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Speaking of human laborers being squeezed: Open Source with Christopher Lydon has an episode called “The End of Work,” with two guests, futurist Ray Kurzweil and MIT economist Andrew McAfee. A few notes.

  • McAfee sees the Technological Revolution as doing for gray matter what the Industrial Revolution did for muscle fiber, but on the way to a world of wealth without toil–a Digital Athens–the bad news is the strong chance of greater income inequality and decreased opportunities for many. Kodak employed 150,000; Instagram a small fraction of that. With the new technologies, destruction (of jobs) outpaces creation. Consumers win, but Labor loses.
  • Kurzweil is more hopeful in the shorter term than McAfee. He says we have more jobs and more gratifying ones today than 100 years ago and they pay better. We accomplish more. Technology will improve us, make us smarter, to meet the demands of a world without drudgery. It won’t be us versus the machines, but the two working together. The majority of jobs always go away, most of the jobs today didn’t exist so long ago. New industries will be invented to provide work. He doesn’t acknowledge a painful period of adjustment in distribution before abundance can reach all.

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Sure, we have phones that are way nicer now, but the Technological Revolution has largely been injurious to anyone in the Labor market, and things are going to get worse, at least in the near and mid term. A free-market society that is highly automated isn’t really very free. Drive for Uber until autonomous cars can take over the wheel, you’re told, or rent a spare room on Airbnb–make space for yourself on the margins through the Sharing Economy. But there’s less to share for most people. From an Economist report:

“Before the horseless carriage, drivers presided over horse-drawn vehicles. When cars became cheap enough, the horses and carriages had to go, which eliminated jobs such as breeding and tending horses and making carriages. But cars raised the productivity of the drivers, for whom the shift in technology was what economists call ‘labour-augmenting.’ They were able to serve more customers, faster and over greater distances. The economic gains from the car were broadly shared by workers, consumers and owners of capital. Yet the economy no longer seems to work that way. The big losers have been workers without highly specialised skills.

The squeeze on workers has come from several directions, as the car industry clearly shows. Its territory is increasingly encroached upon by machines, including computers, which are getting cheaper and more versatile all the time. If cars and lorries do not need drivers, then both personal transport and shipping are likely to become more efficient. Motor vehicles can spend more time in use, with less human error, but there will be no human operator to share in the gains.

At the same time labour markets are hollowing out, polarising into high- and low-skill occupations, with very little employment in the middle. The engineers who design and test new vehicles are benefiting from technological change, but they are highly skilled and it takes remarkably few of them to do the job. At Volvo much of the development work is done virtually, from the design of the cars to the layout of the production line. Other workers, like the large numbers of modestly skilled labourers that might once have worked on the factory floor, are being squeezed out of such work and are now having to compete for low-skill and low-wage jobs.

Labour has been on the losing end of technological change for several decades.”

From the Overcoming Bias post in which economist Robin Hansen comments on Debora MacKenzie’s New Scientist article “The End of Nations,” a piece which wonders about, among other things, whether states in the modern sense predated the Industrial Revolution:

“An interesting claim: the nation-state didn’t exist before, and was caused by, the industrial revolution. Oh there were empires before, but most people didn’t identify much with empires, or see empires as much influencing their lives. In contrast people identify with nation-states, which they see as greatly influencing their lives. More:

Before the late 18th century there were no real nation states. … If you travelled across Europe, no one asked for your passport at borders; neither passports nor borders as we know them existed. People had ethnic and cultural identities, but these didn’t really define the political entity they lived in. …

Agrarian societies required little actual governing. Nine people in 10 were peasants who had to farm or starve, so were largely self-organising. Government intervened to take its cut, enforce basic criminal law and keep the peace within its undisputed territories. Otherwise its main role was to fight to keep those territories, or acquire more. … Many eastern European immigrants arriving in the US in the 19th century could say what village they came from, but not what country: it didn’t matter to them. … Ancient empires are coloured on modern maps as if they had firm borders, but they didn’t. Moreover, people and territories often came under different jurisdictions for different purposes.

Such loose control, says Bar-Yam, meant pre-modern political units were only capable of scaling up a few simple actions such as growing food, fighting battles, collecting tribute and keeping order. …

The industrial revolution … demanded a different kind of government. … ‘In 1800 almost nobody in France thought of themselves as French. By 1900 they all did.’ … Unlike farming, industry needs steel, coal and other resources which are not uniformly distributed, so many micro-states were no longer viable. Meanwhile, empires became unwieldy as they industrialised and needed more actual governing. So in 19th-century Europe, micro-states fused and empires split.

These new nation states were justified not merely as economically efficient, but as the fulfilment of their inhabitants’ national destiny. A succession of historians has nonetheless concluded that it was the states that defined their respective nations, and not the other way around.”

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I previously posted the audio of the “Turn On, Tune In, Drop Out” speech Timothy Leary delivered at UCLA in 1967, and here’s the video of the spirited LSD debate he participated in with Dr. Jerry Lettvin at MIT a few months later. In his remarks, Leary lambastes scientists and technologists devoted to manufacturing entertaining diversions. (Thanks to Open Culture.)

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Robotics will increase productivity, no doubt, but that doesn’t mean wages will likewise rise. Automation to the extent that will soon exist is uncharted territory and no one can predict the exact fallout. From Brad DeLong at Project Syndicate:

“The wages and salaries of low- and high-skill workers in the robot-computer economy of the future will not be determined by the (very high) productivity of the one lower-skill worker ensuring that all of the robots are in their places or the one high-skill worker reprogramming the software. Instead, compensation will reflect what workers outside the highly productive computer-robot economy are creating and earning.

The newly industrialized city of Manchester, which horrified Friedrich Engels when he worked there in the 1840s, had the highest level of labor productivity the world had ever seen. But the factory workers’ wages were set not by their extraordinary productivity, but by what they would earn if they returned to the potato fields of pre-famine Ireland.

So the question is not whether robots and computers will make human labor in the goods, high-tech services, and information-producing sectors infinitely more productive. They will. What really matters is whether the jobs outside of the robot-computer economy – jobs involving people’s mouths, smiles, and minds – remain valuable and in high demand.”

