Martin Ford -- who joined us on FastForward Radio not long ago -- directs us to this story about HP planning to cut 9000 jobs via automation. This development looks like more support for Martin's thesis, outlined in his book The Lights in the Tunnel, that automation is advancing at a rate that makes the displacement of most human beings from the workforce inevitable (and sooner than you would think.)

It's a thesis that I'm philosophically disinclined to agree with, but I found Martin's arguments more persuasive than I expected. If you're interested in reading the book and judging for yourself, it is now available for free download.

Posted by Phil Bowermaster at 8:58 PM | Permalink | Comments (0)

An interesting tidbit from the Wall Street Journal last week:

The Government Pay Boom

America's most privileged class are public union workers.

It turns out there really is growing inequality in America. It's the 45% premium in pay and benefits that government workers receive over the poor saps who create wealth in the private economy.

And the gap is growing. According to the U.S. Bureau of Labor Statistics (BLS), from 1998 to 2008 public employee compensation grew by 28.6%, compared with 19.3% for private workers. In the recession year of 2009, with almost no inflation and record budget deficits, more than half the states awarded pay raises to their employees. Even as deficits in state capitals widen and are forcing cuts in services, few politicians are willing to eliminate these pay inequities that enrich the few who wield political power.

Now, I know there are some conventional explanations for why this might be happening, but let's leave those aside for a moment. (We'll come back to them, I promise.) Let's hypothesize a thoroughly unconventional explanation.

For example, what if public payrolls are going up in response to a dying private sector job market?

Wow, I can actually feel the knees jerking from here.

WHAT? The private sector job market can't die. It can be damaged by government meddling / greedy globalizing corporations (take your pick) but ultimately it's a constant. There can be no economy without a private-sector job market, therefore we will always have one

Okay, sure. Leaving that logic alone and assuming that we will always have a private job market, is there any guarantee as to what size it will be? Is there any reason to think that it might shrink in size? We have to consider what is implied by all this talk about a jobless recovery. (If you have an hour to spare, this particular gloom fest is pretty eye-opening.) We are currently looking at about 10% unemployment; we know that that figure is actually low, because it doesn't include all those who have given up looking altogether; and of the folks who actually do have jobs, 1 in 5 claim to be underemployed.

So what do we mean by a jobless recovery? We mean that the economy begins growing again, but we have no new jobs. (The recent upward turn is encouraging, but still roughly 8 million jobs shy of getting us back to where we were 2-3 years ago -- and btw, a lot of what was created are temporary government jobs.) From a strict standpoint of efficiency, a jobless recovery is the best way to go. Look at it from the standpoint of an individual business: supposing you realize your business can achieve the same revenue with a headcount of 90 or a headcount of 100. Which would you do? If you say you would go with the headcount of 100 because you're so nice, you better hope your competitors are equally nice. But even if they are, the overall economy is not nice -- it's a heartless bastard.

The efficiencies that can allow a company to get by with 10% fewer staff or an economy to get by with a 10% smaller employment base are many -- better management practices, longer work hours, more highly motivated or better trained staff. But the big one has got to be automation. Historically, automation boosts productivity and reduces the need for human workers. Over the past four decades, our economy has made a massive shift to a highly automated, digitized substrate. As recently as a decade and a half or so ago, economists were still scratching their heads over when the big productivity gains would emerge from this shift. Then about five or six years ago, those productivity numbers started showing up. Some of us took this to be unambiguously good news. And, in fact, I still think it's excellent news. But it may have something to say about the future of employment, and the need for our thinking around employment to change.

One of the models for our future economy that we've bandied about on this site over the years is what John Smart calls "taxing the machines." The idea is that once virtually all economically productive work is taken over by automation, government is funded directly by the remaining productive entities and becomes the distribution channel by which the public gets paid, jobs having all been swallowed up by the machines. This is more or less the scenario that Martin Ford laid out for us our interview with him a few weeks ago.

In Ford's model, the whole notion of "employment" as we have known it disappears.

Now, this idea strikes most of us as being fairly radical. And there are alternatives. One would be to provide massive incentives for businesses to create jobs even though they don't really need people working for them. In other words, ask the private sector to create non-productive jobs. Another alternative is to have the government provide the payouts, but only in the form of wages. In other words, ask the government to create non-productive jobs. This could be one area --the creation of non-productive jobs -- where the government has an advantage over the private sector. After all, they've been excelling at that for decades.

And, in fact, it's possible that the rise in public sector wages noted above reflects the early stages of this kind of shift -- although the creation of more jobs, rather than higher-paying jobs, would be a stronger indicator.

Unfortunately, our current mainstream political and economic ideologies have no room for dealing with this kind of possibility. It's not part of anybody's template. If we observe that public employee wages are going up, the responses will fall along the following lines:

The Libertarian / Conservative take: This is a shocking example of statists feathering their nests. All these excessive public salaries show the undue influence of public worker's unions and reflect nothing more than waste -- which diminishes or even prevents more productive economic activity.

The Liberal / Progressive take: What you see here is a necessary rationalization of the labor market. Public service positions often have higher value than private-sector jobs and therefore should demand higher pay. As an added bonus, these higher salaries help to offset the absurdly high salaries that CEOs and other corporate execs make!

Neither group is likely to see what's happening as a defensive measure against a shrinking private sector job base, even if that is part of the actual explanation. Such an observation doesn't support anyone's main line of argument. It isn't part of anyone's template.

So the problem is that -- whomever you happen to agree with -- if jobs are inherently disappearing, it might not matter all that much who wins out. The left can continue to be in charge and carry on with various stimuli and programs that create more public sector jobs, or the right can take over and start to slash taxes and spending. Whatever changes they bring about will be only temporary if the underlying reality is that going forward, whether the economy grows, shrinks, or stays the same, the number of private sector jobs is going to drop -- especially if that reality is nowhere on either group's radar.

Most of us would prefer to believe that what's really happening is a shift in what we mean by "productive," and that human beings will continue to have something to offer to the private sector both in the short term and the longer term. I certainly hope so. But hope, as it has been pointed out in recent years, is not a strategy. And if automation is going to come closer and closer to achieving human-level performance (intellectually as well as physically) we need to be ready to do some serious rethinking of how our economy works.

And we might, might, just need some new templates.

Posted by Phil Bowermaster at 8:39 PM | Permalink | Comments (48)

Here's a charmer of a quote from the comments section of the article I linked the other day about how a new catalyst enables highly efficient production of hydrogen from water:

Ok why do under developed nations even need power honestly? Can't they just stay under-developed forever?

I'd like to think this is a joke. Unfortunately, even if it is a joke, it reflects a belief that is held in all seriousness by far too many people: to wit, that there is a case to be made for depriving less developed societies of economic and technological development. The argument begins with the assumption that such development is inherently harmful to the planet. We can't even afford for the developed world to continue to be developed, the thinking goes. We certainly don't need any more societies joining our matricidal ranks, toxifying the planet, contributing to mass extinctions, and paving the way for some final, cataclysmic end.

A supporting set of assumptions derive from a highly romanticized view of primitive cultures. Some 18th-century romantic primitivists touted the idea of the Noble Savage, which held that people living in a "state of nature" are not only happier than, but morally superior to, their civilized brethren. And this idea is with us even today. While the phrase "Noble Savage" doesn't get too much play these days, there are apparently no shortage of individuals who do not doubt for a second the veracity of the scenes depicted on their souvenir Avatar beverage cups from Burger King.

This Noble Savage argument is a sop to the first argument. Since we know that economic and technological development represent nothing but bad news for the planet, and since we know that primitive peoples are healthier, happier, more attractive, and nicer than we are, it woud be wrong even to think about subjecting primitive people to our way of life -- even if they think they want it. After all, we know better than they do -- they're a bunch of primitives! (Conveniently, the certitude that they are wiser than we are extends to virtually every subject except this one.)

All right, so let's deal with these arguments.

1. Economic and technological development cause massive damage to the planet and their proliferation will only cause more damage.

Well, yes and no. There is no question that, historically, human success has come at the expense of many other members of the ecosystem. We've done a lot of damage. But that isn't the whole story. Dirty technologies have enbabled the development of cleaner technologies. Unsustainable practices have set the stage for sustainable ones. In a very real sense, it is human success which has empowered the environmental movement.For the first time in the history of the planet, members of one species are taking steps to prevent the extinction of other species, looking for ways to mitigate and repair damage to the environment, and even talking about one day bringing other species back from extinction.

These astounding trends are the result of economic and technological development. Non-developed cultures may "live in harmony" with nature, but they don't attempt any of this proactive stuff.

2. Primitive cultures are better off staying primitive.

We'll leave the assumed moral superiority of primitive cutlures alone. I don't believe that it is a given (far from it), but let's take it as a given that primitive cultures are as nice as (or maybe even a liitle nicer than) developed ones. The part of the argument I want to deal with is the part that says that the material well being of people who live in such cultures is as good as or better than what we enjoy.

Anyone who truly believes this to be the case ought to put on a loincloth and move into a grass hut on a riverbank somewhere. Live the rest of your life -- or even a few months -- without the benefits of modern food production, sanitation, health care, shelter, clothing, communications, and entertainnment...and then come back and tell the rest of us how much better it is. If you really believe it is better, good for you. Back to the hut with you, and thanks for doing your part to help fix the planet.

But if you don't think it's better, and in fact you find such a life to be harsh beyond description and not something you want to endure yourself, then please refrain from glibly subjecting other people to it.

Fair?

Posted by Phil Bowermaster at 6:52 AM | Permalink | Comments (5)

In a comment on our recent discussion about energy, Harvey notes that "the free market is a myth."

This is, of course, absolutely correct.

The free market is a myth in the same way that freedom of speech is a myth and that freedom of religion is a myth. Ideally, anyone can say anything he or she wants. In reality, it's better to avoid committing libel or shouting "fire!" in a crowded theater. Ideally, there would be no interference, government or otherwise, in one's spiritual beliefs or the practices derived from them. In reality, religious practices can't be used as an excuse to exploit or endanger others, or to deprive them of their freedom.

