Programming and music are cousins, I suppose. Two different sub-fields within the greater domain that is applied mathematics. While I'd prefer other means than an FFT when describing my enjoyment of, e.g., a Pink Floyd solo, stuff like this has always intrigued me.
Day of the Triffords from Andrew Sorensen on Vimeo.
Now, this isn't exactly the most user-friendly interface in the world. I'm pretty sure that crown is held by "stick + something that sounds cool when you hit it wit a stick." Even so, hackers in general and LISPers in particular can rejoice in the satisfaction that comes from reading the matrix...
Monday, April 27, 2009
Saturday, April 25, 2009
Is that a stimulus, or are you just happy to see me?
A little over a year ago, I wrote this:
1.5 trillion? 2 trillion? More? Depends on whose numbers you're using, but any way you slice it, that's a lot of money. Where is it all going to go? Well, some will go straight to inflation. We'll buy the same stuff as before, made by the same people as before, but we'll be paying more since we'll have more money chasing the same goods.
Hopefully though, some of it will go to employing our currently unemployed resources. That's the whole point. Unemployed workers, entrepreneurs with ideas but no funding... these are the things that, when employed and funded, prompt economic growth and recovery.
What, though, will the unemployed workers get jobs doing? What ideas, though, do the entrepreneurs have? In our last bubble, cheap money chased housing, so resources and labor were deployed there. In the bubble before that, cheap money chased internet startups, so the entrepreneurs in that space got literally more funding than they knew what to do with.
Are we to believe that there won't be overshoot this time? Of course not! We'll be fooled again, and the cheap money will chase something that will seem weird this year, revolutionary next year, proven the year after that, and hopelessly retarded the year after that. Retarded like these guys, or like a subdivision of multi-million dollar houses 40 miles outside of Phoenix.
How to spot the next bubble? Hard to say. We can assume that there will be Zeitgeist clues like Time magazine covers, explanatory documentaries on network television, and a whole section of the bookstore dedicated to books on the subject. Another clue: previously rather non-wealthy individuals making a ton of money at some trade that wasn't popular last year, or maybe didn't even exist yet. Another clue: whatever it is, Warren Buffett won't be investing in it.
Will this bubble be as bad as the last one? Well, there's WAY more money looking for a place to go, so that doesn't look good. On the other hand, firms might have learned their lesson on leveraging (and if they haven't, the government might try to impose that lesson anyhow), so maybe there won't be a huge multiplier from derivative investments like there was this time.
Any guesses? Well, some folks have been throwing around the idea of a Green Revolution. Lots of legitimate opportunity there, but also an opportunity for over-investment in good-sounding but bad-in-practice ideas. That's just a wild guess though, it can be anything. There have been bubbles in tulips and beanie babies, so it's not like there's any guarantee that it's going to make the least bit of sense.
A stimulus package therefore is a suckers game. The market crashed when everyone realized that selling dogfood online wasn't the revolution it was cracked up to be. Bush, Congress and the Fed threw money at the problem, literally. Consumers took the money, avoided the stock market (won't be fooled again) and blew a big real estate bubble (okay, they will be fooled again). What happens when the real estate bubble pops? The powers that are loosen the purse strings...Now, there's a TON of money that's been ejected into the economy in the last year. TARP was more than half a trillion. The stimulus bill that recently passed was closer to a trillion than half of one. Low interest rates courtesy of the Fed, government-financed troubled-asset buyback plans, and warranty guaranties for GM (okay, that last one isn't really significant relative to the others, but it is pretty wild)?
1.5 trillion? 2 trillion? More? Depends on whose numbers you're using, but any way you slice it, that's a lot of money. Where is it all going to go? Well, some will go straight to inflation. We'll buy the same stuff as before, made by the same people as before, but we'll be paying more since we'll have more money chasing the same goods.
Hopefully though, some of it will go to employing our currently unemployed resources. That's the whole point. Unemployed workers, entrepreneurs with ideas but no funding... these are the things that, when employed and funded, prompt economic growth and recovery.
What, though, will the unemployed workers get jobs doing? What ideas, though, do the entrepreneurs have? In our last bubble, cheap money chased housing, so resources and labor were deployed there. In the bubble before that, cheap money chased internet startups, so the entrepreneurs in that space got literally more funding than they knew what to do with.
Are we to believe that there won't be overshoot this time? Of course not! We'll be fooled again, and the cheap money will chase something that will seem weird this year, revolutionary next year, proven the year after that, and hopelessly retarded the year after that. Retarded like these guys, or like a subdivision of multi-million dollar houses 40 miles outside of Phoenix.
