Author Archives: theusernamewhichismine

Why are conspiracies about the stock market so common?

The obvious answer to the question posed in the title is that the market is complicated, and therefore people who don’t understand it are more likely to fall into conspiracies than to admit their ignorance. But I truly am blown away by how common stock market conspiracies are amongst “retail” investors. I don’t just mean the meme stock traders, many many retail investors I’ve spoken to have conspiracies about how the amorphous Wall Street is driving the market one way or the other in order to “punish” someone. Usually the argument goes that X company is a threat to Wall Street, either because it supports some politics that Wall Street doesn’t or because its technology is highly disruptive to an entrenched industry. Therefore Wall Street “punishes” it by deliberately pushing down its stock price.

Just as an aside, that disruptive tech idea is dumb merely on the face of it. The idea is usually said to me as “Wall Street has too much money invested in Y industry, and X company has a technology that could totally disrupt it. Wall Street is protecting its investment by forcing down X company.” This is dumb on the face of it: Tesla, Amazon, and Apple were all exceptionally disruptive and still grew by leaps and bounds. Just because some investors have their money tied up in Ford doesn’t mean other investors won’t give Tesla a shot. Not every investor on Wall Street is invested in the same things, so the idea that they would act as a collective unit is nonsense.

As another aside, I wrote early about how this was a conspiracy I see a lot when talking about nuclear fusion. The idea is that fusion is such an amazing energy source that all other energy sources can’t compete, so they work together to keep it down. But if they can keep down fusion, why haven’t they kept down every other disruptive tech that upended industries through creative destruction? I never get a good answer.

Anyway I think this widely held believe, that Wall Street “punishes” stocks and causes them to go down, is simply another case of people not understanding that the market is filled with individuals acting in their own selfish interest. The only way Wall Street could act as a collective would be if each and every investor was forced to act the same way no matter what.

Say Company X has stock selling at 20$. Some Wall Street investors think that 20$ is a fair price for that stock. But some Wall Street investors are angry that Company X has technology which will disrupt their investments, so they want to “punish” it and force its price down to 1$. They can try to do this by selling the stock, but if the stock falls to say 15$, then the investors who think 20$ is a fair price will happily snap it up, because if 20$ is a fair price, then 15$ is a deal. Quickly the buying pressure from investors who think it’s undervalued should overwhelm those who want to push it down, and the price would stabilize.

Now there are two reasons this mechanism could fail. One is that all investors are forced to act in concert, which again doesn’t make sense at all. Investors compete fiercely with one another, they do not work together for common benefit. And furthermore working together creates a huge prisoners’ dilemma, if even one investor breaks with the group at large, they can reap enormous rewards by buying up stock with a fair value of 20$ for just 1$. Getting to 20x your money for free is a huge incentive to break with the collective, and no greedy investor would pass such an inventive up.

The second reason this mechanism could fail is that there are very few investors who believe the fair value is 20$, and most agree the value is 1$. But that isn’t a conspiracy in action, that’s price discovery in action. The price is an equilibrium between the expectations of the buyers and the sellers. If more and more people think its fair value is higher than at present, its price will go up. If more and more people think its fair value is lower, price will go down.

Trying to “force down” the price of a stock below its fair value is not a profitable way of doing business. No one investor or group of investors control the market, the market is a huge competition between all investors. And so while selling a stock for a price below its fair value can momentarily drop the price, it’s also a great way to lose your own money. Meanwhile if the market is filled with investors who think the fair value is higher, they’ll buy the stock back up to the original point. All you’d succeed in doing with this trick is burning your own money.

The price of your favorite stock went down because more investors thought it was overvalued than thought it was undervalued, not because of some huge Wall Street conspiracy.

The Lunar advantage

This post is gonna be weird and long.

I often have weird thoughts that I wish I could put into a book or story. My thought today is about comparative advantage. Comparative advantage is an economic concept that explains why people and countries can specialize into certain areas of work to become more efficient.

