There is much excitement these days about the coming of the “Internet of Things” (a term coined by Kevin Ashton in 1999, but now coming true.
I’ve been interested in this stuff since before Ashton coined the phrase,
There is so much cool that can be done with smart environments, how could be not be excited?
However, along the way, things languished in unimaginative and short sighted apps–honestly, I don’t need to automate the light switches, they work just fine–and a lack of contact with the real world.
My favorite rant in this area is about the plethora of “intelligent” rooms that sense the wishes of the inhabitant. Not the singular. One person per domicile.
So, it knows your schedule and anticipates when to start the coffee, etc. I adjusts lighting and music to the tastes of the (one) user. And so on. (Also, these systems tend to be given the personality of a servant–a psychologically and sociologically troubling fantasy.)
In real life, for most real people, there are more than one person in the family. So you can’t talk about “optimizing” for the one user, that makes not sense. And optimizing for multiple people is hard–and in any case is what relationships are about. Not really what your thermostat should be doing.
Example of why this is hard: many services offer to take my collection of music recordings, crunch on them, and then make recommendations for me.
Here are some real world problems with that concept.
First, my collection extends decades back. My tastes have changed over the years. (Essentially, I’m not “one person” as far as the algorithm would have to assume.)
Second, the collection was merged with my spouse decades ago. She has her own tastes, which also have evolved.
So how would machine learning deal with this? I have no idea, but I’m sure I don’t care.
When I read this story I realized that, even though I am experienced and well informed, I have no idea how many of the devices in my house may have bluetooth or wifi, nor if they could be hacked. How would I know? Why would I want to know?
Glancing at the web documentation from Google Nest, I found that I was supposed to be reassured by the fact that they use openSSL (!) and will ask before sending data to an app on your phone. Problem solved!
This issue also includes an article by me which develops some of my thinking about the significance of cryptocurrencies and their narratives. [Here] I have developed this theme over the past few months (in this blog look at the category “About Cryptocurrency Narratives”). This piece in VMW collects recent thoughts, plus bonus US history.
VMW itself is a fascinating aspect of the Dogecoin “narrative”, unique within the reddit-based crypto community.
It seems somehow appropriate that the Dogecoin narrative encompasses studying cryptocurrency narratives, including Dogecoin itself…”Such Recursion! Wow Meta!”
Disclosure: I am a paid (in Dogecoin, naturally) columnist for VMW, and therefore not completely unbiased. VMW stands for transparency and so do I, so it is important to note this disclosure.
As widely reported, the US Supreme Court handed down a sweeping ruling, basically recognizing the contents of mobile devices as so far reaching they are now part of your “home” which cannot be searched without warrant.
Some cases are decided on abstract principles, this was based on real world practical facts. As the ruling makes clear, a personal device has so much information about you and your life, that it is not only unjust, it is scary to think about strangers plodding around in there.
If only the supreme court could be as down to Earth about other issues, such as election laws.
I will not be the first nor the last to note that this ruling certainly reflects the fact that the justices all have and use personal devices, and therefore had first had understanding of the issues in question.
Apparently, they do not vote in a state that requires them to travel miles to re-register to vote, and we know they don’t have to run for their office so they do not face the appalling, degrading, and corrupting grind of fund raising and dealing with giant political slush funds. I know their rulings would be different if they had first hand experience with actual democracy.
It will be interesting to see if this principle carries over to scrutiny of private and public data collection from phones and sensors.
This book is a best seller, and the author has been a minor celebrity this summer. So many people are talking about Piketty, so few have actually read him. Not surprisingly, a minor industry has sprouted to “debunk” Piketty, which ranges from academic nit picking to self interested political hackery. I will consider this push back in the future.
I also note that Prof. P. has achieved that exalted status reserved for great works: he is used as the non sequitur introduction for any number of ideas and comments. I see things like, “Piketty writes about ‘r > g’. If he’s so smart, why doesn’t my dog like cheese?”
This sort of nonsense is an indication that Pikatty now symbolically stands for “serious intellectual” in the popular mind. Congratulations!
Maybe I will do a ‘Piketty Non Sequitur Watch’ in the future.
The Main Point (and What He Actually Says)
With all the putting words in his mouth, it is wise to check what he actually writes.
Basically, Piketty unpacks details of wealth and income, over several centuries and as many countries as he can get data for. He synthesizes a number of historic sources and has created a dataset (available to critics). This empirical synthesis was very hard work. His dataset will contain errors, and necessarily required inference and interpolations. But Piketty has been quite careful to document his sources and his assumptions. This is high quality work.
His basic finding is that the world economy is just about recovered from the 1914-onward history of war, depression, war, and decolonisation: pretty much, the twentieth century. Amazingly enough (not), we are returning to a structure similar to the economy of 1910, though much more evenly distributed globally now than then. One implication of this is that the twentieth century was neither typical nor a harbinger of the future, it was actually highly distorted by the catastrophe of world wars and the repercussions of wars.
