Economic Trendline Reversion Does Not Happen Evenly

If we could point to one aspect that makes the modern era different from centuries past, the premier candidate for that distinction is how the centuries-established exponential, accelerating trend of technological progress manifests in economics, and the fact that the trendline is now in a steep upward trajectory.  These are all worldwide metrics, and have to be.  But if one examines the components, the variance contained therein is immense.

One table that I use relatively often is the one that depicts relative GDP gain by country, and have in the past used it to describe how the 2008-09 crisis led to the rebound happening elsewhere.  Google has just updated its economic data engine for 2017, enabling a full decade to be included from the start of the prior crisis.   This enables us to see what happens when the global economy experiences a major dislocation.  The Great Depression (1929-39) was one such dislocaton, and while the trendline is too steep today for a downturn of similar duration to manifest in the global economy, the more recent dislocation was almost as dramatic in terms of how it reoriented the tectonic plates of the global economy.  

From the table, we see that the World Economy grew by 40% in Nominal GDP.  We do not adjust for inflation in these metrics for reasons detailed in the ATOM publication, and we take the US$ metric as universal.  

The US, remarkably, did not grow at a much slower rate than the world average, and hence has not yet experienced a substantial proportional shrinkage.  By contrast, the rest of the advanced world has scarcely grown at all, while European economies have outright shrunk.  An advanced country, of course, does not have the same set of factors to contend with as an emerging economy that is at a stage where high growth is easier, hence this is really two tables in one.  India's underperformance relative to China is just as substandard as the UK's underperformance relative to the US.  

China has effectively dominated the entire world's growth.  China has grown at an astounding 245%, partly due to a structural strengthening of its currency, which itself is partly due to their more advanced understanding of technological deflation and the monetization of such through their central bank (as per the ATOM concepts).  India has not experienced any such strengthening of its currency (quite the opposite, in fact), which is why India's economy has grown at a far slower rate despite starting from a very low base.  

Consider this other chart, of GDP distribution by country (as per the current borders) from the year 1 until 2017.  The growth of China (and to a lesser extent, India) appears to be a reversion to a status quo that existed from the dawn of civilization all the way until the early 19th century.  If this factor is combined with the exponential trend of world growth, then China's current outperformance seems less like an aberration.  

This begs the question of what the next decade will look like.  There is almost no chance that China can outperform the RoW by the same magnitude from this point onwards, simply due to the RoW no longer being large enough to manage the same intake of Chinese exports relative to China's size as before.  But will the convergence take the form of China slowing down or the RoW speeding up?  Will India experience the same convergence to pre-19th century proportional size, or is India a lost cause?

Under the ATOM program, it could certainly be the latter, since the advanced economies already have enough technological deflation that they can monetize it through central bank monetary creation.  China, by contrast, will not be technologically dense enough for it until 2024 or so.  The US could rise to 5-6%/year Real GDP growth by 2025.  

The current mindset in the Economics profession is vastly outdated, and there is little to no curiosity about accelerating economic growth rates, or about the relationship between technological deflation and central bank monetary action.  If China can no longer be an outlet to accommodate the entirety of the trendline reversion force that is seeking to work around these obstructions, then explosive growth combined with chaotic disruption will happen somewhere else.  

 

Related ATOM Chapters :

2.  The Exponential Trendline of Economic Growth

 

 

Comments

[HB]

I had a similar vague perception in my mind so thanks a lot for presenting it more quantitatively.

"An advanced country, of course, cannot grow at the same speed as a country starting from a lower base,..."

To be more exact this may be a general trend but it's far from universally true. Were that the case there would not be prosperity disparities between countries. As soon as a country got significantly ahead, its growth rate would slow down and the rest of the world would catch up. The current great disparities exist exactly because some countries maintain above world average growth rates in spite of having already launched ahead. This is actually what happened in the US in the nineteenth and twentieth centuries. The US maintained a growth rate higher than average in spite of already having achieved "developed" status in those eras, Hence the huge prosperity disparity between the US and most of the world. This growth leadership seems to have subsided in the US, hence our prosperity leadership is currently eroding, albeit slowly, while Europe's prosperity leadership is eroding fast. At this rate most of Western Europe will classify as middle income countries by mid century.

In my view countries with big governments , bureaucracy/regulation, and lots of interventionism and redistribution, inevitably create flatter effort/reward curves, thus less motivated citizens, thus slower growth. That is why the US growth rate has slowed down. Because for a near majority of Americans Europe has become their model continent to imitate.

By mid century average per capita income will have reached the much slow growing European levels. If that is the fate awaiting the US then the best personal skill to master at this point is mobility and emigration. Seems unthinkable, but as the ATOM moves along great tectonic changes will happen ever faster and the unthinkable may arrive within just a few decades. People need to get used to a faster and ever accelerating pace. It is likely that, just like the space traveller is torn apart approaching the black hole, most voter-lemmings will be shred apart by the approaching singularity.

[Kartik Gada]

HB,

I corrected the article. Obviously, the correlation between a low base and growth rate is not that high. Only in Asia are countries consistently growing quickly.

Africa has little to no per capita growth, while Singapore continues to grow rapidly despite being more prosperous than the US.

[HB]

Yes, I agree that there is a correlation. I think its primarily the advantage a less developed country may have in being able to see and copy the trajectories of developed countries that have travelled that road, even though many of these once faster than world average growing countries have now become bad models with severely subpar growth rates (e.g. Europe).

I'm also reluctant to attribute the growth disparities to the interventionist practice of inflating the money supply. Great growth disparities existed in the world well before there was any technological deflation.

I have voiced my objection in the past about the practice of addressing technological deflation through money printing, so I'd rather avoid much repetition here. In short, my view is that the money printing practice remains essentially redistributive, something that effectively flattens the effort/reward curve and thus leads to lower growth, compared to a less interventionist approach. I see no reason to jettison all current economic thinking just to keep the current economic idea that deflation is necessarily bad. Let deflation be -- so that the benefits of accelerating technology do benefit those who contribute to it, in an unfettered meritocratic manner. Printing money to essentially redistribute part of the ATOM benefit is essentially redistribution, a socialism for the ATOM era of sorts, which will stifle incentives and thus growth compared to what it would have otherwise been.

I think that the reason China has developed so fast is exactly that China has, in the last three decades, moved a lot towards a less interventionist economic approach, with effort/reward curves that are closer to those of a free market capitalist economy. It has by no means reached free market capitalism status. However it went from a completely planned, zero freedom, virtually flat effort/reward curve economy to moderate levels of freedom. Moderate levels of freedom correspond to moderate per capita prosperity, a prosperity level where China is still some distance from, hence it is growing fast towards its new equilibrium point, the middle per capita prosperity point.

