Understanding the economic significance of the light bulb(bbc.com)
bbc.com
Understanding the economic significance of the light bulb
http://www.bbc.com/news/business-38650976
94 comments
See also: clean water, warm food, cold food, air conditioning, heating, books (cost of duplication now lower than ~$100k per volume), music (especially when measured per second of other-than-ambient sound supplied), ability to move heavy things short distances, ability to move anything long distances, ability to transfer one's person any distance, cost of moving one letter worth of information one kilometer (for bonus points add SLAs on days required), etc etc.
Yup. It's frustrating to hear people wailing about how shit everything is when in reality they are living lives of comfort and safety unparalleled in human history.
Simply physical comforts will not make humans happy.
We have very intense cheating detection, perceived inequality, unfairness or injustice will piss us off.
Also, our evaluation of how well-off we are is based on comparing to our neighbours.
>We have very intense cheating detection, perceived inequality, unfairness or injustice will piss us off.
True - although it's often a very mono-directional detector. Anyone higher up on the ladder, or taking advantage of cheats we didn't see, gets the full focus of our attention, while anyone lower down or slow on the take is clearly just a sucker.
Pretty bad heuristic, unfortunately.
True - although it's often a very mono-directional detector. Anyone higher up on the ladder, or taking advantage of cheats we didn't see, gets the full focus of our attention, while anyone lower down or slow on the take is clearly just a sucker.
Pretty bad heuristic, unfortunately.
> Simply physical comforts will not make humans happy.
Correct. But take away "physical comforts" and people are much much more likely to be unhappy.
Correct. But take away "physical comforts" and people are much much more likely to be unhappy.
Also lives where the majority of us are obligated to be
stationless indoors in front of screens 9 hours per day.
There's an unequivocal improvement in certain metrics. It doesn't mean there aren't other serious issues often proprietary to the time we live.
I'd also argue that those metrics don't always correlate with happiness beyond a certain level.
There's an unequivocal improvement in certain metrics. It doesn't mean there aren't other serious issues often proprietary to the time we live.
I'd also argue that those metrics don't always correlate with happiness beyond a certain level.
We've been living lives of unparalleled comfort and safety with nearly monotonic increase since after the industrial revolution. Would you have preferred all progress had stopped at some point? Mostly things get better because people are dissatisfied with current state.
edit: I find the downvotes on this confusing - I don't see anything controversial in above.
edit: I find the downvotes on this confusing - I don't see anything controversial in above.
Look at that same statement from the opposite direction: despite constant progress, most people are dissatisfied with current state. Awful way to live! Not an attitude to rationalize and look at the upside of!
Many (most? that seems strong) people are dissatisfied with some aspects of the current state they feel can and should be done better.
Sounds like a perfectly rational attitude, not rationalized. Also doesn't imply any awfulness in the way they live unless you subscribe to Buddhist teaching about attachment.
Sounds like a perfectly rational attitude, not rationalized. Also doesn't imply any awfulness in the way they live unless you subscribe to Buddhist teaching about attachment.
"nearly monotonic increase"
That nearly gets them every time.
That nearly gets them every time.
It is a rather sticky point.
Likewise though, the OPs "people wailing about how shit everything is" are pretty unusual. Mostly what you hear are different people dissatisfied with different things. If you choose to aggregate this in your mind to some abstract "person" you get an odd picture of what is going on.
Likewise though, the OPs "people wailing about how shit everything is" are pretty unusual. Mostly what you hear are different people dissatisfied with different things. If you choose to aggregate this in your mind to some abstract "person" you get an odd picture of what is going on.
Just an addition: electricity grid, without which light bulbs wouldn't do much and would require another source of electricity (a petrol generator, for instance).
Fascinating discussion about technological development. The article didnt say if there is a part two where he answers the question posed in the title.
Inflation (or really the deflating cost of light) is mentioned, and we can infer many things that probably matter based on the falling price, but I still want to know why it matters.
Inflation (or really the deflating cost of light) is mentioned, and we can infer many things that probably matter based on the falling price, but I still want to know why it matters.
It's an example of technology enabling the production of more with less human input, and therefore the freeing up of humans to do other things such as develop more technology. Similar work has been done for e.g. textiles; in the pre-machine era, the amount of work for even a simple shirt in today's minimum-wage-dollars is something like $3000.
The dishwasher/washing machine are, along with textile automation, major liberators of women's work.
The dishwasher/washing machine are, along with textile automation, major liberators of women's work.
My grandma weaved, on a non-mechanical loom, and sewed a light jacket for herself (one that was not even slightly water resistant). She estimated that it took 200 hours, but she also pointed out something else: she was the only one in her weaving group who could make one, and the group has been weaving for years.
So you are not even looking for minimum-wage-dollars. You are looking for semi-skilled labour; and those 200 hours didn't include making and dying the yarn, growing and harvesting the plants, etc (she purchased or were given the yarn).
I love my dishwasher, but that doesn't even come close to reducing the cost of a light jacket by a factor of 100-1000. My washing machine is of much more utility since I spend only maybe ten minutes a week washing vs an entire days worth of labour.
So you are not even looking for minimum-wage-dollars. You are looking for semi-skilled labour; and those 200 hours didn't include making and dying the yarn, growing and harvesting the plants, etc (she purchased or were given the yarn).
I love my dishwasher, but that doesn't even come close to reducing the cost of a light jacket by a factor of 100-1000. My washing machine is of much more utility since I spend only maybe ten minutes a week washing vs an entire days worth of labour.
> I still want to know why it matters
I think the headline was just a catchy way to refer to the thesis of the article: that relying too much on inflation adjustments to make apples-to-apples comparisons misses part of the picture
I think the headline was just a catchy way to refer to the thesis of the article: that relying too much on inflation adjustments to make apples-to-apples comparisons misses part of the picture
The point is that we talk about inflation (and hence, real economic growth) by comparing equivalent baskets of goods and services year-to-year. However, that "equivalent" part is actually non-trivial - how do you decide how much more this year's iPhone 6 is worth than last year's iPhone 5 when you're trying to determine inflation in consumer products prices? (In periods of rapid technological change, the comparisons are much weirder - how do you compare consumer prices when people suddenly start buying cars, or personal computers?)
