Category: Economics

The Universal Roots of Fantasyland

Mark Davis1 Comment

Intellectual history and cultural criticism always teeters on the brink of totalism. So it was when Christopher Hitchens was forced to defend the hyperbolic subtitle of God Is Not Great: How Religion Poisons Everything. The complaint was always the same: everything, really? Or when Neil Postman downplayed the early tremors of the internet in his 1985 Amusing Ourselves to Death. Email couldn’t be anything more than another movement towards entertainment and celebrity. So it is no surprise that Kurt Andersen’s Fantasyland: How America Went Wrong: A 500-Year History is open to similar charges.

Andersen’s thesis is easily digestible: we built a country on fantasies. From the earliest charismatic stirrings of the Puritans to the patent medicines of the 19th century, through to the counterculture of the 1960s, and now with an incoherent insult comedian and showman as president, America has thrived on inventing wild, fantastical narratives that coalesce into movements. Andersen’s detailed analysis is breathtaking as he pulls together everything from linguistic drift to the psychology of magical thinking to justify his thesis.

Yet his thesis might be too narrow. It is not a uniquely American phenomenon. When Andersen mentions cosplay, he fails to identify its Japanese contributions, including the word itself. In the California Gold Rush, he sees economic fantasies driving a generation to unmoor themselves from their merely average lives. Yet the conquistadores had sought to enrich themselves, God, and country while Americans were forming their shining cities on hills. And in mid-19th-century Europe, while the Americans panned in the Sierra, romanticism was throwing off the oppressive yoke of Enlightenment rationality as the West became increasingly exposed to enigmatic Asian cultures. By the 20th century, Weimar Berlin was a hotbed of cultural fantasies that dovetailed with the rise of Nazism and a fantastical theory of race, German volk culture, and Indo-European mysticism.… Read the rest

I, Robot and Us

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What happens if artificial intelligence (AI) technologies become significant economic players? The topic has come up in various ways for the past thirty years, perhaps longer. One model, the so-called technological singularity, posits that self-improving machines may be capable of a level of knowledge generation and disruption that will eliminate humans from economic participation. How far out this singularity might be is a matter of speculation, but I have my doubts that we really understand intelligence enough to start worrying about the impacts of such radical change.

Barring something essentially unknowable because we lack sufficient priors to make an informed guess, we can use evidence of the impact of mechanization on certain economic sectors, like agribusiness or transportation manufacturing, to try to plot out how mechanization might impact other sectors. Aghion, Jones, and Jones’ Artificial Intelligence and Economic Growth, takes a deep dive into the topic. The math is not particularly hard, though the reasons for many of the equations are tied up in macro and microeconomic theory that requires a specialist’s understanding to fully grok.

Of special interest are the potential limiting role of inputs and organizational competition. For instance, automation speed-ups may be limited by human limitations within the economic activity. This may extend even further due to fundamental limitations of physics for a given activity. The pointed example is that power plants are limited by thermodynamics; no amount of additional mechanization can change that. Other factors related to inputs or the complexity of a certain stage of production may also drag economic growth to a capped, limiting level.

Organizational competition and intellectual property considerations come into play, as well. While the authors suggest that corporations will remain relevant, they should become more horizontal by eliminating much of the middle tier of management and outsourcing components of their productivity.… Read the rest

Theories of Leisure, Past and Future

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img_0028I am at leisure. Specifically—and many may not regard this as leisure—I just ran 17.71 miles in Yosemite Valley. I dropped the car along the road near the 41 junction and then just started running. I went south for a while, then circled back to Bridalveil Falls (lightly flowing), then up to the Glacier Point loop, then back down to El Capitan, then up to Yosemite Falls (not flowing). Lunch was at the Village and then I tracked down the car again.

Now, then, I am at leisure. The barman has set me up with a martini. I have a Fresno Fig flatbread on the way: goat cheese, bacon, arugula, and the critical figs. I am showered all the way down to between my toes. The late afternoon light is filtering through a mild haze onto the muddy belly of the lake. There must be bass out there somewhere. Let the bass live. Let them be at leisure.

A must-read on this topic is Derek Thompson’s Atlantic article, The Free-Time Paradox in America. I don’t agree with the thesis, though. It’s not really a paradox. It’s just an unknown. You should read Derek’s original, but I will comment briefly on some of his points. He argues that John Maynard Keynes forecast a reduction in work requirements by the 21st Century. Mechanization would take the drudgery out of most things and we would get to 15 hour work weeks with the management of our leisure time an increasing burden on us.

The present didn’t work out that way.

Instead, educated high-earners work ever harder. The only leisure class is the non-college-educated male youth who don’t work much these days but instead play video games (75% of their spare time) and are happier than when more of them worked.… Read the rest

Subtly Motivating Reasoning

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larson-sheepContinuing on with the general theme of motivated reasoning, there are some rather interesting results reported in New Republic, here. Specifically, Ian Anson from University of Maryland, Baltimore County, found that political partisans reinforced their perspectives on the state of the U.S. economy more strongly when they were given “just the facts” rather than a strong partisan statement combined with the facts. Even when the partisan statements aligned with their own partisan perspectives, the effect held.

The author concludes that people, in constructing their views of the causal drivers of the economy, believe that they are unbiased in their understanding of the underlying mechanisms. The barefaced partisan statements interrupt that construction process, perhaps, or at least distract from it. Dr. Anson points out that subtly manufacturing consent therefore makes for better partisan fellow travelers.