For example, in Iceland the cost of electricity is very low, which is why Iceland has attracted a lot of investment in industries that require lots of electricity, such as aluminum smelting. On the other hand countries like Bangladesh have a low cost of labor, which is why labor intensive activities such as clothing manufacturing invest there. It doesn’t make sense for a company to put an aluminum smelter in places where electricity is expensive, nor does it make sense to put a clothing factory where labor is expensive. Iceland and Bangladesh have their own comparative advantages at this moment in time, and that explains their patterns of industry.

Let’s imagine for a moment that there was a fully autonomous colony on the moon. People lived and worked there without needing to import air, water, or food from Earth. They can trade with Earth, but if Earth were cut off they could still make their own goods, just as if our country were cut off from the world we could still make our own food, drink our own water, breathe our own air. Let’s say they use super-future space technology to extract water and oxygen from moon rocks, and grow crops using moon soil.

If there would be such a moon colony, we would assume there would be trade with Earth. Certainly the cost of moving goods from Earth to the moon and vice versa are enormous. But it was once unbelievably dangerous to cross the oceans, and people still did it because the profits were worth it. We would expect that the moon would have some comparative advantage compared to Earth and vice versa, which would make trade profitable. This comparative advantage is the same reason Iceland sells aluminum products to Bangladesh who in turn sells Iceland clothing.

So with all this in mind, I assert that the moon’s comparative advantage would naturally be in large, heavy goods, but not because of the moon itself but because of the journey.

Let me give another example, suppose there is a factory on Earth making steel and a factory on the Moon making steel. Let’s also say the iron and carbon for the steel can be gotten just as easily on the Moon as on Earth. I assert that the one on the Moon has a comparative advantage because of space travel. Sending goods from the Earth to the Moon means having to spend a lot of energy accelerating out of Earth’s thick atmosphere, then also spending energy to slow yourself down for a moon landing. By contrast it takes much less energy to accelerate off the atmosphere-less surface of the moon, and landing on Earth costs far less energy as you can use the atmosphere itself to brake your fall.

So a moon steel factory can send packages of steel to the Earth at a rather low transport cost compared to vice versa. That gives an advantage to the moon steel factory, as if there are shortages on Earth the moon factory can fill them at a rather low cost, while Earth cannot do the same to fill a need on the moon. The transport costs are not symmetric, and they are in the moon’s favor. I would assert that, all else being equal, investment for steelmaking would flow into the moon and out of the Earth.

Of course the “all else being equal” is the rub. Air, water, and food are hard to come by on the moon. Iron and carbon might be easier but all the mining equipment is already here on Earth. We would have to do a lot of work and build a lot of technology to make a moon-base even possible. But in theory economies of scale and future-technology could make it possible and even economical. And at that point it might enter a virtuous cycle due to these asymmetrical transport costs I mentioned. It will always be cheaper to send goods from the moon to the Earth, than vice versa.

It’s just a random thought I’ve had and I want to put it in a work of fiction. In some sci-fi universe, a moon colony is economically sustained by this comparative advantage compared to Earth. But I’ve never gotten the courage to write this story so until now it’s just been an idle thought in my head.

Tried again, still couldn’t get into Divinity 2

I wrote before about how I prefer real-time-with-pause to turn-based gameplay in RPGs. I wrote that post with Divinity 2: Original Sin in mind since it’s a turn-based game that I did not enjoy. I tried replaying it this week… and I still don’t enjoy it. The first island was a bit more enjoyable this time since I knew all the little places to get experience points, but honestly this game has some terrible mechanical decisions that make it an unfun slog that punishes you for exploring around the second island.

The first decision is that characters’ power is almost entirely based on their level. Power and level always go together in all RPGs, but in Pillars of Eternity I could beat some encounters well below the suggested level just by mastery of the systems and a bit of luck. Divinity 2 doesn’t have this. A fight at 1 level below the enemy is very difficult. At 2 levels below the enemy, it’s nearly impossible. At 4 levels below the enemy I was still pulling off victories in Pillars of Eternity, and I’ve never had a chance to do that here.