As you may already know, a way that is done (1) is by choosing a 'basket' of products, for example "that what a typical family of four spends its money on", and periodically updating that (e.g. by replacing cable tv by a Netflix subscription).
That's similar to the way the components in the Dow Jones industrial are updated to reflect the average US industrial fund (https://en.wikipedia.org/wiki/Historical_components_of_the_D...)
(1) it isn't really possible to do it at all, but it is done that way, anyways.
That's similar to the way the components in the Dow Jones industrial are updated to reflect the average US industrial fund (https://en.wikipedia.org/wiki/Historical_components_of_the_D...)
(1) it isn't really possible to do it at all, but it is done that way, anyways.
What this study is trying to point out is that this substitution doesn't capture the increase in value from switching to the new technologies. That methodology might not capture the superiority (or inferiority) of Netflix as a value proposition. ie if there's a one-to-one substitution of spending but you're getting more for your money, that's a deflation effect that your methodology may not catch.
Usually because it's hard to quantify the relative values of different related products. Light is a theoretically interesting exception that this researcher used to prove a point.
Usually because it's hard to quantify the relative values of different related products. Light is a theoretically interesting exception that this researcher used to prove a point.
The UK doesn't reflect land price increases into inflation stats so any debate over other marginal factors is a waste of time. Inflation figures are a tool for printing via land and for soft default on debt obligations.
I just wanted to take a moment to thank Capitalism - an overwhelmingly positive system of resource optimization that's oft-maligned by the econ-shallow, which drives creativity and human advancement through entrepreneurship and the desire to succeed.
Etymological nit pick:
Capitalism was defined by Marx. It is the political movement to give power to people with financial resources, and it's principal consequence is exploitation (in Marx' analysis, every penny of profit comes from underpayment to your workers. This analysis is a mathematical one, about as rigorous as any theory of economics is possible to be.)
I prefer the term Market Economics or Market Forces to describe the positive effect you mean, which was discovered and described much earlier by Adam Smith.
(If you would like to read a decent history of economic ideas, I recommend The Worldly Philosophers, which is a very good book.)
Capitalism was defined by Marx. It is the political movement to give power to people with financial resources, and it's principal consequence is exploitation (in Marx' analysis, every penny of profit comes from underpayment to your workers. This analysis is a mathematical one, about as rigorous as any theory of economics is possible to be.)
I prefer the term Market Economics or Market Forces to describe the positive effect you mean, which was discovered and described much earlier by Adam Smith.
(If you would like to read a decent history of economic ideas, I recommend The Worldly Philosophers, which is a very good book.)
Not sure what mathematical rigor you're talking about and I must admit I never had the patience to fully read his work, but Marx also promoted the "labor theory of value", saying that the value of a product or service is determined by the labor necessary to produce it and not by the value the owner gets from using it.
It's no wonder then that in Marx' analysis profit comes from the underpayment of workers. But it's a fundamentally flawed theory.
It's no wonder then that in Marx' analysis profit comes from the underpayment of workers. But it's a fundamentally flawed theory.
Exactly. For anyone wondering why "labor theory of value" is flawed, the currently accepted theory is "supply and demand".
I found it very interesting that this was not widely understood during the times of Marx and is a relatively young insight.
I found it very interesting that this was not widely understood during the times of Marx and is a relatively young insight.
And one that still most people reject.
See for example the reactions to "surge pricing" from Uber. Standard economic theory suggests that by letting prices rise (or indeed fall), supply will adjust to match demand and overall utility will be increased. But paying more for a cab when lots of people want to use the available cabs strikes people as unfair.
As a nerdy fan of economics, I believe the underlying problem is inequality which humans are apparently very sensitive to and surge pricing makes it explicity that rich people are getting the benefit. If there was less inequality then it could be reframed as "the people who really value a cab ride right now".
See for example the reactions to "surge pricing" from Uber. Standard economic theory suggests that by letting prices rise (or indeed fall), supply will adjust to match demand and overall utility will be increased. But paying more for a cab when lots of people want to use the available cabs strikes people as unfair.
As a nerdy fan of economics, I believe the underlying problem is inequality which humans are apparently very sensitive to and surge pricing makes it explicity that rich people are getting the benefit. If there was less inequality then it could be reframed as "the people who really value a cab ride right now".
I don't think giving Uber at this point as proof of anything is OK.
In my city Uber has inflated prices almost all the time, except for maybe after 22:00 at night.
And it seems unfair for one because they don't provide a good mental model of what's going on. If the standard pricing is never available between 7 and 22, then the standard pricing is a hoax. In fact, the standard pricing shouldn't be available at rush hours, because daily rush hours are normal. I can understand rainy, snowy or foggy conditions making traffic difficult, or upcoming holidays, but your regular Tuesday should not have surged prices at 9 o'clock in an area that's not the most crowded part of the city, because then the standard pricing is a hoax. Also, people that think Uber's pricing is unfair do so because taxis with much lower and stable prices still exist, even at rush hour. They even have apps now. And many cities have a working public transport system as well.
As for supply and demand, you have to remember that Uber is not a free market, because the drivers are not the ones that can set pricing ;-)
This is why I stopped using Uber, because they'll be very dangerous if they'll ever have monopoly. Now I'm using a local app for cabs (CleverTaxi in Romania, for those interested) and Taxify, which is like this European-made alternative from Estonia. They have the same surge pricing model, but are being more conservative in applying it for now.
In my city Uber has inflated prices almost all the time, except for maybe after 22:00 at night.
And it seems unfair for one because they don't provide a good mental model of what's going on. If the standard pricing is never available between 7 and 22, then the standard pricing is a hoax. In fact, the standard pricing shouldn't be available at rush hours, because daily rush hours are normal. I can understand rainy, snowy or foggy conditions making traffic difficult, or upcoming holidays, but your regular Tuesday should not have surged prices at 9 o'clock in an area that's not the most crowded part of the city, because then the standard pricing is a hoax. Also, people that think Uber's pricing is unfair do so because taxis with much lower and stable prices still exist, even at rush hour. They even have apps now. And many cities have a working public transport system as well.
