Monthly Archives: April 2016

The Facade of Democracy

And for some good news, maybe we’re closer to the ‘dark enlightenment’ than commonly believed, with democracy being mostly a facade. From Taki: Aborting the Working Class

Martin Gilens is a political-science professor at Princeton. Over the course of the past decade, he has authored and coauthored several books and papers in which he argues that the U.S. is essentially an oligarchy. We are controlled by the moneymen, the “1%,” and any claim that our “democracy” is participatory or inclusive is illusory. “Affluence and influence”—that’s what makes the U.S. economic system go ’round. The deck is stacked, and the “liddle peeple” are powerless.

It would seem like growing wealth inequity and Social Darwinisms are making what remnants of democracy left obsolete. Technology is also aiding in the process, amplifying the economic contributions of a handful of ‘winners’. However, this overlooks the issue of people voting in politicians who enlarge welfare spending. Maybe the future if less democracy and more welfare spending – a sort of post -scarcity society where everyone has enough to be placated, but have no power or influence in the process – the ‘un-participatory’ economy and society.

The high incarceration rate of America and the militarization of the police are another examples of how we’re perhaps close to a ‘dark enlightenment’, in contrast to the much less punitive and more ‘liberal’ European countries.

According to Gilens’ research, those dastardly oligarchs, those enemies of the 99%, are overwhelmingly liberal on issues such as abortion, gay rights, race, and immigration. In fact, the affluent are far more “progressive” than the great unwashed whose voices they’ve muted and whose influence they’ve suppressed.

The disproportionate influence of the affluent does not always move policy in a conservative direction. On moral and religious issues, the well off tend to be more liberal than the poor. More equal representation (of the poor) would consequently lead to greater restrictions on abortion, such as banning RU-486. There would also be tighter limits on stem cell research and more support for school prayer.

The poorest and least educated actually tend to vote democratic, not conservative.

“the Democratic agenda has shifted away from general social welfare to policies that target ascriptive identities of race, ethnicity, gender, and sexual orientation.” The takeaway? The “oligarchs” have pushed to make noneconomic “social justice” issues (especially abortion, race, and gender) the party’s primary focus, at the expense of economic policies that are unpopular among the affluent

I think the distinction here is that classical liberals understand the concept of ‘ownership’, whereas far-left liberals want to spread wealth and abnegate private property through Georgism/land-value taxes and redistribution. I would prefer both social conservatism and property rights, but in a pinch I’ll choose the later at the cost of the former than the former at the cost of the latter.

Intellectualism Signaling

In earlier posts here and here I discuss signaling, but I want expound on this further, specifically ‘intellectualism signaling’.

Signaling is actions and mannerisms that are intended to boost one’s social status among like-minded peers. Such mannerisms can include actions (writing, activism, etc.) and aesthetics (physical appearance, materialism, etc.).

I define two types of signaling: intellectualism signaling and visual/materialism signing.

The latter is much more primitive and mainly done to satisfy biological urges, in courting the opposite sex but also in some circumstances boost status, ultimately to increase the probability of procreation. Examples include a muscular man wearing a tight shirt to accentuate his physique. Or someone buying a fancy car or a fancy watch to impress a girl or his friends. Material possessions and visual musculature signal wealth and strength, which are traits some women are seek in men.

The former, intellectualism signaling, is slightly more complicated, and I think more interesting.

Signaling, according to Wikipedia, is defined as:

In contract theory, signaling (or signalling: see American and British English differences) is the idea that one party (termed the agent) credibly conveys some information about itself to another party (the principal). For example, in Michael Spence’s job-market signalling model, (potential) employees send a signal about their ability level to the employer by acquiring education credentials. The informational value of the credential comes from the fact that the employer believes the credential is positively correlated with having greater ability and difficult for low ability employees to obtain. Thus the credential enables the employer to reliably distinguish low ability workers from high ability workers.

I define this type of signaling as ‘intellectualism signaling’, and it has become very prevalent since 2008 in our competitive economy and society that increasingly rewards intellectualism and ‘results’ (individualistic traits) over collectivism and cooperation.

Intellectual signaling can include any intellectual activity that is public and unpaid. Teaching a math class is not signaling, but answering questions in an online math community is because it’s public and there is no expectation of pay. The reward, rather than money, is a boost in ‘expert status’, which is why this category is the same as ‘expert culture’.

If intellectualism signaling, unlike visual signaling, does not seem to fulfill a biological function (procreation), so why is it important, so prevalent? As I explain in In Search of Fulfillment, power, which comes from a boost in social status, elicits positive feelings, as much if not more, as material possessions: people trade time (unpaid experts answering questions through sites like Mathoverflow) and money (an alumni buying a building bearing his name) for power and status, in the former performing feats of intellectualism to boost status even if such acts do not have quantifiable economic return:

Part of the reason has to do with signaling and social status from other like-mined peers that comes from performing difficult feats of intellectualism, even if such feats don’t pay well. The gains in status are valuable, even if such worth cannot be as easily quantified in an economic sense. Popularity, even if it’s only as an esoteric celebrity, means feeling good, endorphin flowing, etc. If people pay money for entertainment and drugs that are supposed to elicit these feelings, then it must be worth something. For example, wealthy alumni trade money for status in having buildings named after them or through philanthropy, creating a legacy that will outlive their lives.

