Cross-posted at Sentient Developments

There is a long list of crises that we need to face and I won’t waste time boring you by listing them. As our brightest minds admit they were wrong, I hope that I can say, without qualification, that big changes in our thinking are required. Unfortunately, we haven’t made that “Change” even though we now have some new faces in power, and a bunch of old faces out of business or in prison.

There is still an unquestioned belief in the need for major public transportation projects, global supply chains, large scale social programs, and economies of scale. These have become so integral to our way of life, that they are hardly ever questioned. Granted, Wal-Mart is often used as a public target for venting our frustrations at these things, but virtually all business nowadays is conducted using global supply chains, economies of scale, and so forth.

Thus, our political discourse usually revolves around ways to prop up these very systems, since these are the only ones we know. We believe we require trillions in “infrastructure” funding. We believe that we must “create jobs.” We believe we must become “competitive” in the international marketplace. All of these assumptions are echoed in academia, merely using fancy jargon as a substitute for insight.

Let me first say that I accept the logic of comparative advantage and economies of scale as it applies to the capitalist mode of production, and it can truly be the most “efficient” allocation of resources in a quantitative sense, though not always. Yet, as Peter Drucker once said, there is nothing so useless as doing efficiently that which should not be done at all. I do not accept that the inevitable centralization of power from this sort of production is a good thing. Centralized powers are able to create artificial scarcities, in order to inflate profits at the expense of everyone else. This invariably requires things like corporatism, regulatory capture, secrecy, and rent seeking.

None of these things are very amenable to true progress, which requires openness, peer review, constructive criticism, and creativity. The types of innovations that occur under these centralized systems, even if they take on a bourgeois bohemian quality and aren’t bland and soul-crushing, are incredibly stifling of progress. Open standards are shucked in favor of closed proprietary ones whenever a corporation can get away with it. Parts are never interchangeable. The production processes are so far removed from our daily lives that we have no idea about the processes involved in the creation of the product, and indeed breaking open the gizmo more likely than not voids the warranty…. though I’m not sure you’d even want to open it up considering the high density of toxic crap trapped inside.

All of this has had corrosive effects on our culture, as well as our environment. Our hyper-consumerist culture encourages us to get the latest and greatest stuff. We follow a sequence of fads specialized to our exact niche market (hipster, redneck, emo, rock, punk, goth, anime, whatever). We indulge in enormous quantities of unsustainable, non-renewable, and disposable products. Even more discouragingly, many companies use engineered obsolescence to artificially increase output at the expense of the environment.

We are now lamenting the fact that none of us have a clue about what it actually takes to produce tangible, concrete things which improve our lives. We are too busy answering phones, producing ad campaigns, and writing paperwork. Thus, instead of becoming active participants in the production of our culture and economy, or even informed consumers, we have become totally and completely dependent upon forces far beyond our control. As the market swings out of control, so do our jobs, our homes, and our very lives.

Yet, a revolution has occurred right under our noses whose effects have yet to be fully explored, and most of us are completely unaware. Digital communications technologies, especially the Internet, have enabled new modes of production and organization, such as Open Source and P2P, which have never before been possible. If we can learn to harness the power of these systems, we can escape the path our current world is on where each labor-saving device seems only to cause us to work longer hours. Where social programs seem only to foster dependence. Instead of innovating in accordance with the logic of centralized power and artificial scarcity, we can innovate in accordance with human needs and wants.

We can collaboratively build all the necessary life support systems needed, but have it be on a self-contained and local scale. It cannot be known whether the shape this takes will favor truly scale invariant systems, like the hyper-local RepRap project which is allowing production right in your living room, or whether it ends up fostering a new urbanism where production takes place in vertical farms, factories, and community hackerspaces. Talk about vertical integration! It also cannot be known how it will reshape our communities, since each community would be redesigned in a participatory fashion by the members of the community itself. Some may opt for small scale pedestrian-friendly towns in harmony with nature, while others may opt for sustainable urban metropolises, and others may ditch both for self-sufficient mobile homes and yachts.

In each of these cases, the means of production will likely have been placed in the hands of individuals, and drudgery will be automated away much like how open source software projects collaboratively eliminate bugs and expose flaws in wiki articles. Considering all of this, it may be useful to begin talking again about incentivizing local production. “Import substitution,” has long been a naughty word among economists. It is the process of breaking free of foreign dependence by incentivizing local production. Usually via tariffs and other measures. However, this would be a misguided way of going about this.

We don’t need to incentivize local production of just any type. We need to incentivize open and collaborative production. For example, creating prizes for contributing to the Commons. In 2007 there was a proposed bill called the Medical Innovation Prize Act which sought to incentivize patent-less medical inventions. If only it was this sort of mentality that guided us for the past few decades, then we wouldn’t have ever had such a monstrosity of a healthcare system. The same mentality could guide any industry. A useful exercise would be to think how it could guide the industry you are currently involved in. Finally, the creation of new local credit systems could also incentivize collaborative local production. There are lots of new concepts along these lines.