So the question is what will happen to China when it reaches that equilibrium point whereby middle economic freedom begets middle per capita income prosperity. My guess is that its growth will slow down unless it moves towards a freer and smaller government regime, something quite challenging with an entrenched communist state. That being said, Asian cultures are better at swallowing their pride and copying more successful systems, so China may yet free its economy beyond my expectations.

In many ways, China has gone from a communist economy with virtually zero economic freedom, and thus near zero incentives, to a fascist economy where meritocracy is at least somewhat respected, albeit in the reduced crony fashion that meritocracy is inevitably compromised in a fascist totalitarian regime. If China continues to liberalize its economy then its per capita income will continue growing at a fast pace, and by mid century it will have reached the per capita prosperity of the dismal growth European big welfare government states. China will then reach American per capita income levels rather soon after that, perhaps after another two decades, by year 2070 or so.

Of course, as everything human is now moving very fast, and accelerating to breakneck velocities, disruptions and trajectories may differ quite a bit from my more steady state predictions -- especially when we are talking about long time horizons of half a century. Most countries will likely see dramatic changes that we currently regard as unthinkable-- some countries for the better, some for the worse-- with the underlying ATOM supporting an overall very positive outlook -- on average.

In addition, as growth rates are accelerating worldwide, the divergences in prosperity will also magnify in my view. My personal advice to people is to stay mobile, so that they can geo-arbitrage different decisions that different countries will make. The western world outlook does not look too good right now. The voter-lemmings of the western world have voted themselves too much redistribution, too much regulation, and too big of a government. More specifically, the voter-lemmings of Europe, their big welfare states, and their flatter effort/reward curves have a pretty dismal outlook going forward. So does the US if that is the continent a majority of Americans seem poised to follow. So do indeed stay mobile! Things we thought unthinkable may be just a couple of decades, or a couple of years, away.

In my view India's underperformance relative to China is due to the fact that India remains stuck in the strongly interventionist hippie-socialist principles of the Gandhi era. I'm sure that people more familiar with the country have more opinions on the details, but that is my general assessment.

With growth rates below average world growth rates nothing is sustainable -- nothing! Economic decline sucks everything down with it. No country with a growth rate below world average will survive for long.

[Kartik Gada]

HB,

I'm also reluctant to attribute the growth disparities to the interventionist practice of inflating the money supply.

That is not what it is. It is merely the progression of technological economics to the next stage. Once could express similar consternation about how companies see their market cap rise on the basis of estimated earnings that may be 5, 10, or even 15 years away. This is a progression of a similar nature and magnitude.

Of course, as everything human is now moving very fast, and accelerating to breakneck velocities, disruptions and trajectories may differ quite a bit from my more steady state predictions -- especially when we are talking about long time horizons of half a century. Most countries will likely see dramatic changes that we currently regard as unthinkable-- some countries for the better, some for the worse-- with the underlying ATOM supporting an overall very positive outlook -- on average.

The thing is, China understands parts of this. Technology really is 'winner take all', and China is willing to devote money printing to the goal of outcompeting Silicon Valley. Silicon Valley could see its dominance reverse faster than they expect.

Economic decline sucks everything down with it. No country with a growth rate below world average will survive for long.

Europe's stagnation is more ominous than they realize. They are falling behind at a rapid pace. In 2007, the UK was still 2.5x the size of India, but now they are equal. That the UK was almost as big as China as recently as 2007 seems incredible today, with China now 4x larger.

[TOM SCHILLER]

In 2016, you talked about the factors that would lead to the next major financial crisis.

http://www.singularity2050.com/2016/07/the-2017-crisis.html

Are you going to revisit this topic soon and update your predictions based on everything that happened in 2017 (Trump presidency, tax cuts, trade wars, etc.)

[Kartik Gada]

Tom Schiller,

Yes, at some point I will. We are clearly not in a recession yet, but at the same time, the ^vix is definitely behaving like a pre-recession, and has been since the end of 2017.

Two other factors.
i) Trump was a total surprise. The entire economy was teetering until the election result surprise (which could either be interpreted as pro-Trump or merely 'thank god we don't have Hillary).
ii) China and Japan have figured out these economics much better than the US has, which, as I wrote, is the way that the crisis can be avoided. China and Japan QE is propping up the entire world, and is even compensating for the US's wrongheaded interest-rate hikes and balance-sheet unwinding.

[HB]

Kartik,

Talking about Europe...

I am from Europe, have grown up and lived there, and I can assure you that virtually nobody on that continent realizes how quickly the continent is sliding in prosperity rankings -- and what the arithmetically inevitable result is.

Whether out of ignorance or desperation, Europe is doubling down on its self righteous goals of a flatter effort reward curve. The few (very few) who dare point out the dismal European no-growth rates -- and thus its deterministic trajectory towards decline and irrelevance -- are quickly silenced with hollow cliches; "people above profits" and the like.

At current trendlines average world per capita income surpasses European levels by 2060. And that is just at current trendlines, completely ignoring the ATOM effects whereby economic growth is not only exponential but the exponent itself is rising. Few people realize how exceptional world growth trendline has been in the last three decades, now hovering at around four percent. Never in human history has there been such growth. And, of course, as I said, this completely ignores the ATOM whereby the growth rate itself will explode.

Even at current trendlines, completely ignoring ATOM for a second, worldwide per capita income rises from $13,000 today to around $500,000 by the end of the century (mind you inflation adjusted, nominal will be even higher), yet most of the world, and especially Europe, pretends to be worried about an additional half degree rise in global temperatures. The epitome of pathetic.

If you are in a 1-2% growth trendline country, you will be economically extinct well before global warming adds another degree of temperature.

Europeans have their head in the sand as to how quickly the rising world average will submerge them into irrelevance.

[Kartik Gada]

HB,

Perhaps you can tell me about something I have wondered for a while.

We know why the Eurozone is stagnant, but why isn't Eastern Europe growing fast enough to achieve parity with Western Europe? With the possible exception of Poland and a couple of the small Baltic states, Eastern Europe appears to be stuck in middle-income status with moribund growth rates. This includes Russia, which has vast natural resource wealth and intelligent people.

China is almost up to full parity with EE + Russia, and India today is where this Bloc was in 2002, but is growing at twice the rate as the Bloc did from 2002-present.

[Kartik Gada]

HB,

Few people realize how exceptional world growth trendline has been in the last three decades, now hovering at around four percent. Never in human history has there been such growth.

