Tag Archives: politics

“The Crime of ’73”

Boy, these posts aren’t quite coming out weekly now are they?

I might have posted on this topic before, but I wanted to write something down and this was on my mind. It’s interesting how the controversies of yesteryear always fade away, even though in their day they dominated the news and the mind-space of politically conscious voters.

Take the Silver vs Gold movement. When America was founded, it had a bi-metallic standard, meaning that both silver and gold were legal tender. Congress set down in writing how much weight of silver made a dollar and how much gold made a dollar, and so both could be used to buy and sell. But of course, as commodities the price of silver and gold in the market would fluctuate, but congress didn’t understand or act quickly enough to fix things.

For example, silver mines in Mexico continued to run and depressed the price of silver relative to gold. This created an arbitrage opportunity because the price of gold was higher than that of silver:

  • Take 10 silver dollars and exchange them for 10 gold dollars, as they are equivalent
  • Take the gold dollars to Mexico and melt them down.
  • Take that gold and exchange it for raw silver
  • Bring that silver back to the Mint in America and demand to have it struck into silver dollars. Because of the price difference between silver and gold, the silver you brought back will make more than 10 dollars worth, so you can pocket the extra as your profit.
  • Start back from the beginning, trading 10 silver dollars for 10 gold dollars

This happened because congress set a fixed value for a commodity who’s value changed on the market, and as that value changed there was arbitrage created. Gold flowed out of the country and was replaced with silver. When the California gold rush happened, the price of gold suddenly decreased and the whole process reversed. Congress didn’t understand what was happening, and so simply decided to remove the bimetallic standard to stop this from happening.

But now we get to “The Crime of 1873.” When congress removed the silver standard in 1873, silver miners could no longer have their pure silver struck into coins that could be used as tender. The mint was by far the largest purchaser of silver and so removing silver from the standard removed most of the demand and so killed the price. Congress therefore upended the livelihoods of thousands of miners and mining towns by changing the laws on coinage. And those people never forgave them.

For years this “Crime” was the hottest topic in certain political sections. It was the litmus test for candidates and parties. And it was the entire foundation of the presidential candidacy of William Jennings Bryan. For years, certain voters would never vote for a candidate or party who had supported the “Crime,” and they may not have even kept polite company with voters who supported those candidates. In its time, the “Crime” was seen as the greatest betrayal possible, and plenty of people pointed to it as the reason for national or local economic problems. They blamed the “Crime” and hoped that overturning it would fix things.

Of course, America never regained the silver standard. For a time, the Federal government compromised and declared it would still buy silver from the miners directly, but in time even this subsidy was removed. The people affected by the “Crime” probably never forgave the Republicans (who passed the bill) for what they did. Indeed the “Crime’s” authors had a hard time defending their actions in the face of angry voters. Some authors claimed that the bill didn’t do what critics claimed, and that the US had technically been non-silver since 1853. Others claimed that ending the silver standard was an unintended biproduct. But this had the perverse effect of amplifying conspiracy theorists who believed the bill was passed with malicious intend, and giving ammo to those who wanted to overturn it.

In the 1880s and 1890s, the “Crime of 73” was as much a controversial topic as any political topic today. Friendships could be ended by it. But it too did pass. I think most of the controversies of our day shall also pass, these days even American History students will barely remember the “Crime.”

Choosing your facts based on your beliefs; everyone believes they are the rational one

It’s very common and very well-known that people will, to an extent, choose their facts to fit their beliefs. But for many the facts they choose aren’t necessarily even well-founded.

If you are a conservative, you probably prefer generally lower taxes, and you can find well-heeled economists who generally prefer lower taxes and lower spending over higher taxes and higher spending. Likewise a liberal or leftist can find economists who support higher taxes and higher spending. The issue is not “settled” and as with anything in economics (besides rent control, which is universally known to be bad) there are voices on either side.

But there are some things that are uncontroversially accepted as true by all the experts in their field, and for some reason there are people that argue against it for no reason whatsoever.