As for supply and demand, you have to remember that Uber is not a free market, because the drivers are not the ones that can set pricing ;-)
This is why I stopped using Uber, because they'll be very dangerous if they'll ever have monopoly. Now I'm using a local app for cabs (CleverTaxi in Romania, for those interested) and Taxify, which is like this European-made alternative from Estonia. They have the same surge pricing model, but are being more conservative in applying it for now.
I argue against tolling as a means of traffic congestion management from the same motivation: I don't actually care how rational it might be, I just can't stomach the idea of creating more opportunities for rich people to buy their way out of hassles the rest of us will continue to be stuck with. Emotionally, I'd rather we just left the highways un-tolled and congested, so at least we all suffer equally.
The rich just move closer to work, then.
Oh hello, San Francisco.
Oh hello, San Francisco.
Sure, that's the whole point of being rich: they already have lots of options. So why on earth would the rest of us want to give them any more?
The point is that if you try to prevent pricing of goods, you get a) pricing by other means, often more inflexible, b) underinvestment and underproduction, c) departure of the wealthy through other markets.
The problem with road pricing is usually not the pricing per se, but rather, that the government bodies doing the pricing just apply the revenues to something totally unrelated, breaking the connection between services and revenue. Road pricing can work if it is actually used for maintaining and building the road network - a genuine pay-for-service model.
The problem with road pricing is usually not the pricing per se, but rather, that the government bodies doing the pricing just apply the revenues to something totally unrelated, breaking the connection between services and revenue. Road pricing can work if it is actually used for maintaining and building the road network - a genuine pay-for-service model.
Like I said, I don't actually care how rational it all might be in economic terms. I'm not willing to allow rich people to pay for more privileges than they already have, even if we might all be better off as a result. They have too many privileges already. So, exactly as ZeroGravitas was saying, it's clear that my reaction is really about inequality and not about highway congestion management. Fix the inequality problem and I'd probably start feeling more OK about tolling proposals.
>Like I said, I don't actually care how rational it all might be in economic terms. I'm not willing to allow rich people to pay for more privileges than they already have, even if we might all be better off as a result.
Cool, we'll just do envy-based policy then. That'll work.
Cool, we'll just do envy-based policy then. That'll work.
For an example which isn't envy based, see the performers who fight against ticket touts and reselling.
Again, my nerdy economics answer is to bid up the price of the tickets so that the people who really want to go pay more and all that extra profit goes to the performer. Yet, they explicitly fight against this, to their own detriment, because they don't want only the rich to be able to buy their tickets.
(I still think my solution has potential. Reserve some small amount of tickets for people with lots of money to buy at short notice. Don't make them Vips or anything, just convienient for busy people and to undercut touts reselling the standard tickets.)
Again, my nerdy economics answer is to bid up the price of the tickets so that the people who really want to go pay more and all that extra profit goes to the performer. Yet, they explicitly fight against this, to their own detriment, because they don't want only the rich to be able to buy their tickets.
(I still think my solution has potential. Reserve some small amount of tickets for people with lots of money to buy at short notice. Don't make them Vips or anything, just convienient for busy people and to undercut touts reselling the standard tickets.)
It's not envy; it's more like resentment. There's something wrong with a system producing such outcomes; lacking the power to change the fundamental character of that system, I fall back on refusing to cooperate with it.
I'm not really advocating that other people should adopt this point of view; I'm simply observing the fact that I have been responding this way, as further supporting evidence for ZeroGravitas' suggestion about surge pricing.
I'm not really advocating that other people should adopt this point of view; I'm simply observing the fact that I have been responding this way, as further supporting evidence for ZeroGravitas' suggestion about surge pricing.
I'm not sure that the labour theory of value is related to "supply and demand" as you say.
If I remember correctly, labour theory of value says that all value come from work, that is: you have nature, you have capital (that is work already done) and the only way to create more value is working. If after consuming the product of that new work, you have surplus, you have new capital available.
How is that related to supply and demand?
If I remember correctly, labour theory of value says that all value come from work, that is: you have nature, you have capital (that is work already done) and the only way to create more value is working. If after consuming the product of that new work, you have surplus, you have new capital available.
How is that related to supply and demand?
If I remember correctly (and its been a while since I've read Das Kapital), Marx tried to explain why a good costs what it costs, where its value really comes from. So he was dissecting the different parts that went into its creation only to conclude that they really weren't different parts, but that it all came down to labour in the end - basically what you said.
His theory however did not explain why the value of a good fluctuates over time, like the price of bread in times of bad harvests, and I have some fuzzy memories of weird corner-case explanations to maneuver around this issue.
Today we know that no matter how much human labour went into the creation of something, in the end the laws of supply and demand determine its price.
I could be wrong though and thats not what Marx goal was, after all.
His theory however did not explain why the value of a good fluctuates over time, like the price of bread in times of bad harvests, and I have some fuzzy memories of weird corner-case explanations to maneuver around this issue.
Today we know that no matter how much human labour went into the creation of something, in the end the laws of supply and demand determine its price.
I could be wrong though and thats not what Marx goal was, after all.
Again from memory, but I think that price and value are related but not the same thing. Prices would be determined by supply and demand, but value would be, by definition, anything added to the inputs.
I think I will spend some time looking into it.
I think I will spend some time looking into it.
The description in the Worldly Philosophers is my main source: that in Das Kapital he flips between ranting and precise mathematical language quite sporadically.
It is my understanding that he was the first to predict economic cycles of boom and bust, too.
It is my understanding that he was the first to predict economic cycles of boom and bust, too.
It is also a system with some very dangerous externalities that should not be ignored simply because you dislike admitting all philosophies have blemishes.
Capitalism, alone, requires all participants to be omnscient in regards to present and future circumstances to be correct. It is a deep flaw you likely ignore along with the externalities involved in the process when such omnscient power is denied to most market participants.
