Author: Amalgamated Contemplation

Three Big Things: The Most Important Forces Shaping the World | Collaborative Fund

Source: Three Big Things: The Most Important Forces Shaping the World | Collaborative Fund, by Morgan Housel

An irony of studying history is that we often know exactly how a story ends, but have no idea where it began.
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Every current event – big or small – has parents, grandparents, great grandparents, siblings, and cousins. … Those roots can snake back infinitely. But the deeper you dig, the closer you get to the Big Things: the handful of events that are so powerful they influence a range of seemingly unrelated topics.

The world is driven by tail events. A minority of things drive the majority of outcomes. … World War II, World War I, and the Great Depression influenced nearly every important event of the 20th century. Industrialization and the Civil War did the same in the 19th.

Demographics, inequality, and information access will have a huge impact on the coming decades.

A demographic shift that reconfigures modern economies.

Wealth inequality that’s grown for four decades hits an inevitable breaking point. … The takeaway is that power is transitory. It shifts when those who don’t have it get so fed up that they bond together to gain enough influence to take it back. Never underestimate the power of a unified group of powerless people with a shared goal. If you accept this premise, then what’s happened over the last 40 years is a Big Thing. … I don’t know where it ends up, but the federal government of, say, 1960 was unrecognizable to that of 1920. The Great Depression and World War II triggered most of that change, but the enduring social changes of that period were centered around supporting lower-income groups after the epic Gilded Age.

Access to information closes gaps that used to create a social shield of ignorance. … The telephone eliminated the information gap between you and a distant relative, but the internet has closed the gap between you and literally every stranger in the world. … Michael Arrington recently wrote: “I thought Twitter was driving us apart, but I’m slowly starting to think half of you always hated the other half but never knew it until Twitter.” This is a good point that highlights something easy to overlook: 1) everyone belongs to a tribe, 2) those tribes sometimes fundamentally disagree with one another, 3) that’s fine if those tribes keep their distance, 4) the internet increasingly assures that they don’t.
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In effect, credentialism is melting away. I don’t care who you are or what your job title is. If you have a good idea, I want to hear it. Of course the flip side of this is dangerous, as the maniac shouting the loudest often gets the attention.
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A third shift is that it is now harder to hide behind, yet easier to spread, false and misleading information. I don’t know how to reconcile that contradiction, but you see both everywhere.

A Separate Kind of Intelligence | Edge

Source: A Separate Kind of Intelligence | Edge, by Alison Gopnik

“Instead of trying to produce a program to simulate the adult mind, why not rather try to produce one which simulates the child?”

— Alan Turing, a 1950 paper

One of the consequences of that, which is not so obvious, is thinking about children not just as immature forms who learn and grow into an adult intelligence, but as a separate kind of intelligence

Life history is the developmental trajectory of a species: how long a childhood it has, how long it lives, how much parental investment there is, how many young it produces. … The strategy of producing just a few younger organisms, giving them a long period where they’re incapable of taking care of themselves, and then having a lot of resources dedicated to keeping them alive turns out to be a strategy that over and over again is associated with higher levels of intelligence. … It turns out to even be true for plants and for immune systems.

Creatures that have more complex immune systems also have this longer developmental trajectory. It looks as if there’s a general relationship between the very fact of childhood and the fact of intelligence. That might be informative if one of the things that we’re trying to do is create artificial intelligences or understand artificial intelligences. In neuroscience, you see this pattern of development where you start out with this very plastic system with lots of local connection, and then you have a tipping point where that turns into a system that has fewer connections but much stronger, more long-distance connections. It isn’t just a continuous process of development.

An interesting consequence of this picture of what intelligence is like is that many things that seem to be bugs in childhood turn out to be features. Literally and metaphorically, one of the things about children is that they’re noisy. They produce a lot of random variability. … That randomness, variability, and noise—things that we often think of as bugs—could be features from the perspective of this exploratory space. Things like executive function or frontal control, which we typically think of as being a feature of adult intelligence—our ability to do things like inhibit, do long-term planning, keep our impulses down, have attentional focus—are features from the exploit perspective, but they could be bugs from the perspective of just trying to get as much information as you possibly can about the world around you.

Being impulsive and acting on the world a lot are good ways of getting more data. They’re not very good ways of planning effectively on the world around you. This gives you a different picture about the kinds of things you should be looking for in intelligence.

My Family Story of Love, the Mob, and Government Surveillance | The Atlantic

Source: My Family Story of Love, the Mob, and Government Surveillance | The Atlantic, by Jack Goldsmith
adapted from Jack Goldsmith’s new book, In Hoffa’s Shadow: A Stepfather, a Disappearance in Detroit, and My Search for the Truth

the government’s surveillance power has grown unfathomably since the 1960s. The “frightening paraphernalia” from six decades ago are toys compared with the redoubtable tools that allow the government to watch and record our movements and communications, and that enable it to store almost limitless amounts of data on its own or to piggyback on the masses of data that we volunteer to private firms. … Congress has ratified and legitimated what were once legally tenuous surveillance techniques. It did so after the executive branch convinced legislators that the techniques were necessary for law enforcement and national security, but it imposed various legal constraints on their use.
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The result of these developments is yet another “new normal” in which the government is constrained in certain respects but citizens are far more exposed to lawful government surveillance than before. This latest new normal, like earlier ones, will not prove stable. … If history is a guide, the government will perceive a security advantage in using these and other tools in new ways to watch us and to predict and preempt our behavior. … Congress will legalize the surveillance practice on the condition, mainly, of new procedural restraints. And we will adjust to our more naked selves.