Stories and shared narratives, as signaling, is a common means of intellectualism to boost social status. If someone posts story about ostracism and getting bullied in high school and the story receives ‘up-votes’ and other tokens of adulation, the writer’s status rises even though he’s not richer, nor did he build anything. In the past, power and status was through nobility, industry, government, physical strength, or wealth, but ‘intellectualism culture’ and ‘expert culture’ has enabled otherwise ordinary people to hold some degree of power and status. Intellectualism, unlike connections, is an internal trait and is thus highly meritocratic. Given how much the post-2008 economy prizes intellectualism, intellectual wealth is almost tantamount to monetary wealth – if not more.

Careers have been built on simple stories, an example being Obama, whose memoir Dreams from My Father helped launched his political career. By mentioning Obama, I’m not denigrating stories and the people who tell them, but I’m amazed by the power of the medium. Many Medium authors have gone massively viral telling stories – the fat passenger on the plane, the article I linked to here, both which went hugely viral, and so on. I guess, the point is, if you want an inexpensive but not necessarily easy way to boost your social status, tell a good story – and or – write the next ‘great American article’. Knowledge really is power, more so than ever.

Apologia signaling – posts on social media (Tumblr, Facebook, LiveJoural, Medium, etc.) about being misunderstood and other types of introspection – can also count as intellectualism signaling through telling stories. This includes ‘naval gazing’, a label that is often used pejoratively, but includes articles about intellectual topics (coding, economics, start-ups, etc.) written from a first-person perspective, often with anecdotal evidence but also technical analysis, and a high caliber of writing ability. This style can be annoying in its tendency to overgeneralize or ‘lump’ people into simple, reductionist categories (rich vs. poor). An example of this type of signaling is Siderea’s long-winded article on class, which combines a personal narrative with fairly complicated, in-depth economic analysis of class structures in America. This signals intellectual competence to like-minded peers who also value intellectualism.

Virtue signaling involves narratives to convey sentimentalism, with facts and objectivity tending to be less important than promoting a social cause. Too many people lump all signalling with ‘virtue signalling’, even though virtue signaling is just one type of signalling. In recent years, with the post-2013 SJW-backlash and rise of centrism and rejection of ‘low information’, virtue signaling and pandering actually seems to have lost its effectiveness, and people who resort to it tend to be called-out, even by the peers the are trying to impress (examples being classically-minded liberals criticizing SJWs). Ideologically, this can both ways, with liberals promoting ‘social justice’ as signing progressiveness to like-minded liberals, and conservatives tending to promote the virtues of traditionalism to other conservatives. Virtue signaling may be the lowest form of ‘intellectualism signalling’, as it tends to require little intellectual rigor and is quite partisan in nature, and the writing ability is mediocre.

Related to the Wikipedia definition, although philosophy has few ‘real world’ applications, an advanced degree in philosophy signals to employers and peers an above-average ability to read and comprehend difficult texts as well as an above-average ability to make inferences from disparate pieces of information – skills that not confer status in an intellectualized cultural enthronement but are skills employers seek. A person who has a PHD in a STEM subject (which I include philosophy as ‘STEM’) has a high-IQ and thus can learn and retain difficult material quickly, so an employer will be able to quickly get him up to speed on any task, not just tasks pertaining to physics, philosophy, or math

Then you have ‘intellectualism-wealth signing’, which is is related synthesis of wealth and intellectualism, as embodied by the likes of Musk, Zuck, Gates, Buffett, Bezos, and Martin Shkreli. Wealth and displays of wealth as measured by bank statements and trading accounts, if obtained through intellectual means, is a valid form of intellectualism, in contrast to ostentatious materialism signaling (fancy cars, big home, Rolex, etc). Based on my own empirical observations on Reddit and elsewhere, many Millennials are rejecting ostentatious materialism in favor of intellectualism-wealth signing. For example, a bank statement showing wining stock trades is an example of intellectualism-wealth signing, because making a lot of money in the stock market, when most people fail, is a an intercultural endeavor, requiring a high-IQ. Founding a hugely successful web 2.0 company or making a lot of money as an Amazon self-publisher are other examples.

Last and probably not least, there is counter-signaling, which Wikipedia defines as showing off by not showing off, or by playing humble: for instance, the nouveau riche are known to flash their cash – expensive champagne and brand new sports cars – while those with old money are more understated, and may drive an old 1989 Volvo. Instead replace, ‘nouveau riche’ with ‘low-information rich’, in contract to ‘intellectualism-wealth’ that is more humble. Counter-signaling also ties into the rejection of ‘low information’ by intellectual circles. Signalling too strongly may be a sign of being too beholden to a belief, as if converted, so counter-signaling is a way of, incidentally, of signalling open-mindedness and other intellectual traits, than being too narrow-minded and and provincial. Pre-2013, for example, the vast majority of liberals online seemed to support social justice causes and then in 2013-2014 there was split, as some on the left realized they had taken their activism and virtue signaling ‘too far’, so ‘counter-signaling’ moves the pendulum closer to the middle as a way of promoting more intellectual honesty and less partisanship/tribal behavior. This lead to the rise of ‘rationalism’ and a return to centrism. Also in 2013-2014, we saw the rise of the ‘alt right’, which uses counter-signaling to question conservative orthodoxy on certain issues such as abortion, in questioning the ‘pro-life temptation’. The article generated a staggering 440 disqus comments, in contrast to the 20-40 comments of a typical Radix article, indicating considerable debate. The debate process itself, to always be questioning than just shutting up and being spoon-fed pablum, is a major part of what differentiates the ‘alt right’ from the ‘mainstream’.