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Libertarian billionaire Peter Thiel, who refuses to do interviews unless someone asks, just sounded off to the Wall Street Journal about the technophobia he feels is pervasive in America and Europe. More likely, people enjoy technology’s benefits but have concerns about the downsides (privacy issues, environmental concerns, unemployment, etc.), although there certainly is tension between the old Dream Factory (Hollywood) and the new one (Silicon Valley). An excerpt:

“Forget all the buzz over driverless cars; the days spent waiting in line for the latest iPhone; the drones delivering medicine. Tech investor Peter Thiel says that, fundamentally, our society hates tech.

‘We live in a financial and capitalistic age,’ he said. ‘We do not live in a scientific or technological age. We live in an age that’s dominated by hostility and unfriendliness towards all things technological.” …

Silicon Valley, he said, has people who believe in technology and scientific innovation, while much of the rest of the U.S. doesn’t.

‘The easiest way to see this is you just look at all the movies Hollywood makes,’ he said. ‘They all show technology that doesn’t work; that kills people; that’s destroying the world, and you can choose between Avatar, or The Matrix, or Terminator films.’ (Mr. Thiel has previously lashed out at Hollywood, including criticizing how Silicon Valley was portrayed in the movie, The Social Network–which documents Facebook’s creation and Mr. Thiel’s part in it.) “

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One question from Jeffrey Rosen’s New Republic interview with Supreme Court Justice Ruth Bader Ginsburg, who has quietly and gradually become a towering figure in American life:

Question:

What’s the worst ruling the current Court has produced?

Ruth Bader Ginsburg:

If there was one decision I would overrule, it would be Citizens United. I think the notion that we have all the democracy that money can buy strays so far from what our democracy is supposed to be. So that’s number one on my list. Number two would be the part of the health care decision that concerns the commerce clause. Since 1937, the Court has allowed Congress a very free hand in enacting social and economic legislation. I thought that the attempt of the Court to intrude on Congress’s domain in that area had stopped by the end of the 1930s. Of course health care involves commerce. Perhaps number three would be Shelby County, involving essentially the destruction of the Voting Rights Act. That act had a voluminous legislative history. The bill extending the Voting Rights Act was passed overwhelmingly by both houses, Republicans and Democrats, everyone was on board. The Court’s interference with that decision of the political branches seemed to me out of order. The Court should have respected the legislative judgment. Legislators know much more about elections than the Court does. And the same was true of Citizens United. I think members of the legislature, people who have to run for office, know the connection between money and influence on what laws get passed.”•

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At the Financial Times, David Runciman has an article about Political Order and Political Decay, Francis Fukuyama’s follow-up to 2012’s The Origins of Political Order. The political scientist thinks America made sequential mistakes, establishing democracy ahead of a strong central government, and is paying for these and other sins. Few would argue the country isn’t currently in a political quagmire, but I think historical sequence may not be the most important factor. America by design is a disparate nation, an experiment in multitudes, and there will always by divisions. We ebb and flow, but the flows are pretty spectacular. And while the writer is correct to assert that too much of America’s power has fallen under the control of too few, you could say the same of the late 19th century, and that was remedied for a long spell. A passage about Fukuyama’s prescription for proper political order:

“Fukuyama’s analysis provides a neat checklist for assessing the political health of the world’s rising powers. India, for instance, thanks to its colonial history, has the rule of law (albeit bureaucratic and inefficient) and democratic accountability (albeit chaotic and cumbersome) but the authority of its central state is relatively weak (something Narendra Modi is trying to change). Two out of three isn’t bad, but it’s far from being a done deal. China, by contrast, thanks to its own history as an imperial power, has a strong central state (dating back thousands of years) but relatively weak legal and democratic accountability. Its score is more like one and a half out of three, though it has the advantage that the sequence is the right way round were it to choose to democratise. Fukuyama doesn’t say if it will or it won’t – the present signs are not encouraging – but the possibility remains open.

The really interesting case study, however, is the US. America’s success over the past 200 years bucks the trend of Fukuyama’s story because the sequence was wrong: the country was a democracy long before it had a central state with any real authority. It took a civil war to change that, plus decades of hard-fought reform. Among the heroes of Fukuyama’s book are the late-19th and early-20th-century American progressives who dragged the US into the modern age by giving it a workable bureaucracy, tax system and federal infrastructure. On this account, Teddy Roosevelt is as much the father of his nation as Washington or Lincoln.

But even this story doesn’t have a happy ending. Just as it can take a major shock to achieve political order, so in the absence of shocks a well-ordered political society can get stuck. That is what has happened to the US. In the long peace since the end of the second world war (and the shorter but deeper peace since the end of the cold war), American society has drifted back towards a condition of relative ungovernability. Its historic faults have come back to haunt it. American politics is what Fukuyama calls a system of ‘courts and parties': legal and democratic redress are valued more than administrative competence. Without some external trigger to reinvigorate state power (war with China?), partisanship and legalistic wrangling will continue to corrode it. Meanwhile, the US is also suffering the curse of all stable societies: capture by elites. Fukuyama’s ugly word for this is ‘repatrimonialisation.’ It means that small groups and networks – families, corporations, select universities – use their inside knowledge of how power works to work it to their own advantage. It might sound like social science jargon, but it’s all too real: if the next presidential election is Clinton v Bush again we’ll see it happening right before our eyes.”

 

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I don’t think there’s any question that Uber is good for consumers and bad for workers, but even if America’s newest set of wheels goes bust like Napster, the bigger picture is that the war has been quietly lost regardless of what happens in that one loud battle. The music industry wasn’t brought down just by Sean Parker, but by the wave he represented. From Avi-Asher Schapiro’s Jacobin article about labor’s share getting smaller:

“Uber claims there’s no need for a union; it instead asks drivers to trust that the company acts in their best interest. Uber refused to show me complete data detailing average hourly compensation for drivers. It does claim, however, that UberX drivers are making more money now than before this summer’s price cuts.

