As of 2015, the US dollar is at record highs versus other currencies, hardly a failure. So I guess you could say many currencies have failed except the reserve currencies.
The gold standard in encumbering, making it harder for the country to recover from recession & panics. Since the end of the gold standard , there have been fewer recessions and the recessions that have existed have been shorter, with prolonged expansion in-between them. In the past 25 years there have only been three recessions (1991,2001,2008), the first two being very shallow and brief.
Nominal prices are higher for many items, but you get much more utility. Personal Computers, hd-tvs, Netflix, iPhones, cancer drugs ….all didn’t exist 100 years ago.
But then you still must adjust for CPI. Although nominal prices are up a lot, movie tickets, for example, in real prices cost the same as they did in the 70′s, but you get much more utility in that the theater is more comfortable and the picture is better (whether or not the movie itself is better is subject to debate).
Other expenses have decreased relative to personal income, such as food & energy:
It’s pretty obvious based on the empirical data there has been no hyperinflation despite the ending of the gold standard.
Almost everyone makes the same basic mistake when it comes to economics. It is assumed that the markets and an economy tend to be naturally balancing mechanisms. Wrong! Horribly wrong!
This is the reality of economies: Economies are naturally in-stable. INSTABILITY is the natural state to which all economies will tend towards, if left unchecked by government intervention.
All economies need checks and balances if one hopes to sidestep the more grievous results of unfettered capitalism, i.e. speculation resulting in boom/bust crisis-es.
The natural tendency of economies to self-destruct was pointed out by the economist Hyman Minsky during the 1960′s. The phrase “A Minsky Moment” gained short fame during the 2008 meltdown, but the principles Hyman Minsky laid down do and will drive all economies towards instability, no matter which century you lived in.
Economies are naturally unstable in predictable ways. Minsky explained why. One can readily understand the human nature that drives instability in markets. Just read Hyman Minsky’s “Stabilizing an Unstable Economy”.
I should now mention that all major economic crisis-es are the result of bank and financial mayhem, other than war that is. So it is totally fair to blame it all on Wall Street with its financial markets and players. It is in the nature of the beast that finance eventually devolves into rampant speculation followed by disastrous results.
Instability is the real natural order of things. Left unchecked, unmonitored and ignored, human nature inevitably repeats itself.
Last time I checked, financial conditions are healthier than ever. Bank have record high profits & balances, and lending standards are more stringent than ever. The leftist pundits and their doom & gloom media enablers try to stoke fears that large systems are inherently prone to failure, when in readily they have proven to be quite stable, except for a few instances of panic (but panic is not failure). For example, going as far back as 100 years, there have only been two major financial problems in America (1929 & 2008). Small systems fail as well, but the failure rate is higher because unlike a large system there is no infrastructure to support it. That’s why every year thousands of small business fail and millions of homeowners go bankrupt. The bigger a system is, the more is at stake in not having it fail, so it doesn’t fail. That’s why the Euro, for example, has resisted the left’s predictions of its demise. But people like me were right in 2010-12 that it would not fail. Same for the TARP, which the left predicted would not work, but exceeded the loftiest of expectations and is an example of how effective policy can stem panic, thus preventing failure. Another example is the post-911 response, including the war on terror. Seven years later and there has yet to be even the lightest hint of a financial crisis relapse, and anyone who bet against bank stocks lost money. The 1998 Russia default was such a big story at the time because it’s so rare for countries to default on their debt, even though the sensationalist liberal media makes it seem like a daily occurrence.
Of course, the counter-argument raised by Taleb and others is that we shouldn’t have systems that are large enough that it necessitates bailing them out when things go wrong. But the problem is large systems and modernity are inseparable. Technological and economic progress is proportional to the size of the underlying economy. Through the division of labor and comparative advantage, large societies have the resources and infrastructure to foster modernity. A person who enjoys coding apps would be of little use in a tiny hunter-gatherer village, but modern society has the resources and infrastructure to allow him to code without having to worry about, say, not starving to death. The person with an IQ of >130 can code, learn math, design stuff (activities that engender modernity) as less intelligent people do the menial work. The only way systemic risk can ever be eliminated is for humanity to regress.