This is a depressing conclusion for many, but it is an inevitable one. The executive branch does what it thinks it must, including conduct robust surveillance, to meet our demands for safety.

Broken Markets, Broken Economy?

Source: WeWork and Counterfeit Capitalism | BIG by Matt Stoller, 2019/09/25

One of the themes of this newsletter has turned out to be the breakdown of integrity in American business, and the consequences in terms of our increasingly inability to produce the vital systems we need to sustain our civilization. … Today I’m going to continue on this theme, and discuss the increasingly common tendency of capital markets to finance loss-making companies, which is an important trend I call “Counterfeit Capitalism.”

Now, Neumann himself isn’t very important, foolish charlatans are common in society. The question is why he became so powerful despite being so obviously unfit for a role stewarding billions in capital and managing thousands of people. And that’s where we get to the real power centers behind this fiasco, the financiers who lent WeWork large sums of money. … WeWork then used this cash to underprice competitors in the co-working space market, hoping to be able to profit later once it had a strong market position in real estate subletting or ancillary businesses.
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Engaging in such a strategy used to be illegal, and was known as predatory pricing. There are laws, like Robinson-Patman and the Clayton Act, which, if read properly and enforced, prohibit such conduct. The reason is very basic to capitalism. Capitalism works because companies that thrive take a bunch of inputs and create a product that is more valuable than the sum of its parts. That creates additional value, and in such a model companies have to compete by making better goods and services. What predatory pricing does is to enable competition purely based on access to capital.

Endless money-losing is a variant of counterfeiting, and counterfeiting has dangerous economic consequences. … [Honest] Competitors have to copy their fraudulent competitors. It’s a variant of Gresham’s Law, which says that “bad money drives out good.” If you can counterfeit something for cheap, the counterfeit will eventually take over the entire market and drive out the real commodity. That is what is happening in our economy writ large, a kind of counterfeit capitalism … eventually these companies become Soviet-style generators of white elephants and self-dealing. The men and women who run them have to be charlatans, because they are storytellers justifying losses.

As it turns out, the S-1 was correct; [Neumann] *was* pivotal to WeWork, because WeWork only exists due to his ability to get money from investors. … if we restore laws against predatory pricing and centralized financial control, the entire counterfeit capitalism model will go away. We can then get back to the business of making and selling things to each other without engaging in celebrated cases of fraud and abuse under the guise of ‘quirkiness.’

 

 

Source: How Monopolies Broke the Federal Reserve | BIG by Matt Stoller, 2019/08/13

Negative interest rates are a signal something is very wrong with finance, and the broader economy. … a bank account is essentially a bank borrowing your money and using it to finance other loans that go into productive purposes like building factories. … A government bond works the same way as a bank account, but it finances government … Like a bank account, buying government bonds is a safe way to store assets, and get a little bit of a return.
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Very low or negative interest rates mean that investors can’t find any place to place their savings. Investors perceive there are no more factories to build, no distribution centers to create, no new energy systems to research, no more products to create. You can only stuff money under a mattress, and the price of mattresses is going up. Our financial system, in other words, is acting like we have no more social problems to profitably solve.

Maybe what’s happening is that we can’t invest profitably, because there are monopolies everywhere you try to put money to work in the real economy.

Economist Simcha Barkai got to this dynamic in a paper he wrote in 2017. Barkai was interested in the decline in the amount of corporate output going to labor. He concluded this decline is not occurring because capital is getting a large share of income. Capital investment is going down even faster than labor share. There’s less spent on workers, and less than that spent on robots. So if labor share is down and capital share is down, what is up? Profits. The driver, Barkai found, is firm concentration is up across the American economy since 1985. This trend is more pronounced in higher concentration sectors, and less pronounced in lower concentration sectors.
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But this works from the other side as well. It’s not just that there’s no place to put money. Even though rates are low or negative, it’s very hard to actually borrow money and put it to work. … who doesn’t have access to low or negative interest rates? Normal people and ordinary businesses. While powerful firms and individuals can borrow at record low interest rates, most firms and individuals cannot.

May 2014 to May 2019 Commercial Bank Interest Rate on Credit Cards, 12.74% to 17.14%
Image from Delinquencies spike with record-high credit card interest rates | Axios, by Dion Rabouin
Data from Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed Interest | Federal Reserve Bank of St. Louis

The result of liberalism and conservatism

Every great achievement, every great leap, every great advance we have made as a species is the result of small-l forces of liberalism and heterodoxy braving new ideas and new shores. AND it is the result of small-c conservatism and the successful institutionalization of orthodoxy around those new ideas alongside those that came before that worked.