Category: Economics

On inflation, inequality, and hungry ghosts.

On inflation, inequality, and hungry ghosts.

If people who earnestly believe in ghosts decide to host a séance, they’re no more likely to conjure an apparition than if non-believers host a similar ceremony simply as a lark.

A ring of candles, a drop of blood, earnest believe: none of these will summon spirits. And so the rest of us – the unwitting public who might find ourselves endangered if hungry ghosts were unleashed upon the world – need not fear any gathering of believers. The force of their belief can’t hurt us.

But inflation is a ghost who can be summoned by belief.

Inflation can only be summoned by belief.

And inflation hungers. But this ghost will not pursue us equally. Rather, inflation is like a spirit of vengeance, aggrieved by inequality. Inflation gobbles fortunes while forgiving debts.

Corporate executives – people with the power to set prices – have contributed most to inflation’s summoning. Their belief, within the financial séance, has mattered more. And, as they tend to be more wealthy than the average person, they have the most to fear.

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Inflation is a rise in the prices of all goods and services. Wages rise, and so do prices, each increasing ostensibly in response to the other.

Consider an example: if the price of apples increased but all other food prices stayed the same, that would not be inflation. That might reflect a poor apple harvest. Apples would become more expensive relative to other goods.

But if, after this poor apple harvest, grocers raise the prices of apples, then notice that people are actually willing to pay those higher prices, and then decide to raise all their other prices too, just to see, and then workers demand higher wages in order to afford their more expensive groceries, that is inflation.

Inflation is a pressure to keep relative prices the same. Which results from belief – in our example, grocers simply believing that two lemons should cost as much as an apple, even after a poor apple harvest, and workers believing that they should be able to afford an apple with the wages of five minutes’ work, just like they could last year.

This distinction – that inflation occurs because people believe one good should not become more expensive compared to another – is essential to understanding the origins of our current episode of inflation. Which has a lot of roots – disruptions to Chinese manufacturing, shipping snafus, embargoes against Russian energy exports – but the story begins with wages.

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In response to the Covid-19 pandemic, many workers realized that they were being unfairly undercompensated. People switched to better-paying jobs. Employers had to offer more money to retain staff. Briefly, it seemed as though workers would become more expensive relative to corporate profits, executive pay, or consumer prices.

Our current episode of inflation can be understood partly as a game of tug-of-war between workers and corporations. Workers insist that they should be valued more than they previously were – in response, their wages increase. Then executives tug back, insisting that workers were already treated well enough – they set prices higher, negating the increase in workers’ buying power.

If a single executive behaved this way, that corporation might suffer. If a can of Coca-Cola cost two dollars while a can of Pepsi cost only one, people might switch to Pepsi. But if many executives coincidentally behave like a cartel, all raising their prices at the same time, then they maintain the séance. Despite needing to pay high wages, their profits rise. So do their personal salaries. They reinforce their belief about the status of workers.

And their belief creates inflation.

See, for example, the New York Times article, “Food Prices Soar, and So Do Companies’ Profits.”

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Increased fuel and shipping costs have also contributed to rising prices, but these didn’t cause the inflation we’re experiencing today.

In our economy, fuel is used for almost everything: powering farm equipment, transporting goods across the country, hopscotching components along the supply chain, even commuting to work. As fuel costs rise, all production becomes more expensive.

You might imagine that if prices were raised to reflect the rising cost of fuel, we’d see something like inflation. But it costs just as much to ship ten pounds of cheap trinkets as it does to ship ten pounds of intricate devices; it costs just as much for a janitor to drive to work as for an executive. Boosting every wage to account for increased commuting costs would compress the percentage gap between executive and worker salaries. Raising the price of all goods to account for increased shipping and manufacturing costs would make formerly cheap products become relatively more expensive.

Instead, prices and wages have increased by a percentage of what they were before. Real occurrences in the world – beleaguered workers bargaining for higher salaries, a shipping crunch when people stuck at home bought furnishings online, a war in Ukraine – caused some prices to rise. Belief lifted all the others.

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Our current episode of inflation has also been abetted by unhappiness.

Because inflation arises from belief, it always has psychological roots. People with the power to set prices will set them higher if they believe that other people are also setting higher prices. But right now, inflation has also been bolstered by the psychological malaise of consumers.

During an interview with Ezra Klein, economist J. Bradford DeLong offers an explanation for the end of inflation in the U.S. in the 1970s:

“And Paul Volcker says, ‘We’ve gotten ourselves into a situation in which people don’t just expect inflation next year to be what it was last year. People expect inflation next year to be what it was last year plus a bit more.”

“ ‘I’ve got to fix this and I got to fix this by hitting the economy on the head with a brick and keep hitting until people understand that no, if they insist on raising their prices, they’ll have no demand for their products.’ ”

In this description, DeLong correctly describes the root cause of inflation as belief. Inflation happens because the people with power to set prices believe that inflation is happening. And DeLong describes a way for inflation to end: convincing those people, the ones who are setting prices, that consumers will stop buying things.

Our current period of inflation began with wages rising – due to the pandemic, people wouldn’t come to work unless they received higher wages. Then executives raised prices. Everyone needs to eat, so consumers have few options if executives raise food prices in concert, but people could choose not to buy a new computer or couch. Raising those prices could have caused a drop in demand, which would have ended the brief kindling of inflation.

But unhappy people are more likely to buy things. I’ve certainly felt this in my own life, spending too much money on stuff I didn’t need when I was feeling crummy.

Incidentally, this is why Facebook (& Instagram, & …) is designed to make users unhappy. The users of Facebook are the product that Facebook sells to advertisers, and an unhappy user is more desirable to advertisers than a happy user. By intentionally cultivating unhappiness in emotionally-addictive ways, Facebook can offer advertisers a premium product: the attention of people who are more likely to buy things as they attempt to fill an empty ache inside.

The lingering malaise of the pandemic and the scary ways that our world has changed have made people more likely to buy things, even when prices should feel “too high” compared to last year. Which means that the concerted price increases set by executives have kept causing inflation instead of reducing demand.

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Legal U.S. currency has only a modicum of inherent value, primarily aesthetic. I’ve heard that a high denomination bill can be rolled into a tube and used to snort cocaine in front of potential romantic partners. Some people think that this showy behavior is alluring.

Mostly, though, U.S. currency is considered valuable because we believe it is, together. The value of money is a collective fiction. Like medieval outbreaks of Tarantism, we keep dancing because we fear that we might die if we ever stopped.

Currency intervenes in every exchange. You can’t directly trade a bail of hay for fifteen-minutes’ legal help in the modern world.

Once upon a time, the value of U.S. currency was backed by gold. Like dollar bills, gold has only limited inherent value, primarily aesthetic. Because gold glitters, it was made into jewelry. In the modern world, gold is also a useful catalyst for certain chemical reactions, but during the glory days of gold – to which some disingenuous or ignorant politicians argue that we should return – gold held value because people believed in its value together. Collectively, people believed that a particular weight of it could be traded for a bay of hay, and that a particular weight could be traded for legal help, and this allowed everything in the world to be assessed with the same measure.

The relative value of goods and services is fixed in the short term. Legal help is judged to be just so difficult to produce, so fifteen minutes should be worth the same as a certain amount of hay. Over longer timespans, these relationships can drift: if a team of programmers creates an AI script that provides legal help much more abundantly than human lawyers, each fifteen minutes of legal help should be worth less hay.

But there’s no constraint on how hay should be priced with respect to a currency whose value is created by belief. As long as the relative prices of hay and legal help stay the same, both a bail of hay and fifteen-minutes’ legal help could be priced at a gram of gold, or a tenth of a gram, or a hundredth. In each case, the world functions the same way. Hay can be traded for currency which can be traded for legal help.

But belief still matters. If lots of people harvest hay, then the aesthetic preferences of any one person aren’t important. But if one person buys up all the hay fields, and then that person decides that gold isn’t particularly attractive, that person might demand twice as much gold in exchange for hay. This demand would be temporarily irksome, but if everyone agrees that this hay merchant has good aesthetic taste – maybe gold was never as pretty as we thought! – people will start trading twice as much gold as before for hay, and for legal help, and for labor. The world still works. Gold was only ever a measuring stick. As long as everyone switches together, it doesn’t matter whether the measuring stick is delineated in inches or centimeters. The numbers change – eight inches, twenty centimeters – while the actual size of objects stays the same.

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Ah, but wait. The world in motion stays the same: a bail of hay is still worth fifteen-minutes’ legal help. But the static world has changed. A dragon, lounging atop his golden horde, had known that he could trade those mounded coins for seven years of legal help. It was a mighty stash.

Suddenly – and all because an influential merchant decided that he didn’t like the look of gold – the dragon can only buy three years of help. The people’s belief crept in like a thief. The dragon’s great wealth was stolen.

The dragon would obviously feel irate.

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Because money has no inherent value, the terms of monetary exchange are set by collective belief. And in recent months, inflation has been summoned by conflicting beliefs: workers claim that they were undervalued, executives claim that they weren’t.

This is the crux of inflation: whether or not relative values should change. Should some things become more expensive, compared to others, or should all things cost more money?

In my opinion, it’s reasonable for workers to become more expensive. Workers were treated unfairly for decades! And it’s reasonable for certain foods to become more expensive – there’s a war in Ukraine!

But some corporate executives disagreed, refusing to believe that workers or food should become more expensive relative to other things. And then, instead of balking, unhappy consumers kept on buying things.

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To recap: the beliefs of powerful people caused inflation. Now many of those same powerful people are upset, because inflation attacks their dragonish hordes. If somebody already has a bunch of money – a bank account with ten million dollars of savings – then a world in which all costs and wages suddenly double will see this person become half as wealthy. If somebody else has debt – a credit card bill, a mortgage, unpaid student tuition – then they’ll become half as poor.

Unless inflation goes so far that we entirely unravel our collective fiction – everyone waking from the collective dream that currency holds any value – only wealthy people will be hurt. Inflation hungers after their large, fictitious numbers.

And yet it was wealthy people’s belief – perhaps real, perhaps purported in bad faith – that summoned inflation in the first place.