Not merely few, but almost none. There are less than five people (including me) that have written anything substantive about this subject in the last 10 years. When I Google something as broad as 'Exponential Economic Growth', I see my own charts!

There is no subject that affects more people yet has so little written about it. If more were aware, then much more enlightened economic and governance policies could be enacted.

Among the many details worthy of consideration :

i) GDP will become increasingly inadequate to measure this exponential trend, as GDP rewards doing 'more with more', rather than the 'same with less', while most technology is about the latter. This is explored in Chapter 2 of the ATOM.
ii) The 'years' gradient. Since Nominal GDP converges up to PPP as a country matures, we can see how even poor countries, if fast-growing, are not very far behind, in calendar years, from seemingly much more prosperous countries/regions.

For example, India is where EE (as an aggregation) was in 2002. India is where Latin America was in 1998. But each of these regions only grew at 3-4% after this stage, vs. India's current 7.5%. Hence, despite India's deep poverty to this day, true liberation is not very far in years at all, provided it can grow at the current rate or even just stay above 6%.

Similarly, China is where South Korea was in 1998, and is growing faster than South Korea did from that point. Mexico is where France was in 1980, but Mexico is not growing very fast.

[fatcat]

>Few people realize how exceptional world growth trendline has been in the last three decades, now hovering at around four percent. Never in human history has there been such growth.

Not merely few, but almost none. There are less than five people (including me) that have written anything substantive about this subject in the last 10 years. When I Google something as broad as 'Exponential Economic Growth', I see my own charts!

[off] First some off-topic. It is normal to have few internet posts on obscure topics. I remember researching a topic and finding related posts that I happened to post a few years earlier; they just got repackaged by content scrubbers. Ironically, I didn’t recognize them as mine for a few minutes. [/off]
There are many people recognizing that the last few decades, or even the last 200 years are quite uniquely unprecedented in the human history, however most of them assume that we will revert to slow or almost no growth. So, the exponential growth we have witnessed for them is just aberration that will soon be erased by the “normal” trend.
The question is how “soon” if the exponential phase fizzles in a few decades, we could be well after many doublings. If it stops after only 10 doublings it would be already thousand times more than today.
In fact, many writers will assume we are addicted to growth. The budgets are relying already on future growth. And even planners are hoping on exponential growth. All private pension funds assume unrelentless growth of the portfolio valuations. It just happens that nobody cares about the big picture and there is an implied assumption that the growth will “normalize” or slow-down in the future. Since there is a slow-down in the OECED world this notion looks convincing.

After all there are always physical limits. We cannot double our energy use indefinitely even with the cleanest technologies. At some point we will have so much waste heat that we will be boiling the planet. If we go off-world we can have a couple of hundred years until consuming the solar system. Then we will be limited by the speed of light. If we manage to avoid the speed of light limit in 30-60 doublings we could consume the whole known universe. So, there are limits. But we are not there yet.

Now assessing what are the physical limits to the economic growth is a different topic

[Kartik Gada]

fatcat,

however most of them assume that we will revert to slow or almost no growth.

This is where they are wrong. This trend has never, ever broken, and there is no evidence that it will.

What is more likely is that the exponential improvement decouples from a) GDP, and b) humanity entirely. The real exponential trend might be 'computational density' or 'intelligence density'.

We cannot double our energy use indefinitely even with the cleanest technologies. At some point we will have so much waste heat that we will be boiling the planet. If we go off-world we can have a couple of hundred years until consuming the solar system.

Again, humans will almost certainly not be the ones that colonize space. AI requires neither air nor water, and can survive a much wider band of temperature, pressure, gravity, and radiation than a human can.

The energy question is quite Malthusian, and the same mitigations through efficiency will emerge yet again, even if that means humans themselves are demoted. If an AI that is more suitable for space exploration is launched, its energy usage (both direct and indirect) might be millions or even billions of times lower than a spaceship carrying humans.

[fatcat]

Hi Kartik,
>What is more likely is that the exponential improvement decouples from a) GDP, and b) humanity entirely. The real exponential trend might be 'computational density' or 'intelligence density'.

We are going into uncharted territory here. Probably the best illustration would be Charles Stross' Accelerando (https://en.wikipedia.org/wiki/Accelerando)

On onehand it is too fantastic to consider. On another, if the acceleration trend contentious and accelerates, we have only a few decades before reaching similar scenarios. Probably the next couple of decades would be the most turbulent. After that we will either adapt or die miserably...

[Geoman]

Accelerando! I loved that book Fatcat. Nice to find another fan.

And i agree with the rest of you post. One effect of the singularity, even approaching the singularity, is that our measurement tools become distorted, and that inexplicable things start to occur. Time is compressed. The rules of economics start to crack.

I find our current economic situation fascinating - just a couple of years ago trump was laughed at for proposing 3-4% growth rates in the U.S. Now we are there. But how did we get there? What did he do? He simply lowered, slightly, the absurd corporate tax rates, especially taxes on importing profits. Cut some regulations. What is remarkable is how unremarkable his changes were. And those changes got us an extra 1% growth. $200 billion extra in growth each year, compounded. And what did we give up in exchange? Hardly anything. Its astonishing how easy it was to pick up a full point of extra growth.

I feel Europe is in the same position - really some minor changes to the tax structure and regulations would correct most of the imbalances and greatly increase growth rates. And growth feeds on itself, so growth in one country will drag the others up.

What is astonishing about it all is we know HOW to make an economy grow very rapidly. There is a stunningly good correlation between economic freedom indices and growth rates. Anything above an indices of 7 seems to be "good enough" to spur rapid growth. What we need to do is start pressuring countries - why are you not implementing programs we know work, and rapidly increaseing the wealth of your citizens? What possible excuse do they have not to do it? It is not remotely theoretical - we KNOW it works.

I see a lot of hope and potential in Africa. I think Ethiopia has turned a corner (8.5% growth), as well as Kenya (5%). Tanzania. Uganda. A whole east Africa strip that is experiencing real growth. There are some surprising bright spots.

And Poland grew 3.8% last year, which is not too shabby. Romania 5.5%. Bulgaria 3.6%. Versus France - 1.6%. the UK 2%. Denmark 1.9%. Germany 2.1%. So Eastern Europe is at leas a full point of growth ahead of western Europe, along with the U.S.

Again - we know what works. What excuse does France have for not growing at at least 3%? There are 192 countries, 106 are above 3% growth last year. That leaves 86 countries at sub-par growth. Imagine those countries jumping up above 3%. What a difference that would make.