The Economic Calm

Lately there have been a lot of ‘weird’ posts on this blog – stuff about IQ, signaling, and intellectualism, and the like. If you go to the archives, back in 2011-2013, not once did I mention IQ (maybe one time in 2013 I think) and no mentions of SJW, Social Darwinism, or HBD either. It was pretty much strictly finance and politics related. So why am I venturing out to these other topics. Mainly it’s because since early 2014 we’ve been in an ‘autopilot’ economy, society, and stock market – or , in other words, there isn’t much going on, besides the usual manufactured hype. So I’m tying to expend the repertoire of posts and topics; otherwise, there would be much less to wrote about. Second, these issues are important – IQ and Social Darwinism – and they tie into finance and economics, and are worth exploring.

From 2007-2006 was the build-up to the crisis, with stories of mortgage-based hedge funds failing, economic weakness, and home prices falling.

From 2008-2009, there was the actual crisis, and then in 2009 bull market which still continues to this day.

In 2010, Europe began to falter, and there was the ‘flash crash’.

2011 was a tumultuous year, with the S&P debt downgrade, debt ceiling, and the economic debt crisis in Europe and possible dissolution of the Eurozone. Portugal, Ireland, Greece, Italy, Spain were all close to defaulting and needed to be bailed out.

2012 was less eventful. Europe began its austerity programs, and the US stock market and economy rebounded despite some weakness in the middle of the year.

In 2013 the S&P 500 rose a whopping 28%, shaking off the fiscal cliff, government shutdown, fed taper, and sequester. Home prices also surged, especially in California.

But not much has happened since then. The S&P 500 is flat since late 2014 and is only up 13% since early 2014. More importantly, the economy is still humming along, with neither deflation nor inflation. All prediction made between 2008-2016 of crisis, bear market, recession, hyperinflation, dollar collapse, or the fed being ‘boxed in’, all failed to come to fruition. The placidity the economy and financial markets has left commentators, myself included, without much to discuss.

Once you pull away the cobwebs of sensationalism, hype, and distractions, a clear picture emerges of what to do: ignore the doom and gloom and buy & hold stocks, which Is what I have done with success since 2011. Some say, ‘it’s different this time; the end is near’. Maybe, but maybe not. Odds are, going by hundreds of years of empirical evidence, it’s not.

As far back as the advent of agriculture, civilization and technology has progressed at an exponential rate, with some hiccups along the way, despite systemic risks. When crisis does occur, it tends to be brief. Of course, this does not prove that future crisis will always brief, but that’s the way it’s been for centuries.

Taleb and others shift the burden of proof unto others to ‘prove’ that there won’t be a crisis, an example of the fallacy of the argument from ignorance.

A common argument you’ll hear is that, ‘the models are wrong/policy makers are ignoring systemic risks’.

If the models are wrong, you can always bet against them, but as it turns out the expected return on such a strategy is negative, meaning that for every large win like in 1929 or 2008, there are enough losers that the expected value is still negative. There is a mathematical explanation for this: volatility skew, which means that anticipated volatility is, 90% of the time, higher than present. That means you are buying ‘high’, not ‘low’. Options are priced to account for jumps, resulting in a skew that makes put options expensive enough that long-term profit is not possible. Betting on crisis is sorta like buying insurance. However, if it weren’t profitable for the insurers, insurance companies would not exist. Policy writers are not going to let policy buyers take their money, or at least not for very long. If insurance companies notice that a certain neighborhood is susceptible to fires, they will raise premiums. Taleb creates a strawman argument that all options are priced with an underlying Gaussian distribution and that traders and statisticians are unaware of factors such as skew and jump processes, when neither of these are true.

Social Taxonomy

This taxonomy aims to unify these blog posts, as well as certain aspects of society and economics under a hierarchical framework. The idea is that I can classify an article or a blog post somewhere in this taxonomy.

Define:

wealth = A

intellectualism = B

individualism (Randianism/Objectivism) and or authenticity = C

Taxonomy:

Primary: ‘smartist era’ (post-2008 American society and economy)

Secondary: ‘individual’, ‘society’,

Tertiary: ‘A+B’, ‘A+C’, ‘B+C’, ‘A+B+C’,'economics (policy)’,'social Darwinism’, ‘zeitgeist & media’, ‘intellectualism culture’

Quaternary: ‘results-orientated’, ‘nerd culture’, ‘hustle culture’, ‘selfie culture’, ‘naval gazing and introspection’, ‘web 2.0 & Silicon Valley’, ‘D’, ‘online discussions & debates’, ‘Q&A communities’, ‘rationalism’, ‘rationalist’, ‘centrism’, ‘alt right’,'long-form online journalism’, ‘signaling & advice & expert culture’

‘D’ includes topics such as the minimum wage debate, poor vs. rich, wealth inequality, basic income, automation vs. labor, student loans & college

Example:

An article about wealth inequality could be classified under both:

smartist era > society > economics (policy) > wealth inequality

smartist era > individual > intellectualism culture > signaling/expert culture > discussing economics online

The second is the ‘meta narrative’.

‘discussing economics online’ is filed under ‘expert culture’ even though the topic matter is economics. The debate process itself is separated from the subject.

Some call it ‘virtue signaling’, but a lot of it is intellectualism signaling. ‘Signaling’ is often used pejoratively, but signaling can include any intellectual activity that is public and unpaid. Teaching a math class is not signaling, but answering questions in an online math community is because it’s public and there is no expectation of pay. The reward, rather than money, is a boost in ‘expert status’, which is why this category is the same as ‘expert culture’. In recent years, with the post-2013 SJW-backlash, ‘virtue signaling’ and pandering actually seems to have lost its effectiveness, and people who resort to it tend to be called-out.

‘Naval gazing and introspection’, labels that are often used pejoratively, can include any article about an intellectual topic (coding, wealth inequality, start-ups, etc.) written from a first-person perspective, often with anecdotal evidence. This style can be annoying in its tendency to overgeneralize or ‘lump’ people into simple, reductionist categories (rich vs. poor).