On brevity and conspiratorial-sounding language.

On brevity and conspiratorial-sounding language.

Several months ago, someone wrote to me for the first time in a few years. A week passed before I saw the message – they’d written to my old Google-hosted email account, and I’ve mostly switched to using Protonmail. So I wrote back using my current address … then heard nothing.

Encountering sudden bouts of radio silence is a common experience for many people in the modern world (I feel so bad for people using dating apps in major cities!), but this can feel particularly triggering for people with autism. Because my brain doesn’t always register social cues that other people notice, my early years were riddled with times when people whom I thought were friends suddenly (from my perspective!) decided that I was awful. I still approach disrupted communication with wariness, assuming that people are angry with me.

Later, though, a friend informed me that messages I send to him are often shunted to his spam folder – perhaps Google generally distrusts “@protonmail” accounts? So I used my old account to write to that first person and asked whether the same thing had happened to our correspondence.

At the beginning of a four-paragraph message, I included a sentence summarizing why I have a new email address: “I have mixed feelings about internet privacy – I worry that a lot of it abets tax evasion & the like – but I like email enough (and dislike the effect of advertising companies like Google and Facebook on our world enough) that I thought I should pay for it.”

This person decided I must be a conspiracy theorist.

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The problem is brevity, of course.

With more words, it’s easy to show the harms caused by Swiss privacy laws (apparently a major selling point for Protonmail, which houses its physical servers in Switzerland). In The Hidden Wealth of Nations, French economist Gabriel Zucman calculated how much wealth is hidden from governments worldwide. As translated by Teresa Lavender Fagan, Zucman writes:

The following example shows it in a simple way: let’s imagine a British person who holds in her Swiss bank account a portfolio of American securities — for example, stock in Google.

What information is recorded in each country’s balance sheet? In the United States, a liability: American statisticians see that foreigners hold US equities. In Switzerland, nothing at all, and for a reason: the Swiss statisticians see some Google stock deposited in a Swiss bank, but they see that the stock belongs to a UK resident — and so they are neither assets nor liabilities for Switzerland. In the United Kingdom, nothing is registered, either, but wrongly this time: the Office for National Statistics should record an asset for the United Kingdom, but it can’t, because it has no way of knowing that the British person has Google stock in her Geneva account.

As we can see, an anomaly arises — more liabilities than assets will tend to be recorded on a global level. And, in fact, for as far back as statistics go, there is a “hole”: if we look at the world balance sheet, more financial securities are recorded as liabilities than as assets, as if planet Earth were in part held by Mars. It is this imbalance that serves as the point of departure for my estimate of the amount of wealth held in tax havens globally.

Obviously, including only the final sentiment – It appears as though a large portion of our planet’s wealth is owned by extraterrestrials! – would make Zucman sound absurd. But Zucman’s reasoning is sensible, and it’s awful that approximately 10% of our planet’s wealth – $7.6 trillion in 2013 – is held in secret bank accounts, abetted by various nations’ privacy laws. If that wealth weren’t illegally hidden, fair taxes would let us alleviate a lot of poverty, vaccinate many more people worldwide, build a more just and equitable world.

Brief statements like “Tech companies are siphoning personal data to mind control us!” or “Facebook & YouTube have shut down our functioning government!” would likewise probably sound absurd to someone who hasn’t read Shoshana Zuboff’s The Age of Surveillance Capitalism or similar reporting. Once upon a time, I liked Facebook – it was a great way to share pictures with friends – but I felt horrified when I learned about Facebook’s role in the election of our 45th president. I haven’t logged in to my account since November 2016.

Honestly, though, it’s my fault for assuming that other people have been following these stories. Just because someone is a left-wing academic type doesn’t mean they’ve seen the same news that I have (the personalized filter bubbles that we get stuck inside are yet another reason why I dislike Facebook & Google).

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It felt sad to have someone assume the worst of me, but then my spouse cheered me up by rattling off other things I say that sound an awful lot like conspiracy theories when they’re phrased too briefly, like:

I only eat plants because I’m worried my planet’s getting too hot.

I rub this glop all over my face so starlight won’t mutate my DNA.

I put this plastic in my mouth at night to stop my teeth from wandering when I sleep.

The dishwasher won’t wash the dishes unless you wash the dishes before you put them in the dishwasher.

We need to tell kids THE TRUTH about Santa Claus.

So, I learned something. If there’s not enough time to explain an idea in full, it might be better to say nothing at all.

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Header image from a prior essay about Thomas Pynchon’s Gravity’s Rainbow and, yes, a Disney conspiracy to misinform children about the natural world. In brief (apparently I still haven’t learned my lesson), the people making Disney’s 1958 documentary White Wilderness wanted to show lemmings leaping off cliffs into the water, but lemmings don’t actually do this. So the film crew instead used a turntable to fling the little critters to their doom and claimed in a voiceover that it was natural footage.

On AI-generated art.

On AI-generated art.

Recently, an image generated by an artificial intelligence algorithm won an art competition.

As far as I can tell, this submission violates no rules. Pixel by pixel, the image was freshly generated – it was not “plagarized” in the human sense of copying portions of another’s work wholesale. Indeed, if the AI were able to speak (which it can’t, because it’s particular design does not incorporate any means to generate language), it might describe its initial training as having “inspired” its current work.

The word “training” elides a lot of detail.

Most contemporary AI algorithms are not wholly scripted – a human programmer doesn’t write code that says, “When given the input ‘opera,’ include anthropomorphic shapes bedecked in luxurious fabrics.”

Instead, the programmer curates a large collection of images, some of which are given the descriptor “opera,” all others being, by default, “not opera.” Then the algorithm analyzes the images – treating the images as a grid of pixels, each with a particular hue and brightness, and also higher-order mathematical calculations on that grid, such as if there is a red pixel in a location, what are the odds that other nearby pixels are also red, and what shape will that red cluster take? From this analysis, the algorithm finds mathematical descriptors that separate the “opera” images from “not opera.”

An image designated “opera” is more likely to have patches with vivid hues that include bright and dark vertical stripes. A human viewer will interpret these as the shadowed folds of fabric draping an upright figure. The algorithm doesn’t need to interpret these features, though – the algorithm works only with a matrix of numbers that denote pixel colors.

In general, human programmers understand the principles by which AI algorithms work. After all, human programmers made them!

And human programmers know what sort of information was provided in the algorithm’s training set. For instance, if none of the images labeled “opera” within a particular training set showed performers sitting down, then the algorithm should not produce an opera image with alternating dark and light stripes arrayed horizontally – the algorithm will not have been exposed to horizontal folds in fabric, at least not within the context of opera.

But the particular details of how these algorithms work are often inscrutable to their creators. The algorithms are like children this way – you might know the life experiences that your child has been exposed to, and yet still have no idea why your kid is claiming that Bigfoot dips french fries into ice cream.

Every now and again, an algorithm sorts data by criteria that we humans find ridiculous. Or, rather: the algorithm sorts data by criteria that we would find ridiculous, if we could understand its criteria. But, in general, we can’t. It’s difficult to plumb the workings of these algorithms.

Because the algorithm’s knowledge is stored in multidimensional matrices that most human brains can’t grasp, we can’t compare the algorithm’s understanding of opera with our own. Instead, we can only evaluate whether or not the algorithm seems to work. Whether the algorithm’s images of “opera” look like opera to us, or whether an AI criminal justice algorithm recommends the longest prison sentences to people whom we also assume to be the most dangerous offenders.

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So, about that art contest. I’m inclined to think that, for a category of “digitally created artwork,” submitting a piece that was created by an AI is fair. A human user still plays a curatorial role, perhaps requesting many images using the exact same prompt and then choosing the best, each generated from random seeds.

It’s a little weird, because in many ways the result would be a collaborative project – somebody’s work went into scripting the AI, and a huge amount of work went into curating and tagging the training set of images – but you could argue that anytime an artist uses a tool or filter on Photoshop, they’re collaborating with the programmers.

An artist might paint a background and then click on a button labeled “whirlpool effect,” but somebody had to design and script the mathematical function that converts the original array of pixel colors into something that we humans would then believe had been sucked into a whirlpool.

In some ways, this collaboration is acknowledged (in a half-hearted, transactional, capitalist way) – the named artist has paid licensing fees to use Photoshop or an AI algorithm. Instead of recognition, the co-creators receive money.

But there’s another wrinkle: we do not create art alone.

Even the Lascaux cave paintings – although no other paintings from that era survived until the present day, many probably existed (in places that were less protected from the elements and so were destroyed by wind & rain & mold & time). The Lascaux artist(s) presumably saw themselves as part of an artistic community or tradition.

In the development of a human artist, that person will see, hear, & otherwise experience many artistic creations by others. Over the course of our lives, we visit museums, read books, watch television, hear music, eat at restaurants – we’re constantly learning from the world around us, in ways that would be impossible to fully acknowledge. A painter might include a flourish that was inspired by a picture they saw in childhood and no longer consciously remember.

This collaborative debt is more obvious among AI algorithms. These algorithms need fuel: their meticulously-tagged sets of training images. The algorithms generate new images of only the sort that they’ve been fed.

It’s the story of a worker being simultaneously laid off and asked to train their replacement.

Unfortunately for human artists, our world is already awash in beautiful images. Obviously, I’m not saying that we need no more art! I’m a writer, in a world that’s already so full of books! The problem, instead, is that the AI algorithms have ample training sets. Even if, hypothetically, these algorithms instantly drove every other artist out of business, or made all working artists so nervous that human artists refused for any more of their work to be digitized, there’s still an enormous library of existing art for the AI algorithms to train on.

After hundreds of years of collecting beautiful paintings in museums, it would take a hefty dollop of hubris to imagine immediate stagnation if the algorithms lacked access to new human-generated paintings.

Also, it wouldn’t be insurmountable to program something akin to “creativity” in the algorithms – an element of randomness to allow the algorithm to deviate from trends in its training set. This would put more emphasis on a user’s curatorial judgment, but also lets the algorithms innovate. Presumably most of the random deviations would look bad to me, but that’s often the way with innovation – impressionism, cubism, and other movements looked bad to many people at the beginning. (Honestly, I still don’t like much impressionism.)