And heck, India posted 7.5% real GDP growth last year, which is pretty damn good.

[Kartik Gada]

Geoman,

I believe the current burst is just due to the surprise election result. It mirrors the big downward shift we saw in August 2008, and the removal of the same anti-business force worked favorably this time.

But whether the 1% growth increase is just a one-time surge, or sustained in subsequent years, remains to be seen. Remember that the US is unwinding QE, which will be very bad unless China keeps doing enough to offset.

What is astonishing about it all is we know HOW to make an economy grow very rapidly. There is a stunningly good correlation between economic freedom indices and growth rates

I hope Artificial Intelligence is used in the policy sphere more. When the most suitable course of action is presented without bias or ideological blinkers, then it is harder for them to avoid these obvious prescriptions.

What is remarkable is how unremarkable his changes were.

But if we see that a few small changes enables a significant improvement, that just shows how constrained the economy is (we know that we are behind the long-term trendline). ATOM-DUES is precisely what is needed, as we really could get to 15%+ growth by 2033 under that. Almost every material scarcity of today will be gone (of course, new ones will be invented). Imagine the surge through having *no* income tax.

[HB]

Fatcat,

I'm familiar with the limits to growth thinking. However a disruptor is exactly that -- something that disrupts normal logical thinking -- something we cannot quite imagine, something beyond our current horizon, something beyond our deductive reasoning -- and there are many disruptors ahead. Actually, the trendline shows an increasing frequency of disruptors.

More practically, global engineering of a slower growth world is probably the most damaging thing we can do to ourselves, and our descendants. Therefore thanks, but no thanks, no slow growth activism for me. Problem is that typically the slow growth activists want the global imposition of this growth slowdown ideology. An ideology that claims to have predicted not only current scientific things, like e.g. the climatological trajectory of the planet, but also the human trajectory, and have thus come to the prediction that humanity will suffer because of growth several decades into the future. The human trajectory part of this prediction is of such speculative magnitude that I classify slow-growth activism as a religion rather than a science. My issue here obviously is that I will resist imposition of that religion on a global scale.

Imagine someone in the early eighteenth century, when all the laws of classical physics of energy conservation and transformation were already more or less known, making the (correct) statement: "The maximum energy output of a human is about half a horsepower and his minimum weight about one hundred pounds. Based on this ratio the fundamental laws of physics make human flight impossible. Therefore humans will never fly", which is BTW a statement that is correct, and remains correct to this day. This statement could have been made by a very smart person of the time, perhaps someone much much smarter than I, and the statement would have been correct. However, what this very intelligent and excellent at calculations and scientific thought person could not think is that humans will not fly on their own. They will invent something called "a machine", and then they will fly on the machine. But the machine, in an era where only living things produce energy is something outside our early eighteenth century scientist's imagination, no matter how smart and erudite he is. He cannot think of a machine (otherwise his scientific and logical mind would immediately recognize its tremendous potential and start working on it). He cannot think of machine and thus even less so of a machine evolving into a machine that flies, and even carries a human, what we call today an airplane. That is what a disruptor is. Something beyond the thinking horizon of even the smartest people.

This is like saying today, as Kartik aptly speculates, that humans may not expand into human form, but perhaps into some other form. Who knows? Perhaps ...let me think of something seemingly crazy... they will find out that what we were referring to as metaphysical phenomena and religions all along were clues to a different world, beyond our imagination, which is after all subject to scientific analysis and exploitation, or perhaps a different kind of thinking that is completely different than current thinking, or not ...like the relativity of time was once thought crazy and metaphysical. Of course I'm making up this example as something crazy, just to point out what disruptive thought is about. Well if not this crazy thing then what? Don't ask me specifics. Don't ask me about how when or where. I do not know. It is beyond the imagination horizon of people much more intelligent than I am. All I see is the trendline on the graph -- which points out to the ever more frequent occurrence of disruptors. Might it stop? Might it flatten out? I think it's unlikely though the probability is not zero. But most importantly and practically I think that a global coercive effort to try to slow it down (e.g. the "sustainability activism" religion) is one of the greatest disservices we can do to our future.

[Kartik Gada]

HB,

But most importantly and practically I think that a global coercive effort to try to slow it down (e.g. the "sustainability activism" religion) is one of the greatest disservices we can do to our future.

Absolutely, and countries like China can scarcely believe their luck. Countries that can (still) outcompete China on many fronts are shortsightedly choosing not to. Especially given the 'winner take all' nature of many technologies (from AI to eCommerce), that China seems to understand, but most of the West does not.

Also, as you point out upthread, the ability to change countries quickly and with confidence is going to be an important skill as the nation-states still refuse to make this easy. China could roll out the red carpet for select high-skilled Western Expats, with deals like 'No income tax for 20 years' or 'we have created an expat town that resembles Paris/London/San Francisco for you to live in' or something like that.

[HB]

Kartik,

Its so interesting that you are also so surprised by what seems to be a dearth of information and recognition about the exceptionality of current world-wide high growth rates, and its implication for the future, especially in light of an accelerating tend in the growth rate itself.

I too was wondering why does anybody talk about anything else? That is the most transforming harbinger of our future lives going forward. So I did a few google searches with keywords similar to the ones you mentioned and this is how I ran into your website. But indeed there's very little on the subject out there. So kudos to you. As a matter of fact I was thinking that the amount of information, technology, sophistication, and wealth that humanity will add by the end of the century will be larger than what humanity has achieved since the dawn of Homo sapiens -- something that you captured superbly and poetically with your dream about the history of humanity book. There's an almost metaphysical, perhaps even religious aspect to it, in realizing that after three billion years of evolution, life and intelligence finally take flight (metaphorically) sometime in this century. The coincidence seems really bezzare, a paradox I described in one of your earlier columns.

In any case, back to slightly more detailed issues...

Why does not Eastern Europe catch up to the Eurozone? In my opinion...

In a nutshell because many of the ex-communist countries of Europe still have low levels of economic freedom. It is incredibly difficult to reverse coercive collectivism once it has taken hold in the psyche of a nation. Therefore, people who grow up in a coercively collectivist environment find it virtually impossible to shake it off. With communism having failed they simply turned to other forms of coercive collectivism, not realizing that economic freedom is the wellspring of prosperity. Even when they do realize it, coercive collectivism is so ingrained into someone who grew up into it that they quickly find other alternative hopeful narratives in other forms of coercive collectivism.

BTW, that is why I am opposed to even just trying out your idea of re-distributing the technological deflation through the money supply. It is incredibly difficult to reverse coercive collectivism once it has taken hold. Coercive collectivism is like a drug. Once you have ingested it for a while then you are forever hooked and destined to low growth --and thus demise.