This is contrast to post-structuralists, anarcho-socialists & syndicalists, postmodernists, and anarcho-primitivists, who tend to reject such categorizations and other ‘grand narratives’ for how the world works.

A very long article by Siderea [psych/anthro/soc, Patreon] Class (American) would be filed under:

smartist era > society > social Darwinism > ‘D’

smartist era > individual > intellectualism culture > naval gazing and introspection

The post-2013 SJW-backlash could fall under:

smartist era > society > zeitgeist > alt-right + centrism > post-2013 SJW backlash

The website Wait But Why could fall under:

smartist era > society > intellectualism culture > long-form journalism

Tim Urban (co-creator and writer of Wait But Why):

smartist era > individual > b+c > rationalist

Millennials and Intellectualism Culture, Part 2

Part 1

Continuing on the article…

No. 1: read a fucking book…

No. 2: learn something…

No. 3: stop buying so much shit….

Everything he’s listing that he wishes were happening is already happening, at least as I can perceive based on my own observations in the field.

As further evidence of how America is not ‘dumbing down’, Arxiv is flooded with complicated physics and math papers – almost 100,000 papers submitted in 2015 alone. http://arxiv.org/help/stats/2015_by_area/index

A ‘Wait but Why’ article about the Fermi Paradox was the most popular on the site ever, getting over 300k Facebook shares…not bad for a country that is supposed to be in the throes of an ‘idiocracy’, indicating a large demand for complicated, intellectual stuff. It may not be as popular as reality TV or the latest scandal on TMZ, but it’s nothing to sneeze at.

Elon Musk, the poster child of the post-2008 wealth and intellect synthesis, AMA was the most popular ever in the history of Reddit, and AMAs by scientists tend to do very well.

Martin Shkreli, a smaller version of Elon Musk, combines wealth with intellectualism, and is very popular among millennials who are rejecting ‘low-information’ SJW-liberalism and class warfare in favor of wealth creation, self-improvement, and intellectualism.

The Big Bang Theory – a hugely popular TV show and one of many examples of the appropriation of ‘nerd culture’ by broader society and pop culture.

Whether it’s economics, political science, philosophy, or advanced mathematics, the internet is making people smarter by exposing them to information that they would have otherwise never encountered. Nowadays, many people are are interested in Category Theory and Tensors, both very advanced mathematical concepts which even just fifteen years ago were inaccessible to anyone that wasn’t studying graduate-level physics or math. The recent explosion of interest in these concepts has less to do with physical applications and more with esotericism and intellect as a form of signaling to boost social status in a society that in recent years values intellect more so than ever, as discussed earlier:

… STEM skills are increasingly valued both culturally and economically in our new economy. It’s the tyranny of the bookish, of smart people pulling ahead as everyone else struggles with a perpetually anemic labor market, stagnant home prices, and falling real wages. Math and code are the new ‘scriptures’ of modern society and economy, with mathematicians, philosophers, physicists, and economists the new ‘priesthood’. More and more young people are studying code and symbols, much like Bible readings, as a way to salvation, except not an intangible one, but one measured by higher wages and more respect.

Interestingly, on Reddit and 4chan, English, History, and Philosophy majors are also respected, too, as they sacrifice monetary gains to pursue a ‘higher’ calling. Such degrees, even though they may not pay very well or have immediate real-world applications, are a solace of intellectual purity, patience, and understanding in a society spoiled by instant gratification, ostentatious materialism, ‘low-information’ pandering, and sensationalism. Both STEM and some liberal arts (not the useless ones like child development or gender studies) combine authenticity, sufficient intellectual rigor, introspection, and abstractions. For the math major such abstractions include axioms, postulates and theorems; for the literature major, it’s words and grammar; for philosophy, it’s ontology and epistemology. ‘Low-information’ means not circuitous enough, too obvious.

Of course Youtube, 4chan, and Reddit are not representative of all millennials or all Americans, but it’s a pretty big sample. I’ve also heard plenty of arguments about how highly intelligent people, versus just the merely competent, are marginalized by society, their talents underutilized or unappreciated. But even the smartest person in the world may still have to market himself, meaning that some effort is required, although the path to success will be easier than for someone who isn’t as intelligent.

Many millennials, to their credit, understand that being financially independent is better than depending on a handout. We’re also seeing the rise of minimalism, with millennials eschewing ostentatious materialism for intellectualism, financial independence, wealth creation, and introspection. Nowadays, it’s ‘cool’ to have money and buying stocks, while reading philosophy, investing, and coding – not frittering money on depreciating positional goods. As evidence of this trend towards intellectualism, for example, many millennials would rather stay home than go clubbing. Intellectualism, with money in a bank or in the stock market or real estate, rather than flashy and rapidly-depreciating car, is more impressive. Like Musk, Warren Buffett is another example of someone who is very wealthy as measured by stock market wealth, but prefers reading complicated financial statements than drawing attention to himself. Counterintuitively, less you try to demand attention, the more people seek your counsel, by virtue of your talents and expertise. Despite Buffett’s minimalist lifestyle and introverted demeanor, thousands of people flock to Omaha for his annual shareholder meetings.

This is related to the rise of ‘advice culture’, the tendency of millennials (but also older generations) to impart their knowledge and advice to others through blogs, social media, and YouTube, whether it’s about self-improvement, economics, masculinity, career advice, and so on. Decades ago, this information either didn’t exist or was only accessible in libraries, but now an abundance of it is online, often with a slight contrarian bent: Vice, Thought Catalog, and Daily Elite articles written by smart people about how conventional wisdom may be wrong, and how political correctness and coddling (which I agree) is incompatible with the harsh realities of the ‘real world’. Here’s one example of such an of such an article.

The rise ‘intellectualism culture’ of the ‘alt right’, objectivism, right-rationalism, and other ideologies and movements is part of a reality-based approach to life, as opposed to delusions, false victimization, and wishful thinking.

RE: How a TV Sitcom Triggered the Downfall of Western Civilization

From Medium: How a TV Sitcom Triggered the Downfall of Western Civilization

he show ended in 2004. The same year that Facebook began, the year that George W. Bush was re-elected to a second term, the year that reality television became a dominant force in pop culture, with American Idol starting an eight-year reign of terror as the No. 1 show in the U.S., the same year that Paris Hilton started her own “lifestyle brand” and released an autobiography. And Joey Tribbiani got a spin-off TV show. The year 2004 was when we completely gave up and embraced stupidity as a value. Just ask Green Day; their album American Idiot was released in 2004, and it won the Grammy for Best Rock Album. You can’t get more timely. The rejection of Ross marked the moment when much of America groaned, mid-sentence, at the voice of reason.

Maybe it’s all harmless fun. Like the good-spirited laughter of a live studio audience? Maybe. But I am sincerely worried we have not done enough to cultivate intellectual curiosity within our culture.

Looks like cherry picking by the author. People thought Elvis and Ed Sullivan were the ‘end of Western civilization’.

Like many things in society, there is a bifurcation : stupidity in some area (such as celeb gossip & entertainment, SJW-infected liberals arts departments, etc) but also capital and ingenuity elsewhere (Silicon Valley, STEM research departments, Tesla, etc).

However, the economic events of 2008, recently accelerated in 2013, have put the cognitive elite at or near the top of the socioeconomic totem-pole as measured by prestige and wealth. As housing, energy, construction, manufacturing and other ‘blue collar’ and ‘low-skill’ jobs and sectors have faltered, ‘nerd’ jobs like IT and coding have been very resistant, seeing strong growth and high wages compared to the proliferation of low-paying service sector and ‘gig’ jobs, as well as the downsizing of middle management and mediocre employees. When you look at all the high-IQ people making fortunes (or good incomes) in web 2.0 (Uber, Snapchat, Pinterest, etc), Bay Area real estate (Palo Alto home prices have doubled since 2011..not a typo), coding, stocks (S&P 500 up 200% since 2009, Nasdaq up 300%), etc…the post 2008 economy is like a ‘revenge of the nerds’ in overdrive, with the synthesis of wealth and intellectualism. Then you have the physics discoveries that are making headlines all over the world, while not enriching the scientists financially, enrich them socially, which is almost as good as monetary wealth.

Since 2008, software, web, and IT jobs have seen strong ‘real’ wage growth, bucking the overall sluggish economy:

At the same time, low-paying service sector jobs have proliferated:

As part of the ‘hollowing out’ of the middle, in post-2008 America, the emphasis, more than ever, is on ‘value creation’, not labor for the sake of labor:

Those overpaid low-IQ jobs are going away, being replaced by software or outsourcing. But at the same time, the low-IQ service sector is thriving. Individuals who are too comfortable doing low-IQ work for high-pay, relying on office politics and connections to get ahead, are in for a rude awakening by the productivity reaper. Going from $150k a year, with golf on the weekends and all-expenses paid business travel, to $20k a year at Starbucks is not all that uncommon.

To be continued

The Wealth Inequality Obsession

There have been more articles than usual about social science issues such as wealth inequality, ‘the 1%’, student loans, offshoring wealth, and so on. I counted ten such articles on Hacker News in the past week alone, all of them viral:

Wealth doesn’t trickle down – it just floods offshore, research reveals (2012)
The 1% hide their money offshore – then use it to corrupt our democracy
What if the problem of poverty is that it’s profitable to other people?
Congratulations You’ve Been Fired
The Blue State Model: How the Democrats Created a “Liberalism of the Rich”
Classism in America
The Housing Market in San Francisco and Ideas to Fix It
More Than 40% of Student Borrowers Aren’t Making Payments
A Basic Income Is Smarter Than a Minimum Wage
How Uber, AirBnB, and the Sharing Economy Avoid Sharing the Wealth

These are just the ones that made it to the front page. There are probably many more.

Economics is a social science, meaning that it affects everyone, from rich to poor, to students and professionals, whereas the ‘hard’ sciences such as string theory or astronomy, while interesting, are mostly confined to laboratories. Favorite discussion topics include student loan debt, rent being too high, STEM vs. liberal arts, the rich not paying their ‘fair share’, wealth inequality, and so on. These debates are almost everywhere online, but seem to be most concentrated in ‘rationalist’ communities.

But why so much debate? I think at the individual level, once essential needs are met (food, housing, employment), you begin to look beyond the purview of your personal economic situation to problems on the outside, whether it’s the rich having too much of the poor having too little.

There also seems to be an ‘activist personality’ involved too – a need to fix the world, to right perceived wrongs. Why are some rich people not paying their ‘fair share’? How can we help people who are displaced by automation? Why do so many students have so much debt, poor job prospects, and what can be done about it? Can a basic income work? And so on.

But I think after a certain point, enough is enough. We need to come to terms with the fact that:

In a free society, some will have more than others, and some will be better than others:

Maybe some rich people don’t pay as much as they should (or as much as you wish they would). Maybe you dislike and or morally object to how they made their money. Tough.

The labor market is competitive and difficult.