Capitalism, alone, requires all participants to be omnscient in regards to present and future circumstances to be correct. It is a deep flaw you likely ignore along with the externalities involved in the process when such omnscient power is denied to most market participants.
>Capitalism, alone, requires all participants to be omnscient in regards to present and future circumstances to be correct.
This is incorrect; even basic economic theories of risk/investment account for uncertainty.
A key concept in economics is that people are economically rewarded for investing the value they've created (as opposed to consuming it all), as compensation for taking on the risk involved in investment. Or to put it another way: part of the returns people get from investing is economic compensation for the risk involved in investing (as opposed to spending the money immediately, which entails no risk of losing that money).
This is incorrect; even basic economic theories of risk/investment account for uncertainty.
A key concept in economics is that people are economically rewarded for investing the value they've created (as opposed to consuming it all), as compensation for taking on the risk involved in investment. Or to put it another way: part of the returns people get from investing is economic compensation for the risk involved in investing (as opposed to spending the money immediately, which entails no risk of losing that money).
> This is incorrect; even basic economic theories of risk/investment account for uncertainty.
> A key concept in economics is that people are economically rewarded for investing the value they've created (as opposed to consuming it all), as compensation for taking on the risk involved in investment. Or to put it another way: part of the returns people get from investing is economic compensation for the risk involved in investing (as opposed to spending the money immediately, which entails no risk of losing that money).
So you view insider trading as an acceptable behavior accounted for in unrestricted capitalism?
If not, you misunderstood my meaning.
> A key concept in economics is that people are economically rewarded for investing the value they've created (as opposed to consuming it all), as compensation for taking on the risk involved in investment. Or to put it another way: part of the returns people get from investing is economic compensation for the risk involved in investing (as opposed to spending the money immediately, which entails no risk of losing that money).
So you view insider trading as an acceptable behavior accounted for in unrestricted capitalism?
If not, you misunderstood my meaning.
Actually I do; it brings information into the market faster, meaning more-accurate prices are realised more quickly.
I second this. While I still will keep pointing out flaws of the market economy, there's no doubt it pretty much lifted us to this age of prosperity most humans enjoy today. It's, I think, something often forgotten. It's easy now to point out problems with capitalism, because we're all used to the parts where it works well and for the benefit of humanity. We should not forget about that, but we also shouldn't stop trying to correct the market in areas it fails.
This doesn't seem like the place to pledge allegiance. Maybe I am wrong.
Capitalism also drives greed, destruction and human misery as well as some other pretty evil things.
Also, the tragedy of the commons. Companies pollute our environment externalizing costs on society. They collect the profits, we pay for the damage. The weakest point of capitalism is the same as its greatest advantage - greed.
> Companies pollute our environment externalizing costs on society.
Interestingly, historical experiments in communism have led to vastly increased rates of environmental destruction as compared to market economies. The reason is fairly obvious if you have a some economic background and think about it for a bit; in a market economy with resource ownership, people who own resource rights (e.g. to fell the trees in an area) will notice that they can make a lot more money if they spread the resource sales over time; if they sell all their trees now, they'll push down the market value of lumber and have decreasing marginal returns on each tree they fell. In the presence of a rich market system including market mechanisms like futures, market participants make a lot more money planning for the future than just trashing the environment as fast as possible.
Compare this to a communist state. The people in charge of resource management don't make money anyway, so they don't really care about the same optimization a capitalist would. Of course, they can buy political favor at little cost to them by pushing way down the diminishing marginal returns curve and exhausting a resource way faster than a self-interested capitalist would. Great job, commissar, look at all this wood! After all, if you can make your peers happy for a few years you'll get a promotion to a better government position (or retire early on your pension) and the fact that this area is now barren is someone else's problem.
Interestingly, historical experiments in communism have led to vastly increased rates of environmental destruction as compared to market economies. The reason is fairly obvious if you have a some economic background and think about it for a bit; in a market economy with resource ownership, people who own resource rights (e.g. to fell the trees in an area) will notice that they can make a lot more money if they spread the resource sales over time; if they sell all their trees now, they'll push down the market value of lumber and have decreasing marginal returns on each tree they fell. In the presence of a rich market system including market mechanisms like futures, market participants make a lot more money planning for the future than just trashing the environment as fast as possible.
Compare this to a communist state. The people in charge of resource management don't make money anyway, so they don't really care about the same optimization a capitalist would. Of course, they can buy political favor at little cost to them by pushing way down the diminishing marginal returns curve and exhausting a resource way faster than a self-interested capitalist would. Great job, commissar, look at all this wood! After all, if you can make your peers happy for a few years you'll get a promotion to a better government position (or retire early on your pension) and the fact that this area is now barren is someone else's problem.
That doesn't always work. If you expect demand for lumber will go down in a few years, as far as you can tell forever, it's better for you to take out your trees as fast as possible.
I think that's part of what's happening with oil, where renewable sources are going to replace them as a bulk good. If you have lots of it like Saudi Arabia, your capitalism-optimal strategy may be to pump up oil now, even if it significantly drives down prices.
It also may be rational to destructively mine lumber if that's the only way you can produce it competitively. Your competition might own woods closer to rivers, for example, making it cheaper for them to transport their wood to the customer.
I think that's part of what's happening with oil, where renewable sources are going to replace them as a bulk good. If you have lots of it like Saudi Arabia, your capitalism-optimal strategy may be to pump up oil now, even if it significantly drives down prices.
It also may be rational to destructively mine lumber if that's the only way you can produce it competitively. Your competition might own woods closer to rivers, for example, making it cheaper for them to transport their wood to the customer.
I've always felt that the big arguments stacking Capitalism and Communism seem to revolve around the practical results of distributed vs centralized allocation of resources - and yet that seems to be a feature that is mostly tangential to both economic theories. Yes, many centrally planned Communist economies failed, but we seem to be approaching a centralization by concentration in the US - where we can't get broad public goods agreed upon (even though private healthcare e.g. has been a clear economic inefficiency compared to public). It's a big economic disconnect akin to the disconnect of factory workers in Communist-centralized factories not being motivated or allowed to improve the output.