When I was in school, I remember a debate about teaching evolution. To cut to the chase, many Christians (not all by a long shot) have thought that evolution undermines their religion, and no matter how much evidence there is for it, these Christians will choose facts to fit their beliefs. That includes denying evolution, but also denying the fossil record (which supports evolution) and the age of the Earth (which supports evolution). This sometimes means denying modern microbiology and cancer biology (which are evolution in action). It’s fairly well-known by anyone who isn’t a Christian that this is a Dumb Thing To Do, and that picking your facts based on your beliefs just leaves you looking stupid.

But then I found that while the Christians do it, the anti-Christians do it too.

Let’s be clear: some atheists are just people who don’t believe in God. That’s fine, everyone has their beliefs. But some atheists are better termed anti-theists, they are people who oppose religion and its existence entirely. And it is these atheists that have constructed their own theories of “Intelligent Design” to support their ideas. Often these theories try to prove that Christianity is not only false, but that is is a complete con from start to finish and that no one truly believes in it anyway.

The Atheist version of Intelligent Design is the “Jesus Myth Theory.” This is the idea that not only was Jesus just a mortal man (not the son of God), but that there was never even a person called Jesus at all, and that this is proof that Christianity was an invented scam. To be blunt, this idea has no more credence than Intelligent Design, but so-called rational atheists who turn up their nose at the stupid Christians with their stupid Intelligent Design will still believe this idea because they have chosen their facts based on their beliefs. I may write a post later about the evidence for Jesus’ existence, but the point I’m trying to make is that even communities which are adamant in their own rationality can wind up being suckered into myths just because those myths agree with what they want to believe.

Let’s get one thing straight: EVERYONE believes that they’re rational. Everyone believes that their opinions are backed by evidence, backed by science, fundamentally true, and that only the dumb and misled would ever believe something different. That’s what makes the self-professed “Rationalist” community so misguided: claiming you’re the only community focused on rational beliefs is just admitting that you’ve never spoken to a community different than your own.

EVERY community believes they are the rational ones, believes they are driven by facts and not emotions, believes that the others are ignoring facts to suit their opinions. And the Rationalist community has it’s own Intelligent Design theories just as the Atheist and the Christian communities do. A good Rationalist, Atheist, or Christian should of course never believe something just because their compatriots believe it, or just because it would support some of their ideology, but a good Rationalist, Atheist, or Christian must also recognize that they probably have biases themselves and that their own community probably harbors an “Intelligent Design” theory all its own.

In the hallowed halls of Twitter and social media it’s widely believed that only the Left of the political spectrum knows and respects science, all right-wing beliefs are obviously false and dis-proven by data. The the exact inverse is believed on the right. I know both communities are havens of their own misinformation. I have seen too many on the Left tell me that supply and demand don’t exist, that building more housing doesn’t lower rent and cost and that inflation is driven only by corporate greed and not supply or demand. I have likewise seen the misinformation on the right over gun deaths, drug crime, vaccines and the like. I’m sure some of my own beliefs are misinformation, but we are all the heroes in our own stories and so self-reflection is very hard.

But I just wrote this post because even if I’m only screaming into the void I wanted to remind people that everyone thinks they are rational. Your political enemies who you consider irrational and emotional idiots are human just like you, and they arrived at their beliefs through the exact same human mechanisms you did. Are you sure anything and everything you believe is true? Are you sure there could never be any evidence that supports your opponents? Don’t dismiss people are idiots just because they believe something else, most humans are just as rational as you.

Tariffs are taxes, I’m tired of pretending otherwise

Every politician says they’re lowering taxes. Or if they raise taxes, it’s only on the rich, poor people definitely deserve lower taxes. So do middle class people (where “middle class” equals “everyone less than rich” and “rich” equals “everyone richer than my current audience and me”). Taxes are unpopular and taxes shouldn’t be raised.

But tariffs are fine apparently. In a new wave of protectionism, Biden and Trump have jacked up tariffs on everything from solar panels to lumbar. And despite claims of “national security” and “containing China” these tariffs have most strongly hit America’s allies such as Canada and Germany. The national security claims are bunk, these tariffs hit allies far more than they hit enemies.

