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.

On Brett Wagner’s “Apocalypse Blaze.”

On Brett Wagner’s “Apocalypse Blaze.”

A friend of mine, whom I first met when he was a student in my poetry class, was writing a post-apocalyptic novel.  There’s nuclear fallout; civilization crumbled.  A few people who haven’t yet caught the sickness are traveling together, fantasizing that they could restart the world.

When the bombs fell, governments collapsed.  Not immediately, but within the year.  The idea of government is predicated on people getting things done: fire fighters who might rescue you, police officers who might protect you, agencies who maintain the roads and ensure the water is safe to drink.  All of which requires money, which the government can print, but those slips of paper don’t mean much if no one will accept them in exchange for food or a safe place to sleep.

“Hangrith,” that’s a beautiful word.  It’s archaic, means a realm in which you can expect security and peace.  Literally, “within the grasp of the king’s hand.”  While you are here, the government will protect you.

Within the grasp. Image by Enrico Strocchi on Flickr.

My friend was skeptical of the concept.  The king’s hand wasn’t cradling him, nor wielding a protective sword to keep orcs at bay; instead, my friend felt the gauntlet at his throat.  We’d met in jail, where he’d landed for addiction.  We volleyed emails after he left, while he was working on his novel.  And then he was in my class again.  Failed check-in.  Once you’re on probation, you’re given numerous extra laws to follow – people on probation don’t have the rights of other citizens, and minor transgressions, like missing a meeting or late payment for a fine, can land you back in jail.

And so it wasn’t difficult for my friend to imagine a world in which there was no government to rely upon.  To reach their destination, his heroes have to barter.  Which meant that, suddenly, my friend’s skills might be treated with respect.

After all, what would people be most willing to trade their food for in a world where waking life was a ravaged nightmare?

I took a patch with me underground when shit hit the fan.  Grew it hydroponically.  Cared for that shit like a baby.  Gave me something to do while I was in that shelter.  Weed is my money.”

Rampant economic inequality, fractured communities, and the spread of attention-grabbing toys that prevent us from making eye contact with one another – these have all contributed to the increase in drug use and addiction in contemporary America.  But the world could be worse.  After the blast, everyone would share the stress and trauma that people in poverty currently weather.

Methamphetamine lets people keep going despite crushing hopelessness and despair.  Meth use is widespread in many hollowed-out towns of the Midwest.  It’s a problematic drug.  At first, people feel good enough to get out of bed again.  But methamphetamine is metabolized so slowly that users don’t sleep.  Amphetamines themselves are not so toxic, but lack of sleep will kill you.  After five, ten, or twenty days awake, vicious hallucinations set in.  The drug is no longer keeping you alert and chipper enough to work – static crackles through your mind, crustacea skitter beneath your skin, shadows flit through the air.

They walked on, their path lit by the moon, among the wreckage of cars and piles of trash and useless electronics that were heaped up until they came to a concrete slab with a manhole in it.

This is my crib, where I sat out that day.”

Image by Joe Shlabotnik on Flickr.

After the fall, experience in the drug trade lets people carve out a living.  And experience on the streets lets them survive.  All the ornate mansions, people’s fine wood and brick homes, have fallen into disarray.  Their inhabitants caught the sickness, or else died in the initial blast.

The survivors were people who slept outdoors, protected by thick concrete.  Not in bunkers; the blast came too suddenly for that.  Beneath bridges, tucked into safe alcoves, or down on dry ledges of the sewers.

My friend understood what it meant to make shelter where you could find it.

After Pops gave me the boot, I had to find a way to support myself; that’s when I learned my hustle.  And Penny here was one of my biggest customers.”

You used to be her dealer?”

Damn, dude, you make it sound dirty.  Weed ain’t no drug, it’s medicine.”

The heroes plan to go west, aiming for San Francisco.  When I was growing up, I had that dream too – I’d read a little about the Merry Pranksters and failed to realize how much the world might have changed.  People living around the Bay Area are still interested in polyamory and psychedelic drugs, but that doesn’t mean they’re nice.  It was heartbreaking to see how racist and ruthless the people there were, especially since I’d expected to find a hippie paradise.

And so my spouse and I moved back to the Midwest. 

But I understand the dream – we’re surrounded by a lot of retrograde cudgleheads, here.  The only problem is that people are pretty similar everywhere else. 

An agrarian based society.  Where everyone works to grow what they eat.  The soil might be okay.  We won’t know all the affects of the radiation until later.”