I also suggest you check out some of my previous work on decentralization. It is this sort of thinking which is required for a peaceful transition to a new era for our civilization. It will allow us to become resilient to the converging threats which face us from ecological destruction to market failure to terrorism. Global supply chains have shown themselves to be exceedingly vulnerable to these shocks. I hope we can overcome these by localizing production by utilizing global knowledge sharing so we can all enjoy the type of future some of the previous guest bloggers have been talking about.

Filed under : Decentralization, Economics, Post-Scarcity

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Nobody is a bigger supporter of energy efficiency than I am. Yet, it is urgent we understand that it is not a solution to our climate crisis.

What is the efficiency paradox?

The proposition was first put forward by William Stanley Jevons in his 1865 book The Coal Question. In it, Jevons observed that England’s consumption of coal soared after James Watt introduced his coal-fired steam engine, which greatly improved the efficiency of Thomas Newcomen’s earlier design. Source: Wikipedia

Why is it that coal consumption soared after the efficiency improved? From an economic perspective, this should be perfectly obvious: as the efficiency of the coal engine increases, it becomes a cheaper option and is thus used at an increased rate.

The same is true with gasoline engines. The more efficient they become, the more likely it is that people will continue to use them. Even if the entire developed world spent tons of money to convert to electric cars and alternative energy, this would only make gasoline an even more viable option for countries which are still developing.

This summer, Tata Motors is releasing a $2,000 car in India called the Nano. It has taken a century for internal combustion automobiles to mature to a point where they can be produced at such low cost. The internal combustion engine is unhindered by patents and has been mass produced for almost 100 years. New electric engines are unlikely to hit that price point in the foreseeable future, and thus the fastest growing parts of the world are highly unlikely to choose them in an unregulated marketplace.

Energy efficiency will also decrease the price gap between the raising of livestock and the growing of plants. Considering the worst contributor of greenhouse gases is actually the livestock industry, this does not bode well for our planet.

Granted, in certain markets people’s habits do not greatly change as a result of efficiency gains. Hybrid car owners do not drive much more than regular motorists, and people who buy more efficient refrigerators are unlikely to use it more wastefully. Yet, the overall number of these machines purchased would likely increase and still cause any efficiency gains to evaporate.

If climate change is likely to cause significant problems for our civilization in the next century, we cannot expect the free market to correct the problem. If measures are not put in place to improve the competitiveness of carbon-neutral technologies, then drastic measures such as geo-engineering are inevitable.

The risks, moral hazards, and political implications brought forth by geo-engineering are going to be challenging indeed. Considering the overwhelming evidence pointing to humanity’s dangerous impact on the environment, we better prepare for this sooner rather than later. Geo-engineering must move closer to the center of the debate on climate change.

Other longer term options such as space colonization should also be considered. Interestingly, learning to live sustainably is a prerequisite for space colonization. Permaculture, recycling, vertical farming, energy efficiency, and the creation of harmonious ecosystems are key to living in space. NASA has known this for some time now, and it is time we start treating our situation here on Earth with as much foresight. Sustainability is key no matter what course we take.

Filed under : Economics, Risk, Sustainability, Technology

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A post from Greg Mankiw’s blog. Highlight:

With this background, I can now state the proposed solution: Reduce the return to holding money below zero. Imagine that the Fed were to announce that, one year from today, it would pick a digit from 0 to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
 

It can’t be worse than this.

Filed under : Economics

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This post will be more personal than others on EmbraceUnity – Edward and I have often written in a collective voice, and I want it to be made clear that this in no way reflects the opinions of Edward or EmbraceUnity in general.

In the past few months it has become increasingly clear to me that my dedication to socialism in general and Marxism in particular (historical materialism to be really particular) is unfounded. Furthermore, any sort of compromise position such as social democracy, state capitalism, or corporatism all seem to be misguided as well. The primary focus of my politics has always been personal liberty – a freedom both political and economic in nature. However, I have always felt that political freedom, while important, pales in comparison to economic freedom - if one is economically free it almost naturally follows that one is politically free. From the time I was sixteen until very recently it seemed that the best way to achieve economic freedom was non-violent anarchist socialism.

This idea is so alien to me now that I can barely remember the reasons for why I chose this system. I vaguely recall that I postulated that the only type of economic freedom that matters was relative economic freedom. If one was more free than another, then there really wasn’t true freedom, especially if someone came about their wealth in ways that primarily involved luck – inheritance, for instance.