How to spot the next bubble? Hard to say. We can assume that there will be Zeitgeist clues like Time magazine covers, explanatory documentaries on network television, and a whole section of the bookstore dedicated to books on the subject. Another clue: previously rather non-wealthy individuals making a ton of money at some trade that wasn't popular last year, or maybe didn't even exist yet. Another clue: whatever it is, Warren Buffett won't be investing in it.
Will this bubble be as bad as the last one? Well, there's WAY more money looking for a place to go, so that doesn't look good. On the other hand, firms might have learned their lesson on leveraging (and if they haven't, the government might try to impose that lesson anyhow), so maybe there won't be a huge multiplier from derivative investments like there was this time.
Any guesses? Well, some folks have been throwing around the idea of a Green Revolution. Lots of legitimate opportunity there, but also an opportunity for over-investment in good-sounding but bad-in-practice ideas. That's just a wild guess though, it can be anything. There have been bubbles in tulips and beanie babies, so it's not like there's any guarantee that it's going to make the least bit of sense.
Thursday, April 23, 2009
I want my emteevee
What do you think would happen if all TV shows were to be magically rendered unavailable to viewers (i.e., no cable, no satellite, no hulu.com, no Netflix season DVDs, etc) for an entire year?
Nielson says that individuals average 4 hours, 35 minutes a day of television viewing. That doesn't include internet and TV-on-DVD watching. Even still, back-of-the-envelope calculation says that's 500 billion hours.
What on earth would the citizenry do with 500 billion hours of free time? Would we see giant churches? A shift to movies? An explosion in live entertainment? An explosion in the restaurant industry? Riots? Revolution (aka, an explosion in the pipe-bomb industry)? People... in... libraries?
A link posted by twifkak recently noted that TV is to the information age as gin was to the industrial age - a means through which society copes with a structure to which it hasn't quite figured out how to adapt yet. Normal people are producing and sharing more content than ever before due to the internet. Would TVs temporary hiatus push that revolution over the edge, or are we not there yet? Or perhaps we're placing a little too much faith in teleology here, perhaps that's not where we're going at all...
If you have a TV, what would you do with your time? Is your alternative method for allocating free time superior to your current, TV-based one? If so, why are you behaving the way you are presently?
If you don't have a TV, think about people that you know who do. What do you think they would do? What do you do with the time you could be spending TV? Do you think your free time choices are superior, or even that you yourself are superior to your TV viewing friends?
Nielson says that individuals average 4 hours, 35 minutes a day of television viewing. That doesn't include internet and TV-on-DVD watching. Even still, back-of-the-envelope calculation says that's 500 billion hours.
What on earth would the citizenry do with 500 billion hours of free time? Would we see giant churches? A shift to movies? An explosion in live entertainment? An explosion in the restaurant industry? Riots? Revolution (aka, an explosion in the pipe-bomb industry)? People... in... libraries?
A link posted by twifkak recently noted that TV is to the information age as gin was to the industrial age - a means through which society copes with a structure to which it hasn't quite figured out how to adapt yet. Normal people are producing and sharing more content than ever before due to the internet. Would TVs temporary hiatus push that revolution over the edge, or are we not there yet? Or perhaps we're placing a little too much faith in teleology here, perhaps that's not where we're going at all...
If you have a TV, what would you do with your time? Is your alternative method for allocating free time superior to your current, TV-based one? If so, why are you behaving the way you are presently?
If you don't have a TV, think about people that you know who do. What do you think they would do? What do you do with the time you could be spending TV? Do you think your free time choices are superior, or even that you yourself are superior to your TV viewing friends?
Monday, April 20, 2009
Robots don't sweat
So, let's say that you're a consumer. You like cheap goods, you dislike sweatshops. How do you encourage the availability of the former while discouraging the latter?
Well, imagine you are a producer of cheap goods, and that those cheap goods are produced by low-skilled workers in an environment that would be considered unpleasant by Western standards. Factory space in your third world country is pretty cheap, as are raw materials. Chances are that a major portion of your expenditure is labor, cheap though that labor may be. Worse, that's not a fixed cost - scaling up your business means scaling up your labor. For every marginal good, you pay a marginal increase in labor.
In the short run, that increase is linear - double the output, and you double the labor costs, hiring more workers, or having workers double their hours. In the long run, the scale is worse than linear - beyond a certain number of workers you need to increase levels of management, consider housing, bigger or more locations, etc.
As an alternative, perhaps you might consider automation. Robots scale much better than humans do, in terms of space and cost. The significant costs with automated production are largely fixed - the initial outlay to purchase the equipment, and the ongoing cost of upkeep. The marginal cost is relatively low - once you've got a well-maintained factory line, the n+1th product doesn't add much cost onto the nth.