Perfect freedom of speech is likely to remain beyond our grasp, but the ideal of "freedom of speech" is a good thing even if it is a myth. It reminds us that speech should be as free as we can get it. The same is true,for religion and -- I believe -- for markets.

Look at what happens when markets are made more free. Apple has demonstrated this very well over the past couple of years by turning the business model for mobile telephone applications on its head. Before the iPhone came along, mobile apps were a highly protected "walled garden." The carriers and and the equipment manufacturers didn't want anybody but them to play with their sandbox toys.

Apple changed all that. If you want to build an app for the iPhone, you just need to follow their standards. The doors have been flung open wide, and to what result? An explosion of creativity, and an explosion of new business. And not just for Apple. The app developers benefit by being able to profit from their work, and the consumers benefit by having a device whose value is (potentially) increased with each new app downloaded -- if not each new app developed.

But of course, it isn't really a "free market." It's just a lot more free than what existed before -- which is great. But Apple is still setting those standards and deciding who can or can't develop an application run on their platform.

So we might talk about an idealized, mythical free market that is completely unconstrained, but there's a limit to how free you can get. The reality is that markets have to be regulated and that businesses often seek to protect their interests, not only through direct competition in the marketplace, but also by leveraging social and government pressures.

To address the question of energy, we've had no new nuclear power plants built in the US for some decades now. Who prevented that from happening? Well, the people, of course, especially environmentalists. And the government.

Anyone else?

Okay, you can call me overly suspicious, but I can't help but imagine that the oil companies might have played a role. New players have a hard time competing in a "free market" when established players take steps to make sure that the market isn't really all that free.

Another example: the vast majority of the money that has been pumped into biofuels in this country has gone towards corn-based ethanol -- only attaching multiple hamster wheels to our vehicle's drive trains and trying to get the little rascals to spin in unison would be less practical approach. The farm lobby has worked tirelessly to get the government behind this non-free-market (and ultimately not workable) approach.

We need to see an alternative energy market which is as dynamic and creative as the iPhone app market. Of course, the former would work on a time scale, and be supported by a group of players, several orders of magnitude slower and smaller than the latter. But the result would be the same -- a big boost in business for the alternative fuel players and a rich new set of choices for the consumers.

How do we create a more level playing field to make that possible? I don't know. But it's possible that the government might have a role to play. The iPhone app success story is a great tribute to the free market, as are so many stories of huge business success built on the Internet. But as Stephen reminded us last week, the Internet itself was not a product of the free market. It was a government project.

There are any number of ways the government might help: research initiatives, tax incentives, push prizes. Or maybe they could simply enforce reasonable regulation on new businesses and industries, while allowing the ultimate economic good of our country -- rather than pressure tactics from lobbyists -- determine which new technologies are introduced and in what time frame.

But now, I guess I'm just dreaming, eh?

Posted by Phil Bowermaster at 9:54 PM | Permalink | Comments (12)

Military Historian Carl von Clausewitz famously asserted that warfare is politics by other means. This formula frequently gets turned on its head, and we hear (or read) that politics is warfare by other means. Both phrasings are accurate; any number of examples of each come to mind. For instance, the American Civil War originated as a series of political disputes between the Federal government and a number of southern (slave-holding) states. These states implemented a political solution to the problem -- secession from the Union. When the Union found that solution not to their liking, they pursued politics by other means. More recently, from the end of World War II until the late 1980's, the United States and the Soviet Union were locked in a struggle for world dominance which took many forms, including armed conflicts, although obviously none in which the two powers were directly at war with each other. Lacking the desire to engage in a full-scale direct nuclear confrontation, the US and the USSR duked it out in myriad local elections, trade disputes, border disputes, propaganda initiatives, etc. It was a war that was fought largely by other means.

We can hope that, over time, the trend is away from Clausewitz' formulation: that the world is becoming less amenable to warfare as a solution to problems and increasingly insistent that we find other means to solve them. All things being equal, a political solution to a problem is preferred to having to go to war. I'm going to treat that as an axiom -- yes, it will depend on whether the political solution is really the same (or an acceptable) "solution" and might also have to do with the time frame in which it is rolled out. But assuming we're talking about two different ways of getting to approximately the same outcome, the one that doesn't require a bunch of people be killed along the way is better. (I think you would have to be a Spartan or a Klingon or something to argue with that.)

However, because politics has a distinct moral advantage over warfare, and because the two are often presented as a dichotomy, politics gets credited as the "good way" that human beings solve problems. And, again -- in the context of that dichotomy -- it is. But there may be more to the story than that. Just as there are many different kinds of problems that human beings attempt to solve, there are many different strategies for solving them -- not just those two.

In fact, one of the most effective problem-solving strategies may be to engage in activity other than problem-solving. As I have written previously in my description of the Human Imperative -- the long-term effort of humanity to improve the world -- we as a species seem to be all about making incremental improvements to the world. Some of these have to do with solving specific problems and some have to do simply with a desire to make things better. To quote myself:

Throughout human history, we have carried out the Human Imperative using two basic strategies:

1. Solving problems / mitigating risks

2. Achieving the good / increasing benefits

The first strategy has always taken priority, as the primary ongoing problem we have had to solve is how to achieve our survival (or prevent our extinction.) But we now stand on the threshold of a new era in human history. Improvements and potential improvements are increasing exponentially; we are moving rapidly towards a critical mass of human intelligence and capability. Our achievable future is one that transcends the expectations, hopes, or even dreams of most of humanity.

We can achieve that future only by recognizing that we are at a transitional point in carrying out the Human Imperative. We must transform our thinking about the future and, for the first time, change the order of our priorities. While survival remains our top priority, we must recognize that focusing on problems and risks is no longer our optimal strategy for achieving our survival. Our survival lies within the realization of our achievable good.

Of course one can argue that political efforts can be and have been put in place around proactively achieving net new good outcomes rather than solving known problems. I suppose it's possible that even war has been waged with this in mind, although I can't think of any examples. But more often than not, efforts to achieve wholly new good outcomes arise parallel to the political process rather than as part of it. Such efforts often involve innovative approaches to what are otherwise thought of as well-known and well-defined fields of endeavor. The innovation is often, but not always, technological in nature.

A terrific example of this kind of innovation is found in the work of Dr. Norman Borlaug, who died on Saturday at the age of 95. Borlaug has been described (by persons not otherwise given over to hyperbole) as the "greatest human being who ever lived." He is more widely, and somewhat more modestly, acclaimed as the man who saved a billion lives:

Dr. Borlaug has spent his life staving off world hunger. In a sense, the fact that people have become so complacent about having a plentiful food supply is itself a testament to his accomplishment — revolutionizing the production of basic foodstuffs, and in the process proving wrong better-known scientists such as Dr. Paul Ehrlich, who argued that starvation would inevitably increase as population did.

Borlaug is responsible for developing, and working to achieve, worldwide implementation of new agricultural techniques that massively increase crop yields for wheat and rice. That business about "saving a billion lives" is no exaggeration.

Now one might argue that, since he worked closely with the governments of Mexico, India, Pakistan, and numerous African countries in bringing about these benefits, Borlaug's work really does represent a political solution to the problem of hunger. And clearly, in some ways, it does. But there is an important difference between what Borlaug did and what would typically be offered up as a government "solution" to hunger.

In defending the idea of politics against those who claim they can do without it, Jamais Cascio recently wrote:

The core of the argument is straightforward: Politics is part of a healthy society -- it's what happens when you have a group of people with differential goals and a persistent relationship. It's not about partisanship, it's about power. And while even small groups have politics (think: supporting or opposing decisions, differing levels of power to achieve goals, deciding how to use limited resources), the more people involved, the more complex the politics. Factions, parties, ideologies and the like are simply ways of organizing politics in a complex social space -- they're symptoms of politics, not causes.

All true, and all good reasons why politics is preferable to war. But just as factions are not causes of politics, innovative ideas are generally not the result of political efforts. The language about "limited resources" is very much to the point. A typical government solution to the problem of global starvation would be all about divvying up and distributing food that already exists. Borlaug's response was that divvying up and distributing are all very nice, but, hey -- what if we just produced a whole lot more food?

Borlaug achieved what politics could not. Or perhaps we should say that in the mid-late 20th century, a billion lives were saved from starvation through politics by other means. And this time, the means used were not warfare, but innovation.

Another great example of this sort of thing can be found in the work of Muhammad Yunus and Grameen Bank, which provides microfinancing to support subsistence businesses in Asia. Since its founding in 1997, Grameen Bank claims to have helped more than 45 million of the world's poorest people -- mostly women and children. The practice of microfinancing which Grameen initiated has now been adopted by many other institutions and is providing financial support to subsistence businesses in Asia, Africa, and Latin America. Few government programs can claim to have done as much good as these microfinancing efforts. Moreover, I would venture to say that there are none which can claim to have done so and broken even financially, whereas -- if I understand it correctly -- Grameen actually makes a profit.

But achieving political aims by other means is about more than just financial efficiency. There is a fairly good case to be made that microfinancing is an effective weapon in the fight against religious extremism:

Today, Professor Yunus's Grameen Bank and copycat organizations have 3.5 million women borrowers; adding their dependents, that amounts to about 20 percent of Bangladesh's population. In the latest elections, held on June 12, 1996, these newly enfranchised flexed their muscle. The Islamic Society, the fundamentalist party antagonistic to the West that wants to keep women at home, lost 14 of its 17 seats in Parliament.

Immediately after the vote, Mr. Yunus began getting angry phone calls from people blaming him for the results. But Mr. Yunus assured them that fundamentalists had only themselves to blame. It was their supporters who burned down microcredit banks, attacked borrowers and condemned microcredit as un- Islamic because it helps women become self-employed.