‘The average fares per hour for a Los Angeles UberX driver-partner in the last four weeks were 21.4% higher than the December 2013 weekly average,’ Uber spokesperson Eva Behrend told me. ‘And drivers on average have seen fares per hour increase 28% from where they were in May of this year.’

I couldn’t find a single driver who is making more money with the lower rates.

What’s clear is that for Uber drivers to get by, they’re going to have to take on more rides per shift. Uber implicitly concedes as much: ‘With price cuts, trips per hour for partner-drivers have increased with higher demand,’ Behrend said.

So while drivers make less per fare, Uber suggests they recoup losses by just driving more miles. That may make sense for an Uber analyst crunching the numbers in Silicon Valley, but for drivers, more miles means hustling to cram as many runs into a shift as possible to make the small margins worthwhile.”

Ebola isn’t threatening to be a pandemic yet and probably won’t, but the rampant regional spread of its terror and death has reached a scale that never had to be. Mobilizing against a known disease should be relatively easy, but politics seldom is. From a Spiegel interview by Rafaela von Bredow and Veronika Hackenbroch with Peter Piot, one of the scientists who first discovered the virus in 1976:

Spiegel:

There is actually a well-established procedure for curtailing Ebola outbreaks: isolating those infected and closely monitoring those who had contact with them. How could a catastrophe such as the one we are now seeing even happen? 

Peter Piot:

I think it is what people call a perfect storm: when every individual circumstance is a bit worse than normal and they then combine to create a disaster. And with this epidemic, there were many factors that were disadvantageous from the very beginning. Some of the countries involved were just emerging from terrible civil wars, many of their doctors had fled and their healthcare systems had collapsed. In all of Liberia, for example, there were only 51 doctors in 2010, and many of them have since died of Ebola.

Spiegel:

The fact that the outbreak began in the densely populated border region between Guinea, Sierra Leone and Liberia …

Peter Piot:

… also contributed to the catastrophe. Because the people there are extremely mobile, it was much more difficult than usual to track down those who had had contact with the infected people. Because the dead in this region are traditionally buried in the towns and villages they were born in, there were highly contagious Ebola corpses traveling back and forth across the borders in pick-ups and taxis. The result was that the epidemic kept flaring up in different places.

Spiegel:

For the first time in its history, the virus also reached metropolises like Monrovia and Freetown. Is that the worst thing that can happen?

Peter Piot:

In large cities — particularly in chaotic slums — it is virtually impossible to find those who had contact with patients, no matter how great the effort. That is why I am so worried about Nigeria as well. The country is home to mega-cities like Lagos and Port Harcourt and if the Ebola virus lodges there and begins to spread, it would be an unimaginable catastrophe.

Spiegel:

Have we completely lost control of the epidemic?

Peter Piot:

I have always been an optimist and I think that we now have no other choice than to try everything, really everything. It’s good that the United States and some other countries are finally beginning to help. But Germany or even Belgium, for example, must do a lot more. And it should be clear to all of us: This isn’t just an epidemic anymore. This is a humanitarian catastrophe. We don’t just need care personnel, but also logistics experts, trucks, jeeps and foodstuffs. Such an epidemic can destabilize entire regions. I can only hope that we will be able to get it under control. I really never thought that it could get this bad.”

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As robots proliferate, we’re going require far more than three laws to govern their actions. The questions are seemingly endless, and the answers will likely have to be very elastic. The opening of an Economist report about the RoboLaw group’s recently released findings:

“WHEN the autonomous cars in Isaac Asimov’s 1953 short story ‘Sally’ encourage a robotic bus to dole out some rough justice to an unscrupulous businessman, the reader is to believe that the bus has contravened Asimov’s first law of robotics, which states that ‘a robot may not injure a human being or, through inaction, allow a human being to come to harm.’

Asimov’s ‘three laws’ are a bit of science-fiction firmament that have escaped into the wider consciousness, often taken to be a serious basis for robot governance. But robots of the classic sort, and bionic technologies that enhance or become part of humans, raise many thorny legal, ethical and regulatory questions. If an assistive exoskeleton is implicated in a death, who is at fault? If a brain-computer interface is used to communicate with someone in a vegetative state, are those messages legally binding? Can someone opt to replace their healthy limbs with robotic prostheses?

Questions such as these are difficult to anticipate. The concern for policymakers is creating a regulatory and legal environment that is broad enough to maintain legal and ethical norms but is not so proscriptive as to hamper innovation.”

Jeremy Waldron of the New York Review of Books has an article about legal scholar Cass Sunstein, who believes a nudge is often better than a “no,” though it’s not always easy to define the distinction.

Of the examples of nudge-ish paternalism provided in the below excerpt, the one that most bothers me is the TV that’s programmed to always turn on first to PBS. It feels like a violation of personal space and an oppression of cultural tastes. Plenty of gatekeepers have been wrong over the years, while the masses have been right. Cheap comics weren’t a plague and rock music wasn’t just a bunch of noise.

It’s true, though, that the absence of paternalism doesn’t mean we have unobstructed free will. Corporations don’t just nudge but shove us toward their products (here and here), often unhealthy ones, and some pushback is warranted. An excerpt:

“Cass Sunstein is a Harvard law professor and the author of dozens of books on the principles of public policy. He knew Barack Obama from Harvard Law School and in 2009, he was appointed administrator of the White House Office of Information and Regulatory Affairs. Sunstein’s thought about nudging is evidently the fruit of his determination to consider alternatives to the old command-and-control models of regulation. Now, with his government service behind him (for the time being), he has given us another book, called Why Nudge?, in which he provides an accessible defense of what he calls ‘libertarian paternalism’—a good-natured paternalism that is supposed to leave individual choosing intact.

‘Paternalism’ is usually a dirty word in political philosophy: the nanny state passing regulations that restrict us for our own good, banning smoking and skateboarding because they’re unsafe, or former New York City Mayor Michael Bloomberg trying to limit the size of sugary sodas sold in New York City—’the Big Gulp Ban.’ Now, a nudger wouldn’t try anything so crass. If you ordered a soda in nudge-world, you would get a medium cup, no questions asked; you’d have to go out of your way to insist on a large one. Not only that, but diet beverages would probably be the ones displayed most prominently in nudge-world and served without question unless the customer insisted on getting the classic version from under the counter.