But still Biden doesn’t get pushback for raising taxes because “tariffs” aren’t seen as taxes. Wrongly, most people don’t realize that slapping a tax on imported goods raises the price of all of those goods, even the locally made ones. Think of it like this: if Biden slapped a tax on Pepsi such that every Pepsi now costed 5$, would Coca-Cola sit back and keep their prices? Of course not, as a greedy company Coca-Cola knows that customers will flock to its lower-priced products, and this will give it the ammunition to raise prices to juuuuuuuust under what Pepsi has. So now 4$ Cokes will become the norm.

So too does it happen with tariffs. When you raise the price of Canadian lumbar, American lumbar companies also raise their prices because they know the consumer has no choice but to take it. When you raise the price of German steel, American steel raises its prices. These taxes on foreign goods have raised the price on all goods. They then raise the price of what those goods are used for, for example lumbar tariffs are raising house prices. And what do you call it when the price of goods rises over time? Inflation.

Biden’s tariffs are adding to inflation. Trump’s tariffs are adding to inflation. Tariffs are nothing more than a tax on goods, a tax that the poor and middle class pay most as they are the ones most damaged by inflation. I’m tired of house prices soaring in part because of these new taxes. I’m tired of solar panel prices soaring as well. It’s all very two-faced of the Biden admin to claim global warming is an existential threat and then do everything in their power to kill the solar industry with new tariffs. Taxing it into the ground only makes global warming worse.

So I’m tired of these tariffs, they’re nothing more than a tax. And I’m not going to pretend otherwise.

Building on the green belt

Kier Starmer wants to build houses on the green belt. For those of you who don’t know, the “green belt” is an area around some English cities where house-building is heavily restricted. It’s name conjures images of pristine creeks and primeval forests, land that has been protected since the dawn of time and must remain so. But nothing could be further from the trust, most of the green belt is monoculture farms and car parks. The only thing “green” about it is the branding. Which is exactly why the Green Party and other self-proclaimed “environmental” groups are so heavily opposed to Kier Starmer’s plan.

In far too many cases, I’ve seen that “Green” and “Environmental” groups are really just NIMBYs. High rise development is far more efficient than spread out housing, but green groups in my city are opposed to it. The German Greens are famously anti-nuclear, but pro-coal; or rather national Greens are fine with coal away from them but local Greens hate coal in their backyard. And in California, CEQA and other environmental regulation has destroyed the state’s ability to build nearly anything. The state has decided to little by little allow special carve-outs to CEQA for projects of dire need (or good kickbacks) but has still refused to just scrap CEQA for good.

But to bring it back to housing, I think the utter lack of housing in most of the Western world is a damn crime, and the entrenched groups opposed to housing must be fought at every turn.

Just take the Green Belt, a quick search of social media shows that many self-proclaimed leftists are up in arms about it. But what is so wrong with a car park being replaced by houses? And the Tories are against it as well, but why should a supposed party of free market economics forbid people from building what they want on their property? If I want to turn my house into an apartment block, why should Big Government forbid me?

The reason is of course NIMBYs, and there’s an entire Maginot Line of mottes and baileys that the NIMBYs have constructed to defend their arguments and their property values. The most baffling is their claim that more supply doesn’t lower prices. In fact some go so far as to claim that a new apartment will raise housing prices in the area through some mechanism heretofore unknown to economics. But think for even half a second: when there was a shortage of eggs just this year, what happened? The price of eggs rose, yes? And when the egg shortage was alleviated by more production, then what happened? The price fell, just as supply and demand says it will. When there is more of stuff, prices go down.

If a brand new high-priced apartment gets built, then a rich lawyer and family can move out of his luxury apartment from the 90s which is sort of grotty after 30 years of use. Now a young couple can move into that apartment from the 90s, moving out of their tiny apartment in the suburbs. And now someone who was homeless or living with family can move into the tiny apartment vacated by the couple. New housing, even ultra-expensive luxury housing, lowers the price of all housing as people move into it and move out of where they currently are.