Why is coercive collectivism so addictive? Because i think it is ingrained in our DNA through our long evolution in a virtually static world, where obedience to the tribe and the static wisdom of elders yielded the best personal and tribal survival result. This is no longer true in our era where a person is born in one world and dies in a completely different one. In any case, the instinctive attraction to coercive collectivism is a related but separate topic. Back to Eastern Europe...,

So these ex-communist nations may have rejected communism and socialism with passion, but coercive collectivism still permeates the personalities of their voters so they gravitate towards other forms of coercive collectivism, like fascism. Russia has more or less completed this transition from communism to near fascism and other ex-communist nations are flirting with various levels of it. Coercive collectivism has such a strong hold on the personalities of these nations that they cannot let go of it. Ironically they embrace forms of fascism (ie. right wing coercive collectivism) and even view it as antithetical to socialism -- not realizing that they are essentially two different facets of the same coin. They hope that since coercive collectivism of the left has not worked, coercive collectivism of the right must be the right recipe, not realizing that either forms yield a flatter effort/reward curve, and thus result in lower growth, inability to keep up with a much faster growing world average, and thus inevitable relative decline.

My prediction is that once these Eastern European generations who remember and resent communism die off, these societies will revert back to socialism. Perhaps not communism but in any case revert back to enough redistribution to flatten the effort/reward curve and make keeping up with average world growth hopeless. For example many of these ex communist counties have already reversed the flat (and low) taxation systems they adopted as a backlash to communism with progressive tax rates.

On a side note, I think that one advantage of being multi-cultural is the confidence to reject practices that any one culture takes for granted. Absent a multi-cultural background it is virtually impossible to sustainably resist the peer pressure of the culture that surrounds you. Then only true mavericks, often with other pathologies, are the ones who can think out of the box. The advantage of a multi-cultural person is that they can then arbitrage irrational national obsessions.

Europe's endemic obsession is higher levels of coercive collectivism "We're all in this together -- hence you must be drafted to the communal goals-- whether you want it or not". Obviously Americans are not devoid of that mentality, but overall I'd say it is more muted here; perhaps forty percent less if I can quantify it purely by gut feeling. That is enough to lift the US to a higher growth rate trendline that almost keeps up with average world growth. But the key word here is "almost". Unless we move to higher freedom levels, and primarily economic freedom levels, our prosperity ranking in the world will also erode, albeit at a slower pace compared to Europe.

[Kartik Gada]

HB,

But indeed there's very little on the subject out there. So kudos to you.

Thanks. I have tried hard for many years to rectify this deficit with my own output, but we are still very far ahead of our time just on account of debating this subject.

As a matter of fact I was thinking that the amount of information, technology, sophistication, and wealth that humanity will add by the end of the century will be larger than what humanity has achieved since the dawn of Homo sapiens

End of the century? It will be much sooner than that. For one thing, contemplate that half of all economic growth that has ever happened, has happened after 1998 (which is also consistent with a 40% gain over the last decade, as per the table above). Hence, in what year will people say that 2018 was such a halfway point? No later than 2032 or so, possibly sooner.

Recall this :
http://atom.singularity2050.com/2-the-exponential-trendline-of-economic-growth.html

Plus this chart :
http://futurist.typepad.com/.a/6a00d83452455969e201b7c86ce56a970b-pi

Why is coercive collectivism so addictive?

Well, China did manage to overcome parts of this, even with force when necessary. It was far worse of a place than Eastern Europe until the 1980s, but look at what has happened after 1991. It has been an amazing portion of the entire world's net growth (and almost all of its net poverty reduction).

Many aspects of China's economy are still state owned, but taxation as a percentage of GDP is lower than America's (let alone the Eurozone's).

[Geoman]

I have noticed a trend toward cities and states experimenting with Universal basic income, which is a bit like the ATOM payments you propose. I suspect they will botch things up mightily, ruining prospects for ATOM like thinking going forward. The sense what the problem is, and the solution, but don't know enough about either to get it right.

"just shows how constrained the economy is (we know that we are behind the long-term trendline." I agree. I often wonder what the upper bound of growth for the U.S. might be if those constraints were removed. But naturally, even as Trump removes restraints, individual states and cities seek to re-impose them. So it is hard to gauge real effects.

How such a tired, shop worn philosophy of socialism still maintains its hold on people after all these years is one of the most baffling mysteries of our age. It is 100 years old, and despite ample and frequent evidence that socialist policies are economically disastrous, they continue to be pursued with ever more vigor. How is this still possible?

Heck, I'll repeat myself. We KNOW what works. We know exactly how it works and why. We can show the math. We have innumerable examples. We can outline a simple, inexpensive, and easily implantable program that will allow any economy to grow rapidly, at 4-6%. Over a short period of time, with compounding, countries will become very wealthy indeed. It is not a road to riches, it is a superhighway - straight, with no traffic.

Why everyone, from individuals to nations, believes in anything other than the proven methods of economic growth is anyone's guess.

[HB]

Geoman,

Well, it depends what you mean by socialism. To me, redistributing the benefits of the ATOM to essentially non contributors or low contributors, as universal income does redistribute, if anything by preventing the natural technological deflation, *is* a form of redistributive socialism.

While to others yet, economic freedom means the liberty to redistribute your wallet via the democratic process.

[HB]

Kartik,

Yes indeed modeling prosperity as a geometric series (as evidenced by trendline so far) humanity will indeed double its prosperity by 2032. Then the next doubling takes fewer years, then even fewer,... soon singularity.

Is there a limit? Who knows? There may be. But in my view it is at least many doublings away, while most of the world (at least the self-righteous policy world) seems to think that we have either reached capacity, or are close to it.

"Well, China did manage to overcome parts of this, even with force when necessary. It was far worse of a place than Eastern Europe until the 1980s, but look at what has happened after 1991. It has been an amazing portion of the entire world's net growth (and almost all of its net poverty reduction).
Many aspects of China's economy are still state owned, but taxation as a percentage of GDP is lower than America's (let alone the Eurozone's). "

How true.

Indeed China seems to send a very ominous sign to the voter-lemmings of developed democracies. It is the message of how important economic freedom is, and in many ways it shows the success of economic freedom --even when imposed-- I know, an oxymoron.