Well, I know for sure it’s mutated animals near the hit zone.  I’ve seen all kindsa freaky shit.  People too.  It’s like the wild west again, where we’re going.”

The actual “wild west,” in U.S. history, was horrible.  Racism, genocide, misogyny.  But the ideal – a lawless land beyond the hangrith where a person’s ingenuity reaps fortune instead of jail time – might be enough to keep someone going.

And it worked, for a while.  My friend carved out months of sobriety.  He was volunteering at the community food kitchen.  In the late afternoons, he’d type using a computer at the public library.  He was always a very hopeful person; while he was in jail, he asked me to bring physics textbooks so he could use the time productively.  You can get a sense of his enthusiasm from his poetry:

“BIRD TOWN, TN”

by Brett Wagner

Picture this young boy

whose favorite color was the blank white

of a fresh page.  We went running once

on the spring green grass.

As I’ve heard it said,

“There’s nowhere to go but everywhere”

so we ran anywhere in this

jungle gym world.

Somewhere the clouds didn’t smother us

and the hills didn’t exhaust us,

where robins, blue jays, and cardinals sing

like boddhisattvas that have taken wing.

But then he slipped.  A first drink led to more.  He’d been in sober housing; he was kicked out, back onto the streets.  A friend, another New Leaf volunteer, gave him enough money for a few days in a hotel.

We had several cold snaps this winter.  Two nights after his hotel money ran out, temperatures dropped. 

We’d made plans for my friend to join us for a panel with Dave Eggers, where we’d discuss storytelling and incarceration. 

Instead, at 29 years old, Brett Wagner froze to death.  His novel is unfinished; his heroes will not build a new agrarian society.

They had grim odds.  Nuclear fallout is a killer.  But my friend was felled by the apocalypse that’s already upon us.

Header image for this post by akahawkeyefan on Flickr.

On taxing robots.

On taxing robots.

My family recently attended a preschool birthday party at which cupcakes were served.  I watched in horror as the children ate.  Some used grimy fingers to claw off the top layer of frosting.  Others attempted to shove the entire frosted top into their gaping maws, as though they thought their jaws might distend snake-like.  These kids failed, obviously, and mostly smashed the cupcakes against their faces.

And then, a mere two minutes later, the kids all slid from their chairs to run off and rampage elsewhere in the house.  The table was a wreckage; no child had actually eaten a cupcake.  They’d eaten frosting, sure, but left the remnants crumbled and half-masticated on their plates.

Someone needed to clean up.

If I was a better person, I would have offered to help.  But I didn’t.  I just stood there with my mouth twisted into a grimace of disgust.

I wonder why it’s so hard for our family to make friends.  Surely my constant scowls seem charming!  Right?  Right?

Even at our own house, where our compost bin ensures that uneaten food isn’t completely wasted … and where my own children are responsible for the entirety of any mangled remnants … I loathe scraping the plates clean. 

And I don’t like washing dishes.

Luckily, we have a dishwasher.  Slide dirty dishes into the rack, push a button, and, voila, a robot will make them clean!

Automation is great!

Also, automation is making our world worse.

Although official unemployment in the United States is low, the economy is doing poorly.  The official statistics don’t count people who’ve given up, and they don’t count people who are stuck with worse jobs that they would’ve had in the past.

Low unemployment is supposed to drive up people’s salaries.  When a company knows that there are few available job seekers, they’ll pay more to prevent you from leaving.  But that’s not happening, currently.  If a company knows that your life is sufficiently bleak, and also that no other company is planning to treat you better, then they can keep salaries low.  Financial misery lets employers operate like a cartel.

Image by Farcaster.

Despite low unemployment, most employees are quite replaceable.  If you won’t do the work, a robot could instead.  Just like my beleaguered dishwasher, filled with plates and bowls too gross for me to want to touch, a robot won’t advocate for better treatment.  And a robot draws no salary.  If you have the wealth to invest in a dishwasher – or a washing machine, or a donut maker, or a legal-document-drafting algorithm – it’ll serve you tirelessly for years.

People often say that the jobs of the future will be those that require a human touch.  Those people are wrong.  Your brain is a finite network of synapses, your body an epidermis-swathed sack of gristle.  In the long run, everything you do could be replicated by a machine.  It could look like you, talk like you, think like you – or better.

And – after its initial development and manufacture – it wouldn’t cost its owners anything.