Another NIMBY motte is the demand that instead of building new houses, we should implement a policy that is utterly useless. Usually they demand that we should have rent control, or forbid foreigners from owning houses, or forbid corporations from owning them. Absolutely none of these things help in the slightest, in fact rent control is actively harmful. Yet NIMBYs will claim we should never ever build a single new home until these useless policies are implemented.

I saw a truly mask-off moment on social media when talking about Boulder Colorado. I wasn’t aware, but Boulder is one of the most unaffordable cities in America. And on a news story talking about such, the response from Boulder residents was clear: “you don’t have a right to live in Boulder, if it’s too expensive then get richer or leave. We don’t want more houses or apartments because it would change the character of Boulder.” You could very easily see George Wallace saying the same thing.

At the end of the day, NIMBYs think that they, personally, should be immune to market or government forces. Their neighbor should not be allowed to build a bigger house on his land because it would affect them personally. And the government should not be allowed to build houses either because again it would affect them personally. NIMBYism is a blight upon capitalism and a war against the poor. I think anyone on the Left, Right, or Center should oppose it.

So god-speed Starmer, and please build 10 million houses on the green belt you beautiful centrist bastard you.

The Many Failures of Industrial Policy

“Industrial policy” is once again the word of the day. Much like how Margaret Thatcher’s greatest triumph was Tony Blair, Donald Trump’s greatest triumph will be Joe Biden. Thatcher forced her opponents to change their policy, socialism was nixed from Blair’s Labour, and Starmer it seems unlikely to bring it back. So too did Donald Trump make free trade into a dirty word for Democrats and American politicians in general. Whereas Obama, Clinton, and 2 Bushes all championed free trade agreements, Biden increased tariffs on everyone he could (even Canada). And instead of free trade and free competition, he has made directed subsidies of domestic industry his main economic plank.

Tariffs and subsidies make up the economic policy known as “industrial policy” and to be blunt, I hate it. Industrial Policy exactly what Servan-Schreiber proposed in his book “The American Challenge,” and I think looking at that book with a modern lens outlines industrial policy’s biggest flaws. You can’t predict the future, and so a government that tries to force its economy in certain directions often winds up funding dead ends and missing out on the next big thing. Look at what Servan-Schreiber thought governments should fund (supersonic planes, space industry), and look how much of it was bunk. Now look at all the things Servan-Schreiber didn’t think were worth a mention (genetics, the Internet, renewable energy) and look at how they’ve transformed our modern economies. And Servan-Schreiber wasn’t some rando, he was a French politician who could make actual decisions on French industrial policy.

The government just isn’t as good as the market in actually innovating. And a hands-on government is more likely to try to smother innovation to protect jobs rather than allow creative destruction to increase productivity and national happiness.

There’s also the inherent corruption that comes with the government funding industries. Why is Intel given so much money for making microchips when there are plenty of other chip companies out there? The excuse is that Intel is making “more important” chips, but it looks to me like they’re just plowing government subsidies right back into their dividend, handing that money to their billionaire share-holders. So billionaires receive billions of Federal Dollars, and we’re supposed to assume this isn’t corruption?

I don’t like the government giving handouts and bailouts to their favorite, politically connected billionaires. I’d prefer companies be forced to stand up on their own 2 feet like the workers have to. You want to corner the chip industry? Do it by providing a better product, don’t just demand ever more subsidies and protectionism.

This sort of policy is exactly the kind of failure that we learned about in Latin American history as well. Many countries in the 20th century instituted a policy of “imports subsidizing industrialization,” where they raised tariffs on foreign goods to subsidize domestic industry. This led to political capture by the industrialist however, as they realized it was far easier to protect their profits by demanding ever higher tariffs and subsidies rather than investing in producing better products. In the end these countries were left with bloated, uneconomical industrial sectors giving sub-par products to customers. The customers lost as they got less for their money than if they could just buy foreign products without the tariffs. Even today Brazil has extortionate prices on consumer electronics, higher than any other country, and the prices only go down on the rare occasions when the tariffs get cut.