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There’s no reason to expect a brain made of salty fat to have incomparable powers. Our thoughts don’t come from anything spooky like quantum mechanics – neurons are much too big to persist in superpositions. Instead, we humans are so clever because we have a huge number of neurons interconnected in complex ways. We’re pretty special, but we’re not magical.

Eventually, a brain made of circuits could do anything that we humans can.

That’s a crucial long-run flaw of capitalism – eventually, the labor efforts of all biological organisms will be replaceable, so all available income could be allocated to capital owners instead of labor producers.

In a world of physician-bots, instead of ten medical doctors each earning a salary, the owner of ten RoboMD units would keep all the money.

We’re still a ways off from RoboMD entering the market, but this is a matter of engineering. AI algorithms can already write legal contracts, do sports journalism, drive cars & trucks, create award-winning visual images – there’s no reason to believe that an AI could never treat illnesses as well as a human doctor, clean floors as well as a human janitor, write code as well as a human programmer.

In the long run, all our work could be done by machines. Human work will be unnecessary. Within the logic of capitalism, our income should drop to zero.

Within the logic of capitalism, only the owners of algorithms should earn any money in the long-run. (And in the very long run, only the single owner of the best algorithms should earn any money, with all other entities left with nothing.)

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Admittedly, it seems sad for visual artists – many of whom might not have nuanced economics backgrounds – to be among the people who experience the real-world demonstration of this principle first.

It probably feels like a very minor consolation to them, knowing that AI algorithms will eventually be able to do your job, too. When kids play HORSE, nobody wants to be out first.

But also, we have a choice. Kids choose whether or not to play HORSE, and they choose what rules they’ll play by. We (collectively) get to choose whether our world will be like this.

I’m not even that creative, and I can certainly imagine worlds in which, even after the advent of AI, human artists still get to do their work, and eat.

On ‘The Dawn of Everything’ and the Future.

On ‘The Dawn of Everything’ and the Future.

Farmers conquered the world.

Not that many of us farm. Modern technologies allow us all to be fed even though less than 1% of the population still does the actual work of farming. But the food we eat comes from farms. Without farms, we couldn’t live as we do.

Indeed, the material luxuries of the modern world would make this place seem like a paradise to our ancestors. So much food, so easily procured! Soft warm clothes – you can buy great digs at Goodwill for a few dollars. Oracular pocket computers – my telephone can prophesize way better than ancient gods. I know when it’s going to rain. I know if the rain will be stopping in 35 minutes.

We have indoor plumbing, hot showers, scented candles – that’s awesome! Think about it: Victorian cities smelled so bad!

I mean, sure – with climate change and rising sea levels, sewers in places like New York City will back up more frequently, and I’ll get to that. But first, let’s take a moment to be grateful: the stuff we have access to is pretty incredible. All our technologies and toys.

Wow.

Farmers really nailed it, didn’t they?

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But before we reached our fabulous present (please continue to suspend your disbelief for a little longer; I understand that the present moment in history feels decidedly less than fabulous for many people), something strange had to happen.

Hunter-gatherers lived pretty well. They ate good food. They spent ample time socializing and relaxing. As best we can tell, their lives had a lot of potential for happiness.

By way of contrast, it was the pits to be an early farmer! You’d work all day; eat crummy food that left you gassy and bloated; die young. Also, you’d feel small – instead of believing that you were probably just as good as anyone else, you’d know that there were kings and such who lived way better than you.

Every now and then, their ruffians might come calling and haul away your food.

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Just like the recently deposed leader of the United States, ancient kings were big on building walls. But there’s a difference. Because it was so miserable to be an early farmer – a cog in the gearworks of a glorious civilization! – early walls may have been built to keep people in.

In Against the Grain, James Scott writes of early states that, “Do what they might to discourage and punish flight – and the earliest legal codes are filled with such injunctions – archaic states lacked the means to prevent a certain degree of [population loss] under normal circumstances. … For China’s Mongol frontier, Owen Lattimore has made the case most forcefully that the purpose of the Great Wall(s) was as much to keep the Chinese taxpayers inside as to block barbarian incursions. … Precisely because this practice of going over to the barbarians flies directly in the face of civilization’s “just so” story, it is not a story one will find in the court chronicles and official histories. It is subversive in the most profound sense.”

The hunter gatherers had been happy, though! So how did we get from there to here? If early farming was so miserable, why did people do it?

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In The Dawn of Everything, David Graeber and David Wengrow argue that a select few prehistoric farming communities were less miserable than the rest. Their arguments are based on sparse archaeological data – in the essay “Digging for Utopia,” Kwame Anthony Appiah presents several examples in which Graeber & Wengrow’s interpretations extend beyond the evidence – and yet, their central conclusion is almost certainly correct.

Many, many groups of humans formed distinct communities over the past ten thousand years. That’s a long time. These people didn’t have access to all the historical knowledge that we have, but they were no less intelligent or imaginative than we are. It would be naive to imagine that every single community followed the exact same political system.

Although Appiah’s review ends with a great line – “Never mind the dawn, Rousseau was urging: we will not find our future in our past” – I agree with Graeber & Wengrow that there’s benefit from showing that cooperation and mutual aid were the underpinnings of successful civilizations in the past. We needn’t be shackled by the choices of our ancestors, but it’s still nice to feel inspired by them. Even one single example of a stable ancient civilization organized around mutual aid would give credence to the idea that a radical reworking of contemporary civilization isn’t doomed to failure.

If prehistoric people did have a variety of political systems, though – some happy, some oppressive – why did we end up with a bad version?

Graeber & Wengrow write:

When people talk about ‘early civilizations’ they are mostly referring to [societies like] Pharaonic Egypt, Inca Peru, Aztec Mexico, Han China, Imperial Rome, ancient Greece, or others of a certain scale and monumentality.

All these were deeply stratified societies, held together mostly by authoritarian government, violence, and the radical subordination of women. Sacrifice, as we’ve seen, is the shadow lurking behind this concept of civilization: the sacrifice of our three basic freedoms, and of life itself, for the sake of something always out of reach – whether that be an ideal or world order, the Mandate of Heaven or blessings from insatiable gods.

Is it any wonder that in some circles the very idea of ‘civilization’ has fallen into disrepute? Something very basic has gone wrong here.

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Presumably, some ancient cultures prioritized happiness (cooperation, sharing, art), while others prioritized growth (acquisition, extraction, war, and work).

I would rather live in the former sort; I assume most people, if given the chance to experience both, would make a similar choice. (Graeber & Wengrow include several examples of well-educated people who experienced both self-interested European-style capitalism and cooperative “savagery” preferring the latter. “By far the most common reasons … had to do with the intensity of social bonds they experienced in Native American communities: qualities of mutual care, love and above all happiness, which they found impossible to replicate once back in European settings. ‘Security’ takes many forms. There is the security of knowing one has a statistically smaller chance of getting shot with an arrow. And then there’s the security of knowing that there are people in the world who will care deeply if one is.”)

But the borders of a political system that prioritizes growth will steadily expand if able. Whenever there’s a meeting between a growth-valuing and a happiness-valuing society, the former is likely to attempt to commandeer the land and resources that had been used to support the latter.

North America was populated before Europeans arrived. The land was intensely managed: Graeber and Wengrow write that “What to a settler’s eye seemed savage, untouched wilderness usually turns out to be landscapes actively managed by indigenous populations for thousands of years through controlled burning, weeding, coppicing, fertilizing and pruning, terracing estuarine plots to extend the habitat of particular wild flora, building clam gardens in intertidal zones to enhance the reproduction of shellfish, creating weirs to catch salmon, bass and sturgeon, and so on. Such procedures were often labour-intensive, and regulated by indigenous laws governing who could access groves, swamps, root beds, grasslands and fishing grounds, and who was entitled to exploit what species at any given time of year.”

But the land was being managed according to ideals other than maximum short-term agricultural extraction and population growth. The original human inhabitants of this continent believed that it would be both morally and ethically wrong to extract everything possible from their surroundings – future generations and other animals also held valid claims to the land – and so their civilizations sought to thrive sustainably amid natural abundance.

When Europeans first arrived in North America, as Matt Siegel relates in The Secret History of Food, people “described great migrations of birds so numerous they were forced to roost on top of each other, downing giant oaks from their weight and covering the forest in four inches of droppings. John Audubon later described flocks so dense they eclipsed the sun, and estimated seeing more than a billion pigeons in a three-hour span.”

Despite this well-managed abundance, many Europeans still starved to death when they first arrived on this continent. They starved “not because of a lack of food, but because of a lack of skill and acquiring it. In unwillingness to heed the advice of the Natives, whom they saw as ‘uncivilized savages.’ Pilgrim John Smith recounts, for example, coming across waters so thick with fish that their heads stuck out above the water, but being unable to catch any for want of nets. ‘We attempted to catch them with a frying pan,’ he writes, ‘but we found it a bad instrument to catch fish with.’ ”

This sort of extravagant abundance is now gone, because the encroaching civilization prioritized extraction. Enough of the Europeans survived to gain a foothold on this continent, after which natural resources would not be managed, but consumed.

The rivers were sullied; the great flocks of birds were killed.

(The other day, my family was driving near a highway where a flock of perhaps a thousand starlings swelled and tumbled through the air – it looked magical. I cannot imagine what a flock of a billion birds would be like.)

#

The standard measure of our economy – the single magical number cited by politicians and talking heads to let us regular TV-watching folks know how our country is doing – is “growth.”

This magic number doesn’t assess how much we have – although politicians occasionally mention “per capita income” or “per capita output,” which could be rough proxies for that, as long as you neglect our slight (ha!) disparities in distribution – nor how happy we are. Instead, we boast or fret over the rate of increase.

But there’s a limit to growth. I loved the game Universal Paperclip, which I’ve discussed previously, because it elegantly depicts what goes wrong when we attempt ceaseless expansion.