I know that economic freedom has many definitions, for example to some people economic freedom means the liberty to vote your wallet in their direction :), but one could argue that a person is freer today in China than in, say, France. Yes, in France you can demonstrate every weekend, apparently even naked if you wish, but day in and day out the French people, through democratic vote, confiscate more than half of your vitality with income taxes, excise taxes, and value added taxes. In China you cannot really demonstrate but the Party mandarins generally confiscate less of your vitality in taxes. Now, all said and done I think that economic freedom is quite low in China, because there are more aspects to economic freedom beyond taxation.

But China points out how inefficient have developed Western democracy voter-lemmings made their societies through the irresistible temptation of redistribution through the polls. The message is ominous in that if western world voter-lemmings continue on the same path then their democracies will end. The drain of decline sucks everything down with it: past prosperity, past civilizations,...and lofty ideals. Actually, more than China, what points out this trend is that virtually all western world "advanced" democracies have growth rates that are half the world average world growth rate, of lower. Clearly an arithmetically deterministic path to decline and marginalization within a few short decades.

I generally agree with geoman that top economic freedom rankings are the elixir of maintaining high growth rates even after you've achieved first world economy status. There are even some systematic indexes (like the one published by the Frazer institute in Canada or the Heritage foundation in the US) that try to quantitatively evaluate economic freedom and rankings. While such indexes are useful in tracking a country's overall progress (actually non-progress if you are a political progressive, in which case you read the index backwards) they are still of limited utility for inter country comparisons. This is because the index is composed of ten factors and each factor is (arbitrarily and for simplicity) equally weighted. Given the very high correlation between economic freedom and growth (and thus longer term prosperity), and given the small absolute score differences between countries, a slightly different weighting would yield different country rankings. For example, should property rights and low taxes be given equal weight? Seems arbitrary.

However generally I agree. High levels of economic freedom are the key to maintaining a growth rate that is above world average even after you've become a developed nation, and thus avoid reversion to average prosperity with time (an increasingly shorter and shorter time as everything human accelerates exponentially).

[Geoman]

HB

Too true. I think the index could be further refined, and work toward a bit of a better formula that quantifies the factors. And naturally the factors feed off each other, say, lower taxes combined with greater property rights generates more growth than the sum of the two. There are all sorts of interesting multiplicative aspects to growth.

[Kartik Gada]

Geoman,

Why everyone, from individuals to nations, believes in anything other than the proven methods of economic growth is anyone's guess.

It is not a guess at all. There are biological reasons that about 70% of voters can be suckered into socialism.

The famous article from Imran explains why most (but not all) of this group is the way it is (and it is still 25% of this website's traffic, even 8+ years on).

http://www.singularity2050.com/the-misandry-bubble/

Just the latest example : Alexandria O-C. It is not remarkable that an unmarried woman is a socialist. What is remarkable is that she a) studied Economics at Boston U and apparently retained nothing, and b) has no curiosity about the causes of economic growth whatsoever.

[Kartik Gada]

Geoman,

I have noticed a trend toward cities and states experimenting with Universal basic income, which is a bit like the ATOM payments you propose. I suspect they will botch things up mightily, ruining prospects for ATOM like thinking going forward. The sense what the problem is, and the solution, but don't know enough about either to get it right.

Oh, they specifically are screwing it up. From Stockton, CA to Finland, they do a small 'UBI' that is a) temporary, b) not assessed in relation to any other entitlement programs, and c) certainly not tied to 0% income tax. When nothing happens, they declare it a failure. They violate the very first letter of the acronym itself, which is 'U' for 'UNIVERSAL'. Only when it is UNIVERSAL and PERMANENT will the curve of the entire society shift favorably.

[Kartik Gada]

HB,

The problem with your opposition to turning ATOM monetization into DUES is that you are effectively guaranteeing the extermination of about 98% of humans, mostly by humans killing off each other.

We have two choices : Either help humans become a decent fraction of post-Singularity technology (the 'pet dog' analogy that Geoman shared), or let them shrink to almost nothing (Mountain Gorillas are 98% of the same DNA as humans, but only 500 still survive).

To put this another way, I take you back to 252 Million years ago.

The accelerating rate of change was already in effect, and the dominant category of creatures was amphibians. But a large asteroid hit the earth, and 96% of all marine species and 70% of land vertebrates went extinct. It was the largest extinction event ever to happen on Earth.

https://en.wikipedia.org/wiki/Permian%E2%80%93Triassic_extinction_event

The effects are still felt to this day. Amphibians exist only in three types (frogs, toads, and salamanders), and almost all are smaller than 1 kg in size. The more advanced categories (reptiles, birds, and mammals) filled the gap, and amphibians are just too small a percentage of the fauna biomass of Earth to matter much. While the megatrend recovered immediately and returned to the trendline, the category that was dominant never did. If the asteroid had never hit, the trendline would have been the same, but amphibians would be a much larger part of life today.

Similarly, the second largest extinction event ever (and the most famous one by far) was 66 million years ago.

https://en.wikipedia.org/wiki/Cretaceous%E2%80%93Paleogene_extinction_event

It was not as dramatic, as only 75% of all species on Earth were destroyed. But while reptiles were overwhelmingly dominant before the asteroid hit, all tetrapods larger than 25 kg died off except for sea turtles and crocodiles. Hence, while reptiles today are larger than amphibians, only four types still exist (lizards, snakes, turtles, and crocodiles). The trendline reverted back with birds and mammals. Had this second asteroid never hit, reptiles rather than mammals would be dominant today, even on the same trendline.

For this reason, a distribution of ATOM deflation enables more people to participate in innovation, more startups, and more demand for technology. Without this distribution, you will not have innovation, demand, or velocity of money. AI will still find a way to advance, but humans will probably get crowded out and most will end up killing each other. This distribution is sort of like ensuring either of the aforementioned asteroids did not hit. Even though we have no power to change the trendline, we do have some limited power to ensure it partly includes us post-Singularity or not.

More simply, certain societal resources have to be used to create markets. Roads always were and always will be disproportionately paid for by the Top 1%, but usable by all. By your method, there should be no roads. At the other extreme, socialists want to take this logic to everything, which is also terrible (as you correctly point out in Europe's case).

If societal resources to create a market has a positive ROI, it can be done. Private entities just won't do it. This still represents a massive shrinkage of govt. scope down to just a Central Bank that publishes a monthly DUES payout that was not money taken from any human.

Lastly, by paying their share of the ATOM, they can contribute in other ways - their consumption of technology generates more data, which is itself the fuel for AI. This data is valuable (as the market cap of Facebook, etc. proves), so their level of DUES payout pays for itself in terms of keeping their own country at the top of the AI race.

[Geoman]

Alexandria O-C is truly strange. Not that she has anything new to say, but that a person can get a degree in economics from an accredited university and believe in the things she says...it is just baffling how that is possible.

