Tag Archives: economics

Paul Kedrosky & Eric Norlin of SKV know nothing about software and you should ignore them

Posted on March 25, 2023 | Comments Off on Paul Kedrosky & Eric Norlin of SKV know nothing about software and you should ignore them

Last week Paul Kedrosky & Eric Norlin of SKV wrote this piece, Society’s Technical Debt and Software’s Gutenberg Moment, and several smart people I follow seemed to like this and think it something worthwhile. It’s not.

It’s not worthwhile because Kedrosky and Norlin seem to know little if anything about software. Specifically, they don’t seem to know anything about:

  • software development
  • the nature of programming or coding
  • technical debt
  • the total cost of software

Let me wade through their grand and woolly pronouncements and focus on that.

They don’t understand software development: For Kedrosky and Norlin, what software engineers do is predictable and grammatical. (See chart, top right).

To understand why that is wrong, we need to step back. The first part of software development and software engineering should start with requirements. It is a very hard and very human thing to gather those requirements, analyze them, and then design a system around them that meets the needs of the person(s) with the requirements. See where architects are in that chart? In the Disordered and Ad hoc part in the bottom left. Good IT architects and business analysts and software engineers also reside there, at least in the first phase of software development. To get to the predictable and grammatical section which comes in later phases should take a lot of work. It can be difficult and time consuming. That is why software development can be expensive. (Unless you do it poorly: then you get a bunch of crappy code that is hard to maintain or has to be dramatically refactored and rewritten because of the actual technical debt you incurred by rushing it out the door.)

Kedrosky and Norlin seem to exclude that from the role of software engineering. For them, software engineering seems to be primarily writing software. Coding in other words. Let’s ignore the costs of designing the code, testing the code, deploying the code, operating the code, and fixing the code. Let’s assume the bulk of the cost is in writing the code and the goal is to reduce that cost to zero.

That not just my assumption: it seems to be their assumption, too. They state: “Startups spend millions to hire engineers; large companies continue spending millions keeping them around. And, while markets have clearing prices, where supply and demand meet up, we still know that when wages stay higher than comparable positions in other sectors, less of the goods gets produced than is societally desirable. In this case, that underproduced good is…software”.

Perhaps that is how they do things in San Francisco, but the rest of the world has moved on from that model ages ago. There are reasons that countries like India have become powerhouses in terms of software development: they are good software developers and they are relatively low cost. So when they say: “software is chugging along, producing the same thing in ways that mostly wouldn’t seem vastly different to developers doing the same things decades ago….(with) hands pounding out code on keyboards”, they are wrong because the nature of developing software has changed. And one of the way it has changed is that the vast majority of software is written in places that have the lowest cost software developers. So when they say “that software cannot reach its fullest potential without escaping the shackles of the software industry, with its high costs, and, yes, relatively low productivity”, they seem to be locked in a model where software is written they way it is in Silicon Valley by Stanford educated software engineers. The model does not match the real world of software development. Already the bulk of the cost in writing code in most of the world has been reduced not to zero, but to a very small number compared to the cost of writing code in Silicon Valley or North America. Those costs have been wrung out.

They don’t understand coding: Kedrosky and Norlin state: “A software industry where anyone can write software, can do it for pennies, and can do it as easily as speaking or writing text, is a transformative moment”. In their piece they use an example of AI writing some Python code that can “open a text file and get rid of all the emojis, except for one I like, and then save it again”. Even they know this is “a trivial, boring and stupid example” and say “it’s not complex code”.

Here’s the problem with writing code at least with the current AI. There are at least three difficulties that AI code generators suffers from: triviality, incorrectness, and prompt skill.

First, the problem of triviality. It’s true: AI is good at making trivial code. It’s hard to know how machine learning software produces this trivial code, but it’s likely because there are lots of examples of such code on the Internet for them to train on. If you need trivial code, AI can quickly produce it.

That said, you don’t need AI to produce trivial code. The Internet is full of it. (How do you think the AI learned to code?) If someone who is not a software developer wants to learn how to write trivial code they can just as easily go to a site like w3schools.com and get it. Anyone can also copy and paste that code and it too will run. And with a tutorial site like w3schools.com the explanation for the code you see will be correct, unlike some of the answers I’ve received from AI.

But what about non-trivial code? That’s where we run into the problem of  incorrectness. If someone prompts AI for code (trivial or non-trivial) they have no way of knowing it is correct, short of running it. AI can produce code quickly and easily for you, but if it is incorrect then you have to debug it. And debugging is a non-trivial skill. The more complex or more general you make your request, the more buggy the code will likely be, and the more effort and skill you have to contribute to make it work.

You might say: incorrectness can be dealt with by better prompting skills. That’s a big assumption, but let’s say it’s true. Now you get to the third problem. To get correct and non-trivial outputs — if you can get it at all, you have to craft really good prompts. That’s not a skill anyone will have. You will have to develop specific skills — prompt engineering skills — to be able to have the AI write python or Go or whatever computer language you need. At that point the prompt to produce that code is a form of code itself.

You might push back and say: sure, the prompts might be complex, but it is less complicated than the actual software I produce. And that leads to the next problem: technical debt.

They don’t understand technical debt: when it comes to technical debt, Kedrosky and Norlin have two problems. First, they don’t understand the idea of technical debt! In the beginning of their piece they state: “Software production has been too complex and expensive for too long, which has caused us to underproduce software for decades, resulting in immense, society-wide technical debt.”

That’s not how those of us in the IT community define it.  Technical debt is not a lack of software supply. Even Wikipedia knows better: “In software development, technical debt (also known as design debtor code debt) is the implied cost of future reworking required when choosing an easy but limited solution instead of a better approach that could take more time”. THAT is technical debt.