We could prioritize something else – happiness, perhaps – but that would require a massive cultural shift. The ideals of growth are ingrained on both sides of our current political spectrum.

In On Freedom, Maggie Nelson discusses climate change and the conflict it presents: the freedom to do what we want now (chop down forests; extract & burn fossil fuels) versus our descendants having the freedom to do what they want later (visit old-growth forests; encounter wild animals; have a stable climate; survive). We now know that we can’t both have these untrammeled freedoms. Someone – either us or our descendants – has to make sacrifices.

Nelson discusses Naomi Klein’s interactions with people who are unwilling to change their current lifestyle: those who demand the freedom to eat lots of meat, crank their air conditioning, purchase & dispose of whatever plastic products they want.

Those people “are right, Klein says, when they say that climate change isn’t really an ‘issue.’ Rather, she says, ‘climate change is a message, one that is telling us that many of our culture’s most cherished ideals are no longer viable.’

These ideals – shared by people on both the right and left, Klein explains – involve a paradigm of civilization based on progress and expansion rather than one based on an apprehension of and respect for natural limits, including the limits of human intelligence, and the material, planetary parameters that make human life possible.”

But it does no good for you to personally refrain from extracting & burning fossil fuels if someone else goes ahead and does it. Our planet is interconnected: the politics of Brazil will affect us all. Clever people are prioritizing growth and expansion.

In The Beginning of Infinity, David Deutsch argues that the Earth was already a poor habitat for humanity; if climate change makes our planet less habitable, so be it. He believes that there’s no limit to the growth of knowledge – or, therefore, to the economic growth possible for a knowledge-bearing civilization – so why should we slow down now?

(Despite his background in physics, Deutsch ignores the hard limit imposed by entropy – all processes in our universe consume order and excrete chaos, There will be no possibility for further action – not even thought – once the initial order has been consumed. Believe me, I’m all for scientific research: if the lifespan of our sun is compressed into a twenty-four hour day, the current time is about 10:58 a.m., humans have been around since about 10:57 a.m., and the sun will become too hot and evaporate all our water by 7:36 p.m. For humanity to carry on, our descendants will have to find a way to leave this planet by then – but humanity won’t carry on infinitely. And we’ll be unlikely to carry on at all if we recklessly wreck the planet before 11 a.m. instead of giving ourselves the full day to work on solutions!)

If a subset of our population agrees with Nelson & Klein, and another subset agrees with Deutsch, those who agree with Deutsch will win – win, that is, in the sense of having done what they want to the world. Sprinting ahead during the first minute of what’s likely to be an eight-hour long marathon, overheating, and expiring at the side of the road.

As a running coach, that’s something I generally counsel people not to do.

#

Europeans arrived on North America. They prioritized growth. They took land from the previous inhabitants.

The vast flocks of pigeons are gone.

#

In The Dawn of Everything, Graeber & Wengrow make a persuasive case that many cultures intentionally avoided the emergence of severe inequality or permanent bureaucracy. “Sometimes indigenous property systems formed the basis for differential access to resources, with the result that something like social classes emerged. Usually, though, this did not happen, because people made sure that it didn’t, much as they made sure chiefs did not develop coercive power.”

Mutual aid and cooperation were intentional goals around which societies were structured.

Unfortunately, although this sort of political structure might be good at producing happiness, it’s inefficient. I volunteer with several organizations that operate on the principle of consensus decision-making; these deliberations can be quite arduous!

Over time, the cultures with more efficient political systems are likely to grow faster – even if they’re less happy – and gradually displace the others. This is the same logic of invasive species: the plants labeled as “invasive” in any habitat tend to begin their growing season earlier and spread more easily, allowing them to replace whatever had been there before.

Capitalism has a lot of flaws, and unfettered capitalism can certainly get stuck with massive inefficiencies through monopoly power or the like, but capitalism is typically more efficient than mutual aid.

Graeber and Wengrow write that:

Both money and administration are based on similar principles of interpersonal equivalence. What we wish to emphasize is how frequently the most violent inequalities seem to arise from such fictions of legal equality.

This equality could be viewed as making people (as well as things) interchangeable, which in turn allowed rulers to make impersonal demands that took no consideration of their subjects’ unique situations.

As anyone knows who has spent time in a rural community, or serving on a municipal or parish council, resolving inequities might require many hours, possibly days of tedious discussion, but almost always a solution will be arrived at that no one finds entirely unfair.

It’s the addition of sovereign power, and the resulting ability of the local enforcer to say, ‘Rules are rules; I don’t want to hear about it’ that allows bureaucratic mechanisms to become genuinely monstrous.

As money is to promises, we might say, state bureaucracy is to the principle of care: in each case we find one of the most fundamental building blocks of social life corrupted by a confluence of maths and violence.

#

I would have preferred for Graeber and Wengrow to continue this discussion of efficiency, which helps explain why we inherited a political system that produces less happiness than the cultures of many of our ancestors.

Hunting and gathering yielded ample calories for ancient humans to build stable, complex societies. But in these societies, little would have been interchangeable; people might engage in different activities each day, each season, each year. The food they ate might vary considerably from one day to the next.

(In Against the Grain, Scott writes “Evidence for the relative restriction and impoverishment of early farmers’ diets comes largely from comparisons of skeletal remains of farmers with those of hunter-gatherers living nearby at the same time. The hunter-gatherers were several inches taller on average. This presumably reflected their more varied and abundant diet. It would be hard … to exaggerate that variety. Not only might it span several food webs – marine, wetland, forest, savanna, arid – each with its seasonal variation, but even when it came to plant foods, the diversity was, by agricultural standards, staggering. The archaeological site of Abu Hureyra, for example, in its hunter-gatherer phase, yielded remains from 192 different plants, of which 142 could be identified, and of which 118 are known to be consumed by contemporary hunter-gatherers.”)

Farming produces equivalence. A farmer can specialize in a small set of actions, raising a small set of plants and animals. Bushels of wheat can be easily measured. There are definite losses in terms of health, happiness, and leisure time, but farming makes political organization more efficient.

Indiana’s forests are filling up with garlic mustard, not because it’s the best plant, but because it grows efficiently.

#

Among the superpowers of the modern world, some have vaguely democratic political systems (although perhaps it’s foolish to lump plutocratic representational systems like the U.S. into this category), and some use dictatorship (like China).

I’ve read a lot of opinion pieces suggesting that the Chinese political system can’t succeed over the long run because it stifles creativity; for instance, an article in the Harvard Business Review titled “Why China Can’t Innovate” claims that Ph.D. students in China receive an inadequate training because “the governance structures of China’s state-owned universities still leaves too many decisions to too few people.”

In the long-run, yes, free societies can produce more creative solutions to their problems. Graeber and Wengrow present compelling evidence that the indigenous free peoples of North America created a much greater variety of political systems than the oppressed peoples of Europe.

In the short run, however, dictatorships can be more efficient. (With the obvious possibility that a dictator might decide to do something counterproductive, as Vladimir Putin is demonstrating.)

Civilizations collapse – or devour each other – in the short run.

On work.

On work.

If you’re living in a capitalist society, having money is great! Money gets you space to live! Money gets you food to eat! And if you ever think of something else you want, money lets you buy it! Right now! Wham!

Hooray for money!

Except that the actual process of getting money can be pretty miserable.

Most people get money by finding a job. At the job, somebody will tell them what to do. They do it, they get paid.

The pay, in the United States, tends to be quite low. Working forty hours a week for fifty two weeks a year, the US minimum wage would net you less than twenty thousand dollars. Even if the US minimum wage were lavishly raised to $15 an hour, you’d still only get about thirty thousand dollars a year.

To keep the US economy going, we’ve relied on desperation. If people had other options, they wouldn’t do dangerous, difficult, or demeaning work for so little pay.

Until recently, though, most people felt like they didn’t have other options. And so they took terrible jobs, hoping to scrape by.

Now, things are looking different.

In the US, lots of people chose not to re-enter the post-pandemic labor force. Among people who did return to work, huge numbers have been quitting.

In China, many young people are advocating for cheaper ways of living. Instead of working long hours at an odious job in order to have enough money to buy fancy things, maybe it’d be better to work less and take joy in simpler pleasures. Of course, this is a rather anti-progress sentiment, so references to the “tang ping” or “lie flat” movement have been deleted from the Chinese internet to quell the ideology.

Even among people who are lucky enough to be paid for doing something fun – and, honestly, among the professional classes, a lot of work is fun, lots of tricksy little puzzles to solve – there’s often an imbalance between how much time we spend working and how much time we spend on family or other sources of lasting joy. This is, roughly, the main argument in the essay by New York Times writer Farhad Manjoo, “Even With a Dream Job, You Can Still Be Anti-Work.”

There are lots of ways to find fulfillment in life. And, yes, work can definitely provide that satisfying sensation of having done something worthwhile with your time! Especially if you’re lucky enough to be paid for doing something you love. My spouse loves to teach. Manjoo loves to research big ideas. I love to write!

But the work that many people find themselves doing – trading away their time so that they’ll have enough money to meet their needs – doesn’t feel rewarding. And even a good job can suck up too much time. Caretaking, conversation, art, travel, philosophy, religious practice – these are also excellent avenues to a fulfilling life, except that they don’t draw a salary. Most people aren’t lucky enough to be able to use their time in those ways.

So: work can feel lousy for the people doing the work.

Boo!

And it gets worse. Because there’s another big problem with work: in a capitalist society, much work makes the world worse.

In the US, for instance, our recent economic miracles are advertising companies: Google and Facebook. Their founders have become absurdly rich; a huge number of people have found well-paying, intellectually-stimulating jobs working for these companies. But their money comes from hurting people! Our world would be better off if all those people’s work wasn’t being done.

Very occasionally, advertising benefits a person. An ad might make you aware of something that improves your life! Maybe you’ve always wanted a little automated rake that cleans your cat’s litter box. (I saw an ad for one of those on the YMCA television while I was lifting weights.)

Or maybe you’d like to go out for Indian food, but hadn’t realized there was an Indian restaurant in your home town. Good thing you saw their ad!