A few issues here. You need an area with the infrastructure to support automation (electricity, security, etc). You need to have the money for the initial setup, or some form of loan. You also need to sell a minimum number of units a year in order to support the fixed costs of maintaining your factory and, if necessary, re-paying your loans.
The more units you sell, the more revenue you get, and the worse the bottom line gets using manual labor. Naturally, you'd want to deploy some of your new revenue toward automating. So... our consumer ought to want you to sell MORE goods rather than LESS, so as to push you over the break-even point on an investment in automation, right? Basically, a boycott is moving incentives in the wrong direction, but a purchase is rewarding behavior that you don't want, right?
Well yeah, but what of the workers currently employed? They're working a crappy job because there aren't any other jobs. As the sweatshop sells more units, they're pushed even harder, until automation makes sense financially, at which point... they're out of a job. So they take an even crappier job... Do we imagine that all of the sweatshop workers will become robot repairmen?
Note that unions and pro-labor laws can hasten this break-point in individual cases or throughout a nation. Restrictions on daily and weekly hours, minimum pay requirements, safety regulations and the like all increase the cost of the marginal worker and, by extension, the marginal unit. The higher those marginal costs get, the better automation looks.
In the long term, theory has it that manual laborers can make the transition from factory work to professional careers, working in support of a relatively more automated factory setup. That said, the US is a first world country with a world class university system... and look at Detroit. If we can't manage this kind of a transition, what hope have, e.g., China and India? Is it the manual labors who will make the transition, or their children?
I think that the crux of it is that if we don't want folks working in crappy conditions, it's on us to conjure up a way for folks of their skill, education and location to live a better life when otherwise employed. How to increase the human capital of a population, as quickly as possible? Perhaps we need robot professors.
Well, imagine you are a producer of cheap goods, and that those cheap goods are produced by low-skilled workers in an environment that would be considered unpleasant by Western standards. Factory space in your third world country is pretty cheap, as are raw materials. Chances are that a major portion of your expenditure is labor, cheap though that labor may be. Worse, that's not a fixed cost - scaling up your business means scaling up your labor. For every marginal good, you pay a marginal increase in labor.
In the short run, that increase is linear - double the output, and you double the labor costs, hiring more workers, or having workers double their hours. In the long run, the scale is worse than linear - beyond a certain number of workers you need to increase levels of management, consider housing, bigger or more locations, etc.
As an alternative, perhaps you might consider automation. Robots scale much better than humans do, in terms of space and cost. The significant costs with automated production are largely fixed - the initial outlay to purchase the equipment, and the ongoing cost of upkeep. The marginal cost is relatively low - once you've got a well-maintained factory line, the n+1th product doesn't add much cost onto the nth.
A few issues here. You need an area with the infrastructure to support automation (electricity, security, etc). You need to have the money for the initial setup, or some form of loan. You also need to sell a minimum number of units a year in order to support the fixed costs of maintaining your factory and, if necessary, re-paying your loans.
The more units you sell, the more revenue you get, and the worse the bottom line gets using manual labor. Naturally, you'd want to deploy some of your new revenue toward automating. So... our consumer ought to want you to sell MORE goods rather than LESS, so as to push you over the break-even point on an investment in automation, right? Basically, a boycott is moving incentives in the wrong direction, but a purchase is rewarding behavior that you don't want, right?
Well yeah, but what of the workers currently employed? They're working a crappy job because there aren't any other jobs. As the sweatshop sells more units, they're pushed even harder, until automation makes sense financially, at which point... they're out of a job. So they take an even crappier job... Do we imagine that all of the sweatshop workers will become robot repairmen?
Note that unions and pro-labor laws can hasten this break-point in individual cases or throughout a nation. Restrictions on daily and weekly hours, minimum pay requirements, safety regulations and the like all increase the cost of the marginal worker and, by extension, the marginal unit. The higher those marginal costs get, the better automation looks.
In the long term, theory has it that manual laborers can make the transition from factory work to professional careers, working in support of a relatively more automated factory setup. That said, the US is a first world country with a world class university system... and look at Detroit. If we can't manage this kind of a transition, what hope have, e.g., China and India? Is it the manual labors who will make the transition, or their children?
I think that the crux of it is that if we don't want folks working in crappy conditions, it's on us to conjure up a way for folks of their skill, education and location to live a better life when otherwise employed. How to increase the human capital of a population, as quickly as possible? Perhaps we need robot professors.
