ATOM Award of the Month, February 2018

For this month's ATOM AotM, we will address the sector that any thought leader in technological disruption recognizes as the primary obstruction to real progress.  When we see that sectors that are overdue for disruption, such as medicine, education, and construction all happen to be sectors with high government involvement, the logical progression leads us to question why government itself cannot deliver basic services at comparable costs to private sector equivalents. 

As just one example out of hundreds, in California and other high-tax states, the annual license plate registration can cost $400/year.  What does the taxpayer truly receive?  The ability to trace license plates to driver's licenses and insurance.  Why should such a simple system cost so much?  It seems that it should only cost $2/year under 2018 technological levels.  By contrast, note how much value you receive from a $96/year Netflix subscription.  By all accounts, many basic government services could easily implement cost reductions of 98-99%.  

While the subject of government inefficiency vs. the ATOM is perhaps the primary topic of this website and the ATOM publication, just one small example across the world demonstrates what a modernized government looks like.  The tiny country of Estonia contains just 1.3 million people.  A desire to catch up from decades of being part of the Soviet Union perhaps spurred them into a unique desire to modernize and digitize government services into a state that Americans would scarcely believe could exist.  Here are some articles by publication about Estonia's successful digitization, where you can read about specific details :

The New Yorker

The Atlantic

Fortune

Estonia has also taken early steps towards certain ATOM realities.  While it does have high consumption taxes, income tax is a flat 21%, thereby saving immense costs in complexity and processing (which cost the US over $700 Billion/yr).  If only it figures out the ATOM principles around monetization of technological deflation, it could reduce income taxes to zero.  

Now, for the unfortunate part.  When a country manages to produce a product or service that the rest of the world wants and cannot produce at the same quality and price themselves, the first country can export the product to the outside world.  From Taiwanese chipsets to South Korean smartphones and television sets to Italian cheeses, the extension of sales to exports is straightforward.  Yet in the governance sector, despite being a third of the world economy, Estonia has no market where it can sell its services to hasten the digitization of other governments.  Whether at the Federal, State, City, or County level, the United States has hundreds of governments that could simply hire Estonian consultants and implementation staff to rapidly install new services.  This could be lucrative enough to make Estonia a very wealthy country, and then attract competition from other countries (such as nearby Finland, which is attempting to follow Estonia's path).  Yet, unlike a private sector product or service, governance just does not value efficiency or productivity to this extent.  The State of California alone could save billions of dollars per year, and either spend the taxes on other things, or (preferably) pass the savings on to the taxpayers.

Before long, the ATOM will force even the largest nation states to improve their productivity of government services.  But that process will be messy, and government officials may take a scorched-earth approach to defending their own rice bowls.  Let us hope that Estonia inspires at least a few other countries into voluntary modernization.   

 

Related ATOM Chapters :

10. Implementation of the ATOM Age for Nations.

 

 

Comments

[Drew]

Hi Kartik, This one is a bad example because the state is clearly trying to collect for other costs in addition to simply registration in car registration - highway patrol, etc. It's a user fee collected as part of registration. Drew

[Kartik Gada]

Drew,

That is obviously not the case. Why do some states have only $30/yr registration? They have highway police as well. Plus, moving violations in CA also cost several times more than some low-cost states.

[Drew]

Because California has higher taxes in general probably, they are just using it as "tollbooth" to collect against autos. In the future you might even justify it that with the rise of electric cars and the decline of gas tax revenue this is how you fund highway work without monitoring everyone's cars and charging depending on when and where you drive.
It's also like some states have sales tax, some have income tax, some have both, its all collecting money. Cheers, Drew

[fatcat]

Hi Kartik,
>That is obviously not the case. Why do some states have only $30/yr registration? They have highway police as well. Plus, moving violations in CA also cost several times more than some low-cost state

obviously because the people are willing to pay this tax in disguise in Cali but will simply not in other places. Why they can get away with it is another question. Now, if the money suddenly dries up then the states will start looking for efficiencies to cut costs. But rarely before.

[Sunny]

So whatever happened to that article you were going to write explaining why the 40-50% correction didn't happen in and around 2017 ?. It is spring 2018.
Or are you capitulating like the other bears.
Keep in mind since you wrote it, amazon has tripled. It was 475-525 when your Atom article came out and the last I checked it was closing or had closed on 1500.00. I have been defending the ATOM amongst the people I shared it with. But it is hard defending something when you look like the fool and everyone else is or already has laughed all the way to the bank. Frankly I don't think your premise is ever going to come true. They didn't let a proper 10% correction playout in FEB. So what makes you think, they will ever allow a 40-50 % correction to ever happen. I am afraid you are going to have to hedge your core premise of the 40-50% correction to something else. It just isn't going to happen. The eventualities in your hypotheses may very well come to fruition but not due to a crash in the market. I think you were wrong in your timing and your scale.