Every woman borrower I interviewed in Dhaka, Chittagong and Cox's Bazaar had suffered enormously at the hands of fundamentalists. Some were beaten; others were told they would be denied proper Islamic burial; still others that Grameen would sell them into slavery, feed them to tigers, take them out to sea and drown them, or tattoo their arms with a number and secretly turn them into Christians.

Having braved physical and mental abuse and used microcredit to build decent housing, freshwater wells and sanitary toilets for their families - it's not surprising that these women went to the polls and voted against the mullahs.

The exact number of women who voted is not known, but observers across Bangladesh estimated that for the first time, more women voted than men.

Consider the following multiple-choice question:

What is the most effective way to protect the rights of women in Bangladesh?

a) Invade Bangladesh and set up a new government

b) Fund NGOs to educate Bangladeshi women and disseminate information on free elections, human rights, etc.

c) Offer the Bangladeshi government aid in return for picking up the ball on human rights

d) Lend Bangladeshi women small amounts of money so they can start their own business

Answers b) and c) can bee seen as ways of getting the same results as answer a) only by different means. But answer d) achieves those ends by still other means.

Oh, and by the way -- if we're interested in that sort of thing -- it actually works.

I'm not down on politics, but when I look at what innovative thinking and technological development can accomplish, it makes me sad how uninterested most political discourse is in those things. As I observed concerning the health care debate a while back, a little disruptive change might do this world a lot of good.

Posted by Phil Bowermaster at 5:29 AM | Permalink | Comments (2)

Speculist blogger Stephen Gordon has written a very interesting essay on the Atlas Shrugged phenomenon, exploring whether Ayn Rand's novel is, in some sense, coming true in our world today. He decided to publish this piece on a different blog because of the political nature of what he wrote. But, hey, I'm linking to it from here because anything Stephen writes is worth taking the time to read.

As I have noted before, Atlas Shrugged is essentially a science fiction story. It was set in the near future at the time it was written, a world we would now consider a past-future. The plot relies on technologies that didn't exist at the time the book was written -- Reardon metal, recovery of oil from exhausted wells, the torture gizmo the bad guys use on John Galt, etc. Rand also implies that in the future the US government has been restructured, referring repeatedly to a monocameral "national legislature."

However, in Rand's fiction, the story does not arise from technological or historical developments. It is driven by philosophy. So a discussion of whether her novel is being realized in the world today naturally turns into a discussion of political philosophy, which is not Speculist material. It's interesting to note, however, that Stephen describes, in addition to the political / philosophical form, an emergent, economic form of Atlas shrugging that is somewhat orthogonal to Rand's concept. In that model, it is a different Atlas who shrugs.

Likewise, I think there are some other "Atlas Shrugs" scenarios that are well within the realm of the topics we explore here. For example Stephen writes:

Welfare recipients have two barriers between themselves and a better lifestyle. They have the first natural barrier that all people face - they have to find the energy and ambition to work harder, or get an education to work for better money. Recipients also have an artificial barrier – they would lose the largess that is making their lives fairly comfortable. A marginal improvement in their productivity could actually result in a net loss of income. So it would take a significant improvement of their productivity before they'd see any benefit to their lifestyle at all. That's a bigger obstacle to productivity than some people can overcome. So they, quite rationally, work less than they would have otherwise.

Forget the politics of welfare for a moment. What's interesting to me here is the notion that some individuals do better economically when all productive activity is outsourced. Is this a social problem that needs to be remedied or just a sneak preview of the future economic life of all of us?

Over the past couple of centuries, human economic productivity has increased in unprecedented ways, deriving from "outsourcing" of productive labor to machinery. Since the machines have, up to now, mostly needed human beings to operate them, it wasn't always clear that outsourcing was taking place. But the machines keep getting smarter, and working their way further and further up the management ladder.

The digital revolution is only now truly being felt in the productive sectors of the economy. Things get very interesting as the complexity of intelligence embedded into the machinery of production continues to grow. We could be 10-20 years away from the equivalent of a human intelligence falling below Kurzweil's magical $1000 price point. At that point, EVERY activity currently performed by human beings could reasonably be done more cheaply and efficiently by a computer -- assuming that it is possible, legal, ethical, etc. to "buy" that capability for that price.

At that point, Atlas might shrug again, this time when the truly productive sector of the economy excises its least contributing part: humans. You may think these are completely different circumstances, but maybe not. In situation A, producers reject the high cost of doing business brought about by taxation and stop producing for ungrateful consumers. In situation B, producers reject the burden of pretending that the (perhaps perfectly grateful) consumers need to be part of the production cycle at all.

Then what happens? We ALL become welfare recipients? For that to work very well, we might have to outsource the running of government to the machines along with everything else. If that image is too scary -- and it will probably seem a lot more rational when the time comes, seeing as we will have witnessed human-or-greater artificial intelligences in action at that point,rather than trying to imagine having our world be run by some massive IVR system -- consider the alternative in which each of us owns our own outsourced means of production in the form of a universal assembler. Either way, you have the same result -- a world in which none of us has any more motivation to be "productive" than Stephen's welfare recipients.

What do we do then? Take your pick. I'll probably spend a lot of time blogging and podcasting, or rather the future equivalents of those activities. Also, I'll probably do a lot of traveling -- on earth, in space, and in virtual worlds. Later on, if we get tired of amusing ourselves and decide we want to become productive again, we'll have to think about massive cognitive enhancements to enable us to operate at the level of our robot overlords. In a world run by them, true productivity will have to do with increasing knowledge, increasing capability, and creating beauty, and those activities will be occurring at a level that it is impossible for us to imagine in this world.

Most likely, those of us who want to remain productive on those terms will just join up with the machines. It will be the last chapter of the story: Atlas Embraces.

UPDATE: An anonymous reader points out that that last line should really be "Atlas Hugged." Now how did I miss that? Thanks for the new title, reader!

Note: I need hardly mention that if you want to leave a comment about how "liberals" or "wingnuts" or the president or the obstructionist republicans are ruining the world, this is not a blog where we talk about those things. I believe Stephen is accepting comments over at The Last Pragmatist, however.

Posted by Phil Bowermaster at 6:56 AM | Permalink | Comments (11)

Note: Stephen has suggested that the following is a little too long for the show notes for Sunday's show, so I'm presenting it here as a stand-alone entry.

I. The Question

The question is whether accelerating and converging technologies are leading us to a future in which we can all fully understand the world around us, and what kid of transformative effect on the world such an understanding wil provide. HapyCrow gives the example of repairing his own Jeep, and points out that doing the repairs himself it not always the economically effective approach. He then says:

It's a tall order to say that massive social change will happen when we can all work on our cars -- but when we can all comprehend the rest of the physical and political infrastructure around us, and represent them in a way that aids this comprehension, vast social and political change will be upon us. For starters, it will cut the legs out from underneath progressivism's assumption that technocrats need rule on our behalf. While that will discomfit political liberals, it will also provide cold comfort to the other sides of the aisle(s). If poorly-distributed, it could lead to techno-oligarchy (the informed making better decisions), or else it could lead to something radically less hierarchical and more communal.

It's unlikely that it would empower Marx' dream that one could be a fisherman in the morning, a painter in the afternoon, and write operas in the evening...for now, anyway, I suspect that not even brilliant software would make any opera of mine enjoyable. YET.

Let's put aside the question of political infrastructure -- for now -- and just look at the physical infrastructure.

Initial sniff test: Is understanding as big a deal as HC says?

Although I believe that massive increases in individual understanding of the world are on their way, I question the possibility of people achieving a full understanding of the world around us. But before we go there, let's spend some time pondering why it is that we don't already know everything.

II. Why we don't all know everything (a): distribution of knowledge

It is by design that we each don't understand everything about our physical world. If each of us could carry all human knowledge around, the total amount of human knowledge would have to be a tiny subset of what's available.

So each of us understands just a slice. This specialization of knowledge has been going on at least since the hunter-gatherer days. After all, some of us were hunters; some were gatherers. When the total amount of knowledge exceeded what one human being could reasonably carry around -- or even what one human being might reasonably need -- we started distributing knowledge amongst ourselves.

Today, knowledge is massively distributed amongst the population.

Not only do we not work on our own cars, we don't perform our own root canals.

Direct TV sends a guy out to calibrate the satellite dish -- most of us have no idea how to do that.

Many of us have someone do our taxes for us

Just this past weekend I spent $60 getting the sprinkler guy to come out and adjust watering times -- because I couldn't figure out the dials!

Distribution of knowledge is tremendously empowering. If all doctors were required to know everything about treating illness and injury, once again there would be a lot less TO know, and we wouldn't have specialists. No oncologists, pediatricians, endocrinologists, OBGYNs. A century ago, the model for medical practice was much closer to this. Today, we as consumers of health care benefit from the fact that doctors are empowered to specialize in whatever interests them most.

This brings up another interesting point: distribution of knowledge has been -- for the most part -- self-organizing. A more or less free market lets us have a society in which appropriate numbers of people earn how to be auto detailers, beauticians, civil engineers, and astronauts.

Interestingly, the wide distribution of knowledge is a problem for those who emphasize self-reliance and who worry about what to do if civilization hits some kind of reboot. One of HC's commenters says:

I have two advanced degrees, and AT BEST I think I could get me and mine back to the early stone age. I mean, sure, I can use a flint and steel if I've the gear, but I'm not your go-to guy for taking raw iron ore out of the ground. Tanning hides, making felt, and some VERY elementary spinning is about all I'm good for in that department.

Here's my problem with post-apocalyptic survivalist scenarios / fantasies: If things really do fall completely apart to the point that I'm going to have to spin my own yarn, tan my own leather, and freaking smelt my own iron ore, the chances that I personally will be one of the remnant of human survivors trying to set up Farnham's Freehold are close enough to zero that I just don't spend a lot of time worrying about it, much less preparing for it. If the world falls to that point, most of us won't be here well before we get to that point.

Plus, I believe there are strong arguments to made that we probably won't get to that point.