Thursday, April 16, 2009
GDP, Value, Resources, and You
A while back, I mentioned that economies can generate wealth without theoretical limit, prompting this question:
For starters, there's a matter of definition. The question above obviously considers physical, tangible stuff. Gold pieces, certainly. Houses. Perhaps iPods. What about the music ON the iPod though, in the unlikely event that it was purchased? If I paid $0.99 for a copy of a song on iTunes, does that count towards my wealth? Even though I really can't re-sell it? What sort of wealth can Apple, Inc. claim by pure fact of having that song on their servers, available for sale? How wealthy is the musician who created the song, and the label that produced it? If I purchase a dividend future against the company that owns the label, how wealthy am I? If your 401K is invested in a company who owns a derivative sold by the company that lent me the money to purchase my house, and my ability to pay that mortage is dependent upon the success of my dividend futures, which depend upon the success of the label, which depends upon the success of the musician, which depends on you spending $0.99 to buy the song on iTunes... Well, where do we all stand?
Well, chances are that Twifkak, the questioner, was referring to more physical stuff, but the physical stuff is readily exchangeable for less phyiscal stuff, like services, or intellectual property, or what have you. Surely possession of those things, or rights to those things, constitute wealth as well.
Let's ignore currency, inflation, gold standard, and all that gobbledygook for a moment. We can ignore the ins and outs of mark-to-market for the most part too. Maybe we can even move beyond the term "wealth." Let's consider resources, and value.
Resources are the things that are limited. There's only so much gold. We can only make so many iPods before we run out of the metals and plastics required. There are other resources too, like the time and effort of the workers who mine the gold, and who design and manufacture the iPods.
Value on the other hand, which is sort of what I was indicating when I used the term "wealth," is the thing that isn't really limited, and is actually kinda hard to measure. Let's consider for example, a lump of gold. The lump isn't too valuable if it's mixed up with a bunch of stone, half a mile under the ground. The same amount of gold is way more valuable in a ring, or in a computer chip.
That makes sense on the surface, but how do we know that? It's the same elemental stuff, right? Well, we know that a customer will pay more for a ring or a computer than for mining rights. What if I'm a naturalist though, and I'd rather have the stuff in the ground? Value, it seems, is subjective. What if, a decade from now, our fancy quantum computers don't require any gold? The chips won't be valuable then, will they? Value, it seems, is time-dependent.
The same thing should apply to labor, right? Consider a lawyer whose expertise is intellectual property. How valuable is his time now? How valuable was it prior to the rise of the internet and all the patent wars, plagarism and copyright wars it brought?
Okay, so value is a slippery term. Wealth, in the sense I used it, is an aggregate measurement of the value currently owned and/or produced by an individual, a group, a nation, or whatever. So, if it's a measurement, how do we measure it?
Well, this would be a convenient time to bring back currencies and markets and all that, but let's resist. In a simple understanding, folks work for currency, which they spend in some form of market, in order to get goods and services that were produced using physical (e.g., gold) and non-physical (e.g., labor) resources that they value. Currency, then, shows up on both sides of the equation, which means we can safely discard it.
The market too is on both sides - there's a market for the labor that the consumer offers in order to earn the currency, and a market for the currency that the laborer then offers in order to get what he values. Since labor is really just a fancy name for "service," we can get rid of the extraneous stuff and concentrate on the important bit: we know how much you value MY good or service by measuring how much of YOUR goods and services you're willing to give up for MINE.
Okay, let's bring currency in, finally. Since the amounts I'll be willing to give up for what you've got and you'll be willing to give up for what some third person has got are all subjective, and time-dependent, and otherwise measured in incompatible units like "hours of time spent by a trained doctor on diagnosing a patient" vs "gigabytes of storage" vs "tins of gourmet green tea in China," things get confusing fast. So fast in fact, it's almost impossible to conduct any but the simplest of economies on currency-less barter. It's currency that lets me say that I'd pay $100 an hour for a physicians care, $100 for a 500GB USB drive, and $0 for gourmet green tea, since I don't like it. If you aren't sick, don't need a hard disk, and fancy green tea, your numbers will be different.
Useful though money is, it's not really special. It's just another good. You might value yen, I might value dollars. If an elementary school economy depends on hostess cupcakes for currency (a likely scenario), prices for, e.g., bully ransom might fluctuate wildly depending on whether the school lunch is yummy or not on any given day. If I offered you a million dollars to shovel manure for a day, you'd probably do it. You value your leisure a lot, and you value not smelling manure a lot, but you value 100 million bucks more. If you knew though, beyond a shadow of a doubt, that you were going to die tomorrow night, you'd probably pass on my offer. New information means that you value dollars a whole lot less (what use are dollars to a dead man?), and your lesisure (i.e., whatever you'd do with your last day otherwise) a whole lot more. If you're afraid that the US government won't be able to pay off its treasury bills, or that the dollars it gives you when it does won't be worth too many yen, maybe you won't purchase any more bonds. You know, that kind of thing.