We know she is wrong. Mathematically, economically, historically, intellectually. The only question - does she know she is wrong?

In the run up to the singularity, it is very hard to chart the least bumpy course of action. In retrospect it will be obvious. But now? DUES might be it. But it might not be. I'm a fan - I think you are advocating for something that needs to be seriously discussed. It is worth talking about, and thinking about, even if we don't do it.

I suspect our main problem will be the need to react much faster than our politics will allow, and that the correct strategy will be changing strategies frequently at different key moments in the run-up to the singularity. It will be like the game of frogger, where we hope to not get run over.

Which makes Alexandria O-C slightly terrifying - do we want someone who not only learned nothing during her education, but obviously clings to tired, old, shopworn economic ideas? The worst possible choice going forward.

[Geoman]

I imagine the best possible singularity outcome is we don't even notice the singularity. Everything is simply better. Much better. Our lives are free from want. We are free to pursue whatever it is we desire. Our real rulers mostly work in the shadows, unseen.

The singularity enhanced portion of our race has moved off to bigger and better things - our care and maintenance is a triviality to them, like saving an old scrapbook in the garage. Too much trouble to bother tossing out. Mostly they just keep us from hurting one another, and leave us to our own devices.

[Kartik Gada]

Geoman,

The anti-misandry community often discusses which subjects are the ones completely out of reach of women. Economics and Astronomy consistently come up as the two highest-ranked fields of knowledge on this metric. Wikipedia never would release contribution by subject by gender (across all of Wikipedia, women contribute 13%), since articles in these two would indicate 100% male contribution.

Regarding Alexandria O-C, demographically she is precisely who the Democrats are trending towards (and thus what the GOPe will unsuccessfully try to copy). But if her economic views were libertarian, she would have got exactly the same number of votes, since her ideology is not the reason people voted for her at all. Getting an Economics degree from a highly ranked school and still having no clue says more about the farce that Universities have become more than anything else.

She even has an asteroid named after her! Yet, I bet she has no curiosity about astronomy whatsoever, even after that.

[HB]

BTW, good article on the misandry. Had never read it. Well written. I posted my thoughts on that thread. In short, misandry is not a bubble, it will stay for a while, and most likely intensify further, until technology enables men to reproduce (in some form) independently of women -- which in light of the exponential path to the singularity may not be that far off.

[Drew]

So, in regards to other predictions, we can expect the world economy to double again before 2040, with most growth occurring in the poorer areas. Wealthier areas that are not part of the global city archipelago (NYC, Singapore, etc) are likely to grow slower or decline. However, because of the IT deflation which is not included in these statistics, lifestyles should improve. Then another doubling of the economy before we get into Singularity territory, but a much greater IT deflation and quality of life increase.

[Kartik Gada]

Drew,

So, in regards to other predictions, we can expect the world economy to double again before 2040, with most growth occurring in the poorer areas.

Perhaps sooner. While the trendline is difficult to measure exactly, the doubling of size from end-of-2017 should be 2033-2037.

However, because of the IT deflation which is not included in these statistics, lifestyles should improve.

Yes, which is why ATOM-DUES is needed. If a town withers away on account of no tech-related industry, that is fine if people living there get a DUES.

[Geoman]

I'm fascinated by the concept of...more things being possible due to the power of computing.

Tail landing a rocket was discussed from the 1930s. Problem is they could never make it work right. It is not a coincidence that SpaceX was found by a guy who made his fortune in the computer business.

The fracking revolution is driven much more by computation and sensor improvements than most people realize.

Computation is allowing us to win wars we previously couldn't win. I have a friend who has a very interesting job in a foreign theater of war as a data analyst. Let's just say what he does is highly effective, and 20 years ago would not have been possible.

It goes on and on - previously moribund industries being revolutionized. Right now we are on the high end/value added curve. Rockets, winning wars, and producing hydrocarbons are luxury items, high cost, high reward. But the revolution is on-going, and more and more things are going to be impacted, in more and more profound ways.

I have a friend who is a history professor. He and I have been discussing this concept. That we could take a slice of history, and populate it with every single person alive at that moment. say...1930 united states. We could create, from existing records, files on each and every person. Every extant bit of information, everything in newspapers, on grave stones, genetic information from ancestors, everything in books, movies, etc. Every scrap of information. And form that, inside the computer, we would recreate the world of 1930 America.

Knowing what we know about the physical world, human nature, etc. we could generate personalities for each person. We would create digital people, much like a video game.

The program could then start to...predict the actions and interactions of each individual person. We could see the interactions of individuals...things that were not recorded, but must be true. For example, we know Roosevelt had a meeting in New York, and one day later gave a speech in Washington. We know how the president traveled, and could predict who he may have encountered along the way, and who each of those people might have met, and so on. With enough information, and computation power, we could start re-running history, backwards and forwards, from that point. We could then compare our fake history with what really happened, making adjustments till things lined up. And we would add more information from different years, and it would become more apparent what the connections between different people are. We could then extend this simulation to other countries, and further back in time. In the end we would have a functioning model of the entirety of human history, down to the individual. And as new documents were discovered, the model would be constantly tweaked. before long the model would predict things - this persona and that person had a torrid affair in Spain in 1922. Roosevelt almost decided to do this rather than that. Russia obviously had a spy in the court of Saint James.

This is just an example of the sort of thing that is coming our way - it hasn't been done because there is no value to it at this time. But coming it is, as the power of computing starts to spread into less high profile areas.

[HB]

Thanks. I was thinking...what is a simple chronological sequence that shows the doubling of world prosperity from today looking backwards? It would be something like 2018, 1998, ?, ?, is it simply a doubling geometric series? I think that would illustrate the exponential nature of things and show how total world growth is not only exponential (compounding) but that the exponent itself is growing.

[Kartik Gada]

HB,

It is definitely rising even in the second derivative. We don't know exactly where the trendline is (hence the range of dates provided), and the megatrend can decouple from GDP. For example, while Moore's Law is reaching its end, the growth of computation is not, as there are many aspects of computation that are much less dependent on Moore's Law.

But Chapter 2 of the ATOM covers both topics in great detail.
http://atom.singularity2050.com/2-the-exponential-trendline-of-economic-growth.html

[HB]

Thanks for the link to the history of human growth.

Being more familiar with European continent mentality, I'm reminded that a majority of European people/voters think the world has too much growth and that humanity needs to move away from a growth based model. Perhaps it is just a psychological adjustment of denial so that they can better deal with their rapidly declining prosperity ranking in the world, but it also explains why they are on the dismal trajectory they are on.

