An Open Market on Economics

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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 07, 2015 12:55 am

Some looooonnng reads for the thread.

A friend and I have been going back and forth on automation and it's potential effect on the labour force for a while now. He has won me over to the viewpoint that CURRENTLY the labour market is depressed in western nations due to globalization's effect on labour markets, as well as demographic trends, and not automation. But I still maintain that it's possible in the near future (he doesn't think it's impossible either, but feels that's too speculative to believe strongly in the possibility).

Anyway, the Atlantic decided to do an interesting article on this very thing: A World Without Work

Mostly it's just playing with the possibilities of what might happen if increasing automation brings permanent structural elevated unemployment. Basically, armchair guesswork, with a bit of optimism.

I focused most on section two, where the supporting arguments for a wave of automation are. The horse example is cute, but also genuinely illustrative that permanent obsolescence is possible, we just didn't care because employment for horses isn't exactly an overriding social concern for humans.

Anyway, some of the souring is poor, or forced. He caught this:
NJ wrote:I looked up the Loukas Karabarbounis and Brent Neiman work, and I think he somewhat misrepresents what their paper actually says-- it attributes that fall in labor share to the relative cheapness of investment (http://faculty.chicagobooth.edu/brent.n ... rch/KN.pdf). You have to really torture that paper to get what the author says out of it:

But Loukas Karabarbounis and Brent Neiman, economists at the University of Chicago, have estimated that almost half of the decline is the result of businesses’ replacing workers with computers and software.


Well, no. What the paper says is that when investments are cheaper than labor, companies spend more on investments and less on labor. Presumably if labor is more expensive, that goes the other direction. This runs into the same problem as all of the labor pool arguments: you're looking at a period that is coincident with the emergence of women in the workforce and that is coincident with globalization, so there's a massively expanding labor pool available to a given company. Plus, we've been short on major wars for a long while, so there's no massive pullback in labor force that might drive up prices.

Re: the plight of the young college grad: https://en.wikipedia.org/wiki/Education ... ted_States

what would you expect, given the rising incidence of college graduation? We've got nearly 35% BAs and above among 25-29 year-olds-- did we imagine that the entry-level job sector needed 35% college grads?


But one of the other sources is much more solid, as well as an interesting read in it's own right: Oxford study, where they project that machines may be able to perform as much as half of all US jobs within the next 20 years

They go into quite a lot of detail, including some surprisingly in-depth historical research. Crucially, they are not stating that mass automation will happen, merely that it is certainly possible.

The second article is quite long, and is academic (though is largely readable other than the math-y bits and even those are probably perfectly readable if you have some basic stats/econ education), so I just noted some interesting points:

- Technological advances favouring more skilled workers is almost entirely a twentieth century phenomenon. Previous mass waves of technological change actually favoured "deskilling", which is to say they resulted in greater employment for wider numbers of people while requiring fewer skills.
- An important evolutionary step that allowed growth during the later stages of the industrial revolution was the transportation revolution which vastly increased market sizes. Our current economy is unlikely to to feature such a jump in distribution capabilities, given we already have the internet and globalization.
- Polarization of the labour market due to technological advances has multiple historical precedents.
- The labour market has historically bounced back from technological changes by becoming more educated on an overall basis, but in the modern era we are for the first time seeing that this is not having the effect it previously did and there is in fact declining demand for skilled labour in terms of overall quantity - the education and labour markets are starting to decouple.
- The expansion of automation to tasks which might be described as "non-routine" is unprecedented, and largely thanks to an explosion in efforts to break down non-routine tasks into well-defined problems.
- They go very exhaustively into complex tasks and, critical and non-critical, which are already seeing automation. Including this potentially terrifying passage:
Baxter, a 22,000 USD general-purpose robot, provides a well-known example. The robot features an LCD display screen displaying a pair of eyes that take on different expressions depending on the situation. When the robot is first installed or needs to learn a new pattern, no programming is required. A human worker simply guides the robot arms through the motions that will be needed for the task. Baxter then memorises these patterns and can communicate that it has understood its new instructions. While the physical flexibility of Baxter is limited to performing simple operations such as picking up objects and moving them, different standard attachments can be installed on its arms, allowing Baxter to perform a relatively broad scope of manual tasks at low cost (MGI, 2013).