But more often, advertising harms us. An effective advertisement instills a sense of absence that some company’s product can supposedly fill. Huge amounts of money are spent creating and distributing ads for beer, for cruise ships, for fast food.

Which people, exactly, do we suppose are unaware of the existence of beer? And would the newfound knowledge help them?

Especially in the face of climate change, our society will have to change. In some fields – manufacturing, advertising, drilling – we need for people to work less. We need for less stuff to be made, used briefly, and shunted off to landfills. The work makes our planet less hospitable.

I used to do biomedical research. I stopped; it seemed that if I did my job well, I too would help wreck our planet. New discoveries are much more likely to yield slight, expensive extensions to the ends of wealthy people’s lives, rather than any additional happiness for the majority of our population.

We already spend inordinate amounts of money on frantic efforts to extend the end of life, even though studies have shown that “the less money spent in this time period, the better the death experience is for the patient.”

This sort of work is good for the economy. But it’s bad for people. Wouldn’t it be nice to live in a world where everyone thought that the latter mattered more?

On Gamestop and counterfeiting.

On Gamestop and counterfeiting.

In high school economics, you may have learned that the Federal Reserve controls the money supply.

When inflation is low, the Fed prints money. They unleash this money by purchasing bonds. When people have more money, they’ll spend it, so inflation rises.

When inflation is too low, the Fed contracts the money supply. They sell bonds. Cash leaves circulation. With fewer dollars in hand, it’s more difficult for people to buy things, and inflation slows.

This is a nice theory. It’s logical and the math works well.

The only flaw is that it isn’t true.

#

The Federal Reserve doesn’t control the money supply – banks do.

If you walk into a bank and apply for a loan, you might expect for them to check how much money they’re holding in deposits, how much money they’ve lent already, whether there’s any more on hand for you to borrow.

That won’t happen. They’ll investigate you, certainly, to assess whether you’re likely to default. But if they like the look of you, you can walk out of there with money.

The bank creates this money. They claim that it exists, and then it does.

I first learned about the distinction between who theoretically controls the money supply (the Federal Reserve!) and who actually controls it (banks!) from economic historian Robert Skidelsky in his book Money and Government.

Skidelsky includes an instructive quote from the investigative report Where Does Money Come From? by Josh Ryan-Collins, Tony Greenham, Richard Werner, and Andrew Jackson:

The theoretical support for deregulation was based on the unrealistic assumptions of neoclassical economics, in which banks are mere intermediaries.

This does not recognize their pivotal role as creators of the money supply.

Since the 1980s, bank credit creation has expanded at a considerably faster rate than GDP, with an increasing amount of bank credit creation channeled into financial transactions. This is unsustainable and costly to society.

As we were taught in high school, increases to the money supply accelerate economic activity.

And our economy is booming. But you might not have noticed. See, banks have been greatly expanding the money supply, but they’ve been injecting all that cash directly into the financial sector.

Investment banks, hedge funds, and the like have been blessed with easy money, and there’s been dramatic inflation in this segment of our economy.

#

Brokerages lend stocks.

This is another way to create money – brokerages might lend more stocks than actually exist. At times, this may be inadvertent – if I own a stock, my brokerage can lend it to someone who’d like to short sell it.

When the short seller puts the stock up for sale – hoping to profit if the stock falls before they’re obliged to return it – someone who uses a different brokerage might buy it.

And then that brokerage might also lend it to a short seller – they have no way of knowing that this particular share has already been lent.

All this lending creates money – with each additional sale, the short seller is pulling the stock’s share price out of thin air, subject only to the contract with the brokerage that a share must be returned later – without anyone necessarily intending to break the law.

#

When I read poetry with guys in jail, they’ll sometimes mention what they’re in for. Not everyone is telling the truth – according to police reports, somewhere near half are there on domestic assault charges, but out of some thousand men I’ve worked with, only three have said they were in on a domestic, and they all told elaborate stories to explain away the charges.

A guy said that his wife was all bruised because he had to resuscitate her from a medical emergency. Another guy told me that he and his girlfriend were “talking loudly,” some neighbor called the cops, and they saw him throw a towel at her. A third said they busted him for domestic violence after all he’d done was chuck a television at the wall (although this guy had been telling me for weeks that he was in on possession of marijuana).

My point being that I’m never quite sure how much credence to give these stories.

Still, I’ve worked with several guys who said they were doing time for increasing the money supply. In practical effect, what they’d done was the same as a bank lending money it doesn’t have – the money supply increases.

Here’s some money that previously didn’t exist, and there will be repercussions if an investigator can prove that it happened.

A guy was printing bills in his basement. Another passed bad checks. Somebody claimed he was there for credit fraud, but I doubt he was busted for the sort of thing the Russian hackers were doing, trawling the internet for unsecured connections – more likely, he’d lifted somebody’s wallet and got nabbed using their cards.

When individuals get caught at this, we bring the hammer down. Bad check guy caught four years (and the prosecutor was originally trying to get him to plea for twelve, he told me).

#

The stock for Gamestop, in and of itself, is worth very little.

The company doesn’t pay a dividend. And the company is failing. They have to pay rent, they have to pay the salaries of living, breathing human employees. They have to maintain an inventory.

They depend on consumers’ willingness to get in the car, drive somewhere, and make eye contact with a living, breathing cashier in order to buy a thing.

But game systems can be bought online. The games themselves can be downloaded. The stylish figurines of people’s favorite characters are cool, and can presumably be sold at a markup in shops since they look more enticing in person than they would as tiny pixelated photos on a telephone screen, but these are heavy and bulky and awkward to ship to the store and keep on the shelves.

I agree with the hedge fund guys who think there’s a high probability that Gamestop was going out of business. That Gamestop might’ve gone under even without the Covid-19 pandemic, and that things look even worse now – the new Gamestop executive’s plans for bringing in money all relied on turning the shops into social spaces, but now nobody’s socializing, and certainly not inside small, poorly ventilated strip mall outlets.

Several hedge funds borrowed lots of shares of Gamestop and sold them, hoping that the price would fall before they were required to return them.

Their positions – short tens of millions of shares of Gamestop – were known. And so people intentionally raised the price of the stock.

The hedge funds were (and possibly still are) contractually obligated to return those shares to the brokerages that they were borrowed from. They’d have to buy shares even if the price became absurd.

So lots of regular people realized they could make a quick buck by buying the shares and then selling them to the hedge fund at a ransom price whenever their loans were up.

#

And, yes, when people drove up the price of Gamestop to grift money out of the short-selling hedge funds, that was collusion. Which would be illegal if done in private, but I don’t think there’s any problem when it’s been done entirely on a public forum.

What the banks and brokerages have been doing – creating money by lending things that don’t exist – isn’t illegal. Perhaps it should be – the practical effect is the same as when somebody starts printing money in their basement – but it isn’t.

#

If the hedge funds are contractually obligated to buy shares of Gamestop, then is this a good bet?

Should you jump in, too?

I don’t think so.

Please note that I’m not a particularly savvy investor – I’ve put my family’s money in Canadian agriculture, air conditioners, coolants, all sorts of things that will presumably accrue value if the planet Earth becomes less hospitable – nor have I studied contract law. I’m a trained economist and reasonably logical thinker, but not an expert.

I do own a single share of Gamestop – I bought it because I appreciated that people wanted to flip off the hedge funds – but, honestly, I don’t have much personal stake in this.

I do think that the financial sector has been creating large, needless drag on our economy. I’m vaguely anti-capitalist. I believe strongly in a global wealth tax and guaranteed basic income. So I’d like for the hedge funds to go bankrupt.

But I don’t think they will.

The hedge funds have contracts, but their contracts aren’t with me – even if they’ve borrowed my share of Gamestop, they didn’t borrow it from me, they borrowed it from my brokerage.

And my brokerage is run by some reasonable people wearing business suits. They know that the Gamestop company itself is troubled. They would probably rather have money than shares of GME.

I think it’s very risky to gamble on a contract between people who aren’t you. The signing parties of the contract could renegotiate it – as a bystander, I can’t influence their negotiations at all.

Still, there’s a chance that some of the short sellers will tank. So although I wouldn’t recommend buying a bunch of shares of GME, it seems prudent to convert some of your retirement savings to cash, just in case the short sellers have to unload a few of their long positions to cover and the prices of those shares fall. You might have a chance to buy other stocks at a discount soon.

Again, I’m not an expert, nor a savvy investor. That’s just what I’m doing.

#

Usually, nobody notices when banks or brokerages create money. We simply assume that they have sufficient holdings to cover whatever they’re lending out.

They often create phantom shares of stocks, and then, when the short sellers resolve their contracts, the phantom shares blip back out of existence, leaving behind only some money – not coins or bills, mind you, but an increased number on a ledger – to indicate that they ever existed.

Account values are like the contrails in a bubble chamber that tell us whether elementary particles briefly existed after a high-energy collision between nuclei.

But Reddit readers’ collusion is causing the contrails to ossify. I don’t have a sell limit set for my single share of Gamestop. Millions of shares are held by people who think short selling ought to be illegal and are planning to let mounting interest payments undermine the hedge funds that were doing it.

#

The turbulence here is obviously unrelated to Gamestop.

The issue isn’t even short sellers – financial markets are obviously irrational, but short selling does push stock prices toward fair valuations for their underlying companies. Which isn’t necessarily helpful, or sufficiently important that we, as a people, should reward the people who do it will millions of dollars.

And the issue isn’t hedge funds.

Rather, it’s whether we want a world that conforms to the fictions we teach in high school economics – the Federal Reserve controls the money supply! – or if we want the world we have now, where guys in my poetry class landed in jail for printing money in their basements but bankers and brokers are rewarded lavishly for printing money in their offices.

I’ve written about this previously, here and here, but the ramifications are much more visible now.

And I should mention that, although I think these behaviors ought to be illegal, I’m not saying that bankers have necessarily done anything wrong.

Brokerages, in this whole mess, presumably weren’t trying to break the law. Each brokerage may have thought they had real shares in hand when they lent them.

But they didn’t.