So you NEED to be at the correct level to have any success whatsoever in beating the fights. But the second terrible decision was to scatter the content for different levels all around the map with no rhyme, reason, or communication with the player. You might be wandering around completing a level 9 quest and suddenly get dropped into a level 11 fight. The quickest move here is to just reload, which also takes far too much time for a simplistic RPG like this one. There is no way of knowing if you’re heading towards content that is level appropriate or towards certain demise and another minute of looking at loading screens.

Taken together, the game is unfun if you’re underleveled and it doesn’t do anything to make sure you’re appropriately leveled for your challenges. The game is also unfun if you’re overleveled by the way, as enemies can barely scratch you. But with nothing done to make sure I’m finding level-appropriate content, I spent most of the game not having fun because I’m either over- or under-leveled for what I’m facing.

So yeah, they need to hire a level designer.

Coda to my thoughts on Civilization 6

I recently wrote about how the AI in Civ 6 seems to be worse at its own game than previous Civ games. I want to give a shoutout to the youtuber Sulla whose “AI survivor” series put this into sharp contrast for me. Sulla sets up games of Civilization 4 that pit the AIs entirely against each other, with no player involvement. He then looks to see how it all turns out.

In Civilization 4, the AIs will usually manage to conquer each other. The games start with 8 AIs and it’s never been the case that they all survive to reach the end of the game. On the other hand in Civ 6 I rarely see even a single AI get eliminated unless I’m doing the eliminating. It just goes to show how passive the Civ 6 AIs are, and how utterly incapable they are at using 1upt and the rules of their own game.

Just something to think about.

Civilization 4 thoughts

Playing Civ 6 made me nostalgic for Civ 4, so I made it my project to get better at it.  I’ve been watching videos from Sullla’s channel (a big Civ lp-er) and have learned a lot of good stuff that helped me in Civ 4

Now to start with this victory wasn’t exactly easy.  I took the most broken, OP leader in Civ 4 (Huana Capac) and used a map-type that the AI does really poorly in (highlands with dense peaks, AI pathfinding screws up).  Even then I did a tiny bit of save-scumming at the beginning to fight off the barbarians.  But once things were going, I found that a Civ 4 game can be really easy… when it acts like a Civ 6 game.  Let me explain:

The reason Highlands map is so easy is as I said the AI’s pathfinding screws up.  I never got war declared on me during my Emperor level game, my only neighbor was Charlemagne who loved me because I adopted his religion, and my other close neighbors fought inconclusive wars amongst each other with no territory changing hands.  This let me sit back and tech away, *and that’s also how I won my Civ 6 deity game*.  It’s made me definitely appreciate that one of the big things holding back Civ 6 difficulty is the AIs’ inability to conquer each other and snowball out of control.  In a normal Civ 4 game one or more AIs will declare war, conquer their neighbor, and suddenly roll right up to the player’s boarders with the world’s largest army in tow.  A successful conqueror loses relatively few units to gain a lot of territory, and unsuccessful one throws away all their production producing units.  This helps AIs snowball when they focus on conquest. I don’t know exactly why Civ 6 AI is unable to conquer each other (OK I do, it’s 1upt) but this failure is a large part of the reason why I think they aren’t able to challenge a player once you escape the early game and are in the midgame.  No single AI will be so far ahead of everyone as to be unstoppable, everyone is usually around the same size.

So that’s a bunch of random thoughts, but it’s what I thought of when playing Civ 4.

Civilization (the game) thoughts

I don’t know if I’ve blogged about Civilization 6 before.  The game has received its final DLCs and the devs have all but left to work on Civ 7, so I guess being 5 years late is the perfect time to talk about it.  Warning, this is a long post.  Also warning, I do enjoy Civ 6 and pretty much every Civ game I’ve ever played, but I will be very critical in this post.

To step back a moment, I’ve played every Civilization game since 3.  Most Civ games have a difficulty scale with funny little names, but basically there are 8ish levels of difficulty, and the AI gets progressively more bonuses as difficulty increases.  In 3, I could barely win on difficulty 3 of 8.  In Civ 4, I could reliably win on difficulty 5 of 8, and sometimes 6 of 8 (Emperor) with the right setups.  In Civ 5, I could win on 6 of 8 reliably, and once managed 7 or 8 using a broken setup and a lot of savescumming.  