Wouldn't it be ironic if all the energy directed to arguing Communism vs Capitalism had completely missed the fundamental principles on both sides?
Wouldn't it be ironic if all the energy directed to arguing Communism vs Capitalism had completely missed the fundamental principles on both sides?
I don't know a huge amount about this. Just wondering though, if those increased rates of environmental damage could also be related to communist states tending to have restrictions on the press, which in turn makes it easier for corruption to flourish.
What you're saying certainly makes sense though.
What you're saying certainly makes sense though.
And yet capitalist societies are invariably the ones that people actually want to live in.
You didn't see West German border guards shooting people who were trying to get into East Germany.
You don't see people leaving Miami for Havana on rafts they've made out of trash bags full of styrofoam packing peanuts.
Why is that, do you suppose?
You didn't see West German border guards shooting people who were trying to get into East Germany.
You don't see people leaving Miami for Havana on rafts they've made out of trash bags full of styrofoam packing peanuts.
Why is that, do you suppose?
The problem is simpler than that: capitalism optimizes for resource allocation, while humans care about more than resources. Stuff is extremely important to our happiness (without getting into that it's probably not) but there are other things we care about too that capitalism is not good at providing.
The opportunity to not be obsessed with stuff is one benefit of the path we've taken. Perhaps you'd have to know Greatest/Silent generation people more to see the change.
Capitalism uses greed, but a person in the Soviet Union would still be greedy.
Capitalism uses the environment and when you mine something you use a resource. Capitalism was not really present in Nazi Germany and they were the cause of an unbelievable amount of destruction.
Human missery? Capitalism has almost eliminated all human missery, we are talking about it being a reasonable goal that by 2035 the should be no humans living at less than a dollar (adjusted for inflation) a day. In the last 15 years that number was cut in half, and it stayed mostly constant from 1900 to 1960 despite the fact that the worlds population grew massively.
The only reason you can even write that is that you have no idea what human missery was before Capitalism.
Capitalism uses the environment and when you mine something you use a resource. Capitalism was not really present in Nazi Germany and they were the cause of an unbelievable amount of destruction.
Human missery? Capitalism has almost eliminated all human missery, we are talking about it being a reasonable goal that by 2035 the should be no humans living at less than a dollar (adjusted for inflation) a day. In the last 15 years that number was cut in half, and it stayed mostly constant from 1900 to 1960 despite the fact that the worlds population grew massively.
The only reason you can even write that is that you have no idea what human missery was before Capitalism.
> Capitalism also drives greed, destruction and human misery
Interesting you say this, because (by a huge margin) the worst instances of all these things took place under non-capitalist governments. Here's a good rundown wrt destruction and human misery: http://necrometrics.com/20c5m.htm
The most incredibly flourishing of human potential has, around and since the renaissance, occurred in market environments. It looks like greed and destruction and misery are probably going to happen no matter what (at least, no one has figured out to prevent them yet), but they seem to actually be minimized in market societies.
Interesting you say this, because (by a huge margin) the worst instances of all these things took place under non-capitalist governments. Here's a good rundown wrt destruction and human misery: http://necrometrics.com/20c5m.htm
The most incredibly flourishing of human potential has, around and since the renaissance, occurred in market environments. It looks like greed and destruction and misery are probably going to happen no matter what (at least, no one has figured out to prevent them yet), but they seem to actually be minimized in market societies.
Greed, destruction and misery are the defaults. Any system which scales at all will amplify them.
All the things you described existed before capitalism and will exist after capitalism.
What is wrong with greed? Most people want more money.
Is it wrong for a poor person to earn more money?
https://www.youtube.com/watch?v=RWsx1X8PV_A
Is it wrong for a poor person to earn more money?
https://www.youtube.com/watch?v=RWsx1X8PV_A
It is wrong to idealize the desire for more money to the point where you hurt people to achieve it. That's what "greed" means. It doesn't mean "wanting more". It means wanting too much. And tautologically, "too much" is too much to want.
Just like stealing, hurting people is not part of capitalism.
What is "too much"? Do people here, who are mostly globally (and often nationally) rich, earn "too much" money?
What is "too much"? Do people here, who are mostly globally (and often nationally) rich, earn "too much" money?
Refusing life saving assistance except in return for payment is part of the pattern of Capitalism.
You cannot ignore externalities inherent to a system and claim yourself absolved of the consequences.
You cannot ignore externalities inherent to a system and claim yourself absolved of the consequences.
> Refusing life saving assistance except in return for payment is part of the pattern of Capitalism.
Comments like this must come from a background of absolute ignorance of utility theory or quantitative economics. I can't think that anyone would make this complaint if they thought critically for a moment about what they were suggesting.
Whether you like it or not, we live in a universe with scarce resources. Humans have finite time, matter, and energy that we need to allocate.
As of today (or at least the very near future), it's probably possible to keep any individual human alive for arbitrarily long. We just might burn trillions of dollars doing it. Obviously, even to someone who can't multiply, this doesn't make sense. If we did our absolute best to keep everyone in the world alive, we would run out of resources immediately.
Now, let's say instead of trillions of dollars, it's millions. This is a plausible multi-year treatment cost. Now instead of running out of resources at 10 people, it's 10,000,000 people. This is still less than the number of people in the world who would plausibly rack up these kind of costs if we didn't "refuse life-saving assistance except in return for payment".
The unfortunate harsh reality is that everyone's life has a finite value. It doesn't make sense to spend more resources keeping someone alive than they're worth; as I said, you'd run out of resources very quickly, even if we pretend it makes sense to dedicate 100% of humanity's output to medicine. Additionally, some people's lives are worth more to everyone else than others. People revile this fact for many reasons, but that's how it is. The market, and most individuals, place a higher value on the life of, say, a surgeon than on that of a busker. The market is a way to (surprisingly accurately) stochastically approximate the value people place on things, including the time of other people. A surgeon gets paid more because (assuming the market is allowed to operate unimpeded) they are valued more, and it therefore makes sense that (through the indirection of money) they are able to pay for that expensive multi-million dollar treatment if they get some complicated disease. Common objections to this include "what about rich retired people who aren't productive anymore", and the answer is that if people knew they couldn't spend the money they were saving right now later on, this would induce even more drastic inefficiencies than that of rich retirees being able to afford medical care more than people still in the workforce.
