Monday, August 24, 2015

[LINK] Mushroom Markets

Normally, I dislike the treatment of markets as natural, rather than intrinsically human, phenomena.

However, the subject of this article by Quartz is something altogether different. Biological symbiosis as a market- with induced scarcity and profiteering to boot. Altogether fascinating- I wonder what other biological interactions may in fact resemble a market?

[LINK] Any Sufficiently Advanced Civilization Is Indistinguishable From.... Nature?

A really interesting article from the Institute for Ethics and Emerging Technologies.

[LINK] Blame Pepper for Imperialism, Bananas for Misery

One of the nerd obsessions I have that has not (really) found its way into the blog is the way that food and foodstuffs have affected human history. (Gastrohistory?)

Here's a really cool article from the Boston Globe that discusses exactly how European tastes helped to reshape the map- and what it means to us today.

Wednesday, August 19, 2015

[LINK] Purdue Wants To Sell Student's Future Income For Tuition

Purdue University is seeking a private investment firm to help them establish an Income Share Agreement program. This is NOT a new idea- they are more commonly called Human Capital Contracts and have been implemented- and promptly withdrawn- by universities in the past. And it appears they (Purdue) are not doing anything to resolve the adverse selection bias inherent in such a plan (people who are more likely to earn less are more likely to sign an ISA because it will be cheaper and vice versa.)

While it is nice that they are considering something new, I wonder if they teach the concept of moral hazards in their Econ classes?

Here's a cool academic article about risk based student loans by Michael Simkovic.

[ESSAY] The Kasparov Effect

"I'm sorry Frank, I think you missed it. Queen to bishop three, bishop takes queen, knight takes bishop, mate."- HAL 9000

February 10, 1996. The first time that a computer defeated a reigning world champion of chess (in this case, Garry Kasparov) using standard tournament rules. Deep Blue won Game 1 of the match. Speaking of his opponent, Kasparov stated "My late game attack would intimidate many players into making a mistake or two, but not this one." His coach would go on to tell TIME magazine that the defeat was "a shattering experience" for Kasparov. Garry Kasparov would go on to win 3 games and draw 2 of the remaining games in the match, ultimately concluding 4-2, Kasparov-Deep Blue.

Kasparov and IBM would go on to schedule a rematch for 1997. That match would ultimately end in Kasparov's defeat and the first match defeat of a reigning world champion by a computer using standard tournament rules.

Deep Blue versus Kasparov, Game 1 ended in victory for Kasparov. But Kasparov was mystified by Deep Blue's 44th move and subsequent resignation. He attributed Deep Blue's move to "superior intelligence" when, in all likelihood, it was a fail safe move (or a bug, according to WIRED). The program, when confronted with no optimal solution, merely chose one at random from all possible moves. Garry Kasparov's belief in the "superior intelligence" of Deep Blue would go on to hurt his game in subsequent matches.

Deep Blue versus Kasparov, Game 2 ended in victory by resignation for Deep Blue. Kasparov, showing signs of distress, sighing and rubbing his face, walked away and resigned after the 45th move, only to later be told that he could have fought the endgame to a perpetual check (and therefore, a draw.) "If he had not stormed off the stage and just played his normal game, he could've tied Deep Blue" (NPR) Garry Kasparov had let himself be psyched out, by a computer he would later say was "only intelligent the way your programmable alarm clock is intelligent." 

Games 3, 4 and 5 ended with mutually agreed draw. Going into Game 6, the match was tied 2 1/2-2 1/2. There was yet hope for Luddites everywhere. It wouldn't last.

Deep Blue utterly defeated Garry Kasparov in that game, concluding in Kasparov's resignation by the 19th move. The whole game lasted under an hour. Naturally, Garry Kasparov, being a good sport and a gentlemanly competitor, accused the IBM Deep Blue team of cheating. He had come to believe that Deep Blue was being guided by a human player, a la the Mechanical Turk, despite his earlier recognition in the first match between himself and Deep Blue that the computer could play "wonderful and extremely human moves". At the post-match press conferences, he was described as "puffing and pouting". Kasparov would continue to accuse the IBM Deep Blue team of cheating before eventually just refusing to discuss his defeat against Deep Blue altogether.

Why did Garry Kasparov let himself get so flustered up against a machine opponent? Why was he such a sore loser after the fact? And what relevance does this have to the wider world?

Deep Blue was not necessarily a better chess player than Garry Kasparov. But unlike Garry Kasparov, Deep Blue was just a chess player. Garry Kasparov was a human with emotions and the possibility to err. More than Deep Blue defeating Kasparov, Deep Blue enabled Kasparov to defeat himself. As Mike Greengard, Kasparov's publicist and confidant, said "Deep Blue could calculate 200 million possible moves per second, but it was Kasparov who is overthinking it."