So I don’t want industrial policy, and I want it even less knowing that my political opponents can control it. America currently has a divided government, but a united government that engage in industrial policy is by far the most likely to simply hand the money to the most politically connected industrialists at the expense of everyone else. If you’re a Democrat, would you want Trump to be handing billions of taxpayer’s dollars to his favorite industries?

And I don’t want the government to subsidize dead end industries at the expense of growing ones. I don’t want them to cut off creative destruction and leave us with hand-weavers instead of looms. I don’t want them to protect domestic manufacturers and leave consumers worse off. I don’t like industrial policy, and I think Biden’s greatest failure is that he has become Trump’s greatest triumph.

Fitch Downgrades America’s credit rating

I’ve spoken before about how credit rating agencies are downgrading the debt of nations. Now, Fitch has downgraded America’s credit rating from AAA to AA+. Once again I’m seeing a lot of conspiracy theories about this and I thought I’d take a moment to hit back against them.

The first conspiracy is the common one that the financial system is conspiring against the common man. This sort of conspiracy is no different from the old “evil bankers control the world” trope, but it gets a lot more traction online when it’s framed with a leftist slant. To be blunt, the financial system is competing with itself more than it is conspiring with itself. Fitch is competing with the other credit rating agencies (Moody’s, S&P) and if it downgrades America’s credit for no reason, it would lose trust in the eyes of the financial institutions which pay for its ratings.

Ratings agencies rate all kinds of debt, not just sovereign bonds. And financial institutions will pay for those ratings so they know where to invest and where to avoid. Trust is key to this, and without trust, Fitch would die. If financial institutions don’t trust Fitch’s ratings, they simply won’t pay for them and will take their business elsewhere. So Fitch cannot in any way downgrade ratings in a way that the broader financial market would not agree with, otherwise it would destroy trust and tank its business model.

In this, there is a common chicken and egg problem with ratings agencies in that they usually only change their ratings when the broader market is already leaning in a certain direction. IE they are followers, not leaders. But that that just lends more credence to their ratings. The market was already very willing to believe that America needed a downgrade, so Fitch isn’t doing anything out of the ordinary. It’s the politicians who have screwed the people on this one, not the ratings agencies.

The other, similar conspiracy I’ve seen is that the ratings agencies are conspiring to undermine Biden and tank his presidency. Biden has been trying to tout the strong economy, and some liberal commentators have been upset that the public doesn’t always buy it. So of course this must be just another GOP plot to brainwash the voters that the Biden economy isn’t awesome.

I would point out however that American real wages are still below where they were when Biden took office. Note for example that real wages declined 3.6% from June 2021 to June 2022. That’s a big dip, and people notice it. People’s ambivalence about the economy isn’t some nefarious plot, it’s very clear when listening to people’s complaints (inflation) and looking at the data (real wages dropping). It’s also quite understandable that ratings agencies have looked at this very same data, as well as the rising debt amid partisan bickering over how to pay it. From this, they might reasonable downgrade America’s credit rating. Not everything is a conspiracy against one’s favorite politician.

Many people will point to 2008 and the financial crisis about why we can never trust ratings agencies again. But that was over a decade and a half ago and every country added new laws to constrain financial institutions. Saying you can’t trust Fitch because of 2008 is like saying you can’t trust the Labour Party because they were in charge during 2008.

So Fitch has downgraded America’s credit rating, and it seems the financial markets were broadly ready to believe them. Rather that stew in conspiracies, it is better to take these criticisms to heart and find a way to fix them.

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.

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.

AI art killed art like video killed the radio star

Everyone knows the song “Video Killed the Radio Star” by the Buggles, it was one of the earliest big hits on MTV (back when it was still called Music Television). The song is pretty good, but it also speaks to a genuine fear and wonder about our world, that changing technology upends our social fabric and destroys our livelihood. The radio star who just wasn’t pretty enough for video, or couldn’t compete with the big production values of music videos, or just didn’t like dancing and being seen at all. That radio star is the Dickensian protagonist of the modern age, as they are tossed aside and replaced when new technology comes along.