Difficulty level 8 of 8 is always called Deity, and it is always an exceptional challenge with the AI receiving ludicrous bonuses to every single statistic.  I have never beaten any Civ game on Deity.  Until Civ 6.

Civilization 6 was the first game I beat on Deity and the crazy thing is I don’t actually think I’m better at Civ 6 than I was at Civ 4 or 5.  I know I’m bad at Civ 3, but that’s because I hate the trading mechanics.  But with Civ 6, I genuinely think it’s just an easier game than its predecessors in an interesting and perhaps bad way.

To start off, let’s discuss how the Civ games make higher level AIs difficult.  They don’t particularly add any new mechanics or strategies, they just give the AIs big multiples to everything they do.  At high levels, an AI city will grow 50% faster, train units 50% faster, build buildings 50% faster, and they start with free technologies.  At the highest difficulty of Deity, the AI also gets to start with 2 settlers to the player’s 1.  That means that on Deity, the AI will start with twice as many cities as the player does, and each city will be 50% more productive.  

That’s a big hole to dig yourself out of, but the player has much better knowledge of the game mechanics and so a very good player can still win, even on Deity.  

The thing is that the AIs understood the game mechanics in 4 and 5 a hell of a lot better than they do in 6.  Some would say 6 is more complex, but I don’t buy that, I think in many ways it has (thankfully) been made simpler and more streamlined for easier access.  But I do think the Civ 6 AI understands its own game a lot worse than 4 and 5.  

It comes down to “one unit per tile” or 1upt as it’s known in Civ circles.  In Civ 4, you could stack as many buildings and as many units on a tile as you wanted.  Want your city to have a forge, a market, a theatre, and be garrisoned by 10 archer units?  Go ahead.  Civ 5 changed this in that only 1 archer unit can ever fit on any tile, but they didn’t update the AIs to make them good at this new system.  There’s a complex juggling act that is needed to make all your units be effective when you can’t stack them all on a tile.  And the AI is not good at this juggling act.

In Civ 4 the AI wasn’t great but it was at least smart enough to gather a dozen units and march towards the nearest city.  If you only had a single archer in that city, well even Alexander the Great can’t win against those odds.  But in Civ 5, the AIs will gather a dozen units, and they will all get in each other’s way as they fail to march against an enemy city.  A single archer in Civ 5 can indeed pick off their enemies one by one, defeating a dozen units without taking a scratch.

So with 1upt, wars in Civilization became heavily player-favored, as no amount of enemy numerical advantage could make up for their incompetence.  However the Civ 5 AIs still had ungodly bonuses that could let them tech up and win the game through other means.

Civ 6 then decided to “unstack the cities,” doing to cities what 1upt had done to military units.  Now you could no longer have a forge, a market, and a theatre all in one place.  They had to be spread across the map of your city.  To make this mechanic fun, they added “adjacency bonuses” so that buildings work a lot better when they’re near things that help them.  If a market is near a river, then it can trade with far away places easier and it makes more gold.  If a theatre is near a world wonder, then it’s in a more beautiful part of town and produces more culture.  The player is encouraged to use these adjacency bonuses to get the most out of their buildings.  The AI… cannot do this to save its life.

Just like 1upt led to the AI being terrible at war, districts led to the AI being terrible at peace.  They have no ability to manage districts or even look for the best spots to place them.  You’ll often conquer an AI city and see districts placed in just such a way that they have zero adjacency bonus, which is hard to do if you know even just look at the tooltips.  They also seem to hyperfocus on research to the expense of all else, which doesn’t really help them.

But on deity the AI is still hard.  In fact, Deity AIs in Civ 6 are the hardest they’ve ever been, getting to start the game with three free settlers and a good sized army while the player starts with a single settler and a warrior.

But this gives a game against Deity AIs a sort of strange difficulty curve.  On turn 1 every single AI is more than three times as strong as you because they start with 3 settlers and their cities get free bonuses.  But as the turns go on the player makes more and more good choices while the AIs make poor ones.  Eventually the player pulls ahead of the AIs, and then starts to “snowball” from there.  Snowballing in strategy games is when the strongest ones in the game get even stronger over time relative to their peers.  Players always snowball better than the AI and so once a player is stronger than the AI, they’ll never ever be weaker again.  