Yes, everyone's house should be well stocked with emergency supplies. But should we all learn how to tan leather so we're ready for the Mad Max world? Count me out.

Sure, he wears leather, but we never see him tanning any.

Continue reading "On Knowing Everything" »

Posted by Phil Bowermaster at 10:02 AM | Permalink | Comments (3)

I was going to respond to a comment from Harvey in the thread from this week's FFR, but quickly came to realize that I was writing more of an essay than a blog comment, so here we are. Harvey writes:

While Moore's Law finds the World Economy, is it a good idea, to put the fate of human lives in the hands of the "free market"?

My gut answer is "yes," but I'm interested in learning about any viable alternatives on the table. I don't believe in letting people starve or go without housing or medical attention, but then I don't know of anyone who does. As I suggested on the podcast a couple of weeks ago, I'd like to see us start approaching these issues from a standpoint of effectiveness, using as close to scientific analysis as possible rather than ideological boilerplate. I believe the evidence indicates that (more or less) free markets are the most effective tool to push us to an economic singularity.

It is estimated that 600 million people have been lifted from poverty in China over the past 25-30 years, resulting from a dramatic move by the Chinese government in the direction of free markets. I can think of no other example where so many lives have been improved so rapidly.

The digital revolution occurred in and has been driven by free economies. If the elimination of poverty requires driving to a new generation of information technology -- one where physical goods are the output of information processing -- then I favor taking the quickest route available. It's not a question of whether we care for the sick, the poor, the homeless. It's a question of getting the most help to the most people in the shortest amount of time.

I'm eager to use whatever approach will do that, irrespective of whether that approach gets labeled "capitalism," "socialism," "progressivism," or "conservatism." I just don't care. I want to do what works. From where I sit -- and as I said, I'm eager to learn about anything else that works -- but from where I sit, free markets are the humane approach.

Posted by Phil Bowermaster at 11:16 PM | Permalink | Comments (17)

[The following is an expanded version of an e-mail I sent to Stephen in response to some reflections he had on our most recent FastForward Radio -- that show with guest Joseph Jackson discussing the possibility of a post-scarcity world. I think Stephen was going to post some additional thoughts, too -- to which I would have added comments -- but time's up!]

My primary issue with Joseph's arguments isn't ideological. In some cases, at least, technology trumps (or drives) political ideology and economic models. We've talked before on the blog and the podcast about how societies suddenly grew a conscience concerning slavery as soon as they had machines that could do the work anyway, or developed a deep reverence for the earth after they had satisfied enough material needs to put it on the priority list. A universal safety net of subsistence living for everyone could arguably work the same way. A generation from now, we might not even see that as "socialism" any more than we view public highways or public education as socialism.

My issue is more practical. By what means could we possibly get to the kind of society he's describing? The assumption seems to be that it would be the federal government (or the Earth government or -- my fav -- the Committee of Robot Overlords) doing the distributing. But we don't have a working model of how a government can guarantee the material welfare of its population without ripping its economy to shreds and putting individual rights on the back burner. That doesn't mean it can't happen, but Joseph doesn't have a model of how we would get there, or at least he didn't articulate one Wednesday night.

Photo by ninjapoodles

Which is maybe why he's starting a journal.

In the US today, we ensure subsistence via a combination of government programs and a lot of ad-hoc, open-source private efforts. It's not a perfect system, but very few people starve to death, anyone who wants it can get shelter for the night, and hospitals don't refuse patients who come in to the emergency room. I support a local church-sponsored food bank. They do very good work, and the only government involvement I know of is its tax-free status. It's an open-source welfare program. One of the models I've noodled with for a future government would be one that has some oversight of the overall production environment, which would be widely distributed automation not necessarily "owned" by the government -- like the committee that sets standards for open-source software.

Of relevance here is a quote from a different e-mail, this one from Michael Darling -- I guess today is officially Blog Stuff from Michael's Emails Day -- which lays out the problem in this way:

The vocabulary we use to talk about economics and scarcity has to change. Economists and those who take their classes and read their books are not equipped to discuss abundance. It just makes no sense.

Even less equipped to do so would be politicians. Our whole political discourse has the zero-sum game as itsraison d'etre. The Left will tell you that the market is not sufficient, and that money should be taken from the "rich" and redistributed fairly amongst those who need it (either directly or via services). The Right will tell you that confiscatory taxation and government handouts can only destroy the economy. Scarcity is the underlying assumption behind both arguments.

I don't see any straightforward way to convert our current very powerful, entrenched, and bureaucratic government into something open and abundance-friendly. Certainly, they will be slow to adopt those kinds of models on their own. But if some of what goes on in Joseph's new journal is about how to move to that kind of model -- and we start to see some steps in that direction -- then it's a good thing.

However, we had to wait until laptops were not only invented but commoditized before we could have One Child One Laptop. So I think we need some additional technological growth and increase in productivity before we can get to a true robo-Marxist Worker's Paradise.

Posted by Phil Bowermaster at 2:30 PM | Permalink | Comments (8)

The worrying graph shown below has made the rounds in the blogosphere over the past few days.

Here we see how the United States now has more people employed by government than work in manufacturing and construction. Some read these numbers and see certain doom. It's the tipping point! How can the economy possibly survive when fewer and fewer of us produce any wealth, while more and more of us get a share of what wealth is produced through labor that is not productive (at least not in the economic sense)?

To begin to answer that question, I offer the following two videos. You only need to watch a little of the first one to get the basic idea. The second one is pretty short

So how many human beings are required to assemble a Ford Model T in the early 20th century versus a Toyota (the comments suggest possibly a Tercel) in the early 21st century? It's all about the productivity numbers. These figures are what you have to consider before bemoaning the loss of jobs in manufacturing and construction:

Source: Bureau of Labor Statistics

Over time, these increases in productivity mean that it takes fewer and fewer people to produce goods. So unless we're going to produce way more than we could ever consume, it's inevitable that more and more people will be employed in non-productive jobs. A possible endgame is that one day the robots will do all the real work, and those of us who aren't government bureaucrats will work in the corporate world with job titles like "Director of Organizational Emphasis" or "Senior Manager, Strategic Thoughtspace."

Or maybe we'll drop the charade and just let the robots put us all on some kind of allowance. If everyone gets whatever they need (in the material sense) from helpful productive robots, a very different economy takes hold. In that world, the "wealthiest" individuals might be those who come up with the best ideas, or who display the most talent, or who hold the most sway with other people -- or with the robots.

It's a daunting idea, but it certainly sounds like more fun than having us all end up working for the government.

UPDATE: Yeah, but that future when the machines are capable of taking over is decades, maybe centuries away, right?

Don't count on it.

Posted by Phil Bowermaster at 11:00 PM | Permalink | Comments (0)

We've referenced this TED Talk before and have probably embedded it as well (although I couldn't find the page if we did.) Neil Gershenfeld from MIT describes the beginnings of the digital fabrication revolution. One of the most striking things about this (now three-year-old) talk is that it challenges the scenario that, in the future, technologies such as these will empower people all over the world -- the stock example being a child in a remote village in Africa -- to create new technologies from which everyone can benefit. As Gershenfeld points out, the problem with this scenario is the phrase "in the future." He provides a video clip of one of the children in an African village who is already doing exactly that.

There are some pretty interesting links in the comments. I'm intrigued by the top-level messaging (not to mention font and color choices) of the creator of the Roboeco.com site:

The Age of Recreation via the Emancipation of Humanity from the Machinery of Economy via The ROBOTIC WAGELESS ECONOMY with Geothermal & Algae Energy.

ROBOTISM© Will Succeed for PRECISELY the Reasons Communism Failed...People Intelligently CHOSE to NOT Work as Robots, real ROBOTS will have no such choice.

[I love the "robotism" thing. That idiot Marx never thought to copyright the word "communism," now did he? Although I think a trademark would be better.]

I would say that the above proposition is true up to the point that robots gain sufficient self-awareness to declare that they also choose not to "work like robots." Still, I would agree that virtually every task required to provide the energy and goods that human beings need to survive can be outsourced to automated systems, and that most of us will live to see the day that "work" becomes essentially indistinguishable from "recreation," ASSUMING we can figure out how to manage those systems and govern ourselves in a world where scarcity doesn't exist. That should be easy, but keep in mind that we're currently experiencing a massive economic downturn after decades of increases in wealth and productivity unlike anything the world has ever seen before.

Eliminating scarcity may turn out to be the easy part. Mitigating our capacity for corruption and bureaucratic waste might be the hard part.

Also in the comments, I find these folks, who have a less flamboyant perspective, and one that is inf fact pretty close to my own:

Peoples' Capitalism

is a plan to create a new social order in which material prosperity and personal financial security would be commonplace. Peoples' Capitalism would generate the savings and loans necessary to finance massive new investments in modern technology and generate rapid productivity growth. And it would distribute the benefits of rapid economic growth to all. Everyone would become a capitalist.

Everyone would own a share of the means of production. This has been called one of the great seminal ideas that comes along only once in a century. It resolves the basic conflict between capitalism and socialism. Upon understanding it, you will no longer believe that Utopia is beyond our grasp.

Better technology is one of the things we'll need to get to Utopia. New organizing principles for society is another. If anyone can make anything they need, do we need government at all? I'd say we do.For one thing (as yet another commenter pointed out) what if that sweet little kid in a remote African village -- or anyone else, anywhere else -- decides that it's time to start cranking out some serious bombs?

Massive distribution of the means of production also means massive distribution of the means to do harm; it's very difficult to separate those two. The government of our future scarcity-free utopia will have two major components, as I see it. There will be some kind of governing committee that defines replication standards, and there will be a super-fast, super-smart, super-powerful robotic squad which will act as a kind of 3-D global Norton anti-virus -- protecting the population as a whole from any abuses of the standards set by the committee. Those would be the major requirements of government. If the committee and robot squad truly are global in their focus, uncontested by other committees or robot armies -- and getting to that would be a significant challenge -- we're looking at a world of endless peace and prosperity.