As our automation technologies improve, more and more of the world’s income will be shunted to the people who are wealthy enough to own robots.  Right now, human delivery people are paid for dropping off the packages people buy from Amazon – but as soon as Jeff Bezos owns drones and self-driving cars, he’ll keep those drivers’ salaries for himself.  As your labor becomes less valuable relative to the output of a machine, it’s inevitable that inequality will increase.  Unless we implement intentional redistribution.

A recent editorial by Eduardo Porter for the New York Times advocates for a tax on automation.  Perhaps this seems sensible, given what I’ve written above – if robots make the world worse, then perhaps robots should be made more expensive.

After all, the correct way to account for negative externalities in a capitalist economy is through taxation.  That’s how capitalism solves the tragedy of the commons.  If the cost of an action is paid by everyone collectively – like pollution, which causes us all to drink dirty water, or breathe asthma-inducing air, or face apocalyptic climate change – but the profit is garnered by individuals, then that person’s private cost-benefit analysis will call for too much pollution.

For every dollar the Koch brothers earn, the world at large might need to spend $1,000 fighting climate change.  That dollar clearly isn’t worth it.  But if each dollar they earn increases their personal suffering by only a nickel, then of course they should keep going!  That’s what capitalism demands.  Pollute more, and keep your ninety-five cents!

But a person’s private priorities can be made to mirror our society’s by charging a tax equal to the total cost of pollution.  Then that person’s individual cost-benefit analysis will compare the total cost of an action against its total benefit.

A pollution tax wouldn’t tell people to stop being productive … it would simply nudge them toward forms of production that either pollute less, or are more valuable per unit of pollution.

But automation isn’t harmful.

Yes, automation is making the world worse.  But automation itself isn’t bad.  I’m very happy with my dishwasher.

If we want to use tax policy to improve the world, we need to consider which features of our society have allowed automation to make the world worse.  And it’s not the robots themselves, but rather the precipitous way that current wealth begets future wealth.  So the best solution is not to tax robots, specifically, but rather to tax wealth (with owned robots being a form of wealth … just like my dishwasher.  Nothing makes me feel rich like that lemony-fresh scent of plates I didn’t have to scrub myself.)

And, after taxing wealth, we would need to find a way to provide money back to people.

World War II taught us that unnecessary production – making goods whose only value was to be used up and decrease the value of other goods, like bombs and tanks and guns – could improve the economic situation of the world.  We ended the Great Depression by paying people to make weapons.  And we could ameliorate the current economic malaise with something similar. 

But an actual war seems misguided, what with all the killing and dying.  There are better, kinder ways to increase wasteful government spending.

If I were in charge of my own town, I’d convert the abandoned elevator factory into a bespoke sneaker and clothing factory.  The local university offers a degree in fashion design, and it might be nice if there were a way for students to have batches of five or ten items produced to specification.

As a business, this wouldn’t be economically viable.  That’s the point.  It would be intentionally wasteful production, employing humans instead of robots.  Everything would be monetarily inefficient, with the product sold below cost.

It’d be a terrible business, but a reasonable charity.

With alarmingly high frequency, lawmakers try to impose work requirements on welfare payments.  I obviously think this policy would be absurd.  But it wouldn’t be so bad if there were government-provided work opportunities.

Robots can make shoes cheaper.  That’s true.  But by taxing wealth and using it to subsidize wasteful production, we could renew people’s sense of purpose in life and combat inequality.  No wars required!

And no need for a tax targeting my dishwasher.  Because, seriously.  I’ve got kids.  I don’t want to clean up after them.  Would you?

On suboptimal optimization.

On suboptimal optimization.

I’ve been helping a friend learn the math behind optimization so that she can pass a graduation-requirement course in linear algebra. 

Optimization is a wonderful mathematical tool.  Biochemists love it – progression toward an energy minimum directs protein folding, among other physical phenomena.  Economists love it – whenever you’re trying to make money, you’re solving for a constrained maximum.  Philosophers love it – how can we provide the most happiness for a population?  Computer scientists love it – self-taught translation algorithms use this same methodology (I still believe that you could mostly replace Ludwig Wittgenstein’s Philosophical Investigations with this New York Times Magazine article on machine learning and a primer on principal component analysis).

But, even though optimization problems are useful, the math behind them can be tricky.  I’m skeptical that this mathematical technique is essential for everyone who wants a B.A. to grasp – my friend, for example, is a wonderful preschool teacher who hopes to finally finish a degree in child psychology.  She would have graduated two years ago except that she’s failed this math class three times.