Okay, rambling aside and a whole lot of opened cans of worms later, what has this to do with economies generating wealth? Well, resource allocation is zero sum, but value allocation isn't exactly. If a wealthy person as a nice Porsche, then it's true that I can't have that Porsche. I could however, build my own. Or take a second job and buy one. Or make something that you thought was worth $80,000 and sell it to you. Or, I could go online, look at some photos of Italian sportscars, and, four hours later, not want the Porsche at all. Or President Obama could announce the Porsche In Every Garage initative, allocating public resources to the hostile takover of Porsche (and, perhaps necessarily, Germany) by the US government, and subsequent mass production and distribution of 911-Turbos for all. Of course, if he did so, we probably wouldn't want the Porsches any more, since everybody would have one. Including the "wealthy" people, except they'd be driving Lambos, which is what we'd want.
Which of course, is the point. This isn't about resources at all, or even goods or services. Value and wealth are way more slippery than that. The overwhelming majority of the last couple thousand years of history consists of subsistence agriculture. For a subsistence farmer, a cheeseburger would a luxury rarely or never experienced. In our age, someone earning minimum wage can secure a cheeseburger for less than 10 minutes' work. Paris Hilton probably hasn't logged 10 minutes of work in her lifetime, as some would measure such things, so how much can we say that she values the 5,000 handbag that she totes? I know I value my pocket change more than that hideous thing. Which was valued more by whom, the entire fortune possessed by Steve Ballmer, who stresses out every night over what new product Apple might be released, or the tree under which the Buddha (himself a "wealthy" prince) attained enlightenment? Who was... wealthier?
Where we're going with all of this, is that redistribution is somewhat nonsensical. The cheeseburger you can get for a buck at Wendy's is the same combination of cheese, bread and meat that would be an unattainable luxury for many today, and nearly all of our ancestors. The value of that cheeseburger though isn't what it IS, but what it REPRESENTS. The Porsche driven by an AIG exec would be just as fast if everyone had one, but way less valuable. We don't evaluate these things based on what they ARE, or how much stuff is in them and in what combination, or how long it took to make them. We evaluate them based on the status they convey, the feelings we have about them, the difficulty or relief from difficulty they bring to our lives.
These are fickle things. They can change based on what your neighbor purchases, or what disease your mother died of, or what ads were on during the super bowl. These are "relative" in the sense that we compare what we've got to what "wealthy" people have got, but that's not the extent of it. They're relative in the sense that we all value different things, and value them differently at different times. It's silliness to conceptualize a giant pool of iPods, Porsches, cancer treatments and the like, and reapportion them out to everyone. Reapportioning them would change the values anyway, and there'd be no way to balance those equations. It's just nonsense.
The economy produced the "wealth" that the stereotype of an AIG exec commands right now. His mansion, his Porsche, the "services," if we might be so blunt, of his trophy wife. Surely it'll produce much more "wealth" in the future. Cures for cancer, quantum computing. Perhaps we'll get our flying cars. Mansions for everyone in moon colonies, 200 year life spans.
Are we being anti-materialist here? I don't really think so. Buddha attained enlightenment under a tree, but did someone plant that tree? Even if it grew naturally, are there enough trees for everyone? Would he have had the time to attain enlightenment had he been working in the fields like his peasant subjects? Even a monk has a rice bowl and a robe, right? I enjoy my computer, and I eagerly await the awesome capabilities offered of my next one. But that's just it, there's always a potential next one. Workers can become more productive. Computers can be faster and smaller. Porsches can be faster, or sleeker, or get sat-nav, or the power of... FLIGHT. Moon colonies can be made more spacious. Or maybe there's a better view to be had on a planet orbiting two stars so that you can have twice the sunsets and sunrises. Or perhaps we'll just have holodecks and simulate the sunsets. But the "wealthy" will be the ones whose holodecks have better contrast ratio and don't leave that weird feeling in the back of your head after a session that's kind of like when you start walking around in normal shoes after ice skating.
Surely once all those things come to pass, our GDP will be through the roof. Even the poorest of us will be wealthier, in dollar terms, or in flying car terms, or whatever terms you'd like, than the wealthiest AIG exec.
Perhaps I should quit rambling and move onto something else. Maybe I could give World of Warcraft another try. I quit last time, since I was only level 12, and it'd take weeks to get to level 80, which I'd have to do in order to get the kickass swords. That's way too much work. If I were in charge of Blizzard, I'd hack the database and give everyone kickass swords. Then they'd be happy.