You could order a supersized sugary beverage if you wanted it badly enough, but it wouldn’t be so convenient to carry it to your table because Thaler and Sunstein are in favor of abolishing trays. It is all too easy to load up a tray with food that will never be eaten and napkins that go unused. You could insist on a tray if you wanted to hold up the line, but a tray-free policy has been proved to lower food and beverage waste by up to 50 percent in certain environments. Nudge and Why Nudge? are replete with examples like this.

Nudging is paternalistic, but it is surely a very mild version of paternalism. It’s about means, not ends: we don’t try to nudge people toward a better view of the good life, with compulsory library cards, for example, or PBS always coming up when you turn on your TV. And it is mild too because you can always opt out of a nudge. Not that Sunstein is opposed to more stringent regulations. Sometimes a straightforward requirement—like the rule about seat belts—might be a better form of paternalism. These options are left open for the regulator.”

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There are many areas where billionaire investor Peter Thiel and I disagree–he seems unconcerned about that–but we do concur that AI is more the solution than the problem. While I accept that smart machines could possibly be the ruination of humans, it seems very likely to me that we’ll become extinct without their continued development. (There are some other low-tech, out-of-the-box measures which might be useful in staving off our species’ collapse, but it’s highly improbable they’ll be implemented.) 

In his new Financial Times piece, “Robots Are Our Saviors, Not the Enemy,” Thiel examines the more mundane economic costs of silicon brain drain. He extols the value of a man-machine hybrid, saying that robots will complement rather than replace human labor in many instances, though former employees of Blockbuster, Borders and Fotomat might disagree. And if driverless cars arrive anywhere near on schedule, there will be a whole new class of unemployed that wasn’t a useful complement. An excerpt:

“Unlike fellow humans of different nationalities, computers are not substitutes for American labour. Men and machines are good at different things. People form plans and make decisions in complicated situations. We are less good at making sense of enormous amounts of data. Computers are exactly the opposite: they excel at efficient data processing but struggle to make basic judgments that would be simple for any human.

I came to understand this from my experience as chief executive of PayPal. In mid-2000 we had survived the dotcom crash and we were growing fast but we faced one huge problem: we were losing upwards of $10m a month to credit card fraud. Since we were processing hundreds or even thousands of trans­actions each minute, we could not possibly review each one. No human quality control team could work that fast.

We tried to solve the problem by writing software that would automatically identify bogus transactions and cancel them in real time. But it quickly became clear that this approach would not work: after an hour or two, the thieves would catch on and change their tactics to fool our algorithms.

Human analysts, however, were not easily fooled by criminals’ adaptive strategies. So we rewrote the software to take a hybrid approach: the computer would flag the most suspicious trans­actions, and human operators would make the final judgment.

This kind of man-machine symbiosis enabled PayPal to stay in business, which in turn enabled hundreds of thousands of small businesses to accept the payments they needed to thrive on the internet.”

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Philosopher Nick Bostrom, who has AI on the brain these days, just did an Ask Me Anything at Reddit. One exchange about the future of labor:

Question:

Good evening from Australia Professor! I would really like to know what your opinion is on technological unemployment. There is a bit of a shift in public thought and awareness at the moment about the rapid advances in both software and hardware displacing human workers in numerous fields.

Do you believe this time is actually different compared to the past and we do have to worry about the economic effects of technology, and more specifically AI, in permanently displacing humans?

Nick Bostrom:

It’s striking that so far we’re mainly used our higher productivity to consume more stuff rather than to enjoy more leisure. Unemployment is partly about lack of income (fundamentally a distributional problem) but it is also about a lack of self-respect and social status.

I think eventually we will have technological unemployment, when it becomes cheaper to do most everything humans do with machines instead. Then we can’t make a living out of wage income and would have to rely on capital income and transfers instead. But we would also have to develop a culture that does not stigmatize idleness and that helps us cultivate interest in activities that are not done to earn money.”

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I was disappointed when I first played the new EconTalk podcast, which featured host Russ Roberts interviewing Capital in the Twenty-First Century author Thomas Piketty; I simply couldn’t understand the guest due to his French accent (or my American ears). Thankfully, the program is transcripted, and it makes for a fascinating read. The Libertarian host and his politically opposed guest go at it in an intelligent way on all matters of wealth creation and distribution.

One argument that Roberts makes always galls me because I think it’s intellectually dishonest: He says that really innovative people (e.g., Steve Jobs and Bill Gates) deserve the huge money they make, implying that most of the wealth in the country is concentrated with such people. That’s not so. They’re outliers, extreme exceptions being raised to argue a rule.

There are also the Carly Fiorinas of the world, who run formerly great companies like Hewlett-Packard into the ground and make a soft landing with a ginormous golden parachute just before thousands of workers are laid off. If you want to say she’s equally an outlier, feel free, but the majority of CEOs in the U.S. aren’t great innovators. They’re stewards being compensated like innovators, collecting generous “royalties” on someone else’s ideas.

One excerpt from the show on this topic:

“Russ Roberts:

I’m just trying to get at the mechanics, because I think it matters a lot for why inequality has risen. So, for example, if somebody has gotten wealthy because they’ve been able to be bailed out using my tax dollars, then I would resent that. But if somebody is wealthy because they’ve created something marvelous, then Idon’t resent it. And my argument is that when we look at the Forbes 400, or the top 1%, many of the people in their, their incomes, their wealth has risen at a greater rate than the economy as a whole not because they are exploiting people, not because of corporate governance, but because of an increase in globalization that allows people to capture–make more people happy. Make more people–provide more value. My favorite example is sports. Lionel Messi makes about 3 times–the great soccer player, the great footballer, makes about 3 times what Pele made in his best earning years, 40 years ago. That’s not because Messi is a better soccer player. He’s not. Pele, I think, is probably a better soccer player. But Messi reaches more people, because of the Internet, because of technology and globalization. You can still argue that he doesn’t need $65 million a year and you should tax him at high tax rates. But I think as economists we should be careful about what the causal mechanism is. It matters a lot.