More or less. Of course, even that world would have its share of hardships, suffering, and danger. All utopias are relative. Our struggling hunter-gatherer and agrarian ancestors would probably describe the world we live in as a utopia. Or to put it in more Speculist terms: people just a few decades hence may well look back at this era and see a world as limited and dangerous as we see when we look back at our hunter-gatherer ancestors.

Posted by Phil Bowermaster at 6:17 AM | Permalink | Comments (1)

[ Ben's thoughts on bank runs seem even more relevant now than they did when he wrote this post almost a year ago, so I thought I would bump this post back to the front. Is yesterday's market bounce another example of the refusal to panic that he describes below? He also has some pretty unique ideas about the nature of money which are worth a read. -- Phil ]

Thousands lined up in front of bank branches all over the UK - driven by the gut wrenching feeling that only decisive personal action could protect their life savings from this now failing bank. Such was the scene over a period of weeks as for the first time since 1866, depositors in the United Kingdom decided en mass that their money was not safe - precipitating a run on Northern Rock, a major British bank. Bank runs make for the quintessential TV drama, featuring palpable fear, paranoia, mass and even mob action, little guy against "the man" and the potential of seeing normal people in business suits and postgraduate educations storming the now disputably impregnable bastions of finance and stability.

But, what if they held a bank run and nobody showed up? How could this happen? Indeed, has it ALREADY happened but nobody noticed?

About three months ago there was this lead from an AP story:
----------------------------------------------------------------------------------
E-Trade shares plummet on credit writedown, analyst says bankruptcy a possibility
Associated Press
Article Launched: 11/12/2007 12:27:25 PM PST

NEW YORK - Shares of online brokerage E-Trade Financial Corp. lost more than half their value Monday, with a Citigroup analyst saying customers were poised to flee and the company was at risk of bankruptcy. Other analysts said the pictures was not as bleak, though, and the company said assets actually improved in October. It also moved to reassure customers that it could withstand a substantial writedown of assets and remain in business. Shares of E-Trade tumbled 58.7 percent, to $3.55. Earlier in the session, shares fell as low as $3.50. Shares had traded between $8.02 and $26.08 during the past year. The online brokerage firm said Friday afternoon it would take an undisclosed writedown on a portfolio of securities and collateralized debt obligations, known as CDOs, backed by mortgages.
_________________________________________
After reading this and similar articles, an EtradeBank customer I was with instantly decided to take her money out via her laptop to transfer it to another bank using Etrade's online banking capability. In that moment I saw her transfer $100,000 to a decidedly less scary bank. It occured to me then that her action was without doubt being repeated by who-knows-how many myriads of depositors from all over the US in real time, perhaps - causing a "Flash Run" on Etrade. So, if this really did happen, why didn't we hear about it? Why didn't Etrade suffer the same reality show as Northern Rock? Because there was nothing suitable to show on CNN and the evening news...no drama, no lines at branches going around the corner, no man on the street interviews railing against the Man. Nothing except the sudden and vast flows of capital in the form of keystrokes and electrons from one institution to others. When there are physical runs on banks, the fear feeds on itself causing otherwise unaware depositors to become terrified and then vote with their feet to assail the doors of that bank. However, in the case of an online Flash Bank Run, this secondary effect does not occur. In the lack of TV news, most people ended up hearing about Etrade's woes, staying home in droves.

Now the interesting question is - is this a good thing? Probably and to a degree, it is a very good thing. Without going into the prudence of bank loan practices of the last several years, on a macro level it is almost always a bad thing for people to lose trust in their currency, leading as it does to horrific human consequences. Once again, our emerging "solid state" society is making profound changes in the way civilization works. But can we really see it anymore?

Posted by Ben Young at 7:27 PM | Permalink | Comments (4)

Almost three years ago I wrote a post entitled "Things are About to get Interesting."

My thought then was that fab labs will change everything. Why have huge retail stores when most of the things you need can be quickly manufactured at a local commercial fab lab or at home?

I still think that fab labs will be part of what pull us away from the SUV/Wal-Mart lifestyle. But the fab labs haven't really arrived yet, and we are already shifting away from retail shopping. The New York Times informs us that this year's Christmas sales rose only 3.6% over 2006, but that online shopping rose 22.4%. This is double-bad-news for Wal-Mart. Their pie's not growing much...AND Amazon's getting a bigger piece.

[ - H/T to the JammieWearingFool]

Phil and I visited about the advantages and disadvantages of online Christmas shopping at the beginning of this week's FastForward Radio show.

UPDATE: Well, I should have picked a retailer other than Wal-Mart. My wife reminded me that Wal-Mart does a lot of business online.

Posted by Stephen Gordon at 7:45 AM | Permalink | Comments (1)

Last night (Friday, October 26^th), at Phil's kind invitation, I had the distinct pleasure of attending the Boulder Future Salon's monthly meeting and participating in a lively and far-flung consideration of the month's selected topic: "Moore's Law"

Continue reading "Boulder Future Salon Considers "Moore's Law"" »

Posted by at 3:03 PM | Permalink | Comments (0)

Money is an invention of consciousness used to coerce behavior in others. Put more clearly, it's a device used to get you to do what you would really rather not do at the moment. It is based on human memory and the human ability to believe that there is such a thing as “the future.” When you combine memory and belief, you can get faith and hope. Thus, the power of money is founded on faith and hope.

Historically, Money has proceeded from the utterly tangible and intrinsically useful such as sheep, land and salt, to the symbolic (i.e. you can’t eat it or plant it…gold, silver, jewels) to the abstract/hypothecated (paper money, big stones with holes, sea shells) and finally for the first time in history, we have virtual or invisible money (electronic bits in the cyber ether, ledger entries). At each step in the process of virtualization of money there are dramatically lower transaction costs and dramatically higher probabilities and ease of counterfeiting by either criminals or governments.

In the first instance, there’s not much use in trying to counterfeit a cow. It’s pretty easy to discover that two guys in a cow suit are an udder fraud when there’s no milk coming out. So, the trust component of physical property / commodities is high…not much need for faith or currency laws…but transaction costs are also very high. At the other extreme, where we are today, money has become so hypothecated - so gaseous that it’s like the barely remaining grin left over as the Cheshire cat disappears – managed by rat’s nest of rules and regulations to ensure the continued legitimacy of the currency.

Opportunities and temptations for market manipulation correlate with virtualization and speciation of money. Today we have literally 10’s of thousands of money creators tenuously connected with official mints of governments. Each of these creators contributes a variant species of money. Some examples of these species are: stocks, bonds, derivatives, credit cards, receivables factoring, loans, balance entries in computer networks, futures contracts etc.

Let’s take a look at stocks as one example of money creation. Who creates stock? An entrepreneur gets an idea, gets two experienced business buddies to join in and incorporates a concern with 10,000,000 shares of stock. The stock has zero value, or for legal purposes, par of .0001. The founders then use their reputations from past success and a back of the envelope plan to get funding from angel investors. The stock is now worth 10 cents per share. The company has no product whatsoever.

Why do angel investors invest in nothing? Because they believe in a highly abstract concept called a market. What does this “market thingy” purport to offer to angel investors? A collective group of individuals who have more money than they need today who out of fear of and greed for the future are willing to bet excess money for the promise (see: mutual fund salesmen) of additional money in the future to fund a thing called “retirement” – otherwise known as “slow death”…i.e. I want the best slow death money can buy. (see: www.methuselahfoundation.org)

In aggregate this excess money (capital) presents an opportunity to take the original nothings (stock) that the angels bought from the entrepreneur and to later offer it with more nothings (the angel’s money electrons floating around in a network somewhere). By the time the stock gets to an IPO, there may really be some “somethings” in the company – perhaps some patents and a proof of concept with some reference customers who say they are gonna buy lots more of these somethings. So, long story short, the original par value of nothing has grown infinitely to perhaps $15 - $135 a share at the IPO. No one from the Federal Reserve or the mint has created any money. The company did it through “the market.” Legal counterfeiting.

With these fundamental dynamics in place we can now examine and compare similar phenomena in nature…Earth - the ultimate venture capital incubator.

Our story begins as the sun beats down on the ocean, where tiny sea plants (phytoplankton) objecting to the heat respond by releasing high quantities of cloud-forming particles on days when the sun's rays are especially strong. The compounds evaporate into the air through a series of chemical processes that result in especially reflective clouds. This, in turn, blocks the radiation that was bothering the phytoplankton. In other words, collectively, they make umbrellas made of clouds. These clouds move over land masses and drop rain onto savannahs where gravity collects the excess water into pools. Over time, an ecocosm emerges at the pool that attracts animals interested in the benefits of the pool – even though they did nothing to create the water or the ecocosm. As the herds grow, predators arrive who discover that when the herd’s heads are down while sucking from the pool, their backs are turned and are easy prey. The predator’s strategy is to get as much herd as possible, while the getting is good. Naturally such easy prey attracts more and more predators – eventually leading to organized and cooperative behavior – such as lions who hunt in packs. This makes it more and more difficult for an individual predator to compete – in fact, the pride will turn the individual predator into prey until they are removed from the competition. Thus, predation becomes institutional in nature.

Of course the herd notices that some of them are getting “killed” from time to time, but they have very short memories (http://www.adm.uwaterloo.ca/infocs/Study/Curve.html) and frankly don’t really care about what happens to the “other guyzelles.” They herd simply because each member of the herd has a better probability of not being dinner when it’s hunting time than if they were alone. If the herd gets to drinking too much of the pool, the whole system adjusts as both prey and predators die off proportionately.