You know the trope of the human worker who has to teach the low-wage temp or foreign worker how to do his job before he's fired, right? Well, we can experience that with robots now!
- They go substantially into detail about task breakdowns to try and ascertain what jobs may be susceptible to automation. There are some big assumptions made, but they're not unsupported.
- For their numerical claims of future potential effect on the job market, some of the math is based on partially subjective premises (given our research and what we know, is this job automatable?). They've lampshaded this seem to have taken fair measures to ensure the subjective portions were as well-based as possible - they sought consensus opinions and also worked from a hard variable list to decide the likelihood of complex task automation.
- They argue that that labour market polarization will be truncated in the coming decades and average wage levels will thereby rise... but only because computerization will fall more heavily on the low-wage jobs, thus eliminating them and leaving higher unemployment rates overall.

One BIG thing I really wish he had more detail or a study link to was the comment in the Atlantic article about new industries being highly labour-efficient. That's massively important for future employment growth and fundamentally crucial to the old idea that new industries bring new jobs as part of the "creative destruction" of industries and labour markets.
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Re: An Open Market on Economics

Postby Friday » Tue Jul 07, 2015 7:29 pm

Or, more simply, unemployment leads to war. War leads to employment.

Also, a bunch of people will die in the next 50 years and free the younger generations to restructure. As long as another Baby Boom doesn't happen, (and the restructuring is done intelligently) that will create a stable economy.

(Of course, War also leads to Baby Booms. You could, in theory, sustain an economy by just continually having Baby Booms [which is how it was done until the 60s] but then you run into other, more serious problems)
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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 07, 2015 8:05 pm

Unemployment leads to war (or unrest)... unless you buy people off with stipends. Bread and Circuses is trite, but true for poorer segments of society.

One of the more perceptive articles I've read recently (might have linked it here?) was one that argued that the marked growth in people on disability or other forms of government support is something that happens because at all stages you have people invested in it happening (doctors meaning well, gov employees keeping their jobs and thinking they're helping people, etc.) and in spite of right-wingers who try to rant about it, society and governments sort of turn a blind eye to it because, well, it prevents the riots historically associated with the angry and destitute.

Not that people on disability are mooching - many of them, probably most of them, are genuinely unable to work or legitimately do need support. But I think we can all think of some borderline cases. Or people who modern society accepts as disabled, but who could in theory perform harsh labour enough to barely stay alive in a crueller world than the one we inhabit. Or even people who are pretty much healthy but who have been effectively excluded from regular society. I don't begrudge people like that a chance to live quietly.
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Re: An Open Market on Economics

Postby Friday » Tue Jul 07, 2015 8:13 pm

Unemployment leads to war (or unrest)... unless you buy people off with stipends. Bread and Circuses is trite, but true for poorer segments of society.


True, but only as a temporary measure. The poor can't keep getting poorer forever without war. I don't care how much bread fully realistic sex holosims/bots you forcefeed them. This is particularly noteworthy in China, where both the poor are getting poorer (way worse than any other modern state) and also not enough women. This is where the sexbots/holosims come in (not kidding about that, by the way) but that will only pacify them for so long. Men go to war if they're not starting families.

I don't begrudge people like that a chance to live quietly.


Nor do I. My point was just that it is a fact that the top-heaviness of our current econ (baby boom with no follow up boom to support) is going to literally die after 50 years, which will create an economy based on replacement population instead of growth population. Except in Africa the third world Africa, which will still cause the global population to increase.
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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 07, 2015 9:17 pm

Well, a couple of things

- We're actually still getting richer on an overall basis and it's disparity, not outright poverty that's the problem. I figure you know this and I agree completely that worsening disparity will eventually lead to *STREETS OF RAGE*, I'm just clarifying that to make sure everyone's on the same page.