This Luddite fear has pervaded throughout history. The loom-smashing followers of Ned Ludd are only the most famous, but there were silent actors who never made it in talkies. There were photo-realistic painters who could never compete with a camera. John Henry died trying to beat a steam drill. In each case, an argument could be made that the new technology removed some important human element. The painters could claim that photography wasn’t “true art”. And the loom smashers too probably believed that their handcrafts were more “real” and more deserving of respect than the soulless cloth that replaced it.

So why is AI art any different? Why should we care about the modern Luddites who want to ban it or restrict it? I say we shouldn’t.

AI art steals from other artists to make its images

common argument

No more than any artist “steals” when they learn from the old masters. It is a grievous misunderstanding of how AI works to claim that it cuts and pastes from other images, and an AI training itself on a dataset of art is no different than an art student doing the same whether in university or on their own. The counter-argument I’ve heard is “why are you ascribing rights to an AI that should only belong to humans! Yes humans can learn from other art, but AI shouldn’t have the right to!” I’m not ascribing anything to AI, the person who coded the AI and the person who used the AI have the right to use any images they can find, just as an artist does. And just as the output of an artist learning from old masters is itself new art, so too is the output of coding or using an AI that has been trained on old works.

AI art is soulless

common argument

As soulless as loom-made fabric is compared to hand-made. Or as soulless as a photograph is compared to a hand-painted picture. Being made with a machine doesn’t detract from something for me, and I think only bias causes it to detract from others.

AI art takes money out of artists’ pockets, it should be banned to protect the workers’ paychecks

common argument

Why is the money of the workers more important than the money of the consumers? Loom-made fabric competes with hand-spun fabric, should we smash looms to keep the tailors’ wages up? Are we ok with having everything cost more because it would hurt someone’s business if they had to compete against a machine? The counter-argument I’ve seen to this is that the old jobs replaced by AI were all terrible drudgery and it’s good that they were replaced, whereas art is the highest of human expressions and should never be replaced. Again I think this is presentism and a misreading of history. I’m sure there were tailors and seamstresses who though sewing and making fabric was the absolute bomb, who loved their job and though that their clothes had so much heart and soul that they were works of art in and of themselves. And I know there are artists in the modern day for whom most of their work is dull drudgery.

Thinking that your job and only your job is the highest form of human expression and should never be replaced, well to me that just shows a clear lack of empathy towards everyone else on earth. No one’s job is safe from automation, but all of society reaps the benefits of automation. We can all now afford far more food, more clothing, more everything, since we started automating manual labor. Labor saving creates jobs, it doesn’t destroy them, it frees people to put their efforts towards other tasks. We need to make sure that the people who lose their jobs due to automation are still cared for by society, but we should not halt technological progress just to protect them. AI art allows creators and consumers to have more art available than they otherwise would. Game designers can whip up art far more quickly, role-players can get a character portrait without having to pay, this lets people have far more art available than they otherwise would. In the same way that the loom let us have far more clothing available than we otherwise would.

AI art is always terrible

common argument

I find it funny that this often comes paired in internet discourse with “I’m constantly paranoid and wondering if the picture I’m looking at was made by AI or not.” There’s a very Umberto Eco-esque argument going on in anti-AI spaces. AI is both terrible and easily spotted, but also insidious and you never quite know if what you’re seeing is AI, and also everyone is now using AI art instead of “real” art.

If real art is better than AI art, wouldn’t there be a market for it still? There’s still a market for good food even though McDonald’s exists, if AI art is terrible and soulless than it isn’t really a danger to anyone who can’t make good art themselves. And if AI art is always terrible, then why are so many people worried about whether the picture they’re seeing is AI-made or not? Shouldn’t it always be obvious?

This is very obviously an emotional argument. If you can convince someone that a picture was not made with AI, they’ll defend it. If you convince them it was made with AI, they’ll attack it.

This was a vague disconnected rant, but I’ve become sort of jaded to the AI arguments I’ve seen going on. I had thought that modern society had somewhat grown out of Ludditism. And to be frank, many of the people I see making anti-AI arguments are supposedly pro-science and pro-rationalism. But it seems that ideology only works so long as their “tribe” doesn’t ever get threatened.