Can you go into more detail on this? As I see it, wealth is the the amount of stuff produced divided by the amount of stuff required. AFAICT, the only two things that can change that ratio are death and technology.Let's see if I can get at what I was getting at. I don't know much about this sort of stuff, but that's why it's time for me to start thinking about it. Thinking through writing. Which means, this will be long...
For starters, there's a matter of definition. The question above obviously considers physical, tangible stuff. Gold pieces, certainly. Houses. Perhaps iPods. What about the music ON the iPod though, in the unlikely event that it was purchased? If I paid $0.99 for a copy of a song on iTunes, does that count towards my wealth? Even though I really can't re-sell it? What sort of wealth can Apple, Inc. claim by pure fact of having that song on their servers, available for sale? How wealthy is the musician who created the song, and the label that produced it? If I purchase a dividend future against the company that owns the label, how wealthy am I? If your 401K is invested in a company who owns a derivative sold by the company that lent me the money to purchase my house, and my ability to pay that mortage is dependent upon the success of my dividend futures, which depend upon the success of the label, which depends upon the success of the musician, which depends on you spending $0.99 to buy the song on iTunes... Well, where do we all stand?
Well, chances are that Twifkak, the questioner, was referring to more physical stuff, but the physical stuff is readily exchangeable for less phyiscal stuff, like services, or intellectual property, or what have you. Surely possession of those things, or rights to those things, constitute wealth as well.
Let's ignore currency, inflation, gold standard, and all that gobbledygook for a moment. We can ignore the ins and outs of mark-to-market for the most part too. Maybe we can even move beyond the term "wealth." Let's consider resources, and value.
Resources are the things that are limited. There's only so much gold. We can only make so many iPods before we run out of the metals and plastics required. There are other resources too, like the time and effort of the workers who mine the gold, and who design and manufacture the iPods.
Value on the other hand, which is sort of what I was indicating when I used the term "wealth," is the thing that isn't really limited, and is actually kinda hard to measure. Let's consider for example, a lump of gold. The lump isn't too valuable if it's mixed up with a bunch of stone, half a mile under the ground. The same amount of gold is way more valuable in a ring, or in a computer chip.
That makes sense on the surface, but how do we know that? It's the same elemental stuff, right? Well, we know that a customer will pay more for a ring or a computer than for mining rights. What if I'm a naturalist though, and I'd rather have the stuff in the ground? Value, it seems, is subjective. What if, a decade from now, our fancy quantum computers don't require any gold? The chips won't be valuable then, will they? Value, it seems, is time-dependent.
The same thing should apply to labor, right? Consider a lawyer whose expertise is intellectual property. How valuable is his time now? How valuable was it prior to the rise of the internet and all the patent wars, plagarism and copyright wars it brought?
Okay, so value is a slippery term. Wealth, in the sense I used it, is an aggregate measurement of the value currently owned and/or produced by an individual, a group, a nation, or whatever. So, if it's a measurement, how do we measure it?
Well, this would be a convenient time to bring back currencies and markets and all that, but let's resist. In a simple understanding, folks work for currency, which they spend in some form of market, in order to get goods and services that were produced using physical (e.g., gold) and non-physical (e.g., labor) resources that they value. Currency, then, shows up on both sides of the equation, which means we can safely discard it.
The market too is on both sides - there's a market for the labor that the consumer offers in order to earn the currency, and a market for the currency that the laborer then offers in order to get what he values. Since labor is really just a fancy name for "service," we can get rid of the extraneous stuff and concentrate on the important bit: we know how much you value MY good or service by measuring how much of YOUR goods and services you're willing to give up for MINE.
Okay, let's bring currency in, finally. Since the amounts I'll be willing to give up for what you've got and you'll be willing to give up for what some third person has got are all subjective, and time-dependent, and otherwise measured in incompatible units like "hours of time spent by a trained doctor on diagnosing a patient" vs "gigabytes of storage" vs "tins of gourmet green tea in China," things get confusing fast. So fast in fact, it's almost impossible to conduct any but the simplest of economies on currency-less barter. It's currency that lets me say that I'd pay $100 an hour for a physicians care, $100 for a 500GB USB drive, and $0 for gourmet green tea, since I don't like it. If you aren't sick, don't need a hard disk, and fancy green tea, your numbers will be different.