Comments like this must come from a background of absolute ignorance of utility theory or quantitative economics. I can't think that anyone would make this complaint if they thought critically for a moment about what they were suggesting.
Whether you like it or not, we live in a universe with scarce resources. Humans have finite time, matter, and energy that we need to allocate.
As of today (or at least the very near future), it's probably possible to keep any individual human alive for arbitrarily long. We just might burn trillions of dollars doing it. Obviously, even to someone who can't multiply, this doesn't make sense. If we did our absolute best to keep everyone in the world alive, we would run out of resources immediately.
Now, let's say instead of trillions of dollars, it's millions. This is a plausible multi-year treatment cost. Now instead of running out of resources at 10 people, it's 10,000,000 people. This is still less than the number of people in the world who would plausibly rack up these kind of costs if we didn't "refuse life-saving assistance except in return for payment".
The unfortunate harsh reality is that everyone's life has a finite value. It doesn't make sense to spend more resources keeping someone alive than they're worth; as I said, you'd run out of resources very quickly, even if we pretend it makes sense to dedicate 100% of humanity's output to medicine. Additionally, some people's lives are worth more to everyone else than others. People revile this fact for many reasons, but that's how it is. The market, and most individuals, place a higher value on the life of, say, a surgeon than on that of a busker. The market is a way to (surprisingly accurately) stochastically approximate the value people place on things, including the time of other people. A surgeon gets paid more because (assuming the market is allowed to operate unimpeded) they are valued more, and it therefore makes sense that (through the indirection of money) they are able to pay for that expensive multi-million dollar treatment if they get some complicated disease. Common objections to this include "what about rich retired people who aren't productive anymore", and the answer is that if people knew they couldn't spend the money they were saving right now later on, this would induce even more drastic inefficiencies than that of rich retirees being able to afford medical care more than people still in the workforce.
> Just like stealing, hurting people is not part of capitalism.
I am not interested in how/why you rationalize it or the morale judgements you make on it.
You cannot simultaneously claim no harm and feel the need to rationalize the harm caused. The fact you did attempt to do so means you acknowledge the harm caused and consider it acceptable.
Calling me ignorant for pointing out the ugly reality you so verbosely attempt to distance yourself from is quite amusing.
You harm a plant when you eat it to gain the calories to live. The act of eating an apple does not directly cause the harm but the process by which it arrives at your table does. Pretending such use of force and harm is not inherent to human life is extremely dangerous as it is the product of doublethink.
I am not interested in how/why you rationalize it or the morale judgements you make on it.
You cannot simultaneously claim no harm and feel the need to rationalize the harm caused. The fact you did attempt to do so means you acknowledge the harm caused and consider it acceptable.
Calling me ignorant for pointing out the ugly reality you so verbosely attempt to distance yourself from is quite amusing.
You harm a plant when you eat it to gain the calories to live. The act of eating an apple does not directly cause the harm but the process by which it arrives at your table does. Pretending such use of force and harm is not inherent to human life is extremely dangerous as it is the product of doublethink.
While I disagree with the parent's general point, not being forced to help others, is not the same as causing harm.
What is the externality here?
A great many of the very rich never spend all their money. They die first. So surely they had too much money.
I'm not trying to qualify what "too much" is. I'm only telling you that greed is obviously wrong, and that this follows directly from the definition of the term. To say greed is not wrong is no more absurd that saying "being incorrect" is not wrong.
I was enlightend once to finish reading an article in a business magazine, and realize that everything discussed benefitted me. The executives in the article had made decisions in order to improve the state of their company, and in doing so were trying to more efficiently deliver products and services to society at large. They get well compensated for what they do, of course. But they also take formidable risk, and must make decisions with only a guess of the consequences. All in order to stay competitive and continue to provide products at a low price.
Communism is well suited to giving people a better horse instead of a car - when the whole system is collectively planned and owned - there is no incentive at all for creative destruction.
> when the whole system is collectively planned and owned
It's funny. It is not that capitalism does not tend towards central planning. When companies fuse and get bigger, they want to reap the profits of centralization and unified control. To exaggerate a bit: the ultimate way to deal with the competition is to absorb or to kill it.
It's funny. It is not that capitalism does not tend towards central planning. When companies fuse and get bigger, they want to reap the profits of centralization and unified control. To exaggerate a bit: the ultimate way to deal with the competition is to absorb or to kill it.
Or form a cartel where the prices and features from each member is decided as a group.
That said, i don't think even Marx considered central planning as more than a transitional stopgap.
Thing is that he expected socialism to rise from industrialized nations like England or Germany, not near-agrarian Russia.
Also, his primary motivation was for workers to have more say in the factories they worked in.
But then few people even know volume one, where as in volume two and three he rails against the rentier capitalists. And lament how in the long run it would be better for industrial capitalist to side with the workers against the rentiers, but that they rarely do so until it is effectively too late.
That said, i don't think even Marx considered central planning as more than a transitional stopgap.
Thing is that he expected socialism to rise from industrialized nations like England or Germany, not near-agrarian Russia.
Also, his primary motivation was for workers to have more say in the factories they worked in.
But then few people even know volume one, where as in volume two and three he rails against the rentier capitalists. And lament how in the long run it would be better for industrial capitalist to side with the workers against the rentiers, but that they rarely do so until it is effectively too late.
Collective planning is not inherent to communism and communism doesn't inherently restrict the sort of market forces that enable "creative destruction".
It's important to remember in these kinds of debates that there are two kinds of communism: The practical communism, the one actually tried dozens and dozens of times, despite implementing a pretty fair range of possible combinations of parameters, yet returning a the same pretty narrow range of failures pretty invariably -- and then the theoretical communism, as read and understood by contemporary western intellectuals for whom practical communism (or, as it's often known, "not real communism") is mostly irrelevant.
With that, your observation is entirely correct, but it pertains to theoretical communism. The GP was likely referring to practical communism, and in that context, yes, practical communism most definitely inherently restricts market-driven creative destruction.