So in a game against Civ 6 deity AIs, the first few turns are the hardest by far, and you can die within the first 10 turns easily.  But if you just make it to turn 50, you’re golden, untouchable even.  The AI isn’t skilled at getting any kind of victory, so even with their huge bonuses you can snowball out ahead of them and get whatever victory you want at your leisure.  This difficulty curve existed in every Civ game, but it is at its harshest in Civ 6 because the AIs have never been worse at playing their own game.

So while I have gotten my first Deity-level victory in Civ 6, I don’t actually feel like I’m all that good at it.  I feel like I’m playing chess against a 5-year-old only they’ve replaced all their pawns with queens.  I feel like this is definitely something that needs to be improved upon in Civ 7.  “Better AI!” isn’t exactly a hype-worthy back-of-the-box quote, but these are primarily single player games and I feel the single player experience is paramount.  I think I’d enjoy my time much more if I felt that my victories were from being out-maneuvered and outplanned, rather than because my opponents got free stuff at the start.  And I think it would be more fun if I could be ahead all game and then a smart AI could sneak up and overtake me in the lategame.  As it stands, once we’re out of the classical age, I’m golden.

I know no one at Firaxis games reads my blog, but if someone could tell John Civilization to fix his AI, that’d be great.

Understanding the lack of free lunch in the student loans debate

I’d guess my opinion matches most Americans about the Supreme Court’s student loan decision. The online response has been rather mental though. There’s been a number of people hyping up “obvious” solutions that have very very obvious problems that they don’t want to confront. So I’d like to speak about some of those.

Student loans should be dischargable in bankruptcy. The entire reason that Joe Biden supported student loans not being dischargable was so that poor students with no assets would be able to get the loans. The only reason someone will give you a loan is because they want their money back with interest. If they don’t think you’ll pay them back, they either won’t give you the loan or will demand exorbitant interest rates. The people who will get loans are either rich enough that they can obviously afford to repay, or are using the loan to buy an asset which can be repossessed if they refuse to pay. Poor students don’t fall into those categories, so for a long time they were locked out of student loans.

If student loans become dischargable, then banks will fear that certain students will rack up student loans and then immediately declare bankruptcy upon graduation. The graduate will have no assets to repossess, and so the bank is SoL. Banks will then only give loans to individuals with enough assets to repossess, or who are already wealthy enough to pay it back easily. Making loans dischargable would reduce the number of poor people who can go to college, and thereby increase income inequality. If you think that’s a good trade-off then we can have that debate, but this isn’t a consequence-free solution.

Loans should have no interest. This is the same as saying there should not be any student loans. Again, the reason people give out loans is because they expect to make back their money with interest. Without interest, there is no reason to ever write student loans. And so again, college becomes unreachable for those not already rich.

College should be free, provided by the government. This is a defensible policy, but too many people imagine a world without trade-offs, and those must be considered. People who think college should be free often point to Europe but don’t even understand that college is in fact not always free. In Germany, where college is free, only 1/3 of adults have a post-secondary degree or certificate, compared to around 1/2 of Americans. The exact numbers vary depending on how you count, but there is a clear divide, higher education is more rationed in Germany than it is in America.

The German system means that not everyone is even allowed to try to go to University, and those that do go usually face fewer teachers per student, (meaning they have to teach themselves more) and less assistance overall. I’m sure a lot of people would immediately fire back that this is a good thing, not everyone needs to go to University. But the thing is they’re usually talking about other people. They would never be able to look themselves in the mirror and admit that they be one of the 2/3 of people who just aren’t good enough to be accepted into a German University. Because higher education is not as rationed in America, more people can go.

Then there are the universities that actually do have fees. On paper these are lower than American fees, in practice many Americans qualify for financial aid that makes college free or at least cheaper than European college. In Belgium, tuition fees are about 1000 euros a year. I paid less than that in my undergrad (around 1000 dollars a year) because I received a good scholarship. And I was not an exceptional student at an exceptional university, if I was I might have gotten a full ride.