Useful though money is, it's not really special. It's just another good. You might value yen, I might value dollars. If an elementary school economy depends on hostess cupcakes for currency (a likely scenario), prices for, e.g., bully ransom might fluctuate wildly depending on whether the school lunch is yummy or not on any given day. If I offered you a million dollars to shovel manure for a day, you'd probably do it. You value your leisure a lot, and you value not smelling manure a lot, but you value 100 million bucks more. If you knew though, beyond a shadow of a doubt, that you were going to die tomorrow night, you'd probably pass on my offer. New information means that you value dollars a whole lot less (what use are dollars to a dead man?), and your lesisure (i.e., whatever you'd do with your last day otherwise) a whole lot more. If you're afraid that the US government won't be able to pay off its treasury bills, or that the dollars it gives you when it does won't be worth too many yen, maybe you won't purchase any more bonds. You know, that kind of thing.
Okay, rambling aside and a whole lot of opened cans of worms later, what has this to do with economies generating wealth? Well, resource allocation is zero sum, but value allocation isn't exactly. If a wealthy person as a nice Porsche, then it's true that I can't have that Porsche. I could however, build my own. Or take a second job and buy one. Or make something that you thought was worth $80,000 and sell it to you. Or, I could go online, look at some photos of Italian sportscars, and, four hours later, not want the Porsche at all. Or President Obama could announce the Porsche In Every Garage initative, allocating public resources to the hostile takover of Porsche (and, perhaps necessarily, Germany) by the US government, and subsequent mass production and distribution of 911-Turbos for all. Of course, if he did so, we probably wouldn't want the Porsches any more, since everybody would have one. Including the "wealthy" people, except they'd be driving Lambos, which is what we'd want.
Which of course, is the point. This isn't about resources at all, or even goods or services. Value and wealth are way more slippery than that. The overwhelming majority of the last couple thousand years of history consists of subsistence agriculture. For a subsistence farmer, a cheeseburger would a luxury rarely or never experienced. In our age, someone earning minimum wage can secure a cheeseburger for less than 10 minutes' work. Paris Hilton probably hasn't logged 10 minutes of work in her lifetime, as some would measure such things, so how much can we say that she values the 5,000 handbag that she totes? I know I value my pocket change more than that hideous thing. Which was valued more by whom, the entire fortune possessed by Steve Ballmer, who stresses out every night over what new product Apple might be released, or the tree under which the Buddha (himself a "wealthy" prince) attained enlightenment? Who was... wealthier?
Where we're going with all of this, is that redistribution is somewhat nonsensical. The cheeseburger you can get for a buck at Wendy's is the same combination of cheese, bread and meat that would be an unattainable luxury for many today, and nearly all of our ancestors. The value of that cheeseburger though isn't what it IS, but what it REPRESENTS. The Porsche driven by an AIG exec would be just as fast if everyone had one, but way less valuable. We don't evaluate these things based on what they ARE, or how much stuff is in them and in what combination, or how long it took to make them. We evaluate them based on the status they convey, the feelings we have about them, the difficulty or relief from difficulty they bring to our lives.
These are fickle things. They can change based on what your neighbor purchases, or what disease your mother died of, or what ads were on during the super bowl. These are "relative" in the sense that we compare what we've got to what "wealthy" people have got, but that's not the extent of it. They're relative in the sense that we all value different things, and value them differently at different times. It's silliness to conceptualize a giant pool of iPods, Porsches, cancer treatments and the like, and reapportion them out to everyone. Reapportioning them would change the values anyway, and there'd be no way to balance those equations. It's just nonsense.
The economy produced the "wealth" that the stereotype of an AIG exec commands right now. His mansion, his Porsche, the "services," if we might be so blunt, of his trophy wife. Surely it'll produce much more "wealth" in the future. Cures for cancer, quantum computing. Perhaps we'll get our flying cars. Mansions for everyone in moon colonies, 200 year life spans.
Are we being anti-materialist here? I don't really think so. Buddha attained enlightenment under a tree, but did someone plant that tree? Even if it grew naturally, are there enough trees for everyone? Would he have had the time to attain enlightenment had he been working in the fields like his peasant subjects? Even a monk has a rice bowl and a robe, right? I enjoy my computer, and I eagerly await the awesome capabilities offered of my next one. But that's just it, there's always a potential next one. Workers can become more productive. Computers can be faster and smaller. Porsches can be faster, or sleeker, or get sat-nav, or the power of... FLIGHT. Moon colonies can be made more spacious. Or maybe there's a better view to be had on a planet orbiting two stars so that you can have twice the sunsets and sunrises. Or perhaps we'll just have holodecks and simulate the sunsets. But the "wealthy" will be the ones whose holodecks have better contrast ratio and don't leave that weird feeling in the back of your head after a session that's kind of like when you start walking around in normal shoes after ice skating.