With this long term view, one can see that one’s intuition about ‘normal’ or trends can be distorted by short horizons. In fact, the “normal” state of wealth and income is highly concentrated, with a few people owning most of the wealth and commanding most of the income. Much of this concentration is due to the return on capital, which is perpetuated by inheritance. “The rich get richer” is basically the story here. This pattern was disrupted by wars, depression, and political uprisings in twentieth century, but has returned since the ‘conservative’ revolutions of the 1980s.
Piketty lays out the historic and statistical case for this story in great detail. It is important to note that his claim is not that “this will happen soon”, his claim is that it (a) is the normal state of affairs and (b) is is already happening. Of course, he also points out that, if nothing changes, there is no theoretical limit to how concentrated wealth may become.
A second contribution is his explanation for how this concentration comes about. He states that when the return on capital is greater than economic growth (‘r > g’), then capital, including ‘old money,’ automatically earns more than other means of income, and therefore naturally becomes more and more concentrated, through this mechanism alone. It is critical to note that this is not a function of “imperfections” in markets, this is how markets work. Creating even more perfect markets will certainly not eliminate this tendency.
Piketty argues that historically, the return on capital has been 4-5%, while the growth rate has been 1% or less (omitting war, recovery, and ‘catch up’ situations). Thus, if no other mechanisms are in place, capitalism leads to highly concentrated wealth.
That is basically what Piketty has to say.
How He Says It
For a 600 page tome on historical economics, this book was relatively easy to read. One reason is that Piketty intentionally eschewed academic formality. Another is that he feels free to snark.
At points he is snarky about professional economists who are fond of theory but don’t seem to care about actual historical data. He also notes that academic economists are generally well compensated, so we can understand their not noticing the stagnation and lost ground of the poorer masses. To give you a flavor of the understated but savage commentary, try this comment: “Some economists have an unfortunate tendency to defend their private interest while implausibly claiming to champion the general interest.” (p. 514).
He has little sympathy for highly paid “super manager” either, commenting on the explosion of pay rates among corporate big wigs: “The propensity to “pay for luck” varies widely with country and period, and notably as a function of changes in tax laws, especially the top marginal income tax rate, which seems to serve either as a protective barrier (when it is high) or an incentive to mischief (when it is low)—at least up to a point.” (p. 335).
There is a section titled, “The Rentier, Enemy of Democracy” (p. 422) and he describes off shore tax evasion and similar mischief by the privileged as a“secession of wealth” (p. 464).
Tell us what you really thing, Professor P.!
One Thing I Didn’t Expect
I didn’t expect literary analysis: Austen, Balzac, Henry James etc.,–and also Disney’s The Aristocats (1970) are discussed in some detail. He uses these sources to illustrate the human dimension of the levels of wealth and income he discusses. More importantly, he argues that the novelists demonstrate common thinking and everyday reality of their times, portraying the realities and parameters of life, as dictated by the economic conditions.
Specifically, these (mainly nineteenth century) novelists use explicit monetary references to denote “the income and wealth hierarchies that existed in their time”, and the references are quite precisely aligned with the statistical evidence Piketty has assembled. In addition, “[t]hey often give a very concrete and intimate account of how people lived and what different levels of income meant in terms of the realities of everyday life.” (p.415)
I note that Piketty has been criticized for cherry picking his evidence. In this non-statistical area, he is certainly open to that critique: there are thousands of novels that could be sampled, but he uses only his favorites. And a Disney toon! C’mon!
What Must Be Done
If this book stopped at economic history, no one would care and we’d never have heard of him. The really “controversial” aspect is Piketty’s understated but crystal clear moral and political stand. He not only explains where we are and how we got there and where we are likely to go; he has strong opinions about what should be done (and how).
Piketty finds inequality of wealth and income dangerous to democracy and common decency, and wants to do something about it. (And the “something” is what has caused serious pushback.)
Let us be completely clear on this point: vastly unequal distribution of wealth is wrong because it is bad for democracy, not because it is “bad for the economy”.
What should be done?
“If democracy is to regain control over the globalized financial capitalism of this century, it must also invent new tools, adapted to today’s challenges. The ideal tool would be a progressive global tax on capital, coupled with a very high level of financial transparency.” (p. 515)
Professor P.’s solutions are based in history and theory.
First, we must keep and sustain the “social state”, including public support for health and education, and income substitutions (pensions, unemployment).
Second, we need confiscatory taxes on absurdly high incomes. This move is the only known mechanism to block the economically, morally, and politically damaging escalation of pay at the very top.
Third, we must tax wealth, not just income. Piketty indicates that even a tiny, nominal tax would have the huge benefit of forcing transparency and standardized accounting. Much of the mischief that created the 2009 crash were due to a lack of transparent standards for defining assets, and repair has been hindered by opacity to the point of complete blindness as to who owned what, and what assets are worth.
Along the way Piketty expresses some strong opinions on inflation and public debt, both of which tend to redistribute wealth from the poor to the rich, in indirect and, in the case of inflation, hard to predict ways. However, he has little truck with either “austerity” or deficit scolds.