#

As it happens, we could easily prevent situations like this from arising again.

I have a rather dour view of Bitcoins – they’ve not as anonymous as people think, and the system is incredibly wasteful, creating more greenhouse gases by design than other forms of currency – but blockchain technology would make the stock market less awful.

A blockchain is like a bunch of stickers plastered to the side of a suitcase – it’s an ordered list of where something has been. You could use blockchains to prevent food-borne illness – for each tomato used for ketchup, you could track its journey from fields to processing plants to restaurants. A blockchain is simply a long list of prior addresses.

With shares of stock, you could track whether that share has previously been lent to a short seller, preventing a single share to be lent twice – which is how brokerages inadvertently counterfeit shares – before the first contract has been resolved.

#

The problem, of course, is that people who are currently wealthy benefit from being allowed to create money.

It’s convenient to own a money printer – you get to buy what you want and donate to charities and feel good about yourself.

And it’ll take a bit of work – not much work, as I described above – to shut the money printers down. Still, any effort at all is hard to muster when the people who currently have power would like to keep things as they are.

On money, nursing home care, and Covid-19.

In April, I wrote several essays and articles about our collective response to Covid-19.

I was worried – and am still worried, honestly – that we weren’t making the best choices.

It’s hard not to feel cynical about the reasons why we’ve failed. For instance, our president seems more concerned about minimizing the visibility of disaster than addressing the disaster itself. We didn’t respond until this virus had spread for months, and even now our response has become politicized.

Also, the best plans now would include a stratified response based on risk factor. Much more than seasonal influenza, the risk of serious complications from Covid-19 increases with age. Because we didn’t act until the virus was widespread, eighty-year-olds should be receiving very different recommendations from forty- and fifty-year-olds.

Our national response is being led by an eighty-year-old physician, though, and he might be biased against imposing exceptional burdens on members of his own generation (even when their lives are at stake) and may be less sensitive to the harms that his recommendations have caused younger people.

I’m aware that this sounds prejudiced against older folks. That’s not my intent.

I care about saving lives.

Indeed, throughout April, I was arguing that our limited Covid-19 PCR testing capacity shouldn’t be used at hospitals. These tests were providing useful epidemiological data, but in most cases the results weren’t relevant for treatment. The best therapies for Covid-19 are supportive care – anti-inflammatories, inhalers, rest – delivered as early as possible, before a patient has begun to struggle for breath and further damage their lungs. Medical doctors provided this same care whether a Covid-19 test came back positive or negative.

(Or, they should have. Many patients were simply sent home and told to come back if they felt short of breath. Because they didn’t receive treatment early enough, some of these patients then died.)

Instead, our limited testing capacity should have been used at nursing homes. We should have been testing everyone before they went through the doors of a nursing home, because people in nursing homes are the most vulnerable to this virus.

I realize that it’s an imposition to make people get tested before going in, either for care or to work – even with real-time reverse-transcription PCR, you have to wait about two hours to see the results. But the inconvenience seems worthwhile, because it would save lives.

#

From March 25 until May 10 – at the same time that I was arguing that our limited Covid-19 tests be used at nursing homes instead of hospitals – the state of New York had a policy stating that nursing homes were prohibited from testing people for Covid-19.

I really dislike the phrase “asymptomatic transmission” – it’s both confusing and inaccurate, because viral shedding is itself a symptom – but we knew early on that Covid-19 could be spread by people who felt fine. That’s why we should have been using PCR tests before letting people into nursing homes.

But in New York, nursing homes were “prohibited from requiring a hospitalized resident who is determined medically stable to be tested for COVID-19 prior to admission or readmission.”

This policy caused huge numbers of deaths.

Not only do nursing homes have the highest concentration of vulnerable people, they also have far fewer resources than hospitals with which to keep people safe. Nursing home budgets are smaller. Hallways are narrower. Air circulation is worse. The workers lack protective gear and training in sterile procedure. Nursing home workers are horrendously underpaid.

The low wages of nursing home workers aren’t just unethical, they’re dangerous. A recent study found that higher pay for nursing home workers led to significantly better health outcomes for residents.

This study’s result as described in the New York Times – “if every county increased its minimum wage by 10 percent, there could be 15,000 fewer deaths in nursing homes each year” – is obviously false. But even though the math doesn’t work out, raising the minimum wage is the right thing to do.

If we raised the minimum wage, we probably would have a few years in which fewer people died in nursing homes. But then we’d see just as many deaths.

Humans can’t live forever. With our current quality of care, maybe nursing home residents die at an average age of 85. If we raise the minimum wage, we’ll get better care, and then nursing home residents might die at an average age of 87. After two years, we’d reach a new equilibrium and the death rate would be unchanged from before.

But the raw number here – how many people die each year – isn’t our biggest concern. We want people to be happy, and an increase in the minimum wage would improve lives: both nursing home residents and workers. Which I’m sure that study’s lead author, economist Kristina Ruffini, also believes. The only problem is that things like “happiness” or “quality of life” are hard to quantify.

Especially when you’re dealing with an opposition party that argues that collective action can never improve the world, you have to focus on quantifiable data. Happiness is squishy. A death is unassailable.

Indeed, that’s partly why we’ve gotten our response to Covid-19 wrong. Some things are harder to measure than others. It’s easy to track the number of deaths caused by Covid-19. (Or at least, it should be – our president is still understating the numbers.)

It’s much harder to track the lives lost to fear, to domestic violence, and to despair (no link for this one – suddenly Fox News cares about “deaths of despair,” only because they dislike the shutdown even more than they dislike poor people).  It’s hard to put a number on the value of 60 million young people’s education.

But we can’t discount the parts of our lives that are hard to measure – often, they’re the most important.

On currency, again

On currency, again

At the beginning of our poetry class in jail, I walked around the room to give the printed poems to people.  I noticed that somebody was working on an elaborate Valentine’s Day card.  (The date was February 28th.)

“Oh, cool,” I said, “did you draw that?”

“Naw,” he said.  “I commissioned it and all, though.  Designed it.  Cost me two Honey Buns.  Check it out.”

He waved me in to see the card up close.  The front had a red rose with marijuana leaves sprouting from its stem.  The poem he’d written inside began:

Roses are red,

Violets are blue,

If you were a blunt

I’d smoke you too …  

“Cost me two Honey Buns each time,” he said.  “They shredded my first.  I mailed it out, but they said I addressed it wrong, said I wasn’t, what’s that thing, no money on your books … ?”

“Indigent mail,” somebody told him.

“Yeah, said I wasn’t indigent, so they shredded it.  Now I’ve gotta send another one.”

#

Another time, somebody explained the booms and busts of the economy in jail. 

In the world at large, the business cycle typically lasts about five to seven years – the economy will rhythmically surge and then contract.  This is bad news for the unlucky cohorts who begin their careers during the cyclical recessions – these people typically have lower earnings over their entire lifetimes – but because the cycles are so predictable, central banks are supposed mitigate the downswings.

The Forces of the Business Cycle. From _Some problems in current economics_ by Malcolm Churchill Rorty, AW Shaw Company, 1922.

In jail, the business cycle lasts a week.

“We get commissary on Friday, so every Friday, people have coffee again, we all drink too much.  People pay off their debts … or you get an asshole who racked up a bunch of debt then goes to seg on Thursday, tells the guards he’s hearing voices.”

“But near the end of the week, Wednesday or something, people are running out, so coffee gets more expensive.  You got to pay a bunch of interest if you’re trying to get coffee from somebody.”

“Worst is you get here near the end of a week.  Cause even if somebody puts money on your books, it’ll take a while before they add your name to the list and you can get commissary.  So you’re getting everything on credit, people bleed you dry.”

#

In Money and Government, Robert Skidelisky addresses common misconceptions about the economy.

Many people are aware that the central bank has a mandate to “control inflation.”  This is very important to political donors – low inflation benefits people who already have wealth, at the expense of current workers.

But most people – including professional economists – think that the central bank controls inflation by manipulating the money supply.  This misconception might be a holdover from ancient history.  Long ago, only sovereigns could create money.  Kings and pretenders would mint coins as a way to flaunt their power.  And they’d unleash their full wrath upon interlopers.

The central bank is a little different.

If there’s too much money, which would cause prices to rise, the central bank is supposed to yank money out of the economy by selling bonds.  If there is too little money, the central bank is supposed to print more.

The central bank attempts to control the money supply this way.

At the same time, other banks are lending money.  If you decide to buy a house, you won’t call up the federal reserve – you’ll probably visit a few banks around town and apply for a mortgage.

Because most money doesn’t exist – it’s just a tally of credits and debits maintained on a server somewhere – a bank that gives you a loan is creating money. Modern banks don’t actually check whether they have money before they lend it to you.

Skidelsky includes a quote from Where Does Money Come From? by Ryan-Collins et al.:

The theoretical support for deregulation was based on the unrealistic assumptions of neoclassical economics, in which banks are mere intermediaries.  This does not recognize their pivotal role as creators of the money supply.

Since the 1980s, bank credit creation has expanded at a considerably faster rate than GDP, with an increasing amount of bank credit creation channeled into financial transactions.  This is unsustainable and costly to society.

Inflation has stayed low, because the amount of money available for purchasing real things hasn’t grown much.  Low inflation means that if people took on debt to go to college, that debt is often still hanging over them years later – inflation would make it easier to clear debt, because employers would respond to inflation by raising salaries.  The amount of debt relative to a week’s pay would fall.

Instead, the money supply in only one corner of our economy has ballooned, producing a flurry of destructive activity in the financial sector.

This has been lucrative for people willing to work in finance, though.

Skidelsky explains that:

The economic collapse of 2008-2009 showed that monetary policy directed to the single aim of price stability was not enough either to maintain economic stability or to restore it.  The economy collapsed, though the price level was stable.

Preventing a collapse in the money supply was to be achieved by what was euphemistically called ‘unconventional’ monetary policy: pump enough cash into the economy and the extra spending it produced would soon lift it out of the doldrums.

As it happens, the method that the central bank chose to inject money into the economy was perversely ineffectual.  The central bank gave money to wealthy people.