(Cool side-anecdote: Karl Popper invented the scientific method partly in response to Marxist "science".)
With that, your observation is entirely correct, but it pertains to theoretical communism. The GP was likely referring to practical communism, and in that context, yes, practical communism most definitely inherently restricts market-driven creative destruction.
(Cool side-anecdote: Karl Popper invented the scientific method partly in response to Marxist "science".)
There is an incentive for creative destruction - failure. If you can't continue innovating (eg you can't make a better horse) you have to take a different approach.
What you're describing is an instance of the knowledge problem or the economic calculation problem. Centralism (to which communism belongs) is good at many things -- including huge endeavours such as space travel or going to all-out war. The immense power unleashed during the two world wars was a major inspiration for centralism in the following decades, in the shape of trying to apply this power towards societal good, rather than destruction.
It even worked, in some form, for a bit. Millions of people were homeless or living in very poor conditions, they were relatively quickly re-housed in housing estates build on an unprecedented scale and with unprecedented speed.
But it didn't work at scale. While certainly better than not having anywhere to live at all, many of the housing estates were awful places, they simply weren't built to live in, they were almost militaristic "machines for living in" rather than "homes".
Which brings us back to the knowledge problem: All-out war has the ability to align almost everybody's interest in the same direction - crush the germans. Individual happiness, even liberty, is basically optional, because if you don't win the war, you will have neither happiness or liberty. With this knowledge, it's reasonably easy to organise the economy both on both the micro and macro levels: I need to mine ore for steel for tanks. I need to grow cabbage because we can't import food and cabbage has the highest calories-output per input (taste is not a factor). At every level, you can get a very reasonable approximation of the right course of action by consulting a very small set of shared objectives.
But in peace-time, things start falling apart. You no longer as a society have a short list of shared objectives, the best you can do is something vague like 'maximising happiness' (and even that is debatable). Even if you could identify a big, shared goal, and you might achieve it by suspending liberty, loosing their liberty will make people unhappy and so the means ends up mattering more than the ends (see: war on drugs).
How do you figure out whether growing cabbage or wheat or carrots or raising beef-cattle in such conditions? Different people prefers different kinds of houses, so do you farm trees for wood, mine coal and dig clay for bricks or whatever it is you do to make concrete? In both cases, you need some combination of all, depending on an extremely complex, inherently unknowable, continuously shifting combination of desires in the population -- and the formation of prices in a free market is perhaps not the best (for some value of 'best'), but it's the only known actually functional mechanism to communicate these desires.
Anyway, bottom line: I don't agree that centralised economic systems can even give people better horses, or better cars. If the need is clear and broad enough, it can give people a horse or a car, but it doesn't implement the feedback mechanisms required to continuously incrementally improve it outputs (cutely captured in this meme: http://9gag.com/gag/4298226).
It even worked, in some form, for a bit. Millions of people were homeless or living in very poor conditions, they were relatively quickly re-housed in housing estates build on an unprecedented scale and with unprecedented speed.
But it didn't work at scale. While certainly better than not having anywhere to live at all, many of the housing estates were awful places, they simply weren't built to live in, they were almost militaristic "machines for living in" rather than "homes".
Which brings us back to the knowledge problem: All-out war has the ability to align almost everybody's interest in the same direction - crush the germans. Individual happiness, even liberty, is basically optional, because if you don't win the war, you will have neither happiness or liberty. With this knowledge, it's reasonably easy to organise the economy both on both the micro and macro levels: I need to mine ore for steel for tanks. I need to grow cabbage because we can't import food and cabbage has the highest calories-output per input (taste is not a factor). At every level, you can get a very reasonable approximation of the right course of action by consulting a very small set of shared objectives.
But in peace-time, things start falling apart. You no longer as a society have a short list of shared objectives, the best you can do is something vague like 'maximising happiness' (and even that is debatable). Even if you could identify a big, shared goal, and you might achieve it by suspending liberty, loosing their liberty will make people unhappy and so the means ends up mattering more than the ends (see: war on drugs).
How do you figure out whether growing cabbage or wheat or carrots or raising beef-cattle in such conditions? Different people prefers different kinds of houses, so do you farm trees for wood, mine coal and dig clay for bricks or whatever it is you do to make concrete? In both cases, you need some combination of all, depending on an extremely complex, inherently unknowable, continuously shifting combination of desires in the population -- and the formation of prices in a free market is perhaps not the best (for some value of 'best'), but it's the only known actually functional mechanism to communicate these desires.
Anyway, bottom line: I don't agree that centralised economic systems can even give people better horses, or better cars. If the need is clear and broad enough, it can give people a horse or a car, but it doesn't implement the feedback mechanisms required to continuously incrementally improve it outputs (cutely captured in this meme: http://9gag.com/gag/4298226).
Le Courbusier did say,
Une maison est une machine-à-habiter.
A house is a machine for living in.
Too bad people, perhaps those in charge of those housing estates, seem not to read further in the same work:
You employ stone, wood and concrete, and with these materials you build houses and palaces. That is construction. Ingenuity is at work. But suddenly you touch my heart, you do me good, I am happy and I say: "This is beautiful." That is Architecture. Art enters in.
Too bad people, perhaps those in charge of those housing estates, seem not to read further in the same work:
You employ stone, wood and concrete, and with these materials you build houses and palaces. That is construction. Ingenuity is at work. But suddenly you touch my heart, you do me good, I am happy and I say: "This is beautiful." That is Architecture. Art enters in.
Agreed. One of the big problems in perception, I think, is the fact that, since a market economy can support a fairly substantial non-market fraction (socialized housing, roads, etc.) people imagine that you can just indefinitely extend the non-market system to encompass the whole economy. But you can't - and if you try, you end up not having enough of anything that you want. But it seems so simple, so people keep trying to do it.
Sputnik
Innovation during the Space Race was driven by the competition between USSR and USA.
More interesting is the effect of lightening Has had from moving us from a primarily "daylight only" culture to a 24-hour culture.