There are many reasons to despise the ever increasing cost of American universities. Most of the money goes to administrative bloat, almost nothing is spent to improve student lives or increase professor’s pay. Even the most “socially conscious” Universities will still pay millions of dollars to water their perfect lawns rather than pay the staff or grad students a living wage. But the student loan debate comes with trade-offs, and we must confront them if we want to change the system. Cakeism will get us nowhere.

If the weavers get replaced by machines, who will buy the clothes?

I’ve seen way too many articles about AI casting doom and gloom that it will “replace millions of jobs” and that this will lead to societal destruction as the now job-less replacees have no more money to spend.  The common refrain is “when AIs replace the workers, who will buy the products?”

This is just another fundamental misunderstanding of AI and technology.  AI is a multiplier of human effort, and what once took 10 men now takes 1.  That doesn’t mean that 9 men will be homeless on the street because their jobs are “replaced.”  The gains reaped from productivity are reinvested back into the economy and new jobs are created.

When the loom replaced hand-spinning weavers, those weavers were replaced.  But they could eventually find new jobs in the factories that produced looms, and in other factories that were being developed.  When computers replaced human calculators, those calculators could now find jobs programming and producing computers.

For centuries now, millenia even, technology has multiplied human effort.  It used to take dozens of people to move a single rock, until several thousand years ago someone had the bright idea of using ropes, pullies, and wheels.  Then suddenly rocks could be moved easily.  But that just in turn meant the demand for moving rocks shot up to meet this newer, cheaper equilibrium, and great wonders like the Pyramids and Stonehenge were suddenly built.

The same will be true of AI.  AI will produce as many new jobs as it creates.  There will be people to produce the AI, people to train the AI, people to ensure the AI has guardrails and doesn’t do something that gets the company trending on Twitter.  And there will be ever more people to use the AI because demand is not stable and demand for products will rise to meet the increase in supply generated by the AI.  People will want more and more stuff and that will lead to more and more people using AI to produce it.

This is something that people get hung up on, they think that demand is stable.  So when something that multiplies human effort gets created, they assume that since the same amount of products can be produced with less effort, that everyone will get fired.  Except that demand is not stable, people have infinite wants and finite amounts of money. 

Technological progress creates higher paying jobs, subsistence farmers become factory workers, factory workers become skilled workers, skilled workers enter the knowledge economy of R&D.  These new higher paying jobs create people who want more stuff because they always want more stuff, and now have the money to pay for it.  This in turn increases demand, leading to more people being employed in the industry even though jobs are being “replaced” by machines.

To bring it all back to weavers, more people are working in the textile industry now than at any point in human history, even though we replaced weavers with looms long ago.

AI will certainly upend some jobs.  Some people will be unable or unwilling to find new jobs, and governments should work to support them with unemployment insurance and retraining programs.  But it will create so many new jobs as well.  People aren’t satisfied with how many video games they can purchase right now, how much they can go out to restaurants, how much housing they can purchase, etc.  People always want more, and as they move into higher paying jobs which use AI they will demand more.  That in turn will create demand for the jobs producing those things or training the AIs that produce those things. 

It has all happened before and it will happen again.  Every generation thinks that theirs is the most important time in the universe, that their problems are unique and that nothing will ever be the same.  Less than three years ago we had people thinking that “nothing will ever be the same” due to COVID, and yet in just 3 short years we’ve seen life mostly go back to normal.  A few changes on the margins, a little more work from home and a little more consciousness about staying home when sick, but life continued despite the once-a-century upheaval.

Life will also continue after AI.  AI will one day be studied alongside the plow, the loom, and the computer.  A labor-saving device that is an integral part of the economy, but didn’t lead to its downfall.

Corporate Greed is over, now comes corporate generosity

If you’ve been to the grocery store recently, you have probably seen an incredible sight. Eggs are now selling for less than they did in 2022. Walmart says they’ll sell me eggs for 1.19$ a dozen, and Target will sell them for 0.99$ with a special discount. Considering that at the beginning of 2023, eggs were selling for as much as 5$ a dozen, this comedown is remarkable.