I could understand if the university wanted her to take statistics, as that would help her understand psychology research papers … and the science underlying contemporary political debates … and value-added models for education … and more.  A basic understanding of statistics might make people better citizens.

Whereas … linear algebra?  This is a beautiful but counterintuitive field of mathematics.  If you’re interested in certain subjects – if you want to become a physicist, for example – you really should learn this math.  A deep understanding of linear algebra can enliven your study of quantum mechanics.

The summary of quantum mechanics: animation by Templaton.

Then again, Werner Heisenberg, who was a brilliant physicist, had a limited grasp on linear algebra.  He made huge contributions to our understanding of quantum mechanics, but his lack of mathematical expertise occasionally held him back.  He never quite understood the implications of the Heisenberg Uncertainty Principle, and he failed to provide Adolph Hitler with an atomic bomb.

In retrospect, maybe it’s good that Heisenberg didn’t know more linear algebra.

While I doubt that Heisenberg would have made a great preschool teacher, I don’t think that deficits in linear algebra were deterring him from that profession.  After each evening that I spend working with my friend, I do feel that she understands matrices a little better … but her ability to nurture children isn’t improving.

And yet.  Somebody in an office decided that all university students here need to pass this class.  I don’t think this rule optimizes the educational outcomes for their students, but perhaps they are maximizing something else, like the registration fees that can be extracted.

Optimization is a wonderful mathematical tool, but it’s easy to misuse.  Numbers will always do what they’re supposed to, but each such problem begins with a choice.  What exactly do you hope to optimize?

Choose the wrong thing and you’ll make the world worse.

#

Figure 1 from Eykholt et al., 2018.

Most automobile companies are researching self-driving cars.  They’re the way of the future!  In a previous essay, I included links to studies showing that unremarkable-looking graffiti could confound self-driving cars … but the issue I want to discuss today is both more mundane and more perfidious.

After all, using graffiti to make a self-driving car interpret a stop sign as “Speed Limit 45” is a design flaw.  A car that accelerates instead of braking in that situation is not operating as intended.

But passenger-less self-driving cars that roam the city all day, intentionally creating as many traffic jams as possible?  That’s a feature.  That’s what self-driving cars are designed to do.

A machine designed to create traffic jams?

Despite my wariness about automation and algorithms run amok, I hadn’t considered this problem until I read Adam Millard-Ball’s recent research paper, “The Autonomous Vehicle Parking Problem.” Millard-Ball begins with a simple assumption: what if a self-driving car is designed to maximize utility for its owner?

This assumption seems reasonable.  After all, the AI piloting a self-driving car must include an explicit response to the trolley problem.  Should the car intentionally crash and kill its passenger in order to save the lives of a group of pedestrians?  This ethical quandary is notoriously tricky to answer … but a computer scientist designing a self-driving car will probably answer, “no.” 

Otherwise, the manufacturers won’t sell cars.  Would you ride in a vehicle that was programmed to sacrifice you?

Luckily, the AI will not have to make that sort of life and death decision often.  But here’s a question that will arise daily: if you commute in a self-driving car, what should the car do while you’re working?

If the car was designed to maximize public utility, perhaps it would spend those hours serving as a low-cost taxi.  If demand for transportation happened to be lower than the quantity of available, unoccupied self-driving cars, it might use its elaborate array of sensors to squeeze into as small a space as possible inside a parking garage.

But what if the car is designed to benefit its owner?

Perhaps the owner would still want for the car to work as a taxi, just as an extra source of income.  But some people – especially the people wealthy enough to afford to purchase the first wave of self-driving cars – don’t like the idea of strangers mucking around in their vehicles.  Some self-driving cars would spend those hours unoccupied.

But they won’t park.  In most cities, parking costs between $2 and $10 per hour, depending on whether it’s street or garage parking, whether you purchase a long-term contract, etc. 

The cost to just keep driving is generally going to be lower than $2 per hour.  Worse, this cost is a function of the car’s speed.  If the car is idling at a dead stop, it will use approximately 0.1 gallon per hour, costing 25 cents per hour at today’s prices.  If the car is traveling at 30 mph without breaks, it will use approximately 1 gallon per hour, costing $2.50 per hour.

To save money, the car wants to stay on the road … but it wants for traffic to be as close to a standstill as possible.