The left picks and chooses the science they want to believe in. Science of man-made global warming? Yes. Science of natural global warming? Umm..maybe not. Science of individual cognitive differences? Hell no. That’s why the welfare left, in contrast to the neo/pragmatic left, for the past few decades has been waging war on IQ and the SAT, trying discredit such tests as ‘racist or class-discriminatory’ since the results could be interpreted to mean some individuals are cognitively superior to others. The welfare left is trying to lower standards, making each iteration of the SAT increasingly easy until it becomes useless at its original intended functions: singling out exceptional talent and assessing college readiness. The losers in this ‘dumbing down’ are the gifted poor, among the people who stand to benefit the most from the SAT and IQ tests since such tests, if well-constructed, should be hard to coach and have a high score-ceiling, allowing gifted and talented individuals form all socioeconomic backgrounds st stand-out from the masses. But instead, the left prefers equal outcomes over equal opportunity, and even though they go to great lengths to present themselves as champions of the later, their actions suggest otherwise.
You can buy private-company shares, but you can’t usually sell them short, which might contribute to bubbly overvaluation in the private markets. (This complaint is to some extent the opposite of the previous one.) A public prediction market, open to everyone, big and small, long and short, could solve both of those problems.
Matt, who is a liberal, actually thinks that allowing the short selling of hot web 2.0/app companies could make prices go lower, but in actually this would have the opposite effect, as short sellers have to scramble to buy back the shares in panic as prices keep going up. Oh, you think Snapchat is a bubble at $4 billion…now it’s worth $40 billion. Enjoy your 900% loss. The idea of a retail investor losing 900% of their money in an extremely illiquid market sounds really awful. Matt is one of those people who thinks that adding a string of footnotes to the end of his article makes him sound smart, when in reality he’s clueless most of the time.
Hasn’t the left predicting this since 2005, to no avail? A simple Google search yields 100′s of failed predictions – predictions made by experts – of China’s ‘inevitable’ economic doom, some of these articles going as far back as a decade. China’s stock market is merely playing catch-up for lagging since 2008. It’s still lower than it’s peak made nearly eight years ago, despite huge growth since then. With 7%-10% average yearly GDP growth, the size of China’s economy has nearly doubled since 2007. Therefore, it should not be a surprise to see the market rise as a consequence.
But the enduring popularity of Chinese bubble folklore is motivated not by a genuine pursuit of the truth, but by an internalized, personal desire – some combination of jealousy, fear, and envy – to see China’s economy fail. Journalists and their readers see China’s stock market going vertical; they see stories of Chinese millionaires and billionaires binge-buying expensive American real estate as average Americans are getting foreclosed, stories about China’s ‘new rich’ sending their kids to elite American schools – and all of this evokes jealousy that the Chinese are doing better than they (the readers) are, or fears that the Chinese are taking jobs. And maybe these fears are well-founded, but it doesn’t in any way lend evidence to China’s economy being a bubble.
Interesting article, obviously written by someone of above average IQ who has had success day-trading.
The market is 99% efficient, but that 1% allows smart people to make money consistently even as the left insists the market is rigged, a zero-sum game, or a bubble. The ‘blank-slate’ left believes that people can only succeed with the help of external factors – the nanny state, tons of practice, cronyism, nepotism, favoritism – never genes or innate talent. And what could be called reverse-Darwinism, the left wants more public resources to help the cognitively weak and inferior – not to advance the superior, who create economic value.
Anyway, back to the topic of trading, the empirical evidence suggests that high-IQ people are more likely to succeed at trading compared to lower-IQ traders. From the Journal of Financial Economics: IQ, trading behavior, and performance$
We analyze whether IQ influences trading behavior, performance, and transaction costs.
The analysis combines equity return, trade, and limit order book data with two decades
of scores from an intelligence (IQ) test administered to nearly every Finnish male of
draft age. Controlling for a variety of factors, we find that high-IQ investors are less
subject to the disposition effect, more aggressive about tax-loss trading, and more likely
to supply liquidity when stocks experience a one-month high. High-IQ investors also
exhibit superior market timing, stock-picking skill, and trade execution.