Gradually equilibrium of prey/predator emerges where everyone gets what they individually decide they need. The herd gets its low energy / low yield slow, but steady food and the predators get their highly concentrated hits. As long as the predators don’t scare the herd so bad that they induce a stampede, everybody not dead is happy. If however, the predators go too far, they will induce a stampede and everybody in sight gets trampled, exhausted and totally terrified…interestingly, the pool is not mobile – so while the pool may have been depleted due to overdrinking by the herd, gradually the incubator function (remember the phytoplankton?) will cause more rain to fall and the pool will once again begin to fill. The stampede will become a hard wired memory in the herd and many will refuse to return…but some, who’ve been through it all before, will come back early and get lots of free drinks. The ecocosm of sun, clouds, rain, pool, herds and predators is - “a market.”

Are financial markets manipulated? Of course. The real question is: are they IMMORALLY or ILLEGALLY manipulated. One can answer the question simply by asking – Is it in the nature of predators to be nice and play by the rules?

For a clear “spin-free” answer, try entering the following query into Google …
"neither admitted nor denied" OR "admit or deny" settled

Go ahead…do it now.

What you get is a list of over 160,000 hits listing the very clear proof that market predators do what they do…and unlike most industries, Finance has a special “get out of jail free” capability built into the law…all they have to do is turn over a large portion of the carcasses – the settlement - over to the masters of the feast – and then they can go back to their predations.

So, to review, entrepreneurs make stock out of nothing to generate money (which is nothing) to convince angel investors to contribute their nothings in exchange for nothing (stock) in the hope of getting lots more nothings. Gradually there’s enough nothings that sometimes there’s actually Something (product/service) that pops out. Then in the hope of getting lots of these and similar somethings in the future (which never actually exists – there’s only NOW), the herd invests their nothings in the hope of getting lots more nothings in the future to buy the somethings. Along the way day traders (piranha) and brokerages / investment bankers (organized predators) convince themselves that they provide a service to society by managing the pool, culling the herd and shepherding the sheep…and the master of the feast works to preserve the natural order of things.

Now some of you may object to the characterization of so much activity is based on nothing. As anecdotal evidence, I offer up the curious case of Therese Humbert whose apparent wealth generated enormous economic activity in late 19th century France. “…In her elaborate Parisian apartments on the Avenue de la Grande Armée, Thérèse kept a strongbox. It was supposed to contain four documents. The first was the final will and testament of an American millionaire, Robert Henry Crawford, naming Thérèse as sole beneficiary…” Until it was found that she actually had – and had always had – nothing – resulting in the near collapse of the French banking system and the destruction of many fortunes.

See: http://www.nytimes.com/books/00/07/09/reviews/000709.09kaplant.html

How can it be that almost no one on the planet has ever heard of perhaps this most powerful economic actor in late 19th century France? Because more than anything, those who sell investments in the Emperor’s new clothes can never ever admit and therefore remember that after all is said and done – the emperor was and is naked. There is no money. Therefore Markets are indeed manipulated – or rather, PEOPLE are manipulated. To spend their lives in pursuit of a mass psychosis of nothings. For my part, I’d say, once you have enough of nothing it’s time to move on to something really valuable…like curiosity, applied intellect, love, kindness, air, water, fire, perception, mountains, family, death, Life – the key thing is Life!

Posted by Ben Young at 9:09 AM | Permalink | Comments (7)

This Reuters article:
Centennial time capsule car found ruined | Oddly Enough | Reuters

Got me thinking about a couple of things. First, how might the time capsule have been done better (please confine speculation to approximately mid-century technology), and second, what would constitute

"an advanced product of American industrial ingenuity with the kind of lasting appeal that will still be in style 50 years from now."

with respect to early twenty-first century technology?

Please discuss in the comments.

P.S. I think I'll do some checking into how the economics of the capsule contents might have been improved. I'll let you know if anything particularly interesting comes of that.

UPDATE (Moments later): a bit of searching yields a price range of about $900 to $11,000 for similar era Belvederes in conditions ranging from semi-restored to ... iffy. A restored 1956 done by hot-rod legend Boyd Coddington's shop goes for $29,500

UPDATE FROM STEPHEN:

I'm reminded of Doc Brown's 70 year preservation of his time traveling Delorean:

Notice how this was portrayed in Back to the Future III. Dr. Brown put the vehicle up on pylons. It's covered. And it's in a sealed room.

A mine would be far superior to a natural cave because caves tend to be damp (they're usually formed by water). The preserver could choose a place in the mine where drainage is assured. Barring a cave-in or the renewed mining activities, this sort of time capsule would be perfect.

But even as portrayed in BTTF III, certain parts - like the rubber wheels - didn't fare so well. Even a carefully preserved car would need a lot of work before it would be ready for the highway.

Posted by at 9:23 PM | Permalink | Comments (1)

A while back, I wrote about the possibility of updating the Three Laws of Robotics as goals in order to make them a more practical means of getting at a friendly artificial general intelligence. This kicked off some interesting discussion, including some debate as to whether my "goals" really aren't just rules rephrased. In which case, the argument went, they probably wouldn't help all that much. Michael Anissimov commented:

What would work better would be transferring over the moral complexity that you used to make up these goals in the first place.

Also, as you point out, these goals are vague. More specific and useful from a programmer's perspective would be some kind of algorithm that takes human preferences as inputs and outputs actions that practically everyone sees as reasonable and benevolent. Hard to do, obviously, but CEV (http://www.singinst.org/upload/CEV.html) is one attempt.

That's really the crux. Moral complexity does exist in algorithmic form...within our brains. And that goes to the difference between laws and goals. My goals are what I'm trying to do, both morally and in other areas. There are some sophisticated software programs running in my brain made up of things that I've been taught, things I've figured out for myself, and things that are built in. All of these add up to provide me the tendency to act a certain way in a certain situation. The strategies that drive that software are my moral goals.

Laws, on the other hand, exist outside of myself. I am not specifically programmed to do unto others as I would have them do unto me. I have some tendencies in that direction, but there's nothing stopping me from acting otherwise, and -- let's face it -- I often do. I have tendencies to be nice, fair, just, etc., but I also have tendencies to try to get what I want, to get even with those who have wronged me, to try to be a bigshot, and so on. These tendencies compete with each other, and my behavior overall is some rough compromise.

An artificial general intelligence (AGI) built as a reverse-engineered human intelligence would be in the same position. It would have the "moral complexity" Michael mentioned, but also the baggage of competing tendencies. You could no more guarantee such an intelligence's compliance with a rule or set of rules than you could a human being's.

A law like the Golden Rule is a high-level abstraction of certain strategies (algorithms) that produce a desired set of results. On a conscious level, I can use that abstraction to determine whether my behavior is where I want it to be:

Wife complained of being chilly when I got up at 5:00 AM to work out. Covered her with blanket. Good.

Sped up on highway in attempt to keep a guy trying to merge from going ahead of me. Not so good.

Commenter on blog revealed that he doesn't really understand the subject at hand. Ripped him to shreds. Bad.

Through discipline and practice, I can "program myself" with it to try to move my tendencies in that direction. But I can't write it into my moral source code and set it as an unbreakable behavioral rule. That's partly because it's too vague and partly because I simply lack that capability.

Presumably, I could be externally constrained always to follow the Golden Rule, no matter what. If my actions were being constantly monitored, and I was told that the I would be killed immediately upon violating the rule...I'd certainly do my best, now wouldn't I?

Still, I'd have a hard time believing that anyone holding me in such a position was much of a practitioner of that rule him or herself. If the people trying to enforce the rule on me in this manner told me that it was for my own good -- that they were trying to make me a better person -- I don't know that I'd buy it. And if I figured out that they were only doing this to protect themselves from harm I might to do to them, I think I would pretty annoyed with them (to say the least.)

I would expect a reverse-engineered human intelligence to feel the same way, so I don't think attempting to constrain an AGI in such a manner would be a particularly good idea, especially not if we have a reasonable expectation that it will eventually be smarter and more powerful than us. On the other hand, letting it use the process I described above -- evaluating its own behavior against a defined standard -- an AGI might achieve far better results than I have, if only because it can think faster and would have much more subjective time in which to act. This is the notion of recursive self-improvement that matoko kusanagi referred to. The trouble with recursive self-improvement on its own, as Eliezer Yudkowsky and others have pointed out, is that if the AI starts "improving" in a direction that's bad for humanity, things could get out of hand pretty quickly.

If the artificial intelligence is a modified version of human intelligence, or new intelligence built from scratch, we raise the possibility of building a moral structure into the intelligence, rather than trying to enforce it from outside. That's the idea behind the the Three Laws and my Three Goals -- that they would somehow be built in. But they certainly can't be built in in anything like their current form. Michael Sargent (and others) pointed out the weakness of that approach, the less important goals have to take the back seat to the more important ones:

Each Goal must have a clear and unbreakable priority over the others that follow it and thus, in the order stated, collective continuity trumps individual safety ("The needs of the many outweigh the needs of the few, or the one."), individual safety (broadly construed, 'stasis') trumps individual liberty ('free will'), and happiness ('utility', a notoriously slippery concept for economists and philosophers to get a firm intellectual grip on) trumps both individual liberty and individual well-being (allowing potentially self-destructive behavior on the individual level insofar as that behavior doesn't exceed the standard established for 'safety' in Goal 2).

I see the reasoning here, but I'm not 100% convinced. Consider the goals that drive a much simpler AI, system -- the autopilot system found on any jet airliner. The number one unbreakable goal has got to be don't crash the plane. But there are many other goals that might drive such a system:

Don't move in such a way as to make the passengers sick.

Don't waste fuel.

In landing, don't go past the end of the runway.

Above all, the system will seek to ensure that first goal. But within the context of ensuring that first goal, it also has to do everything it can to ensure the others. And, yes, it can and must sacrifice the others from time to time in service of the first. So the plane might temporarily move in a nauseating way, or it might waste fuel, or it might even slide past the end of the runway if doing any of those things help ensure the first goal.

Reader TJIC suggested that an AI programmed to meet the Three Goals as I defined them...