I now believe I was wrong. Without a central authority (a board of economic planners), socialism cannot work on a large scale, and large scales make possible incredible advances in technology. Anarchist socialism is out when it comes to bettering the human condition. And examples of the failures of planned economies are endless and I have grown tired of making excuses for them. In the end, the USSR was an experiment in socialism that failed for many reasons, but fundamentally there was one deficiency in the system, that being there was no effective way to gauge what and how much was needed to be produced (here I borrow from the Austrian School). There were far too many surpluses and shortages that went on for far too long, which to me is unacceptable for two reasons. First, it is a huge waste of resources and time. Second, and more importantly, it caused a large amount of suffering in people. The free market, on the other (invisible) hand, naturally fixes surpluses and shortages – people still suffer in a free market, it is definitely true, but one would have to be willfully ignorant of the facts to suggest that there is less suffering under a planned economy.

I also dislike state socialism in principle. There is an underlying assumption in it that the economic planners somehow know better what people will need and want than the people themselves. To me, this idea is extremely elitist and classist – the two things that drove me away from capitalism in the first place. Under a free market, people have a mechanism to rebuff the controllers, and that is simply not paying for the good. If a monopoly exists on the good, at least there doesn’t have to be in principle - a different firm could theoretically pop up. Under a planned economy, nothing of the sort exists; people would have to turn to the black market which can subject them to punishment by the controllers. A monopoly under capitalism is better than a monopoly under state socialism. People, then, are more free under a free market, even if there are differing degrees of freedom between the people, at least in theory. Even in theory, under state socialism there is no economic freedom.

But why does this dissuade me from welfare systems or state capitalism? Once you have accepted the free market, you have accepted the idea of the existence of private property. I have often searched for some ontological proof of the existence of private property and have found none. However, I now accept that private property does exist in some form simply because it needs to exist for a free market to exist, which I have decided is better for the welfare of the people than a planned economy. Consider it an utilitarian argument. Private property now in existence, any sort of redistribution of the property via the state is simply theft, which undermines the market. Some thefts need to occur for a market to function - taxes need to be collected for a government to exist in order to punish lawbreakers without bias (after all, if it were up to private businesses to punish lawbreakers they would simply punish people that affected the business the most, which would result in a loss of competition and a loss of what makes free markets extremely beneficial. Anarcho-capitalism is just as foolish as anarcho-socialism). However, when a government decides that a wealthy person “will not miss the money more than a poor person will benefit from it,” the government is stating that it cares not that people, through their individual economic actions, have affectively decided the wealth of every person; that the government knows better than its people. This is no better than the elistism and classism of state socialism and no better than theft from the wealthy.

I will try to stay away from the tired argument that the wealthy are mostly the suppliers of goods and are the most productive citizens, but hey, they are much more productive than the wealthy under state socialism, if only by the virtue that their money has grown by investing in businesses that are productive and are supplying the wants of the people.

I won’t touch on the issue of the Federal Reserve at this time, but I do have much to say about it.

 I do, however, still consider myself to be a transhumanist. I feel that the free market is the only way to develop technology – a truly free market devoid of intellectual property laws and trade secrets (more on intellectual property law being a barrier to innovation later). And, when scarcity is abolished, there will be no need of capitalism or socialism – both imperfect systems as they still both lead to great suffering.

Until then, I am going to pick the lesser of the two evils.

Filed under : Economics, Politics

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The current scheme for financial aid for college goes something like this: if you or your family make less than x amount, the government will give you x amount of money to pay for college. Even the most leftist of economists will tell you that handing money to people creates disincentives to work, but the idea is that the people going to college will eventually do something good for the state economically – nurses, lawyers, etc. At the risk of sounding libertarian, I will say that what this has done has crowded the field enormously and many people with college degrees will still be ditch-diggers. Not only that, but because grants rarely cover all college expenses, they will be ditch-diggers with a mound of debt. What the system has done, then, is worsen the problem for some of the poor of America.

The solution is not the free market one – to lower the amount of college demanded by removing grants (effectively raising the price); it is the loans that do most of the damage anyway. Despite its faults, this system does allow the less affluent to close out the class gap, the reason being grants. The free market would see a much larger percentage of school being paid with loans than there are now. A better way than free market? Compulsory service (“draft”).

A prerequisite for public colleges and universities ought to be 2-4 years of service to the United Nations, Peace Corps, other national or international public service, or if the applicant chooses, the military. I mention this last option for three reasons: one, it would be much easier for politicians to pitch the program to Americans if the military is included, two, in a legitimate and responsible democracy, the military is a perfectly acceptable form of public service, and three, the current system that the military has is very similar to this new program. This system will pay for four years of college in full to any public college or university.