Thomas Piketty:

Oh, yes, yes, yes. But this is why my book is long, because I talk a lot about this mechanism. And I talk a lot about the entrepreneur, and the reason there is a lot of entrepreneurial wealth around, but my point is certainly not to deny this. My point is twofold. First, even if it was 100% entrepreneurial wealth, you don’t want to have the top growing 4 times faster than the average, even if it was complete mobility from one year to the other, you know, it cannot continue forever, otherwise the share of middle class in national wealth goes to 0% and you know, 0% is really very small. So that would be too much. And point number 2, is that when you actually look at the dynamics of top wealth holders, you know it’s really a mixture of, you know, you have entrepreneurs but you also have sons of entrepreneurs; you also have ex-entrepreneurs who don’t work any more but their wealth is rising as fast and sometimes faster than when they were actually working. You have–it’s a very complicated dynamics. And also be careful actually with Forbes’s ranking, which probably are even underestimating the rise of top wealth holders and you know, there are a lot of problems counting for inherited diversified portfolios. It’s a lot easier to spot people who have created their own company and who actually want to be in the ranking because usually they are quite proud of it, and maybe rightly so, than to spot the people, you know, who just inherited from the wealth. And so I think this data source is very biased in the direction of entrepreneurial wealth. But even if you take it as perfect data you will see that you have a lot of inherited wealth. You know, look: I give this example in the book, which is quite striking. The richest person in France and actually one of the richest in Europe, is Liliane Bettencourt. Actually, her father was a great entrepreneur. Eugene Schueller founded L’Oreal, number 1 cosmetics in the world, with lots of fancy products to have nice hair; this is very useful, this has improved the world welfare by a lot.

Russ Roberts: 

Pleasant. It’s nice.

Thomas Piketty:

The only problem is that Eugene Schueller created L’Oreal in 1909. And he died in the 1950s, and you know, she has never worked. What’s interesting is that her fortune, between the [?], between 1990 and 2010, has increased exactly as much as the one of Bill Gates. She has gone from $5 to $30 billion, when Bill Gates has gone from like $10 to $60. It’sexactly in the same proportion. And you know, in a way, this is sad. Because of course we would all love Bill Gates’ wealth to increase faster than that of Liliane. Look, why would I–I’m not trying to–I’m just trying to look at the data. And when you look at the data, you would see that the dynamics of wealth that you mention are not only about entrepreneurs and merit, and it’s always a complicated mixture. You have oligarchs who are seated on a big pile of oil, which you know, I don’t know how much of it is their labor and talent but some of it is certainly direct appropriation. And once they are seated on this pile of wealth, the rate of return that they are getting by paying tons of people to make the right investment with their portfolio can be quite impressive. So I think we need to look at these dynamics in an open manner. And when Warren Buffet says, I should not be paying less tax than my secretary, I think he has a valid point. And I think the issue, the idea that we are going to solve this problem only by letting these people decide how much they want to give individually is a bit naive. I believe a lot in charitable giving, but I think we also need collective rules and laws in order to determine how each one of us is contributing to tax revenue and the common good.

Russ Roberts:

Well, the share contributed by the wealthy in the United States is relatively high. You could argue it should be higher. As you would point out, I don’t really have a model to know what that would be. But real question for me is the size of government. If there’s a reason for it to be larger, if money can be spent better by the government, that would be one thing. And again, the other question is what should be the ideal distribution of the tax burden.”

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Speaking of machines taking over, here’s one final excerpt from Nick Bostrom’s Superintelligence. It comes from one of the best passages, “Of Horses and Men.” The sequence I’m quoting is rather dire, though Bostrom later looks at the more positive side of technology handling labor for us and how extreme wealth disparity could be remedied. The excerpt:

“With cheaply copyable labor, market wages fall. The only place where humans would remain competitive may be where customers have a basic preference for work done by humans. Today, goods that have been handcrafted or produced by indigenous people sometimes command a price premium. Future consumers might similarly prefer human-made goods and human athletes, human artists, human lovers, and human leaders to functionally indistinguishable or superior artificial counterparts. It is unclear, however, just how widespread such preferences would be. If machine-made alternatives were sufficiently superior, perhaps they would be more highly prized.

One parameter that might be relevant to consumer choice is the inner life of the worker providing a service or product. A concert audience, for instance, might like to know that the performer is consciously experiencing the music and the venue. Absent phenomenal experience, the musician could be regarded as merely a high-powered jukebox, albeit one capable of creating the three-dimensional appearance of a performer interacting naturally with the crowd. Machines might then be designed to instantiate the same kinds of mental states that would be present in a human performing the same task. Even with perfect replication of subjective experiences, however, some people might simply prefer organic work. Such preferences could also have ideological or religious roots. Just as many Muslims and Jews shun food prepared in ways they classify as haram or treif, so there might be groups in the future that eschew products whose manufacture involved unsanctioned use of machine intelligence.

What hinges on this? To the extent that cheap machine labor can substitute for human labor, human jobs may disappear. Fears about automation and job loss are of course not new. Concerns about technological unemployment have surfaced periodically, at least since the Industrial Revolution; and quite a few professions have in fact gone the way of the English weavers and textile artisans who in the early nineteenth century united under the banner of the folkloric ‘General Ludd’ to fight against the introduction of mechanized looms. Nevertheless, although machinery and technology have been substitutes for many particular types of human labor, physical technology has on the whole been a complement to labor. Average human wages around the world have been on a long-term upward trend, in large part because of such complementarities. Yet what starts out as a complement to labor can at a later stage become a substitute for labor. Horses were initially complemented by carriages and ploughs, which greatly increased the horse’s productivity. Later, horses were substituted for by automobiles and tractors. These later innovations reduced the demand for equine labor and led to a population collapse. Could a similar fate befall the human species?