[Kartik Gada]

Sunny,

In fact, on LinkedIn I called the exact day of the market top, with timestamp and everything (Jan 26, 2018) :

https://www.linkedin.com/feed/update/urn:li:activity:6365241958880940033

But I never said that this would specifically happen in 2017. Where did you get that idea?

Regarding the rest, we have been over this before. If you actually think that the Fed will not allow even a 5% correction (as you said before in the link above), and then you cite a single stock (AMZN) as an example rather than a broader index, then you aren't really looking at the right indicators. Among other things, the Fed is rapidly unwinding its balance sheet.

Nothing I wrote has been disproven yet. The fact that ^vix is now high and is not declining to 2017 levels itself proves that the top is behind us.

Furthermore, remember that I told you before that Indians are prone to groupthink and superficial analysis of complex subjects. I also told you that you didn't present the ATOM to them properly (presenting the 2017-18 prediction as the entirety of the ATOM publication). In such a case, another article by me won't extricate you from the situation you got yourself into with them. Get the bullish Indians who are laughing at you to admit that this is because of Trump (who was the wildcard that is in fact delaying the recession).

It just isn't going to happen.

Really? No recession ever again? Let's see what you say when it does happen.

[Geoman]

The simple answer to government services, privatize them.

For example, the DMV. The state can simply license private companies to provide the services on behalf of the state. California changes $400 per year for car registration? I'm going to guess that $200 of that $400 is state expenses. So, simply offer private enterprise $50 to administer car registration. My guess is lines will disappear overnight, costs will be cut, and the state will pick up an extra $150 a pop for registration.

Medicare? Let private insurers/clinics/hospitals bid on providing the services for different areas. Auctioning off provider contracts is pretty easy to do.

[Kartik Gada]

Geoman,

If only! You have just identified an extra 15% of one-time economic growth that could be had, but is not.

Frankly, states like CA and the Federal Govt. could even hire Estonian consultants to execute and implement this.

[Geoman]

I've never understood something about the affordable care act - why oh why did the government decide to set up and run the website? I mean, if they had just said, we want a single nationwide website that sells health insurance, the insurance companies would have formed a consortium, and built the website overnight, for free. And it would have worked. We have similar websites to buy hotels rooms, plane tickets, and car insurance. The Obama administration decision to build it themselves was mind boggling stupid. Even contracting it out was astonishingly stupid. Heck, give Amazon or Costco and a $1 flat rate transaction fee to run the website and see it running the next day at no government cost.

I do work for the government, for which I get a pretty hefty fee. But naturally, my fee is not what I take home, and includes all sorts of company overhead, along with a small (7%) profit. I had a government contracting officer argue with me once that I was grossly overpaid because he had looked at his paycheck, divide it up by the number of hours he worked, and realized he was getting 25% as much as I was charging, and asked, do I really think I am 4 times smarter than him? I didn't know where to even begin with that level of economic ignorance.

[Kartik Gada]

Geoman,

You probably ARE 4 times smarter than him.

Anyway, his mentality is the same as when we hear about the 'pay gap' that women endure relative to men (one of the most basic tests of economic literacy (or lack thereof) that exists).

[Geoman]

What is the saying? It is not that people are dumb, it is that they "know" so many things that just aren't true. A big part of getting smarter is what I like to call the "great un-knowing", that is approaching more problems without pre-conceived notions.

Looking at the pay gap controversy - way too many people think they know the answer without actually examining the data, which is pretty crystal clear and not especially complicated.

[fatcat]

Hi Geoman, Kartik

>You probably ARE 4 times smarter than him.
It is curious how one can quantify the smartness to be x times smarter than someone.

We can more or less determine if A is smarter than B. And if we use the same standards we could have a total sort order. The IQ concept assumes that 100 is the average of the normal distribution curve. But the IQ tests are harder and harder to define the moment you get 2 sigmas away from the center. And the distribution is distorted. On the lower end you can hardly have IQ less than 60 and survive without special hand, and even less able to take the test. So you have somewhat hard cut-off around IQ=50.
So how much smarter are you over somebody who cannot solve a given problem ? Infinitely? What he can solve another one you cannot solve? if we took the same test and got the same result but you finished in half the time are you twice as smart as I am ? (that's how we measure computers :) )

Over the years, I have had a few aha moments where I've got enlightenment ideas or noticed things my smart peers couldn't see initially but got them when i raised the concept. A genius might have such moments every day. And yet on a normal office-drone job might be not performing that well.