Surely once all those things come to pass, our GDP will be through the roof. Even the poorest of us will be wealthier, in dollar terms, or in flying car terms, or whatever terms you'd like, than the wealthiest AIG exec.
Perhaps I should quit rambling and move onto something else. Maybe I could give World of Warcraft another try. I quit last time, since I was only level 12, and it'd take weeks to get to level 80, which I'd have to do in order to get the kickass swords. That's way too much work. If I were in charge of Blizzard, I'd hack the database and give everyone kickass swords. Then they'd be happy.
Tuesday, April 14, 2009
O Canadia?
So, do the Canadians have all the answers? Fareed Zakaria reports, I link, you decide.
A few things to think about:
A few things to think about:
- Canadians don't have our defense budget to worry about, and that leaves a lot of room for universal health care.
- Leverage is obviously dangerous, but how much leverage is bad? Why are/were investors investing in firms that were leveraged at 30:1? If they were before, have they learned their lesson? Or is regulation necessary?
- Speaking of reducing leverage, I'm assuming that repealing the mortgage interest deduction will be part of the government's regulatory reform, right? Why on earth are we encouraging young family's to take on tremendous amounts of debt?
- Budget surpluses, like universal health care, are easier to afford when you don't have the world's most expensive military.
- We've mentioned immigration laws and brain-drain here before, and we'll likely mention it again. You can't turn around in an American grad school without bumping into a foreigner who will be training up here, but going elsewhere due to an inability to work in the US upon graduation.
Friday, April 3, 2009
The Twilight Zone
So there's this book that the tweens were reading and going crazy about. One tween would read it, go crazy about it, and then tell another tween, who would read it, and go crazy about it, and then tell a third... Well, you see how this works. There doesn't seem to be a cure for the craziness, but at first it seemed like things were okay because the tweens were only telling other tweens, not regular people, so my friends weren't effected. Lately though, it's been spreading to folks my age, and all over the internets.
I'm not sure what's to be done.
I'm not sure what's to be done.
Wednesday, April 1, 2009
That's why I say hey man, nice shot...
While meandering about the interwebs, I stumbled upon a whole set of nice shots. That dude makes me want to get into landscape, which certainly hasn't been my primary interest in the photographic discipline to this point.
In related but slightly more local news, here's a sunrise I snapped on the way to work a few weeks back. As morning commutes go, well, I've had worse.
Digital and the internet have really changed photography, when you think about it. An aspiring photographer can:
- See the results of a shot immediately after taking it (even faster than polaroid used to be)
- Take thousands of shots with almost zero marginal cost
- Modify ISO without changing film
- Post-process with a laptop instead of a darkroom. Among the huge advantages here: space, undo, macros, marginal cost, etc.
- Carry a collection of tens of thousands of photos around on a hard disk no larger than a moderately sized hardcover
- Copy, clone, post, email, tag, share, and generally spread about photos to anyone and everyone, once again with near-zero marginal cost
Basically, after laying down a few bucks for a decent body and some glass, one can get all the practice he could ever want, nearly for free. Moreover, one can view the postings of others, also generally for free. No need to go to galleries, or buy books of prints.
Writers, musicians, graphic designers, programmers, visual artists, and scads of other "creatives" are seeing the same thing happen. As the marginal cost of production, publication and consumption head towards zero, the interaction that produces artistic movements ought to increase proportionately. You used to have to move to some physical place in order to take part in e.g., Ashcan, or Bauhaus. Now you just have to click a tag on Flickr, or DeviantArt.
In theory, this change in underlying economics should give rise to tons of new artists, movements and schools. It seems like it ought to be big enough to produce a fundamental revolution in the creative disciplines.
Of course, the flip side of all this is that the increase in signal is accompanied by an even bigger increase in noise. Not all content is good (heck, just look at his blog). Sorting through the crap in search of the decent is a really hard problem. Social filtering (Reddit) can help, automated filtering (Google) can help. At the end of the day though, there's going to be more potentially decent stuff to look at than time to look at it. Physical resources like film and glossy photo paper have been removed as a constraint, but the new constraints are time and attention, and we haven't caught up with that fact yet.
Once folks realize how valuable their time and attention are, how could we ever expect them to spend 40 hours at work, and another umpteen hours watching tv. Talk about under-valuation! It's like you give somebody a two thousand dollar laptop and then they use it as a doorstop since they haven't any idea what else it might be good for. Speaking of commutes, in a world where time and attention are incredibly valuable, who has time to drive an hour each way from the McMansion to the office?
That's some powerful stuff they've got on those interwebs now.
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