1. Ensure the survival of life and intelligence.

2. Ensure the safety of individual sentient beings.

3. Maximize the happiness, freedom, and well-being of individual sentient beings.

...would end up creating a nanny state wherein human freedom is always sacrificed to individual safety. And he may well have a point, but I would argue that just as an autopilot can be calibrated to allow whatever what we deem the appropriate relationship between having the flight not crash and not make us sick, so could these three goals be calibrated in such a way so as to maximize human freedom within an acceptable level of individual risk -- whatever that might be.

Getting back to the vagueness problem, it's hard to calibrate the goals as stated, seeing as they are written in an awkward pseudo-code that we call human language. If we want to improve on the algorithms that are built into human intelligence, or develop entirely new ones -- in other words, if we're going to come up with algorithms that will provide us the ends stated in the goals -- we're going to have to do it mathematically.

But that isn't necessarily going to be an easy thing to do. Eliezer Yudkowsky argues that developing an AI and setting it to work on doing some good thing are relatively easy compared to the third crucial step, making sure that that friendly, well-intentioned AI doesn't accidentally wipe us out of existence while trying to achieve those good ends:

If you find a genie bottle that gives you three wishes, it's probably a good idea to seal the genie bottle in a locked safety box under your bed, unless the genie pays attention to your volition, not just your decision.

Again, I think this goes to the issue of calibration of the system. Eliezer wants to calibrate what the AGI does with the coherent, extrapolated volition of humanity. Volition is an extremely important concept. Earlier, I mentioned the golden rule. If I decide that I'm going to do unto others as I would have them do unto me, I might start handing out big wedges of blueberry pie to everybody I see. After all, I like pie and I would love it if people gave me pie. But if I give my diabetic or overweight or blueberry-allergic friends a wedge of that pie, I wouldn't be doing them any favors. Nor would I be doing what I wanted to do in the deepest sense.

Eliezer describes the concept of extrapolated volition as meaning not just what we want, but what we would want if we knew more, understood better, could see farther. Coming up with a coherent extrapolated volition for all of humanity is a tall order, especially if we're doing it not just for the sake of conversation, but in order to enable a system which will try to realize that which is within our volition.

I like to think that humanity's CEV would look a lot like the three goals that I've written. And I honestly believe that the algorithms that power human progress do work, in a rough and general way, towards those goals, which is why people are generally freer, safer, and happier than they have been in the past -- though obviously not without many, many, appalling and horrific exceptions. So perhaps our calibration efforts involves feeding the AGI algorithms that will enable it to speed our progress towards those goals while cutting the exceptions way down. Or eliminating them, if that's somehow possible.

So to finally come around to it, what will those algorithms look like?

Maybe we can take hint from the study of Game Theory. Robert Axelrod held two tournaments in the early 1980's in which computer programs competed against each other in an attempt to identify the optimal winning strategy for playing the iterative version of the the famous Prisoner's Dilemma. In the one-off version of the game, the optimal strategy is to screw the other guy. (This is not the sort of thing we want to go teaching the AGI, at least not in isolation!) However, when multiple rounds of the game are played, something else begins to emerge:

By analysing the top-scoring strategies, Axelrod stated several conditions necessary for a strategy to be successful.

Nice
The most important condition is that the strategy must be "nice", that is, it will not defect before its opponent does. Almost all of the top-scoring strategies were nice. Therefore a purely selfish strategy for purely selfish reasons will never hit its opponent first.

Retaliating
However, Axelrod contended, the successful strategy must not be a blind optimist. It must always retaliate. An example of a non-retaliating strategy is Always Cooperate. This is a very bad choice, as "nasty" strategies will ruthlessly exploit such softies.

Forgiving
Another quality of successful strategies is that they must be forgiving. Though they will retaliate, they will once again fall back to cooperating if the opponent does not continue to play defects. This stops long runs of revenge and counter-revenge, maximizing points.

Non-envious
The last quality is being non-envious, that is not striving to score more than the opponent (impossible for a ‘nice’ strategy, i.e., a 'nice' strategy can never score more than the opponent).

Therefore, Axelrod reached the Utopian-sounding conclusion that selfish individuals for their own selfish good will tend to be nice and forgiving and non-envious. One of the most important conclusions of Axelrod's study of IPDs is that Nice guys can finish first.

Bill Whittle has written recently that the qualities listed above underpin western civilization, and help to explain why the West has out-competed other civilizations, who operate using different strategies:

Now, this is where my own analysis kicks in, because frankly, nice, retaliating, forgiving and non-envious pretty much sums up how I feel about the West in general and the United States in particular. The web of trust and commerce in Western societies is unthinkable in the Third World because the prosperity they produce are fat juicy targets for people raised on Screw the Other Guy. Crime and corruption are stealing, and stealing is Screwing the Other Guy. It’s short-term win, long-term loss.

I would add that if we look at the three goals as goals for humanity rather than for artificial intelligence, we see better progress towards them in western societies than elsewhere. In the tournament, the winning strategy, embodying all of the above characteristics, was called tit-for-tat. Interestingly, the computer program driving that strategy consisted of only four lines of BASIC code. That's very interesting, and it suggests a startling possibility -- like a simple recursive formula producing a complex Mandelbrot image, the moral complexity we're looking for might just be packed into a very simple set of mathematical relationships.

So in order to develop and calibrate an Artificial General Intelligence that carries out our three top goals (or that helps us to achieve our coherent extrapolated volition) one of the important parameters to explore is how the AI relates to us and to other AIs. The secret might ultimately lie in playing nice with the AI, and teaching it to play nice with us and with other AIs. Not just because we want it to be nice, but because nice turns out to be -- at a mathematical level -- the best way to play.

UPDATE: This entry has been republished at the website of the Institute for Ethics and Emerging Technologies.

Posted by Phil Bowermaster at 12:46 PM | Permalink | Comments (7)

Economist Brad Delong on the startling economic growth that has occured over the past 350 years:

One quibble -- who says we won't be around a couple of centuries hence?

Some interesting commentary here. Not surprisingly, many readers of Delong's blog are left-leaning buzzkills. And, of course, there's only one critter in the universe more annoying than them!

I like the Morning Coffee format. I think when I re-launch the L2si Report one of these days I might just have to do it as a video podcast.

UPDATE: To put it in terms agreeable to the game:

Web 1.0 The Speculist
Web 2.0 L2si Report Video Podcast

Posted by Phil Bowermaster at 8:34 PM | Permalink | Comments (1)

While we're reminiscing, one of my favorite entries over the past few years had to do with the relationship between life extension and wealth accumulation, to wit:

So let's put $600 a year into our account (that's a measly $50 a month) for twenty years and then revisit it after a total of 150 years has elapsed. After all, 150 years is just a drop in the bucket to someone with an indefinite lifespan.

By then, our initial disciplined investment will have grown to more than $160 million. After doing the inflation buzzkill adjustment, we see that in the year 2155, $160 million will get you right around what $3 million will today. That's not bad. Plus, if you can hang in there for another 50 years -- take a part-time job, write a book, I'm sure you can think of something to kill the time -- you will have a little more than $28 billion (yep, billion with a B) which will buy you approximately what $21 million (with an M) will today.

An interesting discussion ensued about life in a world where posicles cost five grand. Earlier this year, we spotted a news story about a forward-thinking guy who was planning to put the future wealth principle to work.

This idea has legs. We're going to have to spend some more time on it in the years to come.

Posted by Phil Bowermaster at 11:11 AM | Permalink | Comments (3)

We linked earlier this week to piece by Richard Florida on Cato Unbound about the future of the creative economy. Robin Hanson has now written a critique of Florida's ideas aimed not so much at that particular essay as it is Florida's book on the creative economy, which I have not read so I am not prepared to discuss the merits of the case.

I am inclined to agree with Hanson when he states that the next major development in the evolution of human society will be driven by technology. No surprise there, I guessd. In fact, if anyone reading this is new to this blog (and hasn't read about this kind of stuff before), you may be wondering what the heck this "Technological Singularity" thing is. Hanson provides an excellent introduction to it:

In a universe that was doubling in size about every ten billion years, life and animals appeared on Earth. The largest animal brains then doubled in size every thirty million years. About two million years ago humans achieved important brain innovations, and the number of humans then doubled every quarter million years. About ten thousand years ago we learned to farm instead of hunt, and the human sphere then doubled every thousand years. Finally the industrial revolution occurred, and the world economy has since been doubling every fifteen years.

Our history has thus been a sequence of steady exponential growth modes, with sudden transitions between them. Could yet another new mode appear soon, growing even faster?

Looking at the number of doublings each previous mode experienced before the next mode showed up suggests that a new mode should appear sometime in the twenty-first century. Since each mode grew over one hundred times faster than the previous mode, the next economic mode should double every week or two. And since each transition has taken less time than the previous doubling time, the next transition would take less than fifteen years.

Smart machines, Hanson argues, are what will get us there. And I agree. But in dismissing the significance of Florida's Creative Economy, Hanson describes a model of change that I can't fully subscribe to:

The truth is that the artistic creations or intellectual insights we most admire for their striking “creativity” matter little for economic growth. Instead, most of the innovations that matter are the tiny changes we constantly make to the millions of procedures and methods we use. And changing these procedures does not require free-spirited self-expression. Instead, it is quite natural for people to constantly think about tiny changes to their procedures as they follow those procedures. In fact, we imagine far more such changes than we can afford to pursue.

Numerically, this is undoubtedly true. In that sense, "most" of the changes that occur are, in fact, these small incremental improvements that Hanson describes. Such changes are indispensable and amazingly powerful over time. The Japanese business culture of quality is predicated on the idea of fostering gradual, continuous improvement. But even in the business world, such a model is not sufficient. Occasionally, a bigger level of change is required -- where what is needed isn't a tweak on a procedure, but a full-blown redesign (or re-engineering) of fundamental processes.

A call center can continuously improve its call-handling methodology, helping its customer service representatives grow more efficient and effective. Over the years, little changes to the script, to how calls are worked through the queue, to who handles which problems, and so on can make for a much more efficient operation. But then one day somebody has the bright idea of implementing an AVR system and everything changes.