And ironically, the pay is not so strongly correlated with how smart are you. The bargaining and social skills might be more important as long as have a bit more than the minimum qualification needed for the job.

[Cloudswrest]

Off topic. The link to "The Techno-sponge" article appears to be dead.

http://www.singularity2050.com/2010/07/the-technosponge.html

[Geoman]

Hey fatcat,

Intelligence is an interesting thing. Women are clustered in intelligence around IQ 100, whereas men have an over presentation in both the high and low ends of the spectrum. So it is amusing that people get upset that most Nobel prize winners are men, without noting most people with 60 IQ are also men.

You are right of course, it is hard to definitively quantify intelligence. Memory is certainly a huge part of it, and people with low IQ can have fantastic memories, and solve problems based on memorization alone. IQ tests, for all their faults, are the best thing we have. And speed counts for an IQ test.

The theoretical limit to IQ is 1,000. IQ is attached to a number of genes, and maximizing each and every one of those factors in favor of intelligence gets us to the theoretical. The highest IQs ever measured are in the 250-300 range. Mostly men, with a couple of notable women. So in theory, assuming your average government official is male and below average (say 80 IQ), it is theoretically possible, to be twice as smart, but unlikely to be 4 times as intelligent.

Also, surveys of executives at the top of companies find that a majority of them display overt sociopathic tendencies, and 20% have psychopathic behaviors. Which are also much more present in men than women. Again, women complain about male CEOs, but not about over representation of male serial killers. It is theorized that extremes in intelligence (high and low) are closely linked to anti-social behaviors.

The hallmarks of the psychopathic personality involve egocentric, grandiose behavior, completely lacking empathy and conscience. Additionally, psychopaths may be charismatic, charming, and adept at manipulating one-on-one interactions. I've had more than a couple of bosses I thought were high functioning psychopaths.

[fatcat]

Hi Geoman,
So in theory, assuming your average government official is male and below average (say 80 IQ), it is theoretically possible, to be twice as smart, but unlikely to be 4 times as intelligent.

Don't forget that an presents IQ rarity and ranking and cannot be compared linearly. It is more wrong than saying that 20db is twice as loud as 10db. With the sound at least you have a log scale. IQ is not a scale but a rank + score+rarity... Also the test are calibrated for small range. They are very good around 100, probably useful up to 130. The extremity on the lower end probably is easier to calibrate, since we are smarter than the retarded people. Do moment you go above 180 it is very questionable what are you getting as result.

Anyway it is a nice off-topic

[fatcat]

Again, women complain about male CEOs, but not about over representation of male serial killers
Yes they do . It is along the lines of the males being brute by nature. On the other hand, they don’t care about men below 60 which might as well not exist

Also, surveys of executives at the top of companies find that a majority of them display overt sociopathic tendencies, and 20% have psychopathic behaviors…. The hallmarks of the psychopathic personality involve egocentric, grandiose behavior, completely lacking empathy and conscience. Additionally, psychopaths may be charismatic, charming, and adept at manipulating one-on-one interactions. I've had more than a couple of bosses I thought were high functioning psychopaths.
I would say those are somewhat necessary features for a boss. Helps you get to there. Not running the company well, though 

[fatcat]

Hi Kartik,
I think it is time to add another nomination for Atom Award of the Month.
It should go to the online sales/shopping which already causes many brick&mortar stores to close. I think it wasn’t awarded yet.

Another future nomination I would like to add is the arrival of the self-driving cars. It is not causing disruptions yet (if we don’t count uber vs waymo lawsuit ) but in a few years it will put more people out of job than there ever were coal miners in US.

And finally, I would like to add somewhat an anti-award. I hereby nominate the Bitcoins and other block-chain coins. For the moment they are creating a net negative impact. But on the other hand, they are pushing speculators' money into graphic cards and computer hardware. So, ATI and Nvidia will have nice operational income. Also the mining operations help exposing the electric grid inefficiencies.

[Stephen Murray]

Suggestion for ATOM of the Month

Youtube/podcasts as a rival to printed materials, as explained by the Good Doctor here

https://youtu.be/U4BoRsPUwUs?t=8m18s

[Geoman]

Fat cat - excellent points.

[Max]

Fatcat, i don't understand...why bitcoins and other cryptocurrencies are creating a net negative impact? can you explain it? thanks.