This doesn’t surprise me. Whether it’s writing, coding, chess, or even stock trading (which the left insists is random and rigged), at any cognitive endeavor it seems the high-IQ people keep coming out on top, even when controlling for practice and socioeconomic backgrounds. Practice does help, but just like no amount of practice will make a person with an of IQ of 90 grasp the subtitles of general relativity, no amount of practice will elucidate the subtleties of market behavior for the average-IQ trader. If the market is 99% percent efficient, it would be reasonable to assume you would need to be of the top 1% intellect (an IQ >135) to find the small inefficiencies. But as Gladwell Vs. Pinker & Charles Murray book sales show, there is a bigger market for fairy tales than cold-hard-biological reality. Tell people that IQ is just a social construct or that IQ, if it exists, doesn’t measure anything important, tell people that if they fail it’s because greedy rich people are holding them down…that’s the ticket to publishing success.
There an ongoing debate if lower taxes pay for themselves, but even if the left is correct that tax cuts don’t 100% pay for themselves, it may not matter, especially given America’s reserve currency status.
Even though I tend to lean to the right on economic issues, admittedly the Laffer Curve may have been oversold – but low taxes are generally better than taxes that are too high, even if we cannot exactly quantify if or how much of the taxes pay for themselves. But considering that the stock market, which is a real-time barometer of economic health, tends to react positively to expansionary policy (lower taxes, QE, lower interest rates, TARP, etc) and negativity to contractionary policy, one can infer that tax cuts do help. With the national debt not being a concern, we should not squander the opportunity America’s reserve currency status affords us, and thus we should keep taxes low as a way of stimulating the economy at no cost, creating free growth. Spending $1 trillion to get $700 billion may seem like a bad deal, but not if that $1 trillion was borrowed for next to nothing and helps create the next Teslas, Facebooks, Apples, and Googles. The evidence suggests Reaganomics was a success, although one could also argue that the strong 80′s economic expansion would have happened anyway and that Reaganomics was only coincidental.
Attributable to American economic exceptionalism, the insatiable demand for US debt it allows the government to borrow more while keeping interest rates low, allowing for spending with impunity without the consequences of hyperinflation. Aside from the doom and gloom from zerohedge and other disreputable sources, global confidence in the US economy is high and this is bullish for treasuries. Taxes still at historic lows, despite rising debt, which illustrates this point. Taxes did go up slightly in 2013, not out of economic necessity, but to due politics. As we argued earlier, government spending could help the economy if it represents an optimal transfer of capital that otherwise wouldn’t have occurred on its own, with high ROI programs being TARP and the funding of high-IQ companies such as Tesla, for example. Monetary and fiscal policy should be about creating economic conditions conducive to growth and wealth creation.
I have repeatedly referred to the post-2008 era as a ‘wealth creation boom’, and sure enough it’s true:
The rise in the stock markets and the increased value of housing have pushed the market value of assets owned by all U.S. households to a record $99 trillion at the end of March, according to a report released by the Federal Reserve on Thursday.
Thank the fed for doing a good job; thank high-IQ, web 2.0, and American exceptionalism; thank the economic contributions of America’s best and brightest; thank the meritocracy, foreign investment, real estate, free market capitalism – and even a nod to George W. Bush.
But the middle class — whose wealth consists mostly of the equity they have in the house they live in — hasn’t been left out entirely. Since 2009, the value of homeowners’ equity has risen by $5.5 trillion, or 90%.
Real estate is a great way to build wealth. My home keeps going up everyday where I live.
No great stagnation, as much as the left insists the economy is weak and America is in decline.
This is the greatest wealth boom in the history of the world, and it will only continue. Snapchat will soon be valued at $15-20 billion, Uber at $30-50 billion, Pinterest at $15 billion, Tinder at $10 billion, AirBNB at $40 billion, and so on… Just two or three of these companies will be equal to one Disney or a McDonald’s, but still not a bubble. The left said Facebook was a bubble at $15 billion back in 2007. Now it’s worth $190 billion.
Those valuations will keep going up…bank on it.
A smaller share of the nation’s total income has been going to wages and salaries, and more to profits and income from assets owned. From the 1970s through the early 2000s, workers received around 65% of national income in compensation, but after the financial crisis their share fell to below 61%.
Of course, the lion’s share of that wealth is owned by a comparative few: just over 1% of Americans own half of that $84.9 trillion, most of it in the form of financial assets such as stocks, bonds and cash. Compared with the nadir six years ago, the value of financial assets has increased by $24.3 trillion, or 54%.
That’s the way you get rich in the smartist era – with stocks, Bay Area real estate, web 2.0…stuff like that. Overpaid, low-IQ, redundant salaried jobs are becoming obsolete, replaced by automation, temp-workers, outsourcing, or eliminated altogether. Due to the supply of labor vastly exceeding demand, employers not only have the luxury of choosing the cream of the crop out of a huge pool of applicants, but to save money and avoid bad PR, employers are becoming increasingly trigger-happy, thus no one’s job is safe. In using Facebook and Twitter, people are walking on eggshells, careers ruined at the slightest misstep. For many it’s too late, with Google indexing your transgressions as part of your online permanent record – an archive that is accessible to anyone with internet and a computer. That’s why online reputation management is such a rapidly growing industry, with individuals and businesses shelling out tens of thousands of dollars to bury their digital past. So while you have all this wealth and prosperity being created, it’s juxtaposed with record-high economic anxiety/uncertainty for millions of Americans.
To quote Tyler Cowen, Average Is Over. To thrive in this hyper-competitive post-2008 economy, you can’t just be ‘good enough’ – you must be exceptional and indispensable. But it also helps to be a nerd, who are among the biggest winners of the post-2008 economy. That’s why you need to learn high-IQ skills, particularly STEM skills, that pay, but most people by virtue of the Bell Curve are probably not smart enough, and maybe that’s too bad, I guess, but your life may stink.
… the attention, a lot of which was in a negative light, may have been overwhelming and he wanted his own personal ‘exit’ from the movement he created. That’s understandable, especially when what starts out as a hobby begins to consume your life, …
As they say, the spotlight burns, even if it’s a relatively small bulb.
After a fruitful 2013 & early 2014 of lots of media coverage and debate, NRx seems to have fallen back into obscurity. With the exception of this recent story of Moldbug being booted from a conference, which even made it on Breitbart and Slate, there haven’t been any NRx stories on any large sites. But from conversations I have online, a surprisingly large number of people know about NRx – probably from the attention the movement received in the past few years, but the momentum has waned. Maybe in a ‘strange loop’ of fate the coverage will breathe new life into NRx, especially given that coverage and general online sentiment is siding with Moldbug – something that NRx isn’t used to seeing from the media.
When debating libertarianism, critics and skeptics sometimes ask: Why isn’t there a libertarian state? Greece could be the closest thing to a libertarian state. You look at how the leadership as well as the citizens, emboldened by recent events, have defiantly given Germany (and the rest of the EU power structure) the middle finger, choosing to forge their own destiny. Greece is almost like a renegade state, driving the Eurozone establishment to fits for their refusal to corporate like they are supposed to. ‘Bullies’ like Merkel, Draghi and Francois Hollande, who usually get their way, are being bested by Yanis Varoufakis, the wonkisk, super-smart Greece finance minister who is a self-described ‘libertarian Marxist’, a hero not only to Greeks, but libertarians and anarchists all over the world. Technically, N. Korea and Iran play by their own rules, too, but their authoritarian governments are antithetical to libertarianism. Meanwhile, the citizens of Greece are using bitcoin, conversing online and in person, living an idyllic, care-free, salubrious lifestyle – almost like a post-scarcity society, in spite of the media’s efforts to make it seem like things are a disaster over there, or that there will be disaster if they don’t cooperate. So let’s hope Greece continues to drive the EU establishment insane, for the good of libertarianism. If Greece can pull this off and not cave-in, we may be the first witnesses of this great libertarian experiment, similar to those who sailed the Atlantic to join another bold experiment in government, America.
Another possible example of a proto-libertarian state is Venezuela, which has consistently snubbed its creditors, it’s citizens and leaders going their own way as the rest of the world tries to pull them in the opposite direction.
The 65-year-old Rupert, who has an estimated net worth of about $7.5 billion, seemed deeply perturbed about the impending disappearance of the middle class due to robotics and artificial intelligence, which he said would “put hundreds of millions of people out of work.”
An example of the Luddite Fallacy. Replace ‘robotics and artificial intelligence’ with ‘internal combustion engines’, etc. New technologies create new jobs for all skill levels, whether it’s automobile engineers to people who wash your car. For example, every major brand has a Facebook page, and these companies hire people to oversee these pages by removing spam and answering questions – a job that didn’t exist as recently as five years ago.
Tell me how the tens of thousands displaced by McDonalds automated ordering and kitchens will be equally replaced by robot related jobs (hint: they won’t, and also not everyone is able to upskill so easily)
What do you say to the 60-200k/year 50-60 age truck driver about to be displaced who’s not intelligent and good at learning? Just pay 50-200k to go to college with no guarantee of a job, or even graduation given the low likelihood you can pass the classes, and still expect less pay than you currently earned pre-automation.
What happened to the buggy driver, the blacksmith, the butter churner? New technologies create new jobs. There are tens of millions of people employed in the IT sector – jobs that didn’t exist 30 years ago. That’s called structural unemployment…something that even liberal economists accept as economic reality, and ultimately desirable in the long-run.
However, one could also argue that eventually the fallacy will become reality if the IQ threshold required to perform the least intellectually demanding work rises high enough that it excludes a sufficiently large percentage of the population; being that the Luddite Paradox is based only on empirical data, there is no immutable ‘law’ that says that can’t happen.
Increasing automation could in theory result in a permanent underclass of millions falling between the cracks, either in poverty or teetering on it.
Then question comes up, shouldn’t we offer a basic income to help people who are left behind?
How about a high-IQ basic income and welfare contingent upon some form of birth control (eugenics). An unconditional basic income just going to perpetuate the problem by creating generations of dependents.
The concept if the high-IQ basic income is discussed here, along with other proposals to helps America’s most important resources, cognitive capital:
A possibility is a high-IQ basic income. It would be like a government Mensa that pays its members, and anyone from rich to poor is eligible for payments provided they meet the IQ requirements. Depending on the requirements, only around 5% of the country would be eligible, so it would cost much less than a universal basic income (UBI). The advantage is that the money would have a higher ROI than a normal UBI because high-IQ people tend to be more productive and creative and therefore would put the money to use in ways that could boost the economy and improve society, such as by starting businesses, coding, tinkering, producing art, and writing – activities that otherwise may not be possible if these smart people are too busy trying to make ends meet than thinking and creating.
A basic income without preconditions seems ripe for abuse, the result being more entitlement spending. Some better ideas:
The high-IQ basic income
Welfare contingent upon birth control
A joint-venture between private companies, donors, and the government to fund the basic income, bypassing the taxpayer
A UBI-like program that replaces existing entitlement spending programs
Another concern by the left is, who will buy ‘stuff’ without a strong middle class; wouldn’t the economy fail?
Last time I checked, there are 7 billion people in the world, of which only around 100 million constitutes ‘America’s middle class’. Then you have the Pareto Principle in that the richest 20% contributes 80% to consumer spending. B2B is also a major part of the economy. Companies are (and will) do doing just fine, even if middle class participation is lagging. The totality of the data – from record high exports, quarter after quarter of blowout profits & earnings, record consumer spending, surging stock prices, to rapid gains technological innovation – suggests that wealth inequality, as bad as it may seem, isn’t actually hurting the economy as measured by the data. The left wishes it were, but incantations of doom and gloom won’t make it so, sorry.
“How is society going to cope with structural unemployment and the envy, hatred and the social warfare? We are destroying the middle classes at this stage and it will affect us. It’s unfair. So that’s what keeps me awake at night.”
To invoke the Fermi Paradox, if it should happen, why hasn’t it? Maybe because people realize that revolting would make things worse, that as much as wealth inequality may suck, modernity and improving living standards borne out of free market capitalism is better than alternatives such as Communism *. Yes, wealth inequality keeps rising, but our dollars buy things that never existed decades ago, new products that have much more utility than old technologies. A $300 iPhone has considerably more utility than a 1960 TV set and rotary phone. Netflix costs $10-20 month, versus 20 cent movie tickets of earlier generations, but Netflix has much more utility in that you can watch pretty much any movie or show ever produced.
So that is one resolution to the automation/job question, that improving living standards and ‘abundance’ wrought by technology will allow people who are permanently unemployed to live a relatively comfortable standard of living, even if they reside at the poverty line, through what is the ‘post-scarcity’ hypothesis.
However, while automation is lowering prices for some goods, on the other hand, despite recent trends in automation, prices for other goods & services like healthcare, education, phone bill, day care, cable & internet, have risen when adjusted for inflation, a phenomena called bifurcated inflation. So while a computer is very cheap, the electricity, software, and internet required to make the computer functional will negate the inflation adjusted savings. The same for TV – the hardware is very inexpensive and the picture of good quality, but the cable bill is very high. The quality may be better, and there may be more features, but it won’t be cheaper, as illustrated by the crudely-drawn graph below:
Microsoft Office is still expensive, 20 years later.
Firms are not going to let their earnings fall due to automation and will make up the difference elsewhere, and that will come from ancillary services. Look at how much entitlement spending has surged in recent decades, despite the promise of lower prices through automation. Automation and robots will make some stuff cheaper, not not nearly enough to create the ‘post-scarcity’ economy many hope for.
Ultimately, there are no universally accepted solutions and explanations for how rapid gains in automation will affect the economy and society, which is why this topic is the subject of so many impassioned online debates.
* Edit: But how about the Nordic economic model, with programs such as universal healthcare? The problem is Nordic countries have a lot of private debt – a fact that is often glossed over by the left, and that universal healthcare is often not what it’s cracked up to be, with long waits. Nordic countries also have very high prices for goods that are otherwise cheap in America. The Nordic model may not be applicable for countries as large and populous as America.
In an ideal world, all the smart people – the scientists and engineers, the physicists and mathematicians, the coders and quants – would get all the good jobs and make all or most of the money. The good news is we’re in that world right now, especially since 2008 with the unending web 2.0, real estate & stock market boom and STEM being the new celebrity status in America today. Of course, there will always be some unemployment among STEM graduates, but their career prospects are far better than a typical liberal arts major.
Sounds like more cry me a river from the left. The left is so desperate for another 2008-like crisis so that rich people lose money, that the liberal media – similar to the Rolling Stone UVA rape hoax – has to make stuff up in order to bolster their arguments and advance their anti-capitalism narrative, throwing all journalistic integrity out the window. When the crisis doesn’t come, the left’s only recourse is to push the date of supposed crisis further to the right, as well as fanning/fomenting crisis by turning molehills into mountains in the hope that one of these non-issues will somehow snowball into a full-fledged crisis just by news coverage alone. The left hopes that repeatedly calling Silicon Valley and the stock market a bubble will become a self-fulfilling prophecy, but as shown below by the long string of failed predictions since 2009 of a stock market crash, wishful thinking seldom – if ever- yields the desired results. No amount of whining about ‘bubble’ will make Uber and Snapchat become pets.com and Webvan, sorry libs, nor will it make Facebook become Myspace. To the left, the perfect world is one where we’re all irrational savages coddled by a paternal state where no one is intrinsically better than anyone else.
The brightest minds in tech just lately seem more concerned with silly business ideas and innocuous “disruption,” all for the shot at an immense payday. And when our country’s smartest people are working on the dumbest things, we all lose out.
The author is waging a thinly-veiled war against IQ and wealth creation, pretending to be ‘looking out’ for the ‘best interests’ of the ‘common man’, provided that rich, smart people are to blame and the solution is wealth redistribution and class warfare. This is much in the same way as those who want the fed to raise rates pretend to be looking out for ‘main street’, despite the fact that raising rates too soon would actually destroy wealth by possibly triggering a recession and a bear market. Peter Schiff comes to mind as someone who advocates wealth-destroying policy under the guise of helping people and the economy.
These ‘silly’ ideas occasionally give rise to entire industries, such as social networking and mobile advertising, much in the same way as the invention of the transistor made small computers possible. In contrast to the nostalgia for ‘macro-inventions’ like jet-packs, flying cars, and moon colonies, the future is in miniaturization, financialization, and ‘micro-technologies’ such as apps, payment processing, and biotechnology.
Another reason is that macro-technologies are often too capital intensive, a problem compounded by the high failure rate for start-ups. Founders and VCs know they can get a much higher ROI on an app or a website than a physical business. Furthermore, these apps are being valued as richly, if not more, than physical businesses. When you have an app like Snapchat, which cost nothing to launch, being worth 1/4 the market cap of Ford Motors, it doesn’t take a genius to see where venture capital is going to flow. Despite high-profile web 1.0 failures, such as pets.com and Webvan, internet and app companies are among the most profitable industries in existence, with Facebook and Google, for example, posting operating profit margins above 30% – among the highest of the S&P 500. Linkedin and AOL are also extremely profitable. It’s doesn’t cost much money to serve ads to billions of users, and it costs next to nothing to store users’ photos and profile information on a server.