One of the things I do in my work is assess technical debt, either in legacy systems or new systems. My belief is that once AI can produce code that is non-trivial and correct and based on prompts, we are going to get an explosion of technical debt. We are going to get code that appears to solve a problem and do so with a volume of python (or Java or Go or what have you) that the prompt engineer generated and does not understand. It will be like copy and paste code amplified. Years from now people will look at all this AI generated code and wonder why it is the way it is and why it works the way it does. It will take a bunch of counter AI to translate this code into something understandable, if that will even be possible. Meanwhile companies will be burdened with higher levels of technical debt accelerated by the use of AI developed software. AI is going to make things much worse, if anything.

They don’t understand the total cost of software:  Kedrosky and Norlin included this fantasy chart in their piece.

First off, most people or companies purchase software, not software engineers. That’s the better comparison to hardware.  And if you do replace “Software engineers” with software, then in certain areas of software this chart has already happened. The cost of software has been driven to zero.

What drove this? Not AI. Two big things that drove this are open source and app stores.

In many cases, open source eliminated the (licensing) cost of software to zero. For example, when the web first took off in the 90s, I recall Netscape sold their web server software for $10,000. Now? You can download and run free web server software like nginx on a Raspberry Pi for free. Heck can write your own web server using node.js.

Likewise with app stores. If you wanted to buy software for your PC in the 80s or 90s, you had to pay significantly more than 99 cents for it. It certainly was not free. But the app stores drove the expectation people had that software should be free or practically free. And that expectation drove down the cost of software.

Yet despite developments like open source and app stores driving the cost of software close to zero, people are organizations are still paying plenty for the “free” software. And you will too with AI software, whether it’s commercial software or software for your personal use.

I believe that if you have AI generating tons of free personal software, then you will get a glut of crappy apps and other software tools. If you think it’s hard to determine good personal software now, wait until that happens. There will still be good software, but to develop that will cost money, and that money will be recovered somehow, just like it is today with free apps with in app purchases or apps that steal your personal information and sell it to others. And people will still pay for software from companies like Adobe. They are paying for quality.

Likewise with commercial software. There is tons of open source software out there. Most of it is wisely avoided in commercial settings. However the good stuff is used and it is indeed free to licence and use.

However the total cost of software is more than the licencing cost. Bad AI software will need more capacity to run and more people to support, just like bad open source does. And good AI software will need people and services to keep it going, just like good open source does. Some form of operations, even if it is AIOps (another cost), will need expensive humans to insure the increasing levels of quality required.

So AI can churn out an tons of free software. But the total cost of such software will go elsewhere.

To summarize, producing good software is hard. It’s hard to figure out what is required, and it is hard to design and built and run it to do what is required.  Likewise, understanding software is hard. It’s called code for a reason. Bad code is tough to figure out, but even good code that is out of date or used incorrectly can have problems and solving those problems is hard. And last, free software has other costs associated with it.

P.S. It’s very hard to keep up and counter all the hot takes on what AI is going to do for the world. Most of them I just let slide or let others better than me deal with. But I wanted to address this piece in particular, since it seemed influential and un-countered.

P.S.S. Beside all that above, they also made some statements that just had me wondering what they were thinking. For example, when they wrote: “This technical debt is about to contract in a dramatic, economy-wide fashion as the cost and complexity of software production collapses, releasing a wave of innovation.” Pure hype.

Or this : “Software is misunderstood. It can feel like a discrete thing, something with which we interact. But, really, it is the intrusion into our world of something very alien. It is the strange interaction of electricity, semiconductors, and instructions, all of which somehow magically control objects that range from screens to robots to phones, to medical devices, laptops, and a bewildering multitude of other things.” I mean, what is that all about?

And this:  “The current generation of AI models are a missile aimed, however unintentionally, directly at software production itself”. Pure bombast.

Or this hype: “They are “toys” in that they are able to produce snippets of code for real people, especially non-coders, that one incredibly small group would have thought trivial, and another immense group would have thought impossible. That. Changes. Everything.”

And this is flat up wrong: “This is just the beginning (and it will only get better). It’s possible to write almost every sort of code with such technologies, from microservices joining together various web services (a task for which you might previously have paid a developer $10,000 on Upwork) to an entire mobile app (a task that might cost you $20,000 to $50,000 or more).”

 

 

 

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If something cost $1 in the 1980s, what does it cost now?

Posted on January 6, 2023 | Comments Off on If something cost $1 in the 1980s, what does it cost now?


If something cost $1 in the 1980s — or the 1990s, or 2000, etc — what does it cost now?

I used to use a calculate this by using a rough 1:3 ratio in terms of 1980s dollars:today’s dollars, but there is a better way. You can go to the site in2013dollars.com and enter your information and it will spit out an answer. For example, what cost $1 in 1980 would cost $3.62 today, according to this: $1 in 1980 → 2023 | Inflation Calculator

I used that site because I was reading that in the early 80s Jim Jarmusch had an apartment in Manhattan that cost $170 a month. I wondered: what would that cost now? Well according to the site above, in 2023 that same place should cost $615. Of course the idea that ANYPLACE in Manhattan cost $615/month is hilarious. But you get the idea. 🙂

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Sunday reads on just about anything, from Inflation to Reversing Death

Posted on November 13, 2022 | Comments Off on Sunday reads on just about anything, from Inflation to Reversing Death

Sunday is a good time to catch up on our reading. If you are looking for something interesting to get you thinking, I recommend these eight pieces:

Inflation is on everyone’s mind these days. Back in the late 20th century, Paul Volcker was credited with solely bringing it down. This Vox piece argues the decline in inflation at the time was much more complicated. An excellent revision to the common wisdom on the greatness of Volcker.