“[T]he idea that we are about to bequeath a shameful burden of debt on our children and grandchildren and that we ought to wear sackcloth and ashes and beg for forgiveness simply makes no sense. The nations of Europe have never been so rich. What is true and shameful, on the other hand, is that this vast national wealth is very unequally distributed. Private wealth rests on public poverty….” (p. 569)
He expends a lot of attention on the political economics of Europe, which are certainly more interesting to Europeans than to the rest of us. (As an American, I have enough to do to try to grok the insanity on this side of the Atlantic, I really can’t worry about Eurocraziness.) In particular, the creation of a currency without a state (the Euro) was an especially “cunning” plan, and they are reaping the whirlwind sewn by this dragon’s tooth.
When he uses phrases such as, “The Rentier, Enemy of Democracy” (p. 422) or refers to the “secession of wealth” (p. 464), he is surpassing an academic history, and entering the arena of politics. This is why he has been savaged by the paid stooges of the media and academia, and celebrated by the few remaining center left intellectuals (including some unseemly fawning by Paul Krugman). I’m sure Professor P. can defend himself.
By the way, Piketty is not a Marxist, and is a pretty moderate social democrat as far as that goes. His “radical” solutions are strongly capitalist, so he has been and surely will continue to be attacked from “the left” for his conservatism.
I will examine the kerfluffles of this “Summer of Piketty” in the future.
My Own View
As far as I’m concerned, Piketty’s clear-eyed view of the social state and the essential importance for real democracy to control wealth is right on target. In this, I don’t really care if some of his data is off a bit: he is describing a whale, we don’t need to fuss about the sub-millimeter accuracy of our ruler, do we?
However, much of this book is a case for some actions that are (literally) purely academic. The concept of multinational cooperation to tax wealth is a fine idea. But nations can’t even tax within their own borders, or collect data that would make such steps possible, or even act together to protect the environment. Other pie in the sky proposals: one time tax on wealth to reduce public debt. This may be better than inflation or debt renunciation or doing nothing. But it’s never going to happen.
This leaves me with a problem: I agree with Piketty and admire much of the book, but I don’t really see much prospect to implement his solutions. We’ll be lucky to survive with much of our democracy and social state intact.
If we are truly headed back to the nineteenth century, then what? A redo of the twentieth?
A hilarious Mythbusters “experiment”, not televised: a reader wondered “which falls faster: a six-pack of light beer? Or a six-pack of regular beer?”
Despite the fact that this is totally stupid (we know from basic physics that they will fall the same speed unless there is something very unusual going on), who could possibly pass up the chance to do this.
It’s called, “Beer Drop“. Two and a half minutes of “science”.
And, by the way, when will we get some new Mythbusters????
I’ll briefly note a project that brings together two flavors of the month, plus the flavor of the month 5 years ago.
VoidSpace is a proposed MMORG (which were all the rage a few years ago).
It is seeking funding through “crowdsourcing”, AKA, “the tip jar model of funding”, definitely the flavor of the month.
VoidSpace has posted a beg for money their request for funding to Steam Greenlight, which is a “kickstarter” feature that is part of their online game service.
If I read Steam correctly, it is infrastructure for creating and hosting MMORGs, and the common infrastructure makes it possible to trade across games, make stuff to share, and so on. If this is basically right, the ‘GreenLight’ is a way for people to make new games. All in all, an interesting mash up of games, social media, and virtual commerce.
The third “hot” feature of VoidSpace is that it aims to use Dogecoin as one of the in-game resources. Of course, Dogecoin is a full blown cryptocurrency, so it could be used outside the game or imported into the game (e.g., by exporting game resources).
Clearly, you could use any cryptocurrency (or many). We assume the developers like the Doge vibe, which is certainly more playful than Bitcoin. The developers do comment that the fact that Dogecoin is valued much less than a dollar is amenable to the in-game mechanics (you’d have to use tiny fractions of a Bitcoin).
At this point it is impossible to evaluate the game or the use of Dogecoin. The prospectus says they will take in Dogecoins as “buy in”, and distribute them in the game as treasure. Players will eventually be able to cash out some of their treasure (I dunno if this is legal).
Presumably, players would be able to conduct business in the game, buying and selling stuff to each other, possibly running businesses.
This is all good ideas, everything will depend on the quality of the implementation and the story telling. We look forward to seeing more.
Apparently whipped up in the last couple of weeks, in response to a very specific (and honestly, not that amazing) event: Cantor coin, a collectible commemorative coin. (Not sure how long these URLs will be around.)
This narrative is a parody which mashes up a generic cryptocurrency story (literally cut and pasted), with souvenir collectible sales pitches (probably cut and paste as well). It also pretends to be a Google project, with a project timer and so on (also cut and pasted from templates).
It appears to be more or less fully implemented (source code), though the web page isn’t even completely filled in, so I have to wonder if the source is really viable. That’s a minor detail–obviously, the code could really work, even if it isn’t working yet.
Ta daa! A new cryptocurrency!
Not only was the code mindlessly cloned, the narrative was cloned, almost mindlessly.
The next breakthrough–and I have actually thought about doing this–is a bot to autogenerate new cryptocurrencies without human intervention.