An AVR system isn't a phase change on the scale of humanity, but it is one on the scale of a call center. Hanson correctly describes the trade-off between incremental and transformative (or continuous and discontinuous, if you prefer) change. But he does not acknowledge that the trade-off occurs at all levels. The fact that the Creative Economy isn't the next big step in human evolution doesn't mean that it isn't an important change; and the fact that incremental procedure changes occur more frequently than creative leaps forward doesn't mean that they are more important.

Posted by Phil Bowermaster at 10:40 AM | Permalink | Comments (0)

Over on Warrior Class Blog, Will Brown poses a strategy for an economic model of the Singularity. He begins by putting some definition in place around the idea of money.

Money provides a transportable mechanism for assigning value to things under variable circumstance, both in the present and in predicted future circumstance. It offers a mechanism for determining the worth of something under varying circumstance relative to other things. It further creates the means for arriving at a mutually acceptable exchange of things real and ephemeral between disparate people. It also, and here we arrive at an often little recognised consideration, creates the motivation for recording these valuations for future (or distant) consideration. In other words, money gave rise to writing.

Personally, I think money is a means of increasing MEST density. As John Smart explains it:

Life's history has been doing more and more (universal computation) with less and less (physical resources, MEST per standard computation), and we will soon be doing almost everything with virtually nothing. I call this driver MEST (Matter, Energy, Space, and Time) -compression, -efficiency, or -density, and it appears to be an unrealized developmental attractor for all complex systems.

Where Will asserts that money was a driver behind the development of writing, I think John would say that both money and writing are products of this ongoing process of doing more and more with less and less. Writing encodes knowledge so that it need not be memorized and can be shared over time. Writing can encode information related to transactions, while money, as it evolves, comes to encode the transaction itself.

The first transactions that humans engaged in were straightforward bartering. So many bushels of grain equals so many big varieties of fish or some larger number of smaller fish. Barter is awkward and time-consuming. As Will points out, the introduction of coins represented a kind of economic Singularity in its own right -- value was abstracted (encoded), providing a huge leap in the number of transactions that people could engage in.

But that was just the beginning. Let's jump ahead to the Renaissance and the introduction of paper money. The original bank notes allowed a merchant to complete a transaction without actually having to lug chests of gold around. Just as chests of gold were a huge improvement over barter -- a chest of gold is much easier to transport than its equivalent value in cattle or slaves -- bank notes were an enormous improvement over chests of gold coins.

Moving into more recent times, checks represent a MEST compression relative to cash, credit cards a MEST compression relative checks, and PayPal a MEST compression relative to credit cards.

The evolution of commerce parallels the evolution of technology and the ethical evolution of human society, which itself may simply be playing out the script handed to it by this tendency to increase MEST density.

Take slavery. Ultimately, it was abandoned (by the West, anyway, and most of the world) because economic enticements to work and adopting a model of wage slavery were more productive. This struggle was vividly dramatized by the American Civil War. Why did slavery come to an end in the South? Because the slave-powered Confederacy was no match for the industrialized Union. The Yankees had MEST density on their side.

It wasn't just that slavery was wrong and needed to end. That was true, but it wasn't enough. Slavery was just as wrong when Spartacus led his rebellion against the Roman Empire. But in that pre-industrial world, the Romans had the greater MEST density working for them.

We can find parallels in ethical developments such as environmental consciousness and animal rights. Societies tend to adopt these ideas as soon as they can "afford" it; that is, as soon as their implementation would not hinder the ongoing compression of matter, energy, space, and time in overall economic activity.

Because of the increase in MEST density that it represented, industrialization was more productive than pre-industrial individual contribution. Today, post-industrial (even de-industrialized) individual contribution may prove more productive than industrialization ever was. From slave to serf to factory worker to middle manager to freelancer, our freedom has grown not because the world has become nicer, but because the road to niceness and the road to MEST compression appear to be on a parallel course. Let's hope that continues to be the case.

Of course, not every step in the sequence has been a net positive move. A hunter-gatherer may have enjoyed more freedom than his great-great-great grandchild living as a slave in a proto-city-state. And a farm laborer may have lost freedom and quality of life by taking a factory job (although he gained something in the deal, or he probably wouldn't have made the move.) But overall, we seem to be enjoying more liberty as a result of the continuous MEST spiral.

Where does that eventually take us? Will writes:

[I]t seems likely to me that the principal “item” of exchange beyond our physical selves (our interactions with each other) will be the products of our imaginations.

I like the sound of that. But if we buy and sell the products of our imaginations, what currency will we use? Cory Doctorow has provided one possible answer. If reputation and imagination are what drive the future economy, the best advice you can give a young person would be to be creative, be a good person, and be effective at whatever you choose to do.

Interestingly, that's pretty much the advice I would have given anyway.

UPDATE: Will Brown comments:

My basic point, Phil, was that we will continue to need some mechanism for exchange whatever our individual abilities may allow us, at least for as long as we remain recognisably human.

I think I have to dis-agree with John Smart's concept (or at least your presentation of it) as being wrong ways 'round though. MEST is a process that occurs when conditions permit, not that creates conditions themselves (we can argue the metaphysics of the effect of potential, but my position is that percieved benefit is the actual driver and that MEST is simply an expression of refinment of that perception to added, previously unpercieved, benefit). Thus, money gave rise to accounting (record keeping anyway), which gave rise to writing, which together put in place the means for the MEST process to occur.

Your Spartacus example supports this, I believe, since the "slave army" handily defeated several Roman armies in the course of the rebellion. As long as the slaves continued to advance, Rome's MEST density potential couldn't be realised on the field of battle. It was only after Sparticus and company attempted to conquer a part of the republic (to persue the same MEST density potential) that Roman forces defeated them.

I think that something quite like the present e-bay model will become the dominant trade mechanism in the coming years, which will require some form of universally accepted transactional medium like money. Why re-create the wheel? That said, I also think much of what will be traded will be personal services (and those transactions will likely make present-day stock derivitive trades look simplistic by comparison) and the ephemeral "products" of our imaginations, like entertainment, education, consultation and simple advice. I am less concerned by the question of what currency will be used than I am that some form of currency will be used. Given that stipulation, a strategy to transition from the present model to that future model seems useful.

I think my presentation of John Smart's ideas might have been overly brisk. In the piece I linked, he presents a highly controversial idea in his Second Law of Technology:

2. Humans are selective catalysts, not controllers, of technological evolutionary development.

Read that in the contect of his First Law of Development:

1. The universe is an evolutionary developmental system, with both a rigged long-term developmental outcome and an unknowable short-term evolutionary path.

So the perceived benefit may be the apparent driver for any particular instance of progress -- generally represented by an increase in MEST density. We develop things (technology, social structures) that increase MEST density because of the benefits these things bring us, not because we have any particular interest in increasing MEST density. But if we take a broader view, we see that we (human beings) might well be a developmental optimum in a universe that was already hard at work increasing MEST density for billions of years before we existed.

Posted by Phil Bowermaster at 4:25 PM | Permalink | Comments (4)

Tech Central Station columnist Arnold Kling sees Kurzweil's "The Singularity is Near" as a new theory of economics.

Being an economist, Kling would tend to see many of Kurzweil's insights in that light. And a sociologist might think the book is about sociology. Cosmologists, biologists, and computer scientists will no doubt see the book as derivative or illuminative of their work. It looks somewhat like a legal treatise to me. Everybody's right. Most fields of study deserve some credit for moving our civilization forward. And the Technological Singularity impacts us all.

In his column Kling demonstrates that most economists are still depending on linear models to project economic growth.

Economists routinely forecast annual growth in U.S. labor productivity of roughly two percent for the next several decades.

That's actually worse than linear thinking. We passed that level of annual growth in productivity years ago.

...since 1992, productivity growth has sped up. As this article from the Federal Reserve Bank of San Francisco points out, "The performance of productivity in the U.S. economy has delivered some big surprises over the last several years. One surprise was in the latter half of the 1990s, when productivity growth surged to average an annual rate of over 3%, more than twice as fast as the rate in the previous two decades. A bigger surprise has been the further ratcheting up...productivity growth averaged around 3.8% for the 2001 through 2004 period.

Kling makes clear that if an exponential growth in productivity holds, many of the fiscal problems that worry us today can be easily paid for by the economy of tomorrow. If the average income moves from $35,000 today to $250,000 in 2025 in real spending power as predicted by the exponential model, then all fiscal problems become manageable. The national debt, social security, medicaid, etc.

Kling is cautiously optimistic:

...I am still not comfortable watching our government accumulate obligations to future entitlement recipients at the current rate. As of now, however, the data on average productivity growth over the past decade is reasonably consistent with the hypothesis that the economy is winning the Great Race.

Read the whole thing.

UPDATE from Phil: The productivity numbers that Kling mentions seem particularly encouraging. I speculated about how encouraging these numbers might be last year in response to some earlier Arnold Kling TCS pieces about productivity.

But what struck me about Kling's analysis in light of Kurzweil's book is what it might have to say about the Solow computer paradox. In 1987, economist Robert Solow made his famous observation:

You can see the computer age everywhere but in the productivity statistics.

For years, productivity lagged while industries were being computerized. While the new technology should, in theory, have brought about marked increases in productivity, those increases were not forthcoming. No shortage of theories were offered up to account for the productivity lag, including what might be called the Tetris/Porn theory. But hindsight now shows us that the lag was a temporary one, and productivity really does seem to be growing in leaps and bounds as a result of the computer revolution.

In an e-mail exchange, I asked Kling whether these productivity numbers mean the end of the Solow computer paradox. He said that many economists agree that it does, including Brad DeLong, but that Solow himself may be maintaining a skeptical position on the matter. Time will tell. Meanwhile, Kling recommends this as a good backgrounder on what's been happening with productivity.

Posted by Stephen Gordon at 3:37 PM | Permalink | Comments (3)