii, Alaska, and any other U.S. territories affected by it.

* * *

Because of the Jones Act, a non-U.S.-flagged ship (which is pretty much all ships) leaving Florida can stop and deliver goods to every island in the Caribbean EXCEPT for Puerto Rico.

A ship returning from California to Asia cannot stop at Hawaii and deliver stuff there.

It’s unfair to PR and HI.

I’m in favor of protecting American workers, we should do that by reducing immigration.

* * *

Of course, the downside of eliminating the Jones Act would be a complete end to U.S. ship building and the U.S. Merchant Marine.

* * *

It should be noted that Trump’s temporary waiver of the Jones Act for hurricane relief is a matter of optics, because according to CNN, there’s already a massive amount of relief aid stuck at the ports in San Juan because there’s no logistics infrastructure to deliver it anywhere.

But why not do it? It makes Trump look like he cares.

Written by Lion of the Blogosphere

September 28, 2017 at 9:12 AM

Posted in Economics

Four types of human capital

Human capital is what enables a person to make money in our capitalist economy.

Human capital can be divided into four categories:

(1) Biological capital
(2) Knowledge capital
(3) Track record capital
(4) Social capital

Biological capital includes your innate biological characteristics such as intelligence, sex, age, and health. Biological capital is the only one of the four types of capital which decreases with age. Not only does intelligence decrease with age (after it peaks in your twenties), but your entire body eventually wears out and dies.

Knowledge capital is everything you’ve learned. Most practical learning which leads to higher income occurs on the job and not through formal education (as evidenced by the relatively low wages paid to college graduates with no real-world experience). So in order to acquire knowledge capital, you need someone to hire you, and that requires track record capital and social capital (see below).

Track record capital is your track record of accomplishments, including your education (credential capital). It’s correlated with your knowledge capital and biological capital, but it’s far from a perfect correlation.

Social capital is your acquired social influence. It’s who you know.
The former two types of capital, biological capital and knowledge capital, are positive-sum capital. This capital adds to the world’s economy.

The latter two types of capital, track record capital and social capital, are zero-sum capital. This capital enables you to transfer wealth from other people to yourself, but it doesn’t create value.

If someone earns a massively huge salary (a CEO for example), it’s probably because he possesses a great amount of zero-sum capital.

* * *

The above post is something I wrote in the past, slightly edited.

* * *

Peterike wrote in a comment:

A big part of biological capital are things like aggressiveness and ambition. I’m a pretty smart guy — despite all evidence on this blog — but my aggression level is very small and my ambition even less. I’ve done ok financially, but could have done a lot better had I had more aggression and drive. Basically, I’m a lazy person who prefers my leisure pursuits over spending the extra hours and energy needed to push up the corporate ladder.

There are also things like ethics and morality that can stand in your way. Having a cutthroat attitude surely helps, and is virtually required if you want to reach into the C-level suite in corporate America. Also, things like loyalty — which is to say, the lack of it. Were I the CEO of a vast corporation, I would never outsource any work or hire H-1Bs because it’s disloyal to my nation and my people. I would share profits with the workforce rather than spending billions on stock buybacks. And of course that’s why I would never make it to be a CEO, or last more than a week if somehow I got there.

So personality traits are a very important part of the biological profile you are given. Intelligence is required for success (outside of sports/entertainment), but not nearly enough.

Inheritable personality factors is something I overlooked.

There are positive-sum personality factors like conscientiousness and not being lazy (which are related).

And there are zero-sum personality factors like extroversion or the right amount of psychopathy which are good for making money in America but don’t benefit society as a whole.

Ambition could be a good thing or a bad thing from a zero-sum vs positive-sum perspective. Ambition is probably correlated with extroversion.

Written by Lion of the Blogosphere

September 11, 2017 at 9:49 AM

Posted in Economics

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