Garry Kasparov was not the first and will not be the last to be profoundly demoralized upon contact with machine intelligence. Inside Chess magazine's cover following the Kasparov defeat read ARMAGEDDON! 

As the ubiquity of machine intelligence in the world only increases, we can expect only more anger and dejection, more feelings of defeat and coming doom. The wide range of human endeavors that machines are now invading will provoke a very raw, human response- a Kasparov Effect, if you will.

What will be the response to the first human casualties due to self-driving cars? Will the automation of jobs provoke more public rage and sympathy than the outsourcing that gutted American manufacturing and others? Should anger at the defeat of man by machine be a legitimate concern in public policy? Is the out-of-proportion emotional response these things will provoke justifiable and worthy of consideration? These are all questions that must be answered and stem from the same bewilderment that Kasparov faced in his rematch with Deep Blue in 1997.

Perhaps it is instructive to look at Garry Kasparov's statements before his second match against Deep Blue. He said "Inevitably the machines must win, but there is still a long way to go before a human on his or her best day is unable to defeat the best computer."

Inevitably the machines must win, indeed. How long a long way is remains to be determined.

Tuesday, August 18, 2015

[LINK] Block-Chain Transactions and Contract Law

In my essay On Technological Unemployment, I talked about how the coming age of automation will strike at all jobs, high-skilled and low-skilled. I didn't give many specifics in that essay, but this article by Quartz is a perfect example of what I was talking about.

I honestly hadn't considered the application of the cryptocurrency in this context, but that is precisely what is so terrifying and exhilarating about the many possibilities that lay before us. The applications far exceed even the initial thoughts of the wildest dreamers.

If contract law isn't safe from being taken out of human hands, what is?

[LINK] Political Consumerism in the 19th Century

Political consumerism is probably the main avenue of political expression for young Americans today- which is telling, in part, of just how tied up in the market system our culture is. Organic, free-range, Fair Trade, Green, everything has a label that can make you feel good just by buying it.

Cathy Kaufman has a really interesting article, entitled Salvation and Sweetness: Sugar Beets in Antebellum America about an earlier political consumerism attempt in American history. Definitely worth a read. Is 'Fair Trade' the 'free sugar' of today?

[MUSING] The Dismal Science

Economics is commonly called 'the dismal science.' Why is that? Is it the field's notorious unreliability in prediction? The spectre of Malthusianism? The dreary nature of discussing monetary policy? The utter, existential grayness of the men who study it? The cold reduction of the world into numbers and figures?

Well, not quite. The phrase "dismal science" first appeared in Occasional Discourse on the Negro Topic (1849) by Thomas Carlyle. "Not a 'gay science,' I should say, like some we have heard of; no, a dreary, desolate and, indeed, quite abject and distressing one; what we might call, by way of eminence, the dismal science."

Economics was a "dismal science" because it had found the secret of the universe in "supply-and-demand" and this universal law of "supply-and-demand" overrode all other laws of 'human governors'- reducing their duties 'to that of letting men alone.' This is similar to many criticisms of the field today- although it took a slightly different tack.

You see, Thomas Carlyle's tract supported the idea that slavery should be reintroduced to the Caribbean and he damned the nascent field of 'political economy' (as economics was then known) for not agreeing with him. He was absolutely enraged at the idea of a 'black Ireland', where men could not be compelled to work for less than what they determined to be their worth. 

That is why economics is called the 'dismal science'. Because, when asked to support the institution of slavery, political economists of the day demurred. They went with what was right, rather than what was expected of them.

I'll take being dismal.

Monday, August 17, 2015

[LINK] Milton Friedman on the Grexit

Honestly, this is one of those things you read that seems almost eerie.... Something like the Grexit could have been and was predicted. There are a number of structural and historical problems with attempting something like the Euro.... so in hindsight this should have been obvious.

[ESSAY] On Technological Unemployment

This is to acquaint you that if your thrashing Machines
are not destroyed by you directly
we shall commence our labours

On behalf of the whole

The above is a fairly typical example of the sort of letters sent by the Swing Rioters of 1830s England. Their demands were simple- the destruction of the crude machines that reduced the number of hired farm-hands needed to bring in a harvest. Their procedure was likewise simple- they would send a letter like that above and, if their demands were not met, they would take matters into their own hands and destroy the machines themselves. The Swing Rioters destroyed their first threshing machine on 28 April 1830. By the middle of October of that year, they had destroyed more than 100. They marched in the streets by day and set fire to threshing machines, barns, mills and fences under the cover of night. Their battle-cry, heard in towns large and small throughout southwest England, was“Bread or Blood!”