We live in an interacting system of market systems, governments, democracies, culture, and technological evolution on a blue, green, brown, and white planet. It is a giant spaghetti ball full of externalities and extremes. Masses of humanity lifted from poverty, massive extinction, climate change, rapid technological development. However, it only a few centuries ago led to massive slavery, population loss, etc... It is hard to say where this will lead but I suspect that it will continue to lead to both extremes and it's a good idea to spread our seed as widely as possible. Mars, Moon, etc... Because it's pretty much a guarantee that someone will screw up mightily and we're not talking just politics.
This reminded me of the book "How We Got To Now" by Steven Johnson. Really interesting book on how development in certain fields enabled other innovations ("adjacent possible"). Really well written and super interesting book! Also, bonus points for the last chapter on Ada Lovelace, and what a visionary she was in terms of what a computer could do.
https://www.amazon.com/How-We-Got-Now-Innovations/dp/1594633...
https://www.amazon.com/How-We-Got-Now-Innovations/dp/1594633...
Excellent Planet Money podcast on the same topic: http://www.npr.org/sections/money/2014/04/25/306862378/episo...
Basically, the history of light makes for a nice capsule summary of the entire history of our economic development.
Basically, the history of light makes for a nice capsule summary of the entire history of our economic development.
When I was in first grade (1972) my teacher said that there was only one factory in the country that made light bulbs. I remember even at that young age thinking that can't possibly be true. But I've never gone and researched it. Funny the things you remember when you're six.
I have a vivid memory of being on a train journey, probably c. 4 years old, with my grandmother and her explaining to me that the reason the train stopped every now and then was because the people pushing it got tired. Yes, it's funny what you remember. I'll never know if she actually did say that or if I invented it. I don't think she was much of a joker.
Bit of a tangent but a shoutout to the darksky movement. Just because lighting is cheaper doesn't mean you have to turn on the switch.
https://phys.org/news/2017-01-dark-astronomy-life.html
https://phys.org/news/2017-01-dark-astronomy-life.html
Was hoping to read why the falling cost of light matters in modern times.
I take it as an example that can apply to many other areas of life and technology. Adjusted for inflation, I earn the same or less than my parents did when they were my age. (This is touted as the failure of the American Dream). Yet my life is considerably less of a hassle then theirs was. While the value of a dollar is less than it was then, I am able to do things that were simply impossible in 1970.
Things I don’t worry about, that they did:
Things I don’t worry about, that they did:
* Cost of long distance phone calls (VoIP)
* Cost of mailing a letter (E-mail)
* Smog (Catalytic converter)
* Missing a TV show (DVR, Netflix)
* Replacing light bulbs (LEDs)
* Hepatitis C (That Gilead drug)
* Depositing checks at the bank
(No more checks, or photo deposit)
* Developing film (Digital Camera)
The optimist glass is full of "nice to have" other than the Hep-C pharma which is the only "must have".
The pessimist glass is full of "must have" like pay kids college, pay for health care, purchase roof over head, purchase car or alternative transport. And those trends are not looking good.
This is aside from negative technologies. Military drones. Mass surveillance. Social media. Fake news. Corn syrup. Industrialized heavily processed food in general.
And of course technologies that are on the bubble. The net result of fast food drive thru as a technology is likely negative, although superficially what could possibly go wrong with food that's fast?
I've noticed over decades in the field that providing more automation to businesses sometimes results in more complicated systems rather than more productive systems. Probably the small number of failures being more memorable than the larger number of successes... An ever more complicated culture is not necessarily better, but it is certainly more brittle and prone to collapse.
The pessimist glass is full of "must have" like pay kids college, pay for health care, purchase roof over head, purchase car or alternative transport. And those trends are not looking good.
This is aside from negative technologies. Military drones. Mass surveillance. Social media. Fake news. Corn syrup. Industrialized heavily processed food in general.
And of course technologies that are on the bubble. The net result of fast food drive thru as a technology is likely negative, although superficially what could possibly go wrong with food that's fast?
I've noticed over decades in the field that providing more automation to businesses sometimes results in more complicated systems rather than more productive systems. Probably the small number of failures being more memorable than the larger number of successes... An ever more complicated culture is not necessarily better, but it is certainly more brittle and prone to collapse.
Some of it's not how much it matters in modern times but that without that decline in cost it wouldn't BE modern times. Even now there are large chunks of the world where LEDs are making a huge difference because their lower cost means it's possible to power them with self-contained solar cells where it'd be a challenge to power even an incandescent nightlight without expensive fuel or a generator.
For those who like podcasts, Planet Money also covered this a few years ago: http://www.npr.org/sections/money/2014/04/25/306862378/episo...
For those who like podcasts, Planet Money also covered this a few years ago: http://www.npr.org/sections/money/2014/04/25/306862378/episo...
It's a superb podcast. Made a huge impact on my 10 year old.
Intriguingly, it probably hasn't fallen that much in terms of total energy spend. At every step of the way on the path to increasing efficiency, we didn't focus on saving; rather, we've increased the amount of light in public and private spaces. Where in the past a dimly lit room or alley might have been fine, you'd use intense light sources nowadays.
I had fifteen 60 watt bulbs in my basement lab/workshop on tracks and that's 900 watts. And in my living room I had two three hundred watt torchaire style halogen bulbs, that's 600 watts. I don't think my house was unusually bright.
My LED replacements are actually brighter in terms of lumens which is very nice, but only recently could I theoretically afford 1500 watts of LEDs. I mean there was an early adopter time not long ago when LED bulbs were like $30/watt. I think 1500 watts of modern LEDs would be quite the searchlight. An eighth of a million lumens seems within reach for one fifteen amp AC power cable. That's about a square meter of bright noontime sunlight, which isn't so bad.
My LED replacements are actually brighter in terms of lumens which is very nice, but only recently could I theoretically afford 1500 watts of LEDs. I mean there was an early adopter time not long ago when LED bulbs were like $30/watt. I think 1500 watts of modern LEDs would be quite the searchlight. An eighth of a million lumens seems within reach for one fifteen amp AC power cable. That's about a square meter of bright noontime sunlight, which isn't so bad.