It gets to the heart of a discussion about the origins of inflation though. The classical definition of inflation is too much money chasing too few goods. That means that when either the money supply is increased or their is a shortage of goods, we should expect to see inflation. This thesis does seem to have played out in 2021-2023. The money supply was increased enormously in 2020 and 2021, while COVID restrictions meant the supply of goods was constrained and could not rise quickly to meet it.

But that isn’t the definition that has been gaining traction. Recently folks have pointed to corporate greed as the primary driver of inflation. Under this thesis, inflation is not driven by the money supply or the goods supply, but by corporate greed in and of itself. If corporations weren’t greedy, they wouldn’t raise prices. But if prices go up because corporations are greedy, doesn’t that mean they go down because corporations are generous?

I’d like to see someone like Bernie Sanders explain the fall in egg prices. Why aren’t Walmart and Target just being greedy like all the other companies? If it’s so easy to raise egg prices by being greedy, then what mechanism could possibly make prices fall? What possible reason could their be for a fundamentally greedy company to willingly lower prices and receive less money?

For that matter, why is Exxon-Mobile being so damn generous? Over the past year, crude oil prices have gone from 100$ to just 70$. Exxon-Mobile was public enemy number 1 when gas prices were high, and was blamed for being too greedy. Have they now become generous instead? Have all the oil companies become generous? Why are the oil companies so much more generous than all the other companies?

It gets to the heart of the problem, inflation isn’t driven by corporate greed. Corporate greed is a constant, I’d go so far as to say human greed is a constant. Corporations (on average) demand the highest possible price for their goods that the market will bear. Laborers (again on average) also demand the highest possible price for their labor that the market will bear. No one ever willingly takes a pay cut without good reason, good reason usually being they have no other choice.

If corporations want to raise their prices above what the market will accept, then they’d be like me walking up to my boss and demanding a million dollar salary. They won’t get what they want no matter how hard they try. If Walmart raises the price of eggs, then Target can steal all of their business by keeping its egg prices low. People stop buying eggs at Walmart, they instead buy eggs from Target or from one of the hundreds of small and independent retailers that still dot America. Grocery stores are not a monopoly in our country, they do not have the power to set prices on their own. They are always in competition with each other and prices reflect that competition.

By the same token, if I demand a million dollar salary, my boss just won’t pay it. If I say I’ll quit if I don’t get it, he’ll show me the door. I am competing with hundreds of other workers in my field and so I cannot raise the price of my labor over and above what others are charging or else I’ll get replaced. It is a fact that many people ignore, but there is a market for labor just as their is a market for any other good. And the labor market has sellers (workers) and buyers (employers) just like any other. So when trying to answer questions about (say) the egg market, it’s useful to first think about how it works in the labor market. We are probably all more familiar the labor market with since if you’re reading this blog you’ve likely worked in your life.

So, in the labor market, can the sellers of labor (the workers) raise their prices just by being greedy? No, of course not. Without some decrease in supply or increase in demand, the price (salary) of laborers doesn’t go up, and workers who refuse to work for the market raise simply won’t receive job offers. It’s the same with corporations and it’s the same with goods inflation. Prices of goods aren’t driven by greed. They’re driven by supply shortages and a glut of money, both of which are in part exacerbated by government policies.

The current administration has continued Trump’s protectionist trade policies, which prevent American companies from being forced to compete with overseas companies. And both congressional spending and the Federal Reserve’s balance sheet have expanded considerably, bringing more and more money into the money supply. Too much money chasing too few goods, that is what causes inflation.

The AI pause letter seems really dumb

I’m late to the party again, but a few months ago a letter began circulating requesting that AI development “pause” for at least 6 months. Separately, AI developers like Sam Altman have called for regulation of their own industry. These things are supposedly happening because of fears that AI development could get out of control and harm us, or even kill us all in the words of professional insanocrat Eliezer Yudkowsky, who went so far as to suggest we should bomb data centers to prevent the creation of a rogue AI.