The parallel to the story of the horse can be drawn out further if we ask why it is that there are still horses around. One reason is that there are still a few niches in which horses have functional advantages; for example, police work. But the main reason is that humans happen to have peculiar preferences for the services that horses can provide, including recreational horseback riding and racing. These preferences can be compared to the preferences we hypothesized some humans might have in the future, that certain goods and services be made by human hand. Although suggestive, this analogy is, however, inexact, since there is still no complete functional substitute for horses. If there were inexpensive mechanical devices that ran on hay and had exactly the same shape, feel, smell, and behavior as biological horses — perhaps even the same conscious experiences — then demand for biological horses would probably decline further.

With a sufficient reduction in the demand for human labor, wages would fall below the human subsistence level. The potential downside for human workers is therefore extreme: not merely wage cuts, demotions, or the need for retraining, but starvation and death. When horses became obsolete as a source of moveable power, many were sold off to meatpackers to be processed into dog food, bone meal, leather, and glue. These animals had no alternative employment through which to earn their keep. In the United States, there were about 26 million horses in 1915. By the early 1950s, 2 million remained.”

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Rebecca Solnit, a very smart writer I know best for this book, has penned “The Wheel Turns, the Boat Rocks, the Sea Rises,” a TomDispatch piece that calls for the ultimate disruption: a humanity-saving mass movement against the forces enriched by the levers of climate change. Solnit suggests that as the Berlin Wall came down without warning, so too can entrenched interests supporting fossil fuels. The economic ramifications are certainly more complex, but it’s already late and can’t get too much later. The opening:

“There have undoubtedly been stable periods in human history, but you and your parents, grandparents, and great-grandparents never lived through one, and neither will any children or grandchildren you may have or come to have. Everything has been changing continuously, profoundly — from the role of women to the nature of agriculture. For the past couple of hundred years, change has been accelerating in both magnificent and nightmarish ways.

Yet when we argue for change, notably changing our ways in response to climate change, we’re arguing against people who claim we’re disrupting a stable system.  They insist that we’re rocking the boat unnecessarily.

I say: rock that boat. It’s a lifeboat; maybe the people in it will wake up and start rowing. Those who think they’re hanging onto a stable order are actually clinging to the wreckage of the old order, a ship already sinking, that we need to leave behind.

 As you probably know, the actual oceans are rising — almost eight inchessince 1880, and that’s only going to accelerate. They’re also acidifying, because they’re absorbing significant amounts of the carbon we continue to pump into the atmosphere at record levels.  The ice that covers the polar seas is shrinking, while the ice shields that cover Antarctica and Greenland are melting. The water locked up in all the polar ice, as it’s unlocked by heat, is going to raise sea levels staggeringly, possibly by as much as 200 feet at some point in the future, how distant we do not know.  In the temperate latitudes, warming seas breed fiercer hurricanes.

The oceans are changing fast, and for the worse. Fish stocks are dying off, as are shellfish. In many acidified oceanic regions, their shells are actually dissolving or failing to form, which is one of the scariest, most nightmarish things I’ve ever heard. So don’t tell me that we’re rocking a stable boat on calm seas. The glorious 10,000-year period of stable climate in which humanity flourished and then exploded to overrun the Earth and all its ecosystems is over.”

 

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From a report by Jennifer Schuessler of the New York Times about the recent debate between David Graeber and Peter Thiel, two big-picture thinkers who could not be more disparate politically:

“If he and Mr. Graeber didn’t plan the future on Friday, they did agree that it needed to be radically different from the present. Mr. Graeber kicked things off with an extemporaneous summary of his essay ‘Of Flying Cars and the Declining Rate of Profit,’ which is included in the new Baffler anthology No Future for You. (As of this writing, the book was lagging about 297,000 spots behind Mr. Thiel’s on Amazon.)

Once upon a time, he said, when people imagined the future, they imagined flying cars, teleportation devices and robots who would free them from the need to work. But strangely, none of these things came to pass.

‘What happened to the second half of the 20th century?’ Mr. Graeber asked. His answer is that it was deliberately short-circuited by a ‘ruling-class freak-out,’ as ‘all this space-age stuff was seen as a threat to social control.’

Mr. Thiel took the microphone and made a similar argument, citing the slogan of his venture capital firm, the Founders Fund: ‘We wanted flying cars, instead we got 140 characters.’

If he didn’t blame any ruling-class freakout, he did see a loss of nerve and sclerotic bureaucracies. He cited the anarchist slogan ‘Act as if you are already free,’ and praised initiatives like SpaceX, the private space technology company started by his fellow PayPal founder, Elon Musk.

‘We’re not going to get to Mars by having endless debates,’ he said. ‘We’re going to get to Mars by trying to get to Mars.'”

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The Olympics are never mostly about the sports. They’re an examination of contemporary geopolitics, a survey of the latest media and technology and a narrative about the host nation, which presents not just itself, but its aspirations, to the world. Of course, such an idealization can have short shelf life. After the success of Sochi, Russia seemed pointed toward the future, perhaps becoming another modern Germany with its technological might and post-conflict politics, but the country was quickly yanked back into the 20th century by Putin’s folly.

Even when the aftermath doesn’t undo the good will, the cost of such an event is beyond onerous. From an Economist article about the buyer’s remorse of Tokyo, the “winner” of the 2020 Games:

“Disquiet over construction plans has been heightened by growing concerns about cost. Estimates for the stadium refurbishment have more than doubled as construction and labour costs have soared under Abenomics, Japan’s bid to end years of deflation. City officials revealed recently that this year’s consumption-tax hike of 3% was not even factored into the original budget. Cost concerns may now force some venues out of the expensive city to the far-flung suburbs.

The 1964 event cost many times more than its predecessor in Rome four years earlier, and added to the Olympics’ spendthrift reputation—not a single games since then has met its cost target. The Tokyo Olympics also triggered the start of Japan’s addiction to bond issuance, which continues unabated today. Tokyo’s original estimate of ¥409 billion ($3.7 billion) for the games now looks unrealistic to most critics. If, as some expect, Abenomics runs out of steam, the city faces a painful post-games hangover.”