The positive effects of this new program would be enormous. Not only will there be less college demanded (it would weed out those that don’t care enough about education to devote a few years of their life to public service), meaning more jobs available for recent graduates, but it would strengthen international opinion of America if more of its citizens devoted some time to international relations and aid efforts. It would also do much to negate a lot of the nationalism and aversion to the U.N. that American citizens have (if a reader is unsure that that is a bad thing, I encourage him or her to read the very first post of this blog detailing the principles on which this blog is based). The military will often meet its target rates of recruitment, delighting neoconservatives and hawks.

Of course, without this being mandatory for anyone wishing to attend a public school, the poor would be disproportionately affected. That is why anyone wishing to attend a state college or university must “join up” – all but the most disabled can contribute in a meaningful way.

Of course, this raises the question, “How will we pay for this?” I am working on exact figures, but I’m sure this program would not be light. This is the part where it does not look so rosy, as it never does when looking for money. A higher estate tax is an option. Legalizing and taxing things such as marijuana, prostitution, and online gambling can bring a large amount of revenue. An option that I personally dislike but could prove beneficial is removing welfare benefits for college aid adults – I am unsure if this would significantly raise crime rates, however, and this again hurts the poor and minorities disproportionately. All is not bleak, however. The services rendered to the U.N. could pay off our debt to the organization, and, in time, a deal could be struck with the United Nations to pay us for those that serve. The richest nation on Earth can certainly find a way for this to work.

A post at a later date will follow with estimated figures.

Filed under : Economics, Education, Politics

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A majority of unskilled jobs are completely unnecessary even with current technology. We are already very much a Robotic Nation; ATM Machines, industrial robots, automated checkouts, e-commerce, computerized help desks, and vending machines have replaced millions of workers. The burden of most unskilled labor can and will be shifted to machines, and the same is true for even a great deal of skilled labor. Yet, currently, it is as if human beings are taking on the role of machines, grinding away day-in and day-out in dead end jobs, all the while, the middle class is shrinking and unemployment is growing. If something isn’t done, there will be some major class warfare.

Leisure is a good thing! Even for our economies it is a good thing. If it wasn’t for the norms and government regulations in our society that produce more leisure time such as weekends, holidays, child labor laws, minimum wage, overtime laws, and so forth, there wouldn’t be nearly as much demand to fuel the enormous industries surrounding music, art, sports, movies, entertainment, etc.

Unfortunately, we have been infected by the Protestant Ethic meme which sanctifies work. This sort of mentality is prevalent among most of society, from CEOs to workers’ unions. Unions fight for the “right to work” and are deeply fearful of their jobs becoming automated. Ironically, many of the policies they push for make human labor more expensive, which gives further incentive for automation. I argue that workers should rejoice at the possibilities created by human labor becoming obsolete. We should speed up the process. Screw the right to work, we need the Right to be Lazy!

Employment is only valuable if it is performing a necessary service. If we can get our basic needs taken care of sufficiently, unemployment could be a perfectly reasonable option. There are plenty of worse things in the world than doing nothing. Being a marketing executive or politician, for example.I would argue, though, that under conditions of abundance, we should seek to find joy in ways that benefit others as well. Volunteering one’s time to nonprofit charitable endeavors would certainly be one example. Creating art, music, comedy, poetry, movies, video games, and so forth would also be valid ways of contributing to the world.

Thus, as automation progresses, we should gradually and continually strengthen laws regarding overtime, retirement, minimum wage, welfare, universal healthcare, importation from sweat-shop-ridden countries, and so forth, all in the name of making human labor more expensive, and compensating for the displacement caused by mechanization of labor. We should consider simultaneously giving positive incentives, such as tax breaks, for businesses that make strides toward automation, and fund research in that area.

I would go so far to say that once a sufficient amount of our production of basic necessities is automated, unemployment would be a good thing. We shouldn’t just have welfare, but a Guaranteed Minimum Income system. (even Hayek would agree)

Once liberated from needless toil, we will be free to spend more time enjoying the fruits of our material abundance by creating art, playing sports, and loving one another. Maybe our GDP won’t be growing quite as quickly at first, but some things are more important than the quantity of stuff we produced this financial quarter. Feel free to share your thoughts. Is the End of Work near? If so, what should be done about it?

Filed under : Economics, Post-Scarcity, Technology

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This is a pretty shocking interview of Jim Cramer, host of the popular show Mad Money. He is talking about “blatantly illegal” and immoral business and investing strategies, such as pump and dump and price fixing, as if they are routine, and acts as if the companies that have yet to do those things are idiotic.

He talks about how he manipulated the stock market when he was a hedge fund manager and explains that if you are unwilling to do so you “shouldn’t be in the game.” There is that noble capitalist spirit for you. Some may call this fraud, others call it capitalism. All I know is what Gordon Gecko tells me. “Greed is good. Greed is right.”

Filed under : Economics

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