One strategy was “quantitative easing.”  The central bank paid people above-market-rate for low-quality financial assets. 

This helped the people who owned these particular low-quality financial assets – typically foolish wealthy people.  They should’ve lost a bunch of money.  They’d bought junk! But they didn’t, because the central bank stepped in to save the day.

Our central bank also fulfilled a small set of private companies’ insurance policies.  The corporations who bought absurd insurance from AIG should have lost all their money when AIG, unsurprisingly, was unable to fulfill their policies. 

If you’re in a high school cafeteria and somebody says, “I bet you a million dollars that …”, you shouldn’t expect the kid to pay up for losing the bet.  But our central bank intervened, giving huge amounts of money to destructive corporations like Goldman Sachs, because it wouldn’t be fair for them to win a bet and then not get the money (even though they’d been betting with a kid who obviously didn’t have a million dollars to pay). 

CODEPINK protests the AIG bailout bonuses in Los Angeles, 2009.

And yet, these tactics didn’t stave off financial recession.  Since the central bank only gave money to wealthy people, these recipients of our government’s largess had no incentive to actually spend the money. 

The main effect of the central bank’s reliance on “portfolio rebalancing” to boost output was to boost the portfolios of the wealthy, with minimal effects on output.  One doesn’t need headwinds to explain why.

#

“There’s a lot you can get in jail.  There were a couple years when people had all this spice, but they cracked down on that.  Still, you can get a blowjob for a couple Honey Buns, some guys will give you a stick for a soup … “

“What’s a stick?” I asked.  My initial assumptions were that it was either something sexual or drug-related, both of which turned out to be wrong.  A single soup would be pretty low to pay for drugs – soups are worth less than Honey Buns.

“Hey, ________, show him.”

A guy pulled down the front of his orange jumpsuit.  In gothic letters arcing across his chest, he had the words “WHITE TRASH.”  The skin around the letters was an agitated red.

“People think you need pens and ink for tats,” somebody said, “but most guys just use a staple and some burnt hair grease … “

The most popular black pigment for oil paints and acrylics is made of charred animal bones.  The calcium phosphate from bones is pale – the deep black color comes from carbon.  When you burn organic material, you’ll make buckyballs – small spheres of carbon like hollow soccer balls – as well as tubes of graphite.  And these molecules have high absorption across the visible spectrum.

Image of carbon allotropes by Michael Ströck.

Whenever a photon of visible light hits one of these molecules, the light is absorbed.  This causes an electronic transition.  But then the physical shape of the molecule doesn’t match its electronic structure, so the molecule begins to vibrate. 

By the time the molecule collapses back to its initial electronic structure – which ejects a photon – some of the energy that the molecule absorbed has been used up by vibrations.  So the outgoing photon will have lower energy.  It’ll be “infrared radiation,” which we can’t see.  So, colored light goes in, and then invisible light comes out – to us, it looks black.

Still, I hadn’t considered that you could burn the gunk that gathers on unwashed hair in order to make tattoo ink. Despite the brutal efforts of our government, people find ways to live even while incarcerated.

As in the world at large, many transactions in jail are made with hard currency.  If something costs a Honey Bun and two soups, you might be expected to hand over the food.  Sometimes, currency actually exists.

But people can create money, too. 

“Thanks, I owe you one.”

With those words, we gain the power of medieval kings.

.

Featured image by Andrew Magill on Flickr.

On currency

On currency

The value of money is a useful fiction.

As with most fictions, the story that we tell about money helps some people more than others. 

Money, in and of itself, is useless.  Gold, cowry shells, slips of paper with pictures of dead presidents.  The story makes us want these things.  We tell ourselves that these items can “hold value.”  Instead of lumbering about with all the goods we want to barter, we can carry a small purse of coins.  As long as everyone believes the same fiction, we can trade our apples for some coins, then later use those coins to pay someone to help us dig a well.

The story that money has value is most helpful for the people who already have money.

If everyone suddenly woke up from the story, and decided that coins were worthless, the people who grow apples would be okay.  In some ways, it’s less practical to pay people with apples – coins don’t bruise or rot – but it can be done.  Similarly, the people who dig wells would be okay. 

But the people who owned coins would be worse off – previously, the things they owned could be traded for other, inherently useful goods.  And people who had made loans would be much worse off – they would have given away money at a time when it could be used to buy things, and when they receive the coins back, they’ll be worthless.  No recompense for past sacrifice – only loss.

So people with current wealth benefit most from the fiction that money has value.

This is, as far as I can tell, the only real virtue of Bitcoins.  This form of currency is not anonymous – indeed, it works through the use of “blockchains,” a permanent ledger that records everyone who has ever owned a particular piece of money.  Bitcoins are a little like dollar bills where you have to sign your name on it in order to spend it.  And they’re excruciatingly bad for the environment – it takes energy to mint a real-world, metal coin, but nothing like the amount of energy that’s constantly wasted in order to verify the ledgers of who owns which Bitcoin.  Ownership is determined by vote, and the system was designed to be intentionally inefficient so that it’s difficult for one person to overwhelm the system and claim ownership of everybody’s coins.  And it’s unstable – it’s difficult for someone to outvote the system and take control, but not impossible.

Those all seem like bad features.  But Bitcoins are now incredibly valuable – in the years since I explained all these flaws to a high school runner who’d begun investing in Bitcoins, his $500 investment has burgeoned to be worth $24,000.

The only “good” feature of Bitcoins is that the system is designed to reward past wealth.  The total money supply approaches an asymptote – new Bitcoins are added to the system more slowly over time.  If the currency is successful, this will impose a deflationary pressure on prices.  Today, a certain amount of heroin might cost 0.1 Bitcoin – in the future, that same amount of heroin might cost 0.01 Bitcoin.

This deflationary pressure would cause the value of current holdings to increase.  By simply buying Bitcoins and hoarding them, you’d gain wealth! 

But this only works for as long as people keep believing the fiction that Bitcoins have value.  And the more people who buy and hold Bitcoins, as opposed to actively using them as currency, the less believable the story will be.  Anyone who “invests” in Bitcoins is wagering that other people will behave in a way that maintains the fiction, even though the person who is making the wager is actively undermining the story.

When we immerse ourselves in stories, we often need to temporarily suspend our disbelieve, but that particular set of mental gymnastics is too twisty for my mind.

Modern money barely exists.  Before, we spun stories about the value of coins – now, the fiction lends value to certain strings of numbers.  In addition to the Federal Reserve, any bank can create money by making a loan and claiming that a certain amount of currency has been added to one account or another.

This has allowed our fictions to become more intricate.  In 2008, the banking crisis threatened to make wealthy people much less wealthy – they had purchased certain financial assets that seemed valuable, and then these assets turned out to be worthless. 

It’s as though there was a certain new Magic card that everyone assumed was great, and a few rich kids bought all the copies of it, but then people finally read the card and realized it was terrible.  Now these rich kids are holding hundreds of copies of a worthless piece of cardboard.

This would be sad for those rich kids.  But, lo and behold, it was fixable!  If everyone can be forced to believe, again, that the item has value, then it will.  The story needs to be chanted more loudly.  If I paid $50 for this card last week, then it’s still worth at least $50!

That’s what “quantitative easing” was – governments around the world agreed to buy worthless items in order to convince everyone that these items had value.  This way, the wealthy people who had initially bought them wouldn’t have to suffer.

In the years since I’ve been teaching in our local county jail, I’ve struggled to comprehend the disparities between the way we treat poor people and wealthy people who made mistakes.

For instance, stock traders stole $60 billion from state governments across Europe – the trick was to have two people both temporarily own the stock around tax time, then they lie to the government and claim that they both had to pay taxes on it.  Only one set of taxes were actually paid, but they lie and claim two rebates.  Money from nothing!

From David Segal’s New York Times article:

A lawyer who worked at the firm Dr. Berger founded in 2010, and who under German law can’t be identified by the news media, described for the Bonn court a memorable meeting at the office.

Sensitive types, Dr. Berger told his underlings that day, should find other jobs.

“Whoever has a problem with the fact that because of our work there are fewer kindergartens being built,” Dr. Berger reportedly said, “here’s the door.”

They stole billions of dollars, and the question at stake isn’t whether they will be punished, but whether they can be forced to return any of the money. 

By way of contrast, many of the guys in jail are there for stealing $10 or so.  A guy did five months for attempting to use my HSA card to buy two sandwiches and a pack of cigarettes.  Another violated probation when he stole a lemonade – “In my defense,” he told me, “I didn’t even mean to steal it, I was just really fucking high at the time.”

Two weeks ago, a dentist visited the jail during my class.  I go in from 4:00 p.m. to 5:30 – at about 4:15, a guard came to the door and barked somebody’s name.

“Med call?” somebody asked.

“Shakedown?” asked another.

The guard looked at the sheet of paper in his hand, then said “Dentist.”  And suddenly six guys started clamoring, “You got time for extras?  I gotta get on that list!” 

The man whose name had been called jumped out of his chair and sauntered to the door.

After he’d left, the guys explained the system.  “You can get dental, like real dental, but you have to put your name on the list and they only come like every five, six months.  So there’s no hope unless you’re gonna be here for a while.  And it’s kinda expensive, you pay like fifty for the visit and another ten for each tooth they pull.”

Apparently that’s the only service – pulling teeth.

“They do good work,” said the older man next to me, “I got these bottom two done here.”  And he tilted his head back and opened his mouth.  But I grew up wealthy – it’s hard for me to assess quality by eyeballing the blank gap between somebody’s teeth.

About twenty minutes later, the guy came back.

“Which ones you have them do?” somebody asked him.

“I had ‘em get these bottom three,” he said, although his voice was slurry because they’d loaded his mouth with novacaine.

“You idiot!  You didn’t have them get the top one?”

“No, man, that’s my smile!  Gonna find a way to save that tooth.”

“Man, see, how come I couldn’t be on that list?  I would’ve had ‘em pull a whole bunch of ‘em out.  Wouldn’t give ‘em no that’s my smile bullshit.”