As an example, had the US had an annual growth rate of just 1% lower since 1900, American prosperity would be where Mexico is today.

Also, your very intuitive exploration of what might have happened had growth started a little earlier, or had it been a little faster, is quite illustrating. For example, when do you think a cure for cancer will be found? Yes this time things are indeed different, as we are making considerable advances in understanding and intervening in the micro molecular function of life itself. Actually, for the first time since life on earth three billion years ago, indeed perhaps for the first time in the whole universe, life is on the verge of taking control of its evolutional and biological destiny.

So when is a cancer cure found? Let's just say in 2070. Now... had human economic growth been 1% higher per year in the last century, we would already be there. In essence, any person who dies of cancer between now and 2070 (a couple of billion?) is a victim of slower growth. That puts the extreme cost of slow growth into perspective. One can change the time estimates for cancer cure discoveries but the essence of the argument does not change.

Yet, there are people for whom growth is a problem (they have a religion, the "sustainability" religion). And in Europe they seem to be a majority. Now, if this is the way for a nation to be politically informed, like Europe, then perhaps one is better off being politically naive, like Americans.

[Kartik Gada]

Geoman,

I'm fascinated by the concept of...more things being possible due to the power of computing.

Oh, yes. It ultimately diffuses into everything. More low-tech industries and products begin to improve at high-tech rates (we are about to see cars move into this trajectory). When this diffusion reaches 50%, that is a Singularity.

You may want to skim these again :

http://atom.singularity2050.com/3-technological-disruption-is-pervasive-and-deepening.html
http://atom.singularity2050.com/4-the-overlooked-economics-of-technology.html

One of the biggest chances of disruption is Artificial Intelligence moving into more decision-making. From government decisions about economic matters (since we know what boosts growth, but there are politically-driven reasons that certain factions oppose this), to the wholesale disruption of a dishonest media by AI (why are a few thousand people allowed to deceive hundreds of millions of people?). If the solutions to growth are obvious, and the costs of a deceptive, agenda-driven media are too high, technological adaptations around that are a certainty.

[Kartik Gada]

HB,

As an example, had the US had an annual growth rate of just 1% lower since 1900, American prosperity would be where Mexico is today.

That is very true. That presents many examples. India, despite its deep poverty to this day, is merely a few years behind a number of middle income countries as long as current growth rates hold.

So when is a cancer cure found? Let's just say in 2070. Now... had human economic growth been 1% higher per year in the last century, we would already be there. In essence, any person who dies of cancer between now and 2070 (a couple of billion?) is a victim of slower growth.

This is an excellent example, even if there are many cancers and each will see treatment breakthroughs at very different times. The only detail I would add is that the world trendline does not change much (and arguably cannot), so the low growth in Europe merely means Asia has higher growth than average. But that does mean that growth that went to moving destitute peasants to a more basic non-poverty happened instead of cancer cures for first-world cancer patients. Both are desirable, but which happens first is a function of which type of country the growth occurred in.

The table itself shows the stunning shift. The Eurozone used to be 4x the size of China a mere decade ago, but now the two are equal. The UK was 2.5x the size of India, but now the two are equal. What percentages will the next decade hold?

[fatcat]

Hi HB
For example, when do you think a cure for cancer will be found? Yes this time things are indeed different, as we are making considerable advances in understanding and intervening in the micro molecular function of life itself. Actually, for the first time since life on earth three billion years ago, indeed perhaps for the first time in the whole universe, life is on the verge of taking control of its evolutional and biological destiny.

So when is a cancer cure found?

A cure for "a" cancer existed even hundreds of years ago. Cancer is not a single disease but many different ones that happen to be under the same umbrella. For example, it might not be worth treating the prostate cancer at all for the elderly, since it grows so slowly and the side effects of treatments are so detrimental, that the treated patients lived shorter. A side point is that once the tumor is removed we don't call those people cured. We call them "in remission" . Every year there are discoveries, better options and more types of cancers become treatable and even "curable" . However, there was an estimate that even if we could cure all types of cancer as we do with simple infections, that would increase the life expectancy just by 7-8 years.

So , I think, you are not asking the right question. And the right question was asked by Aubrey de Grey. It is when we will cure aging ? A similar question was asked by Ray Kurzweil. He is too optimistic, though. Some of hist estimates are just a few years away from now, which is a obviously not happening unless Calico has some huge breakthrough happing overnight.

But your concept is correct. When we reach a certain level of prosperity the healt and aging becomes one of the main problems for the society. Nobody really cared about the aging when the life expectancy was 40 and your chances of dying form some infection or famine were quite high anyway. And the higher levels of growth we have the more resources we as a whole can afford to assign to researching health issues, or even we can get away with gross misallocations of capital.

[Geoman]

"... had human economic growth been 1% higher per year in the last century, we would already be there. In essence, any person who dies of cancer between now and 2070 (a couple of billion?) is a victim of slower growth."

Spread that idea across everything, and you'll quickly realize polices that limit growth are DEEPLY immoral and selfish.

Reducing growth in any country by just 1% per year condemn thousands of people to pain and death.

Given we know what works (economic freedom), at what point will some politician point this out? High taxes literally KILL people by reducing economic growth, even by a small amount. The regulatory state is literally killing its subjects by reducing growth.

Growth saves countries and the citizens in them.

The future can't arrive fast enough. Lives are at stake.

[Kartik Gada]

Geoman,

Given we know what works (economic freedom), at what point will some politician point this out? High taxes literally KILL people by reducing economic growth, even by a small amount. The regulatory state is literally killing its subjects by reducing growth.

Indeed. As HB points out, Europe believes it is moral by sloganeering about 'people before profits', but in reality it is going to harm both due to an anti-growth ideology.

It is weird that we have effectively made a case that China is more moral than many Western countries, at this point.

The case for ATOM-DUES is even stronger than I thought.

[Fatcat]

In essence, any person who dies of cancer between now and 2070 (a couple of billion?) is a victim of slower growth."

A similar argument could be made about global warming. I had the intuitive understanding that in 100 years time we would worry much less about a couple of degrees of temperature rise , and indeed, a couple of years ago, I stumbled on a paper discussing the trade-off of slower growth due to carbon emission controls vs higher growth and dealing with consequences later when everybody is richer and has more options.

Of course , this argument doesn't go well with the Gaia cultists...

Another illustration is that the growth per capita eliminates deaths. First from simple famine, then from reduced infections, reduced risk of accidents, harmful chemicals and such. Poverty is a fertile ground for armed conflicts too.

OