Monthly Archives: February 2010

Dystopian Tubes

I have some assumptions about economics, finance, and trends but I don’t spend much time looking at how things would have to change to accommodate my weird predictions. So that’s what I’m writing about tonight… Tonight I make omelets.

My condensed take on the economic camps’ assumptions about our predicament: The Austrians assume job growth resulting from lower taxes will organically release us from the Great Recession. The Keynesian camp assumes deficit spending will save us. I think both are wrong in this case. The housing boom masked the fact that the middle class is shrinking due to automation and global wage arbitrage. Neither of which show any signs of abating.

Both camps assume that for 300 years the middle class will remain stable. They do that because their models (mainly Keynesian) get too complex unless you assume all things are equal. So the complexity of their models preclude the notion that demographics and common sense can come into play. This is probably why they missed the housing bubble. My take assumes accelerating societal change.

The Austrian school isn’t so burdened by math (they did see the housing bubble coming) but its practitioners are burdened by political assumptions about fairness and justice (Bastiat and Rand). The social consequences of a shrinking middle class aren’t a concern for most Libertarians. But in the long run you start to have serious problem with a society with no middle class (so I’ve heard).

In short, they Keynsians think they can avoid the inevitable and the Austrians just don’t give a damn. So nobody is writing much about the problem.

In the back of my head I’ve remained optimistic that the brains in Washington can transition society to a future where there is no middle class because of rampant productivity growth which will (not ironically) make increased wealth redistribution palatable. This rising productivity simultaneously solves the deficit problem. Then I read this unfortunate bit of research today from Julius Wilson via The Atlantic:

“A neighborhood in which people are poor but employed is different from a neighborhood in which many people are poor and jobless. Many of today’s problems in the inner-city ghetto neighborhoods—crime, family dissolution, welfare, low levels of social organization, and so on—are fundamentally a consequence of the disappearance of work. “

So there are two problems for the future. The first is dealing with the potentially outdated financial framework that assumes a healthy, stable middle class (think 30 year mortgages). And the second is the psychological ramifications of joblessness even with bountiful welfare benefits.

So politicians are going to have to look at how to make wealth redistribution work given the understanding that you can’t just throw money at the jobless and expect them to avoid dysfunction.

Reflections

Woohoo! I’m writing again. It feels good. (and cooking, mostly high end omelets). My thoughts from the last week:

“In this case it’s the application of reason to the study of the financial
behavior of irrational, social, creatures (humans). AKA economics. ”

“20 years ago we could blame the lack of information for our inability to fix the world’s problems. Now we’re the bottleneck.”

On CA:
“Our taxes are high but they’re not nearly high enough to pay for all of the earth fixing programs we like to “fund”.

“California is basically a giant version of an idealistic student at Berkeley with a Visa who has never taken a class on personal finance.”

“Don’t forget California. The Republicans are supposed to come in and cut taxes and spending but they find it’s a lot easier to just cut taxes.”

On wholistic medicine:
“It’s called the placebo effect and it does work but, like Peter Pan, only if you believe.”

On Keynesian misconceptions and fiscal shenanigans:
“Krugman (liberal) thinks Obama isn’t doing enough to stimulate the economy. Their prevailing wisdom is that you do need to worry about deficits but not until we’re through this recession. Otherwise we could get caught in a deflationary spiral (see Great Depression).
A deflationary spiral would collapse tax receipts and would grow the deficit. This is why unfunded spending and low GDP both have a negative impact on the dollar.”

“Giving away mortgages on crack houses doesn’t make them crack homes.”

On the moon:
“Some of us Luddites think we should pay down the deficit before space travel becomes a priority.”

“Baby boomers already saw a guy on the moon. At this point in their lives they’re going to vote for more drug benefits. The baby boomers get what they want.”

On Socialism:
“Socialism is basically the Apple model. Things cost more but you get a strong leader (Jobs) and nationalistic pride (the Apple brand/ lifestyle), and you don’t have to worry about evil monopolies because you assume the government monopoly is benevolent.

Some of us prefer an open model with fierce competition. Brands aren’t as important because if companies are dropping prices fast and innovating faster, nobody will remain king of the hill. This is Capitalism but it requires regulation.

Bill Gates was completely wrong when he likened Open Source to Communism. Socialism consists of government run monopolies. Bill Gates as a politician in other words.

Socialism is basically the admission that the lobbyists have won, no regulation will pass, and it’s time to pray for competent bureaucrats. We Americans have trouble admitting that, probably given our history of occasionally tarring and feathering corrupt politicians.

Though I think we should take from the rich and give to the poor (within reason, wealth divides are growing) it doesn’t mean the government has to expand out from the department of motor vehicles and start running our supermarkets. If you don’t see the problems inherent in letting the government run businesses then you’ll probably like Socialism.”

On law:
“If regulation is just legislation and you assume laws are enforced then leadership should only consist of representatives. A Representative Democracy is arguably the antithesis of strong leadership.”

On Toyota:
“I think you should engineer safe gas pedals rather than change the behavior of the throttle system.”

“Toyotal Recall” My highest ranked comment this week but it looks like some headline writers at Fox news thought it up a few days before me.

On dog lovers eaten by their own dogs:
“You would expect man hungry dogs to eat a man so that’s not ironic but the fact that he is the supposed leader of their wolf-pack is.”

On Graphine based processors:
“I doubt that other than supercomputers the effort will be in reaching that level of performance. For most of us they’ll try to slow them down to only what is required for the application to reduce power consumption. Cell phones lasting a week on a charge would be nice.”

“Dixon Ticonderoga Number Two processors.” My second highest rated thought for the week according to Reddit.

” I think the concept of “good enough” may start to apply in the near future.
I would rather have a cell phone or PC that uses 5 watts than something that requires 150 but can render full length Pixar movies.
GPUs will probably jump on this for performance but it’s hard to argue many people are dissatisfied with current top of the line graphics.”

“Watch your cpu use, even during compiling, a lot of the bottleneck these days is IO. Most people are surprised what their CPU can do after installing a good SSD.”

Media Flavors and Aggregation – TVs Matter Again

A funny thing is happening to TVs; they’re getting interesting again. Prices of computers smart enough to do all the basics of what you get on a MacBook or Dell are making their way into the guts of TVs. Other than 3D, the interesting topics this year were the Boxee Box and the various apps available for TVs.

We have all sorts of technology on smart phones and desktop apps but the vast majority of citizens will not use tech until it’s so easy to use that it doesn’t risk offending one’s sense of control of their environment. These new TVs are interesting because the apps aren’t revolutionary, their accessibility is.

Once the technology is transparent the really interesting phase of this shift begins. I think Boxee is the first real vision of “TV” post cable box. You can’t buy it yet so I installed in on the PC plugged into my TV to get a feel for it. You have your standard media center options (movie, music libraries, tv shows) but you also get apps. This is a huge leap.

Right now I’m sitting on my couch writing this on my TV with a wireless keyboard running Boxee. I’m running the Boxee LastFM music app and it just occurred to me that I haven’t sat down at my laptop in a couple of days now. Maybe my couch is just too damn comfortable but I suspect it’s my new found freedom to get stuff done without feeling like I’m at the office.

Shows are the new channels if this new TV series interface sticks:

The only reason I pay for cable at this point is because I occasionally watch live sports. I’m seriously starting to wonder if it’s worth the $600 a year. If these TVs take off I fully expect Apple to create their own big screen TV with proprietary apps tied to the ITunes store for rentals, etc. Time will tell.