As it happens, I’d gone in for a cleaning at my dentist just the day before.  And I’ve had braces.  Invisalign.  I suddenly felt rather self-conscious about my own perfectly clean, perfectly straight, perfectly intact teeth.

“So who was it, that lady doctor?”

“Naw, was the Black guy.”

“What?  Fuck’s it matter that he’s Black?”

“Nobody said it matters, it’s just, there’s three dentists, there’s the lady doctor, the Black guy, and then that other guy.  There’s just three, is all.”

“Oh.”

Our man was out eighty dollars after the visit.  Could’ve spent ninety, but he was holding out hope for that last one.  And they didn’t let him keep the teeth. 

I’m not sure the tooth fairy ever visits the county jail, anyway.

On auctions, politics, quantum computing, and waste.

On auctions, politics, quantum computing, and waste.

I recently played the board game Fists of Dragonstone.  It was fun – the premise is that each turn a spell is revealed and players will make a simultaneous, secret bid to acquire its effect.  The spells might earn victory points, increase your future income, or help you thwart other players’ plans.

Each turn felt tense because Fists of Dragonstone uses “all pay” auctions.  If you bid two dollars, you’ll lose this money whether or not you get the prize you wanted.  This type of auction is a slippery beast – inherently stressful in the real world, but psychologically compelling within the safe confines of a game.

Fists of Dragonstone. Image by hal_99 on Flickr.

When most people think of auctions, they imagine the type that eBay uses – only the winner pays, and the amount paid is equal to the second-highest bid.  In this type of auction, you ought to state your intentions honestly.  If you would get $15 worth of joy from owning an item, you should bid $15 – you’ll either get to have it for that amount of money (or less), or else learn that someone else values the item more.

If we didn’t have such rampant wealth & income inequality, this type of auction would arguably improve the world.  Objects would wind up in the hands of whomever valued them most, boosting overall happiness.

In practice, of course, things don’t work out so well.  Some people have access to far more money than others.  Even if a wealthy person estimates that a blanket would provide $60 of happiness, and a poor person estimates that the same blanket would provide $10 of happiness, it might be that the poor person would actually get more happiness from the blanket.  Inequality means that there’s no universal way to convert between money and joy, but the marketplace treats all our dollars the same.

Image by Todd Huffman on Flickr.

In a board game, you can address inequality by doling out the same set of initial resources to each player.  But the standard auction type – which rewards honest valuation – wouldn’t be much fun.  Everyone should value each item equivalently, and so the game is reduced to a puzzle.  It might be fun to solve once, but there wouldn’t be a reason to play again.

In an “all pay” auction, though, you benefit by being unpredictable.  Because you lose your bid whether or not you win the auction, you should often bid zero even if there’s an item you’d like.  You’re throwing away money if you make a non-zero bid but someone else bids higher.

You could still attempt to “solve” this sort of game, but the optimal solution invokes random behavior.  You should make a bid somewhere between zero and your true valuation, with a certain probability assigned to each.  That’s what a robot would do.

Most humans are pretty terrible at doing things that are actually random, though.  When we try to create a fake list of outcomes from a set of coin flips, for instance, we usually hew to an alternating pattern of heads and tails.

Since we’re bad at making random choices – and we know that other players are bad at it too – we fall back on misguided psychological reasoning.  She bid nothing the last two rounds, so maybe I can sneakily win this next auction with a $1 bid!  We get to feel clever when our stratagems succeed.  We get to curse when they fail.  All much more fun than the honest appraisal encouraged by auctions in which only the winner pays!

In the real world, though, an “all pay” auction is a recipe for waste.

This type of auction is a good proxy for many types of adversarial encounters.  Political contests, computer security, sporting events.  Even restaurant management, if people have a discrete budget set aside for eating out and are simply choosing which establishment to frequent. 

In each of these situations, every player has to pay – to run for political office, you invest years of your life and spend a whole bunch of money on advertisements.  It’s not as though you get that time or money back when you lose.  All players spend their total bids, but only one gets the prize of elected office.

Contemporary political campaigns are incredibly expensive.  So many people have already devoted years of their lives to the 2020 presidential campaign.  The efforts of the losing side will have been wasted.  Because major platforms are willing to air totally fraudulent advertisements, candidates have little chance of victory if they spend much less than their opponents.

Sure, sometimes people will console themselves with the thought that “We may not have won the election, but we changed the tenor of political discourse!”   In our country, this is a fantasy.  U.S. politics is sufficiently polarized that the winners rarely concern themselves with the expressed desires of the losing side.  Two of our past three presidents lost the popular vote and still proceeded with their agendas as though they’d received an overwhelming mandate.

Security is another form of “all pay” auction.  This is an asymmetrical game – your initial resources and victory conditions are clearly different if you happen to be playing as a homeowner or a thief – but the basic principle remains the same.  One player bids an amount on security; the other player bids time and money to undermine it; depending on who bids more, a break-in succeeds or it doesn’t.

As in Fists of Dragonstone, players have an incentive to randomize their behavior.  Sometimes a homeowner should display signs for a security system that hasn’t actually been installed.  Sometimes a thief should pass by a house even if it looks like a juicy target.  If players are too predictable, they can be narrowly outbid.

Computer encryption is an auction like this.  Equifax bid less than the people trying to hack its servers; a huge amount of personal data was stolen.  Mine too.  As an apology for low-balling their security bid, Equifax will send me a settlement check for some amount between $125 and $0.03, depending on how many of the other victims they choose to compensate.

What could I do with three pennies?

I glued pennies together to make little legs for my laptop computer – three cents for the back legs, two for the front – hoping to improve air flow for the exhaust fan.  When a computer overheats, programs malfunction.  The operating system might freeze, the same way I do when I’m typing and somebody says “Hi” to me.  My brain stutters – processing, processing – unable to determine whether I know this person, and, if so, from where.

Shut down, reboot.

Anyway, building these laptop stilts out of pennies seemed cheaper than any other materials.  I’ve already built them, though.  I don’t really need another $0.03 check from Equifax.

But this situation must feel frustrating for the people at Equifax, too.  Improved encryption isn’t valuable in and of itself.  This is an adversarial contest that produces only waste.  A world in which companies spent little or nothing on computer security and other people simply chose not to breach their nonexistent defenses would be better than our world, in which data needs to be scrupulously guarded.

A world in which politicians didn’t advertise, trusting voters to learn about their platforms from impartial sources, would be better than our world.

That’s not where we live, though.  Instead, scientists are working to create quantum computers.  These are marvels of engineering.  In contrast to the behavior of macroscopic objects, certain properties of a quantum transistor can remain undefined during a calculation, collapsing into a discrete binary value only at the end.  To accomplish this, the transistor must be guarded from its environs – you may have heard that “measurement” collapses wavefunctions, but measurement doesn’t mean that a human is looking at something.  Measurement simply means that the state of an object becomes coupled with the state of its environment.

If a photon approaches, the state of the object becomes linked with the state of the photon.  They might’ve collided or not, which narrows the range of space in which the object might exist, which narrows the set of wavefunctions that could be summed to give its momentum.  A collision-less encounter restricts us to a different set of futures than if the photon hit the thing.

In practice, that means a quantum computer needs to be kept dark, and atmosphere-less, and very, very cold.  For a long time – the transistors have to stay unmolested for the entire duration of a calculation.

IBM’s Quantum Q. Photo by IBM research on Flickr.

Obviously, these devices are very expensive to build and run.

And why might we want them?  Well, they’d be better than conventional computers at … um … at factoring the large numbers that are used for computer encryption! 

Quantum computers are fascinating.  Our attempts to build them have helped us learn more about the workings of our world.  But the actual existence of quantum computers – at least until we think of an application other than cracking computer security – will make the world worse.

Worried that people might copy data and then use quantum computers to decode it later — you know, after these computers have been invented — security experts say that we need to start spending more money on encryption now. 

While playing Fists of Dragonstone, my friends would curse and shout after making an exorbitantly high bid and then seeing that every other player bid zero.  I could have won with $1! 

That’s basically what security experts are encouraging us to do. Not curse — overbid. They say that we should make extremely high bids on encryption now, to protect ourselves from a technology that might never exist.  Otherwise, undesirables might gain access to the password-protected folder of risqué photographs that you and your partner(s) took.  Or break into your bank account.

Occasionally, adversarial work improves the world.  When restaurants compete, service might get better. The food, tastier.

But most adversarial contests are engines for waste.  High-speed stock trading makes the market more fluid – you can log on and purchase a few dozen shares of whatever you’d like since AI algorithms are ready to facilitate transactions between buyers and sellers. 

That’s a small service, though.  High-speed trading firms shouldn’t be extracting as much wealth as they are in this country.  Mostly they eavesdrop on others’ conversations, sneak in front of people who’re trying to buy something, then scalp it back at higher prices.  Trading firms pay exorbitant rent on shelf space that’s close as possible to the stock exchange mainframes – if one scalper is microseconds faster than another, that’s the one who gets to shake you down.

In a board game, cooperation is generally less fun than adversarial play.  For the former, players are trying to solve a puzzle created by the designer.  With adversarial rules, players are using their intelligence to create puzzles for each other in real time.

In a game, the waste is the entire point.  Nothing tangible is produced, but the expended time leads to social camaraderie.  The expended brainpower can give you a sense of satisfaction from having worked through intellectual puzzles.  And, hopefully, you’ll have fun.

But – whoops – we’ve used the principles of good game design and mistakenly applied them to the real world.  Fists of Dragonstone was fun; our political system shouldn’t be based on all-pay auctions.  With major politicians poised to ravage the Amazon, cull the world’s few remaining old-growth forests, and dredge up Arctic oil fields, the people wealthy enough to make high bids on upcoming elections might well destroy us.

NASA image revealing the ongoing deforestation of the Amazon rainforest.  Just f.y.i., the forest is being cleared to make space for cows.  Each time you choose eat beef or dairy cheese, you’re contributing to the destruction of the “Lungs of our Planet.”

Featured image for this post: “Auction Today” by Dave McLean on Flickr.