There are a number of theories concerning how meanings must get incorporated into our semantic systems, and whether the idea of meaning itself is as good or worse than simply discussing reference. More, we can rate or gauge the uncertainty we must have concerning complex systems. They seem to form a hierarchy, with actors in our daily lives and the motivations of those we have long histories with in the mostly-predictable camp. Next we may have good knowledge about a field or area of interest that we have been trained in. When this framework has a scientific basis, we also rate our knowledge as largely reliable, but we also know the limits of that knowledge. It is in predictive futures and large-scale policy that we become subject to the difficulty of integrating complex signals into a cohesive framework. The partisans supply factoids and surround them with causal reasoning.… Read the rest

The Retiring Mind, Part III: Autonomy

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Retiring Mind IIIRobert Gordon’s book on the end of industrial revolutions recently came out. I’ve been arguing for a while that the coming robot apocalypse might be Industrial Revolution IV. But the Dismal Science continues to point out uncomfortable facts in opposition to my suggestion.

So I had to test the beginning of the end (or the beginning of the beginning?) when my Tesla P90D with autosteer, summon mode, automatic parking, and ludicrous mode arrived to take the place of my three-year-old P85:… Read the rest

Intelligence Augmentation and a Frictionless Economy

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Speed SkatingThe ever-present Tom Davenport weighs in in the Harvard Business Review on the topic of artificial intelligence (AI) and its impact on knowledge workers of the future. The theme is intelligence augmentation (IA) where knowledge workers improve their productivity and create new business opportunities using technology. And those new opportunities don’t displace others, per se, but introduce new efficiencies. This was also captured in the New York Times in a round-up of the role of talent and service marketplaces that reduce the costs of acquiring skills and services, creating more efficient and disintermediating sources of friction in economic interactions.

I’ve noticed the proliferation of services for connecting home improvement contractors to customers lately, and have benefited from them in several renovation/construction projects I have ongoing. Meanwhile, Amazon Prime has absorbed an increasingly large portion of our shopping, even cutting out Whole Foods runs, with often next day deliveries. Between pricing transparency and removing barriers (delivery costs, long delays, searching for reliable contractors), the economic impacts might be large enough to be considered a revolution, though perhaps a consumer revolution rather than a worker productivity one.

Here’s the concluding paragraph from an IEEE article I just wrote that will appear in the San Francisco Chronicle in the near future:

One of the most interesting risks also carries with it the potential for enhanced reward. Don’t they always? That is, some economists see economic productivity largely stabilizing if not stagnating.  Industrial revolutions driven by steam engines, electrification, telephony, and even connected computing led to radical reshaping our economy in the past and leaps in the productivity of workers, but there is no clear candidate for those kinds of changes in the near future.

… Read the rest

The Rise and Triumph of the Bayesian Toolshed

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Bayes LawIn Asimov’s Foundation, psychohistory is the mathematical treatment of history, sociology, and psychology to predict the future of human populations. Asimov was inspired by Gibbon’s Decline and Fall of the Roman Empire that postulated that Roman society was weakened by Christianity’s focus on the afterlife and lacked the pagan attachment to Rome as an ideal that needed defending. Psychohistory detects seeds of ideas and social movements that are predictive of the end of the galactic empire, creating foundations to preserve human knowledge against a coming Dark Age.

Applying statistics and mathematical analysis to human choices is a core feature of economics, but Richard Carrier’s massive tome, On the Historicity of Jesus: Why We Might Have Reason for Doubt, may be one of the first comprehensive applications to historical analysis (following his other related work). Amusingly, Carrier’s thesis dovetails with Gibbon’s own suggestion, though there is a certain irony to a civilization dying because of a fictional being.

Carrier’s methods use Bayesian analysis to approach a complex historical problem that has a remarkably impoverished collection of source material. First century A.D. (C.E. if you like; I agree with Carrier that any baggage about the convention is irrelevant) sources are simply non-existent or sufficiently contradictory that the background knowledge of paradoxography (tall tales), rampant messianism, and general political happenings at the time lead to a likelihood that Jesus was made up. Carrier constructs the argument around equivalence classes of prior events that then reduce or strengthen the evidential materials (a posteriori). And he does this without ablating the richness of the background information. Indeed, his presentation and analysis of works like Inanna’s Descent into the Underworld and its relationship to the Ascension of Isaiah are both didactic and beautiful in capturing the way ancient minds seem to have worked.… Read the rest

Inequality and Big Data Revolutions

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industrial-revolutionsI had some interesting new talking points in my Rock Stars of Big Data talk this week. On the same day, MIT Technology Review published Technology and Inequality by David Rotman that surveys the link between a growing wealth divide and technological change. Part of my motivating argument for Big Data is that intelligent systems are likely the next industrial revolution via Paul Krugman of Nobel Prize and New York Times fame. Krugman builds on Robert Gordon’s analysis of past industrial revolutions that reached some dire conclusions about slowing economic growth in America. The consequences of intelligent systems on everyday life will have enormous impact and will disrupt everything from low-wage workers through to knowledge workers. And how does Big Data lead to that disruption?

Krugman’s optimism was built on the presumption that the brittleness of intelligent systems so far can be overcome by more and more data. There are some examples where we are seeing incremental improvements due to data volumes. For instance, having larger sample corpora to use for modeling spoken language enhances automatic speech recognition. Google Translate builds on work that I had the privilege to be involved with in the 1990s that used “parallel texts” (essentially line-by-line translations) to build automatic translation systems based on phrasal lookup. The more examples of how things are translated, the better the system gets. But what else improves with Big Data? Maybe instrumenting many cars and crowdsourcing driving behaviors through city streets would provide the best data-driven approach to self-driving cars. Maybe instrumenting individuals will help us overcome some of things we do effortlessly that are strangely difficult to automate like folding towels and understanding complex visual scenes.

But regardless of the methods, the consequences need to be considered.… Read the rest