The Swing Rioters were variably killed, imprisoned or exiled to Australia. Some were merely left jobless and destitute, to be swept up, as so many others were, into the Second Industrial Revolution. The “thrashing Machines” kept on bringing in the harvest. History marched on. The Swing Rioters were not the first or the last to protest the replacement of men by machines, but their experience was mostly typical. The humans lost, the machines won.

Nowadays, we do not give a thought to the intensive mechanization of agriculture- and it far exceeds that found in the days of the Swing Rioters. In 1900, 41 percent of the American populace was employed in agriculture. In 2012, only 1.5% of the American populace was likewise employed, with almost no change in the amount of land under cultivation and an increase in productivity, both total and per-person. This sea change was far beyond even the most feverish speculations of the Swing Rioters. Yet, with the exception of Depression Era populism (itself coinciding with the first halving of American agricultural employment in 1930), there were no calls for “Bread or Blood!” in twentieth century America.

John Maynard Keynes, coining the term technological unemployment, wrote in 1930: "We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor. But this is only a temporary phase of maladjustment.” Keynes' claim that “technological unemployment” was merely a “temporary phase of maladjustment” became the mainstream view in economics, with good reason. For much of the twentieth century, jobs replaced due to technology were replaced in short order by jobs enabled either by the new technology or due to the freeing up of labor reserves. From 1947 to 2000, productivity gains outside of agriculture and employment outside of agriculture were closely tied and followed the same general curve. Productivity gains from the economizing of labor could be said to lead to increased employment. Evidence-based economics at its finest. Technological unemployment was, in essence, self-correcting- if it existed at all.

In 2000, however, the curves became decoupled. A rise in productivity and real output was accompanied by a decline in overall employment- a trend that has continued, mostly unabated, to the present day. It is no longer clear that technological unemployment is self-correcting.

The Swing Rioters had no recourse except to violence. Trapped between the enclosure of the commons, anti-vagrancy laws and the odious Poor Laws of England, unable to imagine any economic activity other than agriculture (the primary human economic activity for much of recorded history), they burned machines and mills because there was no alternative. It was a matter of bread or blood. In contrast, the agricultural workers of the twentieth century United States had no reason to resort to violence. The United States government supported full employment as a matter of policy. The post-WWII consensus on education pushed record numbers of students through American colleges and universities. In 1956, white-collar workers finally came to outnumber blue-collar workers in America, for the first time anywhere in human history. It was easy to imagine a world where agriculture was not the primary economic activity- because it hadn't been for some time. It was a temporary phase of maladjustment.

Our situation is different and more dramatic than either. Lawrence H. Summers, former US Secretary of the Treasury, wrote in 2014: "There are many reasons to think the software revolution will be even more profound than the agricultural revolution. This time around, change will come faster and affect a much larger share of the economy. [...] There are more sectors losing jobs than creating jobs. And the general-purpose aspect of software technology means that even the industries and jobs that it creates are not forever."

The coming age of automation will not affect one sector, allowing the movement of excess labor into a new, labor-intensive endeavor. The coming age of automation strikes at all levels of and all forms of employment. Routine manual labor. Difficult cognitive tasks. Transportation. Administration. White-collar and blue-collar, alike. Algorithms may as easily be adapted for use in machine-guided cutting as in cost-benefit analysis. Machines may come to replace doctors as easily as they replace factory workers.

Whether technological unemployment will become a question of “Bread or Blood” or “a temporary phase of maladjustment” is entirely in our hands.


US Department of Agriculture, The 20th Century Transformation of U.S. Agriculture and Farm Policy, retrieved from Economic Information Bulletin, Economic Research Service, June 1, 2015

Keynes, John M. "Economic Possibilities For Our Grandchildren", Essays in Persuasion (1930): W.W. Norton & Co. Retrieved from Economics Department, Yale University, June 1, 2015

US. Bureau of Labor Statistics,All Employees: Total nonfarm [PAYEMS], retrieved from FRED, Federal Reserve Bank of St. Louis, June 1, 2015.

US. Bureau of Labor Statistics,Nonfarm Business Sector: Real Output Per Hour of All Persons[OPHNFB], retrieved from FRED, Federal Reserve Bank of St. Louis, June 1, 2015.

Summers, Lawrence H. "Lawrence H. Summers on the Economic Challenge of the Future: Jobs." Editorial. Wall Street Journal 7 July 2014. Retrieved from Wall Street Journal, June 1, 2015