To get my thoughts out there, this is nothing more than moat building and fear-mongering. Computers certainly opened up new avenues for crime and harm, but banning them or pausing development of semiconductors in the 80s would have been stupid and harmful. Lives were genuinely saved because computers made it possible for us to discover new drugs and cure diseases. The harm computers caused was overwhelmed by the good they brought, and I have yet to see any genuine argument made that AI will be different. Will it be easier to spread misinformation and steal identities? Maybe, but that was true of computers too. On the other hand the insane ramblings about how robots will kill us all seem to mostly amount to sci-fi nerds having watched a lot of Terminator and the Matrix and being unable to separate reality from fiction.

Instead, these pushes for regulation seem like moat-building of the highest order. The easiest way to maintain a monopoly or oligopoly is to build giant regulatory walls that ensure no one else can enter your market. I think it’s obvious Sam Altman doesn’t actually want any regulation that would threaten his own business, he threatened to leave the EU over new regulation. Instead he wants the kind of regulation that is expensive to comply with but doesn’t actually prevent his company from doing anything it wants to do. He wants to create huge barriers to entry where he can continue developing his company without competition from new startups.

The letter to “pause” development also seems nakedly self-serving, one of the signatories was Elon Musk, and immediately after Musk called for said pause he turned around and bought thousands of graphics cards to improve Twitter’s AI. It seems the pause in research should only apply to other people so that Elon Musk has the chance to catch up. And I think that’s likely the case with most of the famous signatories of the pause letter, people who realize they’ve been blindsided and are scrambling to catch up.

Finally we have the “bomb data centers” crazies who are worried the Terminator, the Paperclip Maximizer or Roko’s Basilisk will come to kill them. This viewpoint involves a lot of magical thinking as it is never explained just how an AI will find a way to recursively improve itself to the point it can escape the confinement of its server farm and kill us all. In fact at times these folks have explicitly rebuked any such speculation on how an AI can escape in favor of asserting that it just will escape and have claimed that speculation on how is meaningless. This is of course in contrast to more reasonable end-of-the-world scenarios like climate change or nuclear proliferation, where there is a very clear through-line as to how these things could cause the end of humanity.

Like I said it I take this viewpoint the least seriously, but I want to end with my own speculation about Yudkowsky himself. Other members of his caucus have indeed demanded that AI research be halted, but I think Yudkowsky skipped straight to the “bomb data centers” point of view both because he’s desperate for attention and because he wants to shift the Overton Window.

Yudkowsky has in fact spent much of his adult life railing about the dangers of AI and how they’ll kill us all, and in this one moment where the rest of the world is at least amenable to the fears of AI harm, they aren’t listening to him but are instead listening (quite reasonably) to the actual experts in the field like Sam Altman and other AI researchers. Yudkowsky wants to maintain the limelight and the best way to do so is often to make the most over-the-top dramatic pronouncements in the hopes of getting picked up and spread by both detractors, supporters and people who just think he’s crazy.

Secondarily he would probably agree with AI regulation, but he doesn’t want that to be his public platform because he thinks that’s too reasonable. If some people are pushing for regulating AI and some people are against it, then the compromise from politicians who are trying to seem “reasonable” would be for a bit of light regulation which for him wouldn’t go far enough. Yudkowsky instead wants to make his platform something insanely outside the bounds of reasonableness, so that in order to “compromise” with him, you’ll have to meet him in the middle at a point that would include much more onerous AI regulation. He’s just taking an extreme position so he has something to negotiate away and still claim victory.

Personally? I don’t want any AI regulation. I can go to the store right now and buy any computer I want. I can to go to a cafe and use the internet without giving away any of my real personal information. And I can download and install any program I want as long as I have the money and/or bandwidth. And that’s a good thing. Sure I could buy a computer and use it to commit crimes, but that’s no reason to regulate who can buy computers or what type they can get, which is exactly what the AI regulators want to happen with AI. Computers are a net positive to society, and the crimes you can commit on them like fraud and theft were already crimes people committed before computers existed. Computers allow some people to be better criminals, so we prosecute those people when they commit crimes. But computers allow other people to cure cancer, so we don’t restrict who can have one and how powerful it can be. The same is true of AI. It’s a tool like any other, so let’s treat it like one.