Luckily for the car, this is an easy optimization problem.  It can consult its onboard GPS to find nearby areas where traffic is slow, then drive over there.  As more and more self-driving cars converge on the same jammed streets, they’ll slow traffic more and more, allowing them to consume the workday with as little motion as possible.

Photo by walidhassanein on Flickr.

Pity the person sitting behind the wheel of an occupied car on those streets.  All the self-driving cars will be having a great time stuck in that traffic jam: we’re saving money!, they get to think.  Meanwhile the human is stuck swearing at empty shells, cursing a bevy of computer programmers who made their choices months or years ago.

And all those idling engines exhale carbon dioxide.  But it doesn’t cost money to pollute, because one political party’s worth of politicians willfully ignore the fact that capitalism, by philosophical design, requires we set prices for scarce resources … like clean air, or habitable planets.

On alternate truths.

On alternate truths.

Sometimes the alternatives are jarring – you look and count a certain number, another person proffers a radically different amount.

Surely one of you is mistaken.

In the United States, there’s a rift between those who overestimate certain values (size of inauguration crowds, number of crimes committed by immigrants, votes cast by non-citizens, rates of economic growth) and their fellows.

Henri_Tajfel.jpgIn the 1960s and 70s, psychologist Henri Tajfel designed experiments because he was curious: how is genocide possible?  What could sap people’s empathy so severely that they’d murder their thinking, perceiving, communicating neighbors?

Tajfel began with a seemingly irrelevant classification.  In the outside world, people have different concentrations of epidermal melanin, they worship different deities, they ascribe to different political philosophies.  But rather than investigate the gulf separating U.S. Democrats from Republicans, Tajfel recruited a homogeneous set of teenage schoolboys to participate in an experiment.

Screen Shot 2018-09-19 at 2.38.26 PMOne by one, the kids were shown a bunch of dots on a screen and asked to guess how many dots were there.  Entirely at random, the kids were told they’d consistently overestimated or underestimated the number of dots.  The numbers each kid guessed were not used for this classification.

Then the kids participated in a pretty standard psychology experiment – they had various amounts of money to split between other study subjects.  In each case, the kids were told that one of the recipients would be a fellow over-estimator (not themselves, though), and the other recipient would be an under-estimator.

An intuitive sense of “us vs. them” would pit study subjects against the researchers – kids should assign payoffs to siphon as much money as possible away from the university.  When every option has an equivalent total payoff, you might expect a fair distribution between the two recipients.  After all, the categorization was totally random, and the kids never had a chance to meet the other people in either their own or the other group.

Instead, over-estimators favored other over-estimators, even at the cost of lowering the total payout that the kids would receive from the researchers.  Oops.

We should expect our current over-estimators to favor each other irrationally, too.  These groups aren’t even randomly assigned.  And many of the alternate truths must seem reasonable.  Who among us doesn’t buy in to the occasional fiction?

For instance, there’s the idea of “free market capitalism.”  This is fictitious.  In the absence of a governing body that threatens violence against those who flaunt the rules, there can’t be a market.

Sometimes anarchists argue that you could have community members enforce cultural norms – but that is a government (albeit a more capricious one, since the “cultural norms” might not be written down and shared policing introduces a wide range of interpretations).  Sometimes libertarians argue that a government should only enforce property rights, but they purposefully misunderstand what property rights consist of.

garden-gardening-growth-2259If you paint a picture, then I spray it with a hose, you won’t have a picture anymore.  If you have a farm, then I buy the adjacent property and start dumping salt on my land, you won’t have a farm anymore.  I don’t have the physically take things out of your hands to eliminate their value.

If you own a house, then I buy the adjacent property and build a concentrated animal feeding operation, the value of your house will plummet.  You won’t have fresh air to breathe.

Or maybe I want to pump fracking chemicals into your aquifer.  You turn on your tap and poison spills out.

We have rules for which of these actions are acceptable and which are not.  The justifications are capricious and arbitrary – honestly, they have to be.  The world is complex, and there’s no pithy summary that solves all our quandaries.  Right to swing my arm, your nose, pffft, nonsense.  Why’d you put your nose there, anyway?

And our government enforces those rules.  The market is not free.  Corporations that denounce government intervention (e.g. dairy-industry-opposing tariffs, carbon tax, etc.) seek government interventions (now the dairy industry hopes that producers of soy milk, almond milk, coconut milk, etc., will be forced to rename their products).

But this probably doesn’t feel like hypocrisy.  We humans are good at believing in alternate truths.