In a Financial Times essay, economist Tim Harford finds a link no one else was looking for: the scorched-earth strategies which drive both Amazon and contemporary Russia. An excerpt:

“Brad Stone’s excellent book, The Everything Store: Jeff Bezos and the Age of Amazon, paints Amazon’s founder to be a visionary entrepreneur, dedicated to serving his customers. But it also reports that Bezos was willing to take big losses in the hope of weakening competitors. Zappos, the much-loved online shoe retailer, faced competition from an Amazon subsidiary that first offered free shipping and then started paying customers $5 for every pair of shoes they ordered. Quidsi, which ran Diapers.com, was met with a price war from “Amazon Mom.” Industry insiders told Stone that Amazon was losing $1m a day just selling nappies. Both Zappos and Quidsi ended up being bought out by Amazon.

When the weapons of war are low prices, consumers benefit at first. But the long term looks worrying: a future in which nobody dares to compete with Amazon. Apple is a striking contrast: the company’s refusal to compete aggressively on price makes it hugely profitable but has also attracted a swarm of competitors.

Consider a grimmer parallel. Vladimir Putin’s Russia is the chain store. Georgia, Ukraine and many other former Soviet states or satellites must consider whether to seek ties with the west. In each case Putin must decide whether to accommodate or open costly hostilities. The conflict in Ukraine has been disastrous for Russian interests in the short run but it may have bolstered Putin’s personal position. And if his strategy convinces the world that Putin will never share prosperity, his belligerence may yet pay off.

I feel a little guilty comparing Bezos and Putin. My only regret about Bezos’s Amazon is that there aren’t three other companies just like it. I do not feel the same about Putin’s Russia.”

 

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Unlike many of his friends and neighbors, an Iraqi teenager named Khidir only pretended to be murdered in August after he was herded with others into a mass execution by members of ISIS. The opening of a survivor’s story, as told by Lauren Bohn in Foreign Policy:

Duhok, Iraq — One sunny day this summer, 17-year-old Khidir lay on the ground and pretended to be dead for what seemed like an eternity.

On Aug. 15, masked Islamic State (IS) militants stormed into his village, Kocho, about 15 miles southwest of the town of Sinjar, ordering hundreds to gather in the village’s only school. There they took everyone’s mobile phones and valuable possessions — wedding rings, money, life savings, all gone in a flash. They told the villagers not to worry, that they would simply drive them all to Mount Sinjar to be with their fellow Yazidi people, who practice an ancient religion considered heretical to the Islamic extremists.

‘We had heard they might come to the village, but we didn’t actually believe they would,’ says Khidir, his hands brushing against a dirty white bandage on his neck.

They told Khidir he’d be among the first group of men to leave. A wave of relief washed over him. ‘I thought that maybe they weren’t so evil as we had thought,’ he recalls. 

He and 20 or so other men piled into a white Kia truck, unnerved to be separated from their families but hopeful about reaching the mountain, where thousands of Yazidis had fled from the Islamic State’s advance. About 10 minutes later, the truck stopped in the middle of a field, where two other men were waiting with machine guns. Khidir suddenly realized they weren’t going to the mountain after all.”

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E.O. Wilson has a bold plan for staving off a mass extinction of life on Earth: radical biodiversity ensured by demarcation. The evolutionary biologist wants humans to “rope off” half the planet for non-human species. Tony Hiss, the longtime New Yorker writer who did some wonderful work for that publication (like this and this) has an article in Smithsonian about Wilson’s bold proposal. An excerpt:

“Throughout the 544 million or so years since hard-shelled animals first appeared, there has been a slow increase in the number of plants and animals on the planet, despite five mass extinction events. The high point of biodiversity likely coincided with the moment modern humans left Africa and spread out across the globe 60,000 years ago. As people arrived, other species faltered and vanished, slowly at first and now with such acceleration that Wilson talks of a coming ‘biological holocaust,’ the sixth mass extinction event, the only one caused not by some cataclysm but by a single species—us.

Wilson recently calculated that the only way humanity could stave off a mass extinction crisis, as devastating as the one that killed the dinosaurs 65 million years ago, would be to set aside half the planet as permanently protected areas for the ten million other species. ‘Half Earth,’ in other words, as I began calling it—half for us, half for them. A version of this idea has been in circulation among conservationists for some time.

‘It’s been in my mind for years,’ Wilson told me, ‘that people haven’t been thinking big enough—even conservationists. Half Earth is the goal, but it’s how we get there, and whether we can come up with a system of wild landscapes we can hang onto. I see a chain of uninterrupted corridors forming, with twists and turns, some of them opening up to become wide enough to accommodate national biodiversity parks, a new kind of park that won’t let species vanish.'”

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In an excellent New York Times Magazine article that completely untangles for the first time the players and particulars of the Gary Hart political scandal of 1987, Matt Bai reminds us what was lost for good when a confluence of factors brought down the front-runner for the American Presidency. Hart was an astute observer of his time, aware long before his peers that stateless terrorism and the Information Age were twin challenges that would soon require aggressive management. But his mastery of the moment was laid to waste by indiscretion. The Colorado candidate wasn’t collared only by ego, stupidity and the media’s shifting rules of engagement–when the get became more important than what was gotten, when the political became truly personal–but seemingly by a streak of common jealousy. An excerpt about a key figure who escaped notice at the time:

“Dana Weems wasn’t especially hard to find, it turned out. A clothing designer who did some costume work on movies in the early 1990s, she sold funky raincoats and gowns on a website called Raincoatsetc.com, based in Hollywood, Fla. When she answered the phone after a couple of rings, I told her I was writing about Gary Hart and the events of 1987.

‘Oh, my God,’ she said. There followed a long pause.

‘Did you make that call to The Herald?’ I asked her. 

‘Yeah,’ Weems said with a sigh. ‘That was me.’

She then proceeded to tell me her story, in a way that probably revealed more about her motives than she realized. In 1987, Armandt sold some of Weems’s designs at her bikini boutique under a cabana on Turnberry Isle. Like Rice, Weems had worked as a model, though she told me Rice wasn’t nearly as successful as she was. Rice was an artificial beauty who was ‘O.K. for commercials, I guess.’