- There actually is a fair-sized boom in the MIllenial generation - it's the largest since the baby boom.

- No one has figured out a way to run an economy without growth, including population growth. In theory there's maybe stuff about shifting things around so more individual wealth grows and an overall growth rate remains, but no one's actually figured out HOW, much less worked out a way to get our whole society turned round so that it happens.

- Yeah, I still have no idea what is going to happen with all those frustrated blueballed chinese men, like there are glimpses of possibilities, but the massive puppetry of the Chinese government is making the outcome really opaque.

- I actually sort of worry that income disparity won't lead to *STREETS OF RAGE*, until things get SO bad that it's just ridiculous. Most people I interact with seem apathetic and far too law-abiding. Even people who are against so many things about our current society seem to be unwilling to throw a brick (to steal a phrase from the Clash). Reminds me of how I mentioned that in an economic article in the globe, saying we could probably use some rebellion and got downvoted to hell (haha). This gets into the recent research that shows we're basically the least violent humans earth has ever seen... what we don't know is if some kind of permanent change is going on (it's not impossible...), or if we're just moving to more dramatic boom and bust cycles (WWII was the most violent war in history, directly killing a staggering 3% of the planet's entire population - just imagine what we could do if things grew an order of magnitude worse!). I don't want to, uh, watch the world burn, but nor do I want to watch people keep letting themselves get totally fucking rolled over like they have for the past thirty odd years.

A big thing I keep carping on is how ideological debates are still essentially based on concepts developed during the European enlightenment and then developed further during the mid 1800's. We are so overdue for some new social and economic theories, it's ridonkulous.
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Re: An Open Market on Economics

Postby Friday » Tue Jul 07, 2015 9:29 pm

- We're actually still getting richer on an overall basis and it's disparity, not outright poverty that's the problem. I figure you know this and I agree completely that worsening disparity will eventually lead to *STREETS OF RAGE*, I'm just clarifying that to make sure everyone's on the same page.


I'm not sure why you're bringing this up: I mean, you immediately say you agree with me anyway, and "everyone getting richer overall" doesn't mean jack when you're getting that average because the rich are getting rich faster and faster than ever before.

- There actually is a fair-sized boom in the MIllenial generation - it's the largest since the baby boom.


True, but the point stands. You can't have a generation of average five kids directly followed by a generation of 2.5 kids without problems.

- No one has figured out a way to run an economy without growth, including population growth. In theory there's maybe stuff about shifting things around so more individual wealth grows and an overall growth rate remains, but no one's actually figured out HOW, much less worked out a way to get our whole society turned round so that it happens.


It worked for a long time before antibiotics. I'm sure we can figure something out.

- Yeah, I still have no idea what is going to happen with all those frustrated blueballed chinese men, like there are glimpses of possibilities, but the massive puppetry of the Chinese government is making the outcome really opaque.


Yeah, China is like the Black Hole of humanity. We all know it's going to be really, really pivotal, but it's not giving off much information.

- I actually sort of worry that income disparity won't lead to *STREETS OF RAGE*, until things get SO bad that it's just ridiculous.


It's pretty simple: People revolt when there isn't enough food. Unless you're North Korea, I guess.

A big thing I keep carping on is how ideological debates are still essentially based on concepts developed during the European enlightenment and then developed further during the mid 1800's. We are so overdue for some new social and economic theories, it's ridonkulous.


I couldn't agree more. Well, I could, but then there would be two Mongrels and the world would collapse under the weight of all the posts.
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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 07, 2015 10:10 pm

Friday wrote:I'm not sure why you're bringing this up: I mean, you immediately say you agree with me anyway, and "everyone getting richer overall" doesn't mean jack when you're getting that average because the rich are getting rich faster and faster than ever before.

Actually it does matter because we're trying to establish baseline facts. I'm not trying to catch you out or anything, it's just that poverty has objective meaning in economics so it's important to establish that there are gains and losses versus straight losses.

The best way anyone's put this to me recently is this:
like, there is no question in my mind that my life right now is better than it would be if I were making the same amount of inflation-adjusted money 10 or 20 or 50 years ago. I would probably take my life today over the same number of dollars income non-inflation-adjusted for any of those timeframes-- certainly for 10, I would, I guess I'd have to think about it for 50.

I don't know that I completely agree with his opinion (that gets into "How much do you wish you lived in a past era?"), but I think we both understand what he means. Technological improvement, health care, social legislation, and many other things have improved over time in ways that contribute to our well-being.

It's important to acknowledge this, because in arguments with wealthy dickbags or economist nerds, they will trot this out like some sort of econ 101 gotcha, you know, stop whining, you have it so good look at this chart it shows you're rich, you big baby and blah blah blah.

Better to understand that and set the terms straight from the beginning. And actually describing what's happening accurately does sorta matter too!

True, but the point stands. You can't have a generation of average five kids directly followed by a generation of 2.5 kids without problems.


Oh sure! I absolutely agree there'll be problems. I thought you were saying we'd just transition without any trouble.

It worked for a long time before antibiotics. I'm sure we can figure something out.


Okay wait, now I'm confused again. What worked? Economic growth without population growth? Historically, prosperity has been extremely strongly linked to population growth, hence wars over good land, (or any land), subjects, etc. This is a pretty bedrock demographic thing. Nations with declining populations faced severe economic troubles as well. Today we have the best shot of finding a way to de-link the two, but we haven't managed it yet - even though birth rates are down, nations are desperate for immigrants (where politics allows for it) to continue population growth via other means. Nations which are famously anti-immigrant are seeing issues, in many cases severe ones.

In the premodern era, both population growth and economic growth were typically very low by modern standards (yes, people died a lot) and this went arm in arm with prevailing economic theory, mainly Mercantilism which assumed that the global economy was a zero-sum game (i.e. the "pie" was a fixed size forever and that the only meaningful way for a nation to become rich was to steal someone else's pie, i.e. war and conquest). Then, when we started getting better survival rates with more population growth and more prosperity because of it, we moved to a theory of growth, free economies, and trade ("make the pie higher!").

Now, I've talked about that on here before that I think that in a closed, globalized world, there might be a place for a partial return to the idea of Mercantilism, but that's just a personal notion and a bugaboo for a few economists. But I'd hate for our response to be a return to pre-modern attitudes to war and conquest - I don't think it's a purely zero-sum game, so there's ways we can grow more intelligently. But right now, all our economic machinery, interest rates, the banking system as a whole, national finance - all the bedrock foundations of the way our modern economy works - are dependent on some level of growth, long-term. If that's going to change then we need to change EVERYTHING about the way our financial systems work. And because we're not going back to the gold standard, agriculture, slavery, plunder, and jewish moneylenders we'd need to find something else to allow us to pay our bills.

It's pretty simple: People revolt when there isn't enough food. Unless you're North Korea, I guess.


Yeah. But while we haven't "solved" starvation, it's not even close to the overriding social concern it used to be for most of history. So I don't know? If you're right, it means we can expect to keep getting fucked because people just won't give enough of a shit? I don't know if I think that's what's happening. I think that within the next five to fifteen years you're going to see a lot of people who are forced to understand that they will never be as well off as their parents were and there's going to be some anger - there already IS some, it's just not enough to effect social changes or overcome entrenched power. Right now a lot of the worst-off people are still young enough that they can keep telling themselves that they still have a chance at a really decent job if they just hang on long enough. They're not yet forty or fifty and staring down the barrel of a life where they'll only ever do the shit jobs they've done up to that point. A lot of this is Boomers transferring vast amounts of wealth to their kids to keep them in the game too.
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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 07, 2015 10:11 pm

Uh, I apologize if any of that comes off as condescending, I really don't mean it to sound that way... I'm just not sure how much you've read on this stuff so I erred on the side of covering things you might know already?
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Re: An Open Market on Economics

Postby Friday » Tue Jul 07, 2015 10:31 pm

Don't worry, you're not irking me.

I'd reply more but I don't really disagree with anything you've said or have anything more to add. The only thing I meant by "it worked before rapid population growth" was that humanity worked, not our society. I don't want to get into that discussion, because I actually believe our society/way of life is unsustainable and that is a whole nother can of worms.
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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 07, 2015 10:34 pm

Oh okay.

No, I agree completely that we can't go on as we have. We desperately need for our moral and philosophical growth to catch up with our technological growth, at least a little (okay, probably a lot).

It's possible that the internet is starting to do this, but it's really hard to say since it's all so immediate; we're too immersed in this to be unbiased about what's happening socially online. And certainly we're not seeing some overarching theory on economics, social relations, or morality coalesce out of the noise. So far anyway.
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Re: An Open Market on Economics

Postby Mongrel » Wed Jul 08, 2015 12:20 pm

Sooooooo China's stock market is going in the crapper in spite of several days worth of complex and creative attempts to shore it up (i.e. direct manipulation) by Beijing.

And if you want to put your tinfoil hat on, the NYSE was shut down today by *technical problems*
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Re: An Open Market on Economics

Postby Mongrel » Fri Jul 10, 2015 12:17 pm

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Re: An Open Market on Economics

Postby Mongrel » Sat Jul 11, 2015 3:50 pm

Breaking: Utter capitulation by the Greeks is not enough for Germany. Was this part of Tsipras's plan?

Desperately hoping Greece tells the EU negotiators to go fuck themselves at this point.
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Re: An Open Market on Economics

Postby Mongrel » Tue Jul 14, 2015 4:40 pm

The Battle For The Customer Interface

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.
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Re: An Open Market on Economics

Postby Mongrel » Mon Jul 20, 2015 10:50 am

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Re: An Open Market on Economics

Postby Brentai » Mon Jul 20, 2015 10:53 am

So... expect it to pass faster than a chicken vindaloo in 2020?

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Re: An Open Market on Economics

Postby Mongrel » Wed Aug 05, 2015 5:52 pm

Bloomberg It is kinda sorta maybe possible that Index funds are technically illegal.

The article is kind of dense, so a little tl;dr is in order. For those who don't know, Index Funds are a form of mostly automated mutual fund with a large stock pool from mostly big, market-pillar companies, that is set up with rules that aim to make sure the fund simply tracks the overall performance of a stock index for an entire market, like the S&P 500 or the Nikkei 225. They're supposed to be like autopilot robot investing and give the end customer the same overall return as the market as a whole.

Well, some folks are positing that such funds technically violate antitrust legislation. For example, if McDonald's Wendy's and Burger King's stock is only owned by people buying an index fund that buys all three, then theoretically they shouldn't be competing with each other, since no stockholder is helped by McDonald's stealing a customer from Wendy's. Instead they should work to maximize their profit margin, and compete against non-fastfood restaurants. In practice this doesn't happen because while institutional investors as a whole hold 80% of S&P 500 corporate stock, only about 22% of institutional investor stock is indexed. But indexes have gradually become a benchmark by which regular mutual funds are judged on. In theory, if more institutional funds were indexed...
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Re: An Open Market on Economics

Postby zaratustra » Mon Aug 24, 2015 12:23 pm

stock markets fell 5% today

so how much bailouts you think the banks will ask for this time

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Re: An Open Market on Economics

Postby Mothra » Mon Aug 24, 2015 3:06 pm

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Re: An Open Market on Economics

Postby Romosome » Tue Aug 25, 2015 4:31 pm

Mongrel wrote:The Battle For The Customer Interface

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.


"Something interesting" is technology making it easier than ever to apply the principles of usury to things other than pure finance.

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