Jobs will be lost but also created by new technologies.

Capital gains reward investment and risk taking.

Life is unfair. Mark Zuckerberg became immensely wealthy with Facebook, even though the idea may not have been exclusively ‘his’. Is this fair? Maybe. Maybe not. It doesn’t matter.

Incentives matter. You punish the rich too much and they may not stick around to create jobs, instead moving money and jobs offshore.

The rent in the Bay Area is high, and homes are expensive, and there isn’t much you can do about it.

Sometimes the world can be maddeningly complicated, confusing, and unfair, and we need to let go. By the time you have finished reading this sentence, a couple hundred people will have died, a student loan will have gone into default, and someone will have lost their job. I’m not dismissing other people’s hardships, but you’ll drive yourself mad worrying about it.

Perspective is needed: the poor of America are economically better-off than the poor in other countries. From the Daily Caller Bernie’s Poverty Delusion: America’s Poor Are Richer Than Europe’s Middle Class:

Data from the U.N. agency UNICEF, shows that the US has a lower child poverty rate than other first-world countries, such as Spain and Israel. But Sanders is incorrect on a more fundamental level when claiming Europeans are better off than Americans thanks to a host of social programs and entitlements.

And finally, for many these social science topics, unlike the hard sciences, there aren’t clear-cut answers. Which I guess is why there is so much debate.

Post-2008 Themes

Lately there has been a plethora of these ‘how-world-is-changing’ type articles on social news sites, and they seem to do well, as measured by comments, interactions, and shares, so here is another one:

The Crisis of the Blue Model

Within a decade … between a third and a half of the current employees in finance will lose their jobs to … automation software. It began with the lower-paid clerks … It has moved on to research and analysis, as software … has become capable of parsing enormous data sets far more quickly and reliably than humans ever could. The next ‘tranche’ … will come from the employees who deal with clients: Soon, sophisticated interfaces will mean that clients no longer feel they need or even want to work through a human being.

The Luddite fallacy means that there will always be an abundance of jobs for all skill levels, despite advances in technology. Carriage mechanics become auto mechanics, who become rocket mechanics, etc. Whether or not it remains a fallacy is up to debate, but technology has yet to eliminate all jobs – far from it. However, instead of fewer jobs, the labor market distribution may become bimodal, with a ‘hollowing out’ of the middle.

The Year of Disillusion

Then came the inevitable crash. Home prices collapsed and well-paying white collar jobs disappeared. The brother-in-law who made $150,000 a year as a mortgage broker in 2007 was unemployed in 2009 and driving a FedEx truck in 2010–or doing nothing at all, as the labor force participation rate collapsed. …

But I think every year there is some ‘disillusion’. In the 2000′s it was about 911, Iraq, the dotcom bubble bursting, and in 2008, the financial meltdown. In the 90′s it was about Y2K, militia groups and domestic terrorism against abortion clinics and government buildings, Clinton’s ‘culture wars’, the Persian Gulf War, the first biotech revolution, and the beginning, maturation, and eventual euphoria of the world wide web.

Now it’s apps and social media, Iraq and Syria, on-demand services such as Netflix and Uber, the sharing and gig economy, spree shootings and domestic terrorism by Muslims instead of Christians, ‘outrage porn’ as the new culture wars, perpetually low interest rates, the crummy labor market that never seems to get better, a generation of graduates shackled by debt, and the ongoing debates over wealth inequality.

A major theme of post-2008 America is upheaval, or a re-shuffling to a new, more cut-throat ‘status quo’: jobs that were considered safe and good-paying no longer so, replaced by cheaper but more efficient ones; student loan debt rising, but job opportunities for many graduates falling; ;economic and technological abundance, but possible lack of fulfillment; too many applicants and too little hiring for many jobs; IQ being more important than ever (cognitive castes and Social Darwinism); millennials having to clean-up the mess the baby boomers left behind.

Another theme is the ‘inevitability of everything’, meaning that everything has become predictable up until the moment it happens. The stock market has continued to defy the predictions of collapse and doom and gloom, year after year, leaving the bears empty-handed, yearning for the crisis that will never come, as many seek ‘reset‘. The stock market will keep going up, reflecting the inevitably of the ‘status quo’ economy, that while it may suck for some – is persistent, so you may as well get used to it and adapt. Due to economic fundamentals and other factors, the bull market will likely continue.

Anomie and enniu are other themes, possibly related to the un-participatory nature of both the economy and society:

… what will happen instead is that the economic contributions of the most productive will be able to compensate for the least. The future is one where a decreasingly small percentage of individuals and corporations contribute to the bulk of economic output and activity – the Pareto Principle again, in which 20% contributes 80%, as shown below:

In the future, the curve will become steeper – possibly until a singularity is attained – one company to rule all- the Matrix? This could be the ‘other’ singularity, but instead of AI and computing power, it’s a company or economic entity.

Then you have the social component. Whether it’s the latest physics discovery making headlines, web 2.0 start-ups being worth billions seemingly overnight, Twitter wars, or social media and campus outrage, you have all this activity going on, but on the other hand most of us are on the outside ‘looking in’ rather than contributing or participating in any meaningful way to the debate. Social media platforms give us the illusion of influence and power, but for the vast majority of people it’s very limited, like screaming from the rooftop in a neighborhood where each home is spaced two miles apart. Social media and the celebritization of individualism may magnify this isolation.

Pre-2013, political discourse was dumb, and so was most internet content, too, with the hegemony of Buzzfeed-style ‘listicles’. Then, in 2013, a switch suddenly flicked: the assent of rationalism, long-form internet content, and centrism, all representing a smarter, more evolved form of online discourse and a rejection of ‘low information’, including pandering. This is also related to the post-2013 SJW-backlash and the rise of the ‘alt-right‘, as a challenger to ‘low-information’ mainstream conservatism. Rational liberals, to their credit, played a role in this backlash, denouncing certain aspects of ‘social justice’ once free speech began to be impugned by the more radical elements of the left. Preaching tolerance is hypocritical if you’re only tolerant of those who hold similar views.

In the comments of the Slate Star Codex Sub Reddit, someone bemoans how culture is dominated by a ‘priestly class’ that puts education on the top of the ‘status pedestal’. A retort is that college professors don’t dominate our culture any more than, say, Kim Kardashian.

The common thread here is individualism, a defining characteristic of post-2008 society. What Kim Kardashian and the professor have in common is that their domains are highly individualistic, and both are elevated in society based on individual merits: for the professor, it’s making discoveries, which is related to intellectual-based authenticity and is highly individualistic, and Kim Kardashian for being authentic in her socialite lifestyle, in not having to conform to ‘midstream’ beauty standards and conventional categories of fame (being a singer, actor, etc). Our culture of individualism prizes individual accomplishments (like a physics or math discovery), popularity (Instagram & Twitter followers), and merit (related to individual intellectual accomplishments), which tend to be harder and more exclusive and celebrated than collectivist ones. Religion is inherently collectivist, generally having low barriers to entry for salvation. Same for political parities, which tend to have low barriers to entry for participation. Neither spotlight the individual. But a degree in physics or math, while much harder to obtain than going to church, brings much more prestige to the individual than being a random churchgoer. Perhaps some are tired of the celebration of ‘self’ and wish to return to simpler, more collectivist times. As I discuss earlier, some individualism and intellectualism is need to for society to advance, and there is is probably an optimal balance between the two.

Maybe you can call this New Era the Renaissance of The Mind, one that deals with data and social currency, not mortar and easels.

The Daily View: Dumbing-Down, Poverty in Africa, Space-X, Job Creation, Race & Crime

From Sott.net: The cult of ignorance in the United States: Anti-intellectualism and the “dumbing down” of America

The verdict may still be out as to whether or not America is dumbing down…I wrote two articles that offer an opposing view, that America, contrary to popular belief, may not be dumbing down:

http://greyenlightenment.com/is-america-really-dumbing-down/

http://greyenlightenment.com/is-america-the-intellectual-capital-of-the-world

It may be more like a barbell: while America may have a lot of dumb people, it also has a lot of intellectual output. America’s education system is like a factory, every year churning out millions of mediocre, average people who are sufficiently literate and numerate to contribute to the economy, although with the trend towards automation it may be that these skills that were sufficient 20 years ago will not remain so in the future.

Interesting article: The Great “White”-Washing

With progressive whitewashing, Africans are reduced to pacified, convenient, interchangeable black people with no history of their own and the continent is reduced to a single entity, completely ignorant of its great diversity. The history of the continent is reduced to simplistic notions of a pure, Rousseauean existence that was shattered by whites (Arabs being left out because non-whites can’t oppress other non-whites, apparently). The dissonance occurred when it was implied that only Communist organizations (with natives educated, funded and organized by liberal whites while studying abroad in European universities) would be able to fix all of Africa’s problems during the decolonization era. After that didn’t work out–African nations fell into poverty, disease, genocide and tragedy–it began being implied that only NGO’s, humanitarianism, rock concerts and philanthropy would be able to help.

The problem with central Africa has less to do with racism (from either the left, the right, or whites) but likely, instead, low IQs, civil war, and dysfunctional leadership (the three probably related), as well as geography.

Africa ranks lowest in global IQ map:

This is not a one-time anomaly, but as been corroborated by over a dozen studies, some as recent as 2002. Despite decades improving living standards in America, recent studies show a persistent half-standard deviation IQ gap between blacks and whites:

Closing the Black/White IQ Gap?

Flynn looks at test scores in the year they are administered without taking account of differences in age, e.g., how blacks and whites of every age who took in the test in 1985 compare. Flynn found that the black/white IQ score gap narrowed by 5.67 points between 1972 and 2002. Thus the IQ gap has fallen from 15 points to about 10 ten points. Flynn and Murray agree that the debate over how best to analyze the data is not settled.

Whether of not this gap is biological or environmental, it does have potentially significant ramifications for socioeconomic outcomes at both the individual and national level.

Germany and Japan rebuilt after after WW2 into thriving economies, whereas central Africa, despite $500 billion in aid by western countries, is still mired in poverty. IQ also explains why North and South Africa have thrived compared to the rest of the country, due to white settlers. To quote Robin Hanson:

Most nations today would be richer if they had long ago just submitted wholesale to a rich nation, allowing that rich nation to change their laws, customs, etc., and just do everything their way. But this idea greatly offends national and cultural pride. So nations stay poor.

During the 18th and 19th century, North Africa was colonized by France, the United Kingdom, Spain and Italy. Trade also plays a role, and central Africa, unlike the coastal countries, are cut-off. Coastal African countries, which have a greater Arab or European admixture, tend to be more prosperous than those that are homogeneous and inland. ‘Cognitive flight’ is another reason: the smartest of Africans are more likely to emigrate to more prosperous regions.

However, Bulgaria, Czech Republic, Slovakia, and Hungary, despite being inland, are obviously much more prosperous than inland African counties:

Green and yellow indicate better living conditions:

Space-X Lands Falcon 9 Rocket on Barge

That’s pretty amazing, and is an example of high-IQ ingenuity by the free market. That’s why, despite writing about NRx, I’m not a collapse-ist. If society and the economy collapses, it will hurt innovators like Musk the most. Instead, the system needs to be reformed – gradually, creating a new system where the best and the brightest will lead. My ‘mantra’ is: Replace and Rule: replace (not collapse) the current system, and then rule. The fall of the Roman Empire lead to the Dark Ages, and eventually the Renaissance, the Reformulation, the Scientific Revolution, and finally the Enlightenment If history is any guide, collapse would lead to a long period of decay, followed by a new regime that may even more liberal than what replaced it. On a somewhat related note, Tesla stock keeps going up, and will keep rising, as much as the left wishes that wealth inequality would hurt Tesla sales.

Tomgram: Thomas Frank, The Inequality Sweepstakes

What Thomas Frank does not realize, or is ignoring, is that it’s still the ‘elite’ who create jobs, and antipathy towards them won’t improve the situation for the millions who are without work. The reality is, without job creators, most people wold fail, as the success rate for entrepreneurship is very low.

Large businesses still produce 30% of jobs:

Small businesses typically aspire to become larger ones. Attacking the elite may have the unintentional effect of dissuading small businesses (that the left claims to support) from expanding, or being created at all.

When telling the truth come back to haunt politicians. The fear of being called ‘racist’ is why everything has become so scripted in politics, and why Trump is so popular for his candidness and honesty. It’s not a myth – just look at the statistics. The statistical reality that some people commit more crime than others is in itself not racist.

Universal Basic Income – Why It Can’t Work in America

From Bloomberg: A Basic Income Is Smarter Than a Minimum Wage

The Universal Basic Income (UBI) is one those economic debate topics that will never be resolved to anyone’s satisfaction, unlike Newtonian gravity, for example, which with the exception of possible quantum gravity, has long been long settled. That’s the problem with the social sciences. Excluding fundamental concepts (comparative advantage, trade, supply vs. demand), pretty much everything else is subject to debate, whether it’s supply side vs. demand side, govt. debt vs. GDP growth, minimum wage vs. flexible wage, fair tax vs. flat tax vs. progressive tax, free trade vs. protectionism, or the best interpretation of the Laffer and Philips curves. Even studies aren’t good enough, because if you look hard enough, you’ll likely find the same number of studies that oppose your viewpoint, and it seems all studies in the social sciences are beset by methodological flaws, if not outright fabrication. The best anyone can do is present evidence, and it’s up to policy makers to choose whether or not to heed said economic these models. In the Case of Bush and Reagan, they went with supply-side (Mundell and Laffer). Obama went with demand-side (Keynes, Solow, and Krugman). Even when something seems certain (Enron’s fraud, for example) doubts can remain – was the trouble with Enron that its management didn’t tell us enough—or that analysts failed to make sense of the data it supplied?

Some try to re-frame it as an immigration issue – ‘either basic income or immigration’ – but eliminating immigration won’t magically make the basic income workable.

A prosperous country with a small citizenry, such has the UAE, could probably sustain a UBI. In 2013, the UAE’s total population was 9.2 million, of which 1.4 million are Emirati citizens and 7.8 million are expatriates. The gross domestic product of the UAE for 2013 was
$402.3 billion, with a nominal GDP per capita of $43,000. Sweden, Norway, and Luxembourg rank much higher, with a nominal GDP per capita of around $90,000. For the UAE, after excluding the guest workers, the per capita GDP surges to $285,000. The USA ranks in the middle at around $55,000 per capita. A basic income for every adult American citizen at $10,000 a year would cost $2.45 trillion annually, or about 13% of GDP. In the case of the UAE, a $10,000 a year basic income for every citizen (including children) would cost just $14 billion, or only 3.5% of GDP. A low or average GDP per capita in an otherwise very large economy implies a Pareto distribution of only a small percentage of citizens producing the bulk of economic value, which is why a UBI may work for the UAE but not America.

Some approaches to the UBI:

High-IQ basic income (a basic income only applicable to individuals of a sufficiently high IQ)

The high-IQ basic income would have the effect of only making the program applicable to only a small percent of the population (the most economically productive and or the potential to be productive), which seems more fair than giving it to everyone indiscriminately. This would dramatically lower the cost relative to GDP and guarantee the highest ROI from the program.

Mandatory birth control for low-IQ recipients of the UBI, with revocation of UBI for repeat offenders.

Credits (food, housing, gas, and electricity credits) instead of cash. the former much less susceptible to abuse, unlike cash which may be squandered on non-essentials.

A UBI is also similar to negative tax rate, which due to entitlement spending already exists for about 20-40% of the population (people who consume more in benefits than they produce in taxes):

A UBI without preconditions will only compound entitlement spending, because what is to stop people from wasting their basic income on frivolities while also drawing from existing welfare programs.

Many people may agree to work for less than the current minimum wage, and on more flexible terms, if they’re supplementing a guaranteed income, not scrambling to avoid having to beg for food.

But this is not the case. Somewhat counterintuitively, the poorest are not starving to death; in fact, they’re more likely to be obese than higher income earners:

More than forty percent of student loan borrowers are not making payments, sometimes even when they are financially capable. So that’s effectively like a ‘basic income’ as far as education is concerned. Similar patterns are observed with healthcare, with medicare, medicaid, and free emergency room treatment for millions of Americans who are uninsured and cannot afford to pay.

The assumption that a UBI, on top of existing welfare programs, will make people more compelled to work seems like a stretch.

Ultimately, given existing negative effective tax rates and the surge in entitlement spending, we’re probably much closer to something resembling a ‘basic income’ than many realize.