Weems recalled going aboard Monkey Business on the last weekend of March for the same impromptu party at which Hart and his pal Billy Broadhurst, a Louisiana lawyer and lobbyist, met up with Rice, but in her version of events, Hart was hitting on her, not on Rice, and he was soused and pathetic, and she wanted nothing to do with him, but still he followed her around the boat, hopelessly enthralled. . . .

But Donna — she had no standards, Weems told me. Weems figured Donna wanted to be the next Marilyn Monroe, sleeping her way into the inner sanctum of the White House, and that’s why she agreed to go on the cruise to Bimini. After that weekend, Donna wouldn’t shut up about Hart or give the pictures a rest. It all made Weems sick to her stomach, especially this idea of Hart’s getting away with it and becoming president. ‘What an idiot you are!’ Weems said, as if talking to Hart through the years. ‘You’re gonna want to run the country? You moron!’

And so when Weems read Fiedler’s story in The Herald, she decided to call him, while Armandt stood by, listening to every word. ‘I didn’t realize it was going to turn into this whole firecracker thing,’ she told me. It was Armandt’s idea, Weems said, to try to get cash by selling the photos, and that’s why she asked Fiedler if he might pay for them (though she couldn’t actually remember much about that part of the conversation). Weems said she hadn’t talked to either woman — Rice or Armandt — since shortly after the scandal. She lived alone and used a wheelchair because of multiple sclerosis. She was surprised her secret had lasted until now.

“I’m sorry to ruin his life,’ she told me, offhandedly, near the end of our conversation. ‘I was young. I didn’t know it would be that way.'”

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A gigantic prison population in the U.S. has unsurprisingly begat an intricate illicit social order behind bars. The crime hasn’t truly disappeared–it’s just been disappeared into cells. From Graeme Wood’s new Atlantic article, “How Gangs Took Over Prisons“:

“Understanding how prison gangs work is difficult: they conceal their activities and kill defectors who reveal their practices. This past summer, however, a 32-year-old academic named David Skarbek published The Social Order of the Underworld, his first book, which is the best attempt in a long while to explain the intricate organizational systems that make the gangs so formidable. His focus is the California prison system, which houses the second-largest inmate population in the country—about 135,600 people, slightly more than the population of Bellevue, Washington, split into facilities of a few thousand inmates apiece. With the possible exception of North Korea, the United States has a higher incarceration rate than any other nation, at one in 108 adults. (The national rate rose for 30 years before peaking, in 2008, at one in 99. Less crime and softer punishment for nonviolent crimes have caused the rate to decline since then.)

Skarbek’s primary claim is that the underlying order in California prisons comes from precisely what most of us would assume is the source ofdisorder: the major gangs, which are responsible for the vast majority of the trade in drugs and other contraband, including cellphones, behind bars. ‘Prison gangs end up providing governance in a brutal but effective way,’ he says. ‘They impose responsibility on everyone, and in some ways the prisons run more smoothly because of them.’ The gangs have business out on the streets, too, but their principal activity and authority resides in prisons, where other gangs are the main powers keeping them in check.

Skarbek is a native Californian and a lecturer in political economy at King’s College London. When I met him, on a sunny day on the Strand, in London, he was craving a taste of home. He suggested cheeseburgers and beer, which made our lunch American not only in topic of conversation but also in caloric consumption. Prison gangs do not exist in the United Kingdom, at least not with anything like the sophistication or reach of those in California or Texas, and in that respect Skarbek is like a botanist who studies desert wildflowers at a university in Norway.

Skarbek, whose most serious criminal offense to date is a moving violation, bases his conclusions on data crunches from prison systems (chiefly California’s, which has studied gangs in detail) and the accounts of inmates and corrections officers themselves. He is a treasury of horrifying anecdotes about human depravity—and ingenuity. There are few places other than a prison where men’s desires are more consistently thwarted, and where men whose desires are thwarted have so much time to think up creative ways to circumvent their obstacles.”

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David Pilling of the Financial Times visited North Korea’s showcase city, Pyongyang, and had a “stage-managed” experience that elicited very little about the true nature of Kim Jong-un’s country-wide cult. An excerpt:

“One needs to be wary of impressions gleaned from Pyongyang. This is a showcase city, the home of the connected and presumably loyal elite. You have to remind yourself constantly that you are being shown the ‘good parts.’ The rest of North Korea is, to quote resident diplomats, ‘another country.’

The second thing to note is the pervasive sense of victimhood. Paul French’s book North Korea: State of Paranoia is aptly named. Any conversation on a serious topic starts and ends with Pyongyang’s struggle for survival in the face of unrelenting pressure from ‘the imperialist US’ and its ‘puppet’ South Korean servant. The US wants to control all of northeast Asia. China wants to use North Korea as a buffer. Everyone wants to topple the Kim regime. (Just because you’re paranoid, doesn’t mean they’re not out to get you.) Singled out for opprobrium are the regular US-South Korean military manoeuvres, which are deemed ample justification for Pyongyang’s nuclear weapons programme.

Even economic policy is framed in terms of external threat. That is why North Korea must be self-reliant – something it has patently failed to achieve given its dependence on outside aid. Paranoia assumes an almost surreal quality. Asked about the rate of economic growth, the head of one institute replies: “It is the policy of our party not to reveal statistics about our economy.”

A third observation, hardly surprising, is the sheer intensity of the cult of Kim. The interests of state and dynasty have merged. One senior researcher quoted a poem suggesting the Kims would rule forever. No mention of the nation’s founder is complete without the epithet ‘Great Leader’ and no reference to his 31-year-old grandson and current ruler without a nod to ‘the wise leadership of the Great Marshall Kim Jong Un.’ Kim badges, worn over the heart, are obligatory. So is bowing at the foot of the dynasty’s ubiquitous monuments.

Yet in the end, [Barbara] Demick is right. A visit to North Korea reveals little. Our trip resembled The Truman Show, in which the protagonist is trapped in a televised soap opera.”

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