We think a lot about scarcity. Maybe too much. We need to think more about abundance. Read this: Unblocking Abundance – by Sarah Constantin and see if you agree.

Here’s some good pieces on history worth reading even if you don’t think history is interesting.  For example, this is a fascinating article: Who owned slaves in Congress? As was this, on the rare coins of ancient Israel. Who were the radium girls? This piece explains.

Is death reversible? In some ways, yes. For more things philosophy related, here are the best philosophy books of the last decade. 

Lastly, I recommend this: Why Gen X Failed. Even if you are not Gen X.

 

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What’s the best way to deal with inflation? Are we in a recession? Here’s some pieces that address these good questions.

Posted on October 21, 2022 | Comments Off on What’s the best way to deal with inflation? Are we in a recession? Here’s some pieces that address these good questions.


First up, inflation. As inflation heats up….

Central bankers around the world are lifting interest rates at an aggressive clip as rapid inflation persists and seeps into a broad array of goods and services, setting the global economy up for a lurch toward more expensive credit, lower stock and bond values and — potentially — a sharp pullback in economic activity.

…according to the New York Times. Not all economist and thinkers agree with this. Here’s Hadas Their providing a socialist’s view on why price controls are a better idea. More on her argument in Jacobin. For a counter to that, here’s someone from the Fed arguing that price controls should stay in the history book. I tend to side with the Fed’s view over Their’s, but she raises valid criticisms of the central bank’s approach.

Perhaps I am too used to economics only coming from a male perspective. Perhaps you are too. If so, we might all benefit from reading this: We all play by economic rules set by men. What could a feminist economics look like?

But back to the Fed. If they want to bring down inflation, how does they go about doing that? You can learn about their methods to control the economy here: The Federal Reserve’s Open Market Operations.

Besides dealing with inflation, many economists are looking to see if and when we will be in a recession. One surprising way to do that is look at the price of copper. If you are asking yourself, what does the price of copper tell us about the economy, then read this. For more on this, see:  historical Copper price data. Here’s more on the Global price of Copper (PCOPPUSDM) from FRED.

One last thing. On the topics of inflation and the economy, the economist Larry Summers has been popping up more and more because he seems to me he’s been predicting bad inflation early on. Given that, here’s something to keep in mind: Summers Watch from The American Prospect. Let’s just say that I think there are better people to get your advice from.

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Italy is a reminder not to be cheap if you want to tackle climate change

Posted on August 18, 2022 | Comments Off on Italy is a reminder not to be cheap if you want to tackle climate change


To tackle climate change, Italy provided what is considered by some a superbonus to homeowners to make specific renovations. That’s right, Italy reimbursed home owners 110% to upgrade their homes in a way that helps the environment. That prompted some to ask: ‘Why so generous?’. One reason? It resulted in a “surge of green home renovations” which is great for Italians and great for the climate.

Look, people know that something has to be done about climate change. People are also motivated mainly by their own self interests. Take advantage of that by offering generous benefits for people to change. We need to use every tool at our disposal, from alternate energy to alternative uses of energy, and more. Now is not the time to quibble about the price: that time is past. Now is the time to hurry things up. Throwing money at a problem can often do that. Italy showed it.

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The great Starbucks retreat

Posted on June 27, 2022 | Comments Off on The great Starbucks retreat

For most of the pandemic, food/bev businesses worked hard to hang on and last through this period. Not Starbucks. They did the opposite. As soon as they could, it seems they shut down their locations. Locations that had barely been open a few years were shuttered. Even this location above, on Eglinton Avenue just east of Yonge in Toronto closed up despite a steady flow of customers even during the pandemic. 

Apparently at the start of the pandemic their goal was to close 400 stores over 18 months.  I would not be surprised if more than that closed. 

I wonder what the fallout for all this will be? One thing for sure, the idea of getting Starbucks as a tenant will likely lose its lustre when they do come back and want to expand. Then again, given that people are reluctant to go back to the office, that expansion could take some time.

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In the future, will you own anything?

Posted on July 15, 2021 | Comments Off on In the future, will you own anything?


In 2030, you may not own any gadgets, says this Gizmodo piece: In the Future, You Won’t Own Any Gadgets.

It makes some strong points. It’s true, younger people aren’t as keen to own things. (Heck, this is also true of older people who get fed up with the accumulation of things). And companies are keen to lease things. Add that up and you will see less and less owning.

From an IT perspective, I’ve been through this before. For a long time IBM had a very strong business in leasing technology. That gradually went away and more and more companies bought their technology. Then server farms came followed by the cloud, and now we are effectively seeing companies lease more IT again. Will it switch back again?

I think so. Eventually the cons outweigh the pros, be it for leasing or owning. People will move to leasing because it saves them money in the short term. Then eventually it gets more costly and the restrictions on the leases push them to own things again. Until the costs of owning add up and they switch back to leasing.

So yes, people will be moving to leasing for some time. Then they will switch back to owning more stuff. Of this I am confident.

(Photo by Michael Dziedzic on Unsplash)

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Upgrade your thinking about economics

Posted on May 14, 2021 | Comments Off on Upgrade your thinking about economics


If you want to upgrade your thinking on economics, I recommend these four pieces:

  • The Choice Isn’t Between Capitalism or Socialism – this seems obvious to me and likely you too, but it is a good reference to keep around for whenever you hear people talking about capitalism and socialism.
  • America Never Learns the Limits of Bootstrapping – a good piece on the limits of social safety nets built using private initiatives. My belief is that social safety nets should come both from governments and individuals, and that we should be looking into how our society is set up to provide a wide range benefits for everyone. For example, unemployment insurance is good, but free or low cost education to allow people to improve themselves and others is important also. We need more initiatives to improve people’s lives.
  • A Basic Income Could Solve 8 of Society’s Biggest Problems – the big initiative in the 21st century should be this. We can eliminate poverty and remove many social ills with it. It will not be a cure all, but it can cure a-lot.
  • If You’re so Smart, Why Aren’t You Rich? Turns out It’s Just Chance – finally, some many say if you have all these social programs, no one will every try again because we need a system in place that encourages people to work hard and get rich. If you think that, read the article.

Not everyone will benefit from these pieces. I did, though, and for some of you reading this, you will as well.

(Photo by Aziz Jus on Unsplash)

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Iowa shows why the move from big cities may be only temporary

Posted on March 6, 2021 | 1 comment

Brooklyn
One thing that happened during the pandemic is that big cities like New York vacated to some degree. When they did, there was talk about how in the future more people would continue to work from home, and if they did, they might go to smaller and more affordable cities, like Des Moines, Iowa. Indeed, places like Des Moines has been recruiting people.

The problem these cities have, though, is that they are missing part of the puzzle. People in big cities like NYC and San Francisco live there for a lot of reasons. One of those is the freedom and rights that come with living there.  The respect those places have for progressive values are a big draw. Unfortunately, as this really good piece shows, Iowa (and likely other conservative cities and states) can’t and won’t provide that any time soon.

After reading that piece, I thought: yeah, even if the majority of people can still work from home, the mass exodus from Brooklyn to Des Moines is not going to be happening. Some will, for sure. But when the pandemic is over, people are going to head back to the major cities. They have more to offer than  affordability.

(Photo by Julian Myles on Unsplash)

 

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Will a $15 minimum wage in the US be a good thing?

Posted on February 11, 2021 | Comments Off on Will a $15 minimum wage in the US be a good thing?


If you are wondering if a $15 minimum wage in the US will be a good thing or not, read these two pieces:

  1. Economists reverse claims that $15 Seattle minimum wage hurt workers admit it was largely beneficial
  2. How new research is shaking up the debate about a $15 minimum wage

My belief is it will be a good thing. We may get a chance to see that soon.

(Photo by NeONBRAND on Unsplash)

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What do Bernie Sanders, billionaires, global warming and you have in common?

Posted on January 31, 2021 | Comments Off on What do Bernie Sanders, billionaires, global warming and you have in common?


What Bernie Sanders, billionaires, global warming and you all have in common is this: you are all mentioned in one or more of these articles I found on economics. All good pieces.

  1. Sanders & Socialism: Debate Between Nobel Laureate Paul Krugman & Socialist Economist Richard Wolff | Democracy Now!
  2. Free exchange – Why Americans and Britons work such long hours | Finance & economics | The Economist
  3. Billionaires should be taxed out of existence, says Thomas Piketty
  4. The technological and economic prospects for CO 2 utilization and removal | Nature
  5. Daily chart – How much would giving up meat help the environment? | Graphic detail | The Economist
  6. The Flaws a Nobel Prize-Winning Economist Wants You to Know About Yourself
  7. Frederick Douglass Railed Against Economic Inequality

(Photo by rupixen.com on Unsplash)

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If you are slogging through your laundry this weekend

Posted on November 1, 2020 | 1 comment

Then read this: Laundry is a never-ending chore – Vox

It’s about the social, historical, and economic aspects of laundry. It will make you think of laundry in a whole new light.

P.S. It’s the pandemic. I hope you are giving the ironing a pause in this difficult and wrinkly time. 🙂

(Photo by Filip Mroz on Unsplash)

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What if the Government Gave Everyone a Paycheck? Well it just did. What did we learn?

Before the pandemic (i.e. 2018), people were asking this: What if the Government Gave Everyone a Paycheck? – The New York Times.

It seemed impossible at the time. Then the pandemic came, and governments in the US and Canada essentially did just that.

What I fear is going to happen is economic conservatives are going to rush in and start yelling “Deficits are Bad!!!” and all the Establishment will nod and a new wave of austerity will come in. What I hope is that better economists will come to the fore and push and see how close we can get to UBI, given what we learned so far.

Much depends on what happens in the next six to twelve months.

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Posted on July 15, 2020 in economics, new!

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Inequality is a fundamental problem over many centuries


At least, according to this:  700 years of Western inequality, in one chart – Vox

The chart shows the percentage of wealth owned by the top 10% since 1300. There are only two times it takes a major drop: during the Black Death in the 14th century and during World War II in the 20th century.

If true, it means that wealth concentration will continue unless another major catastrophe occurs (pandemic? global warming?).

There is lots to debate in all this. The numbers themselves are debatable (i.e. just how accurate and representative are they?)  As well, there is an argument to be made that it doesn’t matter how inequally distributed wealth is  if generally life for the 90% is good. But the Vox piece argues that such inequality leads to political instability and other problem, and that a good life for the majority isn’t enough.

Read the piece and consider it for yourself.

 

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Posted on June 22, 2020 in economics, new!

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Is it time for Frank Ramsey to get his due?

In some ways, that question is ridiculous. Ramsey and his ideas are embedded in so many fields of thought, from mathematics to economics to philosophy. However, I had never heard of him before. Or I should say, I had heard of him, but I never thought of him the way I thought of Russell or Wittgenstein or other contemporaries he had.

That might change now. There are two good pieces I recently found, here on CBC Radio and here in The New Yorker. I really enjoyed both. If you do too, you can get a recent book on him called, Frank Ramsey: A Sheer Excess of Powers
by Cheryl Misak.

Recommended.

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Posted on May 6, 2020 in ideas, new!

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The Free-Time Paradox in America

Here’s something to ponder on a Sunday:

The rich were meant to have the most leisure time. The working poor were meant to have the least. The opposite is happening.

That is extracted from this: The Free-Time Paradox in America – The Atlantic

It’s a fascinating study of work and leisure and why it is not what many expected.

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Posted on February 2, 2020 in ideas, new!

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How to think of climate change/the environment in terms of economics

Forget what Steven Mnuchin said about Greta Thunberg needing to study economics before offering climate change proposals. That was an asinine thing for him to say.. But read that article in the Washington Post for the ideas. They spoke to an economist about climate change and how economics comes in and it’s worthwhile for that.

People might argue that we need to do something about climate change, but we can’t afford it. If you want to argue back, the article can help.

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Posted on January 28, 2020 in economics, new!

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Is Muji doomed?

Not yet, but clearly it is in trouble, based on this: Why Muji Is Struggling | News & Analysis | BoF.

My feeling is they have expanded past the point it is sustainable, and now they are going to have to adjust. Hopefully they can adjust: they are a good company and they could be as big as IKEA or H&M. Or they could go bankrupt. The next few years will show which direction they go.

Thanks to Jeff Smith for sending me this link!

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Posted on January 16, 2020 in decor, new!

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Falling

We don’t talk much about poverty anymore. We talk about the middle class a lot. We don’t talk about the upper class or the rich anymore: instead we talk about them in terms of percentage points. And we don’t talk about the poor as much as we talk about those who are homeless. But there are still poor people in our society, and one member of that group wrote about it here: Falling.

He has a home, he was middleclass, and now he is poor. The story is sad but not exceptional.

I don’t know why we don’t talk about the poor so much any more. Perhaps we see poverty as shameful, not for the people who are poor, but shameful for people who don’t see themselves as poor. I don’t know. I think we do need to talk about it and the spectrum of financial status, and I think we need to work towards a fairer and more equitable society. First, we need to look and talk about it more clearly.

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Posted on November 6, 2019 in economics, new!

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The greatest thing Obama did

Is the one thing about the Obama legacy that can’t be repealed. Namely this:

There is no mystery about Barack Obama’s greatest presidential achievement: He stopped the Great Recession from becoming the second Great Depression.

Obama did many important things, Obamacare being the obvious. As someone who had seen many failed attempts at achieving this, to see him team with Pelosi and others to achieve this was astounding.

That said, there would have been nothing accomplished by Obama if the US spiralled into a second Great Depression, dragging down the world economy with it. I continue to see criticism of the actions taken by his team then, especially among progressives. They argue that more should have been done. You can google “Obama terrible” and find pieces like this.

Time will tell, but so far Obama is holding up as anything but terrible. I predict he will rise in Presidential standing in the future. Meanwhile, the world is in much better shape due to the actions he took in the early stages of his presidency to avert worldwide economic disaster.

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Posted on October 3, 2019 in new!, politics

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Something I think on often: capital Is no longer scarce


I have thought about this piece on capital often since I read it: Continuations by Albert Wenger : Capital Is No Longer Scarce.

I realize it is relative and that there are people and organizations that have difficulty accessing capital. But I believe overall there is an abundance of capital. I believe that is why you see a lot of the behaviours you see in the world, from negative interest rates to bogus unicorns like We and Uber and Lyft to high housing valuations to no inflation.

 

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Posted on September 25, 2019 in economics, new!

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The case for unions


German Lopez from Vox makes it, here: America needs more unions – Vox.

As for me, many unions fall under the idea of countervailing power, which I am a strong proponent for. The countervailing power aspect is important.  The worst unions are not that.

 

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Posted on August 24, 2019 in ideas, new!

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Can cities be affordable?


If you read articles like this, Why Homes in Major U.S. Cities Are Nearly Impossible To Afford – Curbed, it can be hard to believe than any city not on the decline can be affordable. But there are exceptions, and it is good to know about them and why they are. One such city is Vienna, and this piece has a good explanation on why it is.

If you are concerned about cities being affordable, I recommend the piece on Vienna. Affordable cities is going to be one of the big challenges of the 21st century. We need good ideas to deal with this.

(Image via pexels.com)

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Posted on June 11, 2019 in cities, new!

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The law of supply and demand strikes again, this time with truckers for Walmart

It seems to me that the law of supply and demand stops working from time to time. But I think that is wrong, and pieces like this remind me that I am wrong: How Walmart has successfully recruited truck drivers amid a labor shortage crisis.

The reason I think it stops working is because I see wage growth stagnating in many places. But I also see productivity stagnating too, and I think there is a relationship between that. There is some elasticity there that allows wage growth to stagnate but in return productivity growth stagnates too.

In Walmart’s case, the elasticity is gone: if they can’t get truckers, they lose business. It’s simple.  But for businesses without such hard and fast metrics, you might just continue to see slack productivity and slack wage growth.

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Posted on February 14, 2019 in economics, new!

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New York City and the future of retail in cities


I’ve read a number of articles talking about the demise of New York due to rising rents and gentrification. After reading them, tt’s easy to feel hopeless about New York and cities in general. Which is why I was glad to read this: New York City Reveals the Future of American Retail – The Atlantic. It’s true, there are big changes in New York, just like there are big changes in other cities. And it’s true that many beloved retail stores are disappearing in cities everywhere. But it’s untrue that vacancy rates are shooting up and it’s untrue that it’s only big chains taking over. While retail stores threatened by Amazon are closing, places like restaurants and fitness locations are filling the gap.

You can argue that a city needs more than this new world of cafes and restaurants and gyms. The article points out to ways cities can encourage that. Specifically:

According to Jeremiah Moss, specific policies caused the disappearance of old New York—like tax breaks for big businesses, which have been a hallmark of city governance since the Ed Koch days (and up through HQ2). Moss says that several new policies could fix the problem. First, he is an advocate of the Small Business Jobs Survival Act, which would make it easier for small retailers to extend their lease in neighborhoods with rising rents. Second, he favors zoning laws that would limit the density of chain stores. He and others have also called for “vacancy taxes” that punish landlords who sit on empty storefronts for months at a time. All of these policies could help small businesses push back against the blandification of New York and the broader country.

Cities thrive when there is a mix of establishments servicing the wants and needs of its occupants. After reading this article, I think cities, New York and elswhere, are doing well and have a viable path to get better.

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Posted on December 7, 2018 in cities

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Are the new iPhones more expensive than ever?

That’s been a question I have been asking myself for some time. I felt like the price just keeps going up. And if you read articles like this, it’s easy to conclude it’s true.

But here’s some numbers on the least expensive models over time, taken from this:

iPhone (4GB): $499
iPhone 3G (8GB): $599
iPhone 3GS (16GB): $599
iPhone 4 (16GB): $599
iPhone 4S (16GB): $649
iPhone 5 (16GB): $649
iPhone 5s (16GB): $649
iPhone 6 (16GB): $649
iPhone 6 Plus (16GB): $749
iPhone 6s (16GB): $649
iPhone 6s Plus (16GB): $749
iPhone 7 (32GB): $649
iPhone 7 Plus (32GB): $769
iPhone 8 (64GB): $699
iPhone 8 Plus (64GB): $799
iPhone X (64GB): $999

Looking at that, I have to think that the phones are getting more expensive, but likely they have always been that way. (And note, this doesn’t account for inflation or the improved quality of the phones, including greater storage.)

Occasionally Apple will make a cheaper phone like the 5C or the SE that are essentially remixes of older models. Or they will continue to support a wider range of phones, like continuing to sell the 7, the 8, and now the X. But it seems the high end was never inexpensive and likely never will be.

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Posted on November 27, 2018 in IT, new!

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Senior Citizens Are Replacing Teenagers as Fast-Food Workers. Some thoughts.

Worth reading: Senior Citizens Are Replacing Teenagers as Fast-Food Workers – Bloomberg.

Some thoughts:

  • the reasons to hire older workers for fast food places is also true for other work as well.
  • the notion of retirement needs to be rethought. People are living lives well past traditional retirement ages, and some people retire involuntarily decades before they die.  Additionally, many of them cannot afford to not work all that time. Having work and an income in their later years makes sense.
  • Good work is uplifting. If you can find good work as you get older, you can find a way to make your later years more worthwhile.

 

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Posted on November 6, 2018 in economics, work

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How economic hardship traumatizes people individually and as a culture

This piece, Opinion | Still Haunted by Grocery Shopping in the 1980s – The New York Times, by a Brazilian economist highlights the emotional scars that economic hardship has on a person. Key quote for me was this:

Research has found that children living in poverty are at increased risk of difficulties with self-regulation and executive function, such as inattention, impulsivity, defiance and poor peer relationships. It takes generations until society fully heals from periods of deep instability. A study in the early 2010s showed that Germans were more worried about inflation than about developing a life-threatening disease such as cancer; hyperinflation in the country ended almost 100 years ago.

Not only does it touch people individually, but you could make the case that it gets embedded into the culture. Germans are still worrying about inflation! Indeed, I remember my mom telling me how the Great Depression affected her mother to the point that she adopted behaviors she could never shake, not matter how much she had in the future.

Economics can seem dry, especially when people focus on numbers. But those numbers paper over how people are really affected. What is the emotional impact of high (or low) unemployment? What do we see happening in the culture when housing becomes unaffordable or work impossible to get. The numbers are an essential part of the story but they are also just the start of the story.

 

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Posted on September 30, 2018 in economics

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Can housing be affordable?

Based on many affluent cities currently, the answer is “no”. But there are exceptions we can learn from like Vienna. As this piece shows,  Vienna’s Affordable Housing Paradise | HuffPost, it’s possible even in affluent cities and countries to have affordable housing under the right conditions.

Well worth reading that if you are feeling it is impossible to have affordable housing these days.

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Posted on August 24, 2018 in cities

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It’s Monday morning: are robots going to replace you at your job?

Possibly, but as this article argues, there are at least three areas where robots and suck at:

Creative endeavours: These include creative writing, entrepreneurship, and scientific discovery. These can be highly paid and rewarding jobs. There is no better time to be an entrepreneur with an insight than today, because you can use technology to leverage your invention.

Social interactions: Robots do not have the kinds of emotional intelligence that humans have. Motivated people who are sensitive to the needs of others make great managers, leaders, salespeople, negotiators, caretakers, nurses, and teachers. Consider, for example, the idea of a robot giving a half-time pep talk to a high school football team. That would not be inspiring. Recent research makes clear that social skills are increasingly in demand.

Physical dexterity and mobility: If you have ever seen a robot try to pick up a pencil you see how clumsy and slow they are, compared to a human child. Humans have millennia of experience hiking mountains, swimming lakes, and dancing—practice that gives them extraordinary agility and physical dexterity.

Read the entire article; there’s much more in it than that. But if your job has some element of those three qualities, chances are robots won’t be replacing you soon.

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Posted on July 16, 2018 in AI, IT

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On Finland and UBI (Universal Basic Income)

Two links worth reading on Finland and UBI: this one and this one.

Essentially, Finland did a form of UBI and it didn’t work. Those for UBI will argue it was implemented poorly. Those against UBI will argue those people are purists and in fact UBI will never work.

I think there are limits to UBI, but the Finnish implementation was poor. I think it can be done better than that. Read the two pieces in the New York Times and decide for yourself.

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Posted on July 11, 2018 in money

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Can we have greater equality without great catastrophes?

Posted on December 2, 2017 | Comments Off on Can we have greater equality without great catastrophes?

This is the question reviewed here:  Are plagues and wars the only ways to reduce inequality? | Aeon Essays.  (It’s a long read but a good one.)

If you are not familiar with this idea, consider this graph:

The higher the red line is, the greater inequality is. Throughout the last 2000+ years, inequality has been reduced only by terrible events like plague and war.

For a time post World War II, inequality was declining in much of the world. Then, around the 1980s, it started to increase and continues to do so. Now we have a race on. Population declines should occur over the next 100 years, leading to greater equality. To counter that, we have greater automation occurring which may boost inequality as those with the means to control the automation make much of the income and increase their wealth. Will this inequality lead to events that once again levels off the distribution of wealth and income? Or will we reach a balance somehow?

I highly recommend the article. Rising inequality will be one of the great strains on the 21st century, and this article helps to provide some context on the subject.

 

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Posted in economics, history, new!

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Good news regarding food and agriculture

Posted on November 23, 2017 | Comments Off on Good news regarding food and agriculture


The good news is this: There’s More Farmland in the World Than Was Previously Thought | Agweb.com.

There are still problems in preventing hunger and famine, but decreasing farmland should not be adding to that. Good! Now to decrease conflicts and ensure everyone has access to good, cheap, nutritious food.

(image via pexels.com)

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Posted in economics, food, new!

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An introduction to Richard Thaler, winner of this year’s Nobel Prize for Economics

Posted on October 9, 2017 | Comments Off on An introduction to Richard Thaler, winner of this year’s Nobel Prize for Economics

Often times it is hard to appreciate the work of Nobel Prize winners, including those in Economics. Thaler is not one of those people. His work is very approachable for laypeople, and the benefits of his work is obvious.

Here’s one example, of how his work led to better results for people in terms of pensions.

Youtube is a great source of videos on Thaler. If you want to get started understanding what is behind his thinking, you can start there.
In addition, the New York Times covers his award winning here and it is another good introduction. Finally, here is a piece in the Times that Thaler wrote himself, on the power of Nudges. If you do anything, read that.

Good to see him win.

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How technology can enhance work and not simply eliminate it

Posted on October 3, 2017 | Comments Off on How technology can enhance work and not simply eliminate it

robot and human working together

This piece: What it’s like to be a modern engraver, the most automated job in the United States — Quartz, reminded me once again that the best use of technology is to augment the people doing the work, and not simply take away the work. Must reading for anyone who’s believes that the best way to use AI and other advanced tech is to eliminate jobs. My believe is that the best way to use AI and other advanced tech is to make jobs better, both for the employee, the employer, and the customer. The businesses that will succeed will have that belief as well.

(Image from this piece on how humans and robots can work together.)

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Posted in AI, IT

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Some thoughts on the end of the CBC mail robots

Posted on October 3, 2017 | Comments Off on Some thoughts on the end of the CBC mail robots

mail robot
According to Haydn Waters, a writer at CBC, the mail robots at the corporation are being discontinued. Instead:

Mail will be delivered twice a week (Tuesday and Thursday) to central mail delivery/pickup locations on each floor.”

What gets lost in alot of discussions of robots, AI, etc., taking all the jobs is that the drivers for the decisions is not technology but economics. If there is no economical need for robots and other technology, then that technology will not just appear. There is nothing inevitable about technology, and any specific technology is temporary.

Of course there will be more use of robots and AI and other technology to replace the work people may currently do. The key to finding work will be to continually improvise and improve on the tasks one has to do to remain employed. That’s something humans do well, and technology will struggle with for some time in the future, AI hype not withstanding.

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Posted in IT, new!

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34 good links on AI, ML, and robots (some taking jobs, some not)

Posted on September 25, 2017 | Comments Off on 34 good links on AI, ML, and robots (some taking jobs, some not)

If you are looking to build AI tech, or just learn about it, then you will find these interesting:

  1. Artificial intelligence pioneer says we need to start over – Axios – if Hinton says it, it is worth taking note
  2. Robots Will Take Fast-Food Jobs, But Not Because of Minimum Wage Hikes | Inverse – true. Economists need to stop making such a strong link here.
  3. Artificial Intelligence 101: How to Get Started | HackerEarth Blog – a good 101 piece
  4. Deep Learning Machine Teaches Itself Chess in 72 Hours, Plays at International Master Level – MIT Technology Review – the ability of tech to learn is accelerating.
  5. Now AI Machines Are Learning to Understand Stories – MIT Technology Review – and not just accelerating, but getting deeper.
  6. Robots are coming for your job. That might not be bad news – good alternative insight from Laurie Penny.
  7. Pocket: Physicists Unleash AI to Devise Unthinkable Experiments – not surprisingly, a smart use of AI
  8. AI’s dueling definitions – O’Reilly Media – this highlights one of the problems with AI, and that it is it is a suitcase word (or term) and people fill it with what they want to fill it with
  9. A Neural Network Playground – a very nice tool to start working with AI
  10. Foxconn replaces ‘60,000 factory workers with robots’ – BBC News – there is no doubt in places like Foxconn, robots are taking jobs.
  11. 7 Steps to Mastering Machine Learning With Python – don’t be put off by this site’s design: there is good stuff here
  12. How Amazon Triggered a Robot Arms Race – Bloomberg – Amazon made a smart move with that acquisition and it is paying off
  13. When Police Use Robots to Kill People – Bloomberg this is a real moral quandary and I am certain the police aren’t the only people to be deciding on it. See also: A conversation on the ethics of Dallas police’s bomb robot – The Verge
  14. How to build and run your first deep learning network – O’Reilly Media – more good stuff on ML/DL/AI
  15. This expert thinks robots aren’t going to destroy many jobs. And that’s a problem. | The new new economy – another alternative take on robots and jobs
  16. Neural Evolution – Building a natural selection process with AI – more tutorials
  17. Uber Parking Lot Patrolled By Security Robot | Popular Science – not too long after this, one of these robots drowned in a pool in a mall. Technology: it’s not easy 🙂
  18. A Robot That Harms: When Machines Make Life Or Death Decisions : All Tech Considered : NPR – this is kinda dumb, but worth a quick read.
  19. Mathematics of Machine Learning | Mathematics | MIT OpenCourseWare – if you have the math skills, this looks promising
  20. Small Prolog | Managing organized complexity – I will always remain an AI/Prolog fan, so I am including this link.
  21. TensorKart: self-driving MarioKart with TensorFlow – a very cool application
  22. AI Software Learns to Make AI Software – MIT Technology Review – there is less here than it appears, but still worth reviewing
  23. How to Beat the Robots – The New York Times – meh. I think people need to learn to work with the technology, not try to defeat it. If you disagree, read this.
  24. People want to know: Why are there no good bots? – bot makers, take note.
  25. Noahpinion: Robuts takin’ jerbs
  26. globalinequality: Robotics or fascination with anthropomorphism – everyone is writing about robots and jobs, it seems.
  27. Valohai – more ML tools
  28. Seth’s Blog: 23 things artificially intelligent computers can do better/faster/cheaper than you can – like I said, everyone is writing about AI. Even Seth Godin.
  29. The Six Main Stories, As Identified by a Computer – The Atlantic – again, not a big deal, but interesting.
  30. A poet does TensorFlow – O’Reilly Media – artists will always experiment with new mediums
  31. How to train your own Object Detector with TensorFlow’s Object Detector API – more good tooling.
  32. Rise of the machines – the best – by far! – non-technical piece I have read about AI and robots.
  33. We Trained A Computer To Search For Hidden Spy Planes. This Is What It Found. – I was super impressed what Buzzfeed did here.
  34. The Best Machine Learning Resources – Machine Learning for Humans – Medium – tons of good resources here.

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Wages, Nash equilibrium, and the productivity paradox: a small theory of my own

Posted on July 29, 2017 | Comments Off on Wages, Nash equilibrium, and the productivity paradox: a small theory of my own

Economists write a lot about the mystery of why productivity is not increasing, with pieces such as this. There’s even a section on it in Wikipedia.

My own theory is that limited wage increases is also limiting the benefits of productivity aids. How I think this works is so:

  1. Employers wont raise wages for employees.
  2. Employers deploy technology that should result in productivity gains.
  3. Employees take the technology deployed and use them to decrease their efforts.
  4. The employer sees some productivity gains and assumes that is the limit for the technology deployed.

Look at this chart:

In much of the world economy, all the job growth is in the services sector (green line), not the manufacturing sector (red line). Achieving productivity gains in the manufacturing sector is more straightforward: replace people with robots and you are done. It’s not as straightforward as that in the services sector. In some services sector jobs, it is not possible to decrease effort without it being visible. But in many services sector jobs, it is. If employees cannot improve their lives by making more money, they may decide to do so by working less and working right up to the point where they don’t lose their job.

If you look at employment as a game, then we currently have a Nash equilibrium where the employees know that they won’t get paid more working for the same company, because that is the best strategy for the company. Therefore the best strategy for the employee is to minimize their effort without getting fired and while showing little if any productivity gains.

That’s to me is key reason why I think we have the productivity paradox.

I would add that the reason this is a paradox is because no one wants to admit that this is happening. It seems like a failure on both the employers and the employees side. The employee wants to be seen as a good worker and the employer doesn’t want to admit it could be paying more. Instead technology is brought in to solve an organizational problem, which is something technology cannot do.

(Chart from Business Insider).

 

 

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Posted in economics

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Capital and slavery in America

Posted on May 22, 2017 | Comments Off on Capital and slavery in America

It is striking to see what percentage of American capital attributed to slavery in the 18th and 19th centuries (the striped section in the chart above). In the late 18th century only agricultural land counted for more, and there slavery contributed to that too.

The American Civil War and the emancipation of those bound in slavery destroyed all that capital, and that was great and necessary. While it is wrong to consider slavery only in terms of money, it is impossible to talk about slavery in the United States without considering its relationship to the economy and capital.  The capital that derived from slavery was massive.

In the U.K. the abolition of slavery resulted in the government providing capital back to the slave owners. It was a terrible omission that neither the U.K. nor the U.S. provided capital to the freed slaves.  There are those, like Ta-Nehisi Coates, who argue that such capital in the form of reparation is due.  Based on the chart above, a case could be made that it would be a tremendous amount of money.

(Chart above taken from “Capital in the Twenty-First Century” by Thomas Piketty)

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Posted in history

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Two interesting pieces on UBI (universal basic income)

Posted on May 5, 2017 | 1 comment

There have been many articles written on UBI. (If you don’t know what it is, it’s  universal basic income: a cash payment made to every individual in the country).

Two of the more interesting ones I’ve read are here: The UBI already exists for the 1% – Medium, and this one here (on how India is looking to do it).

UBI is coming. It may take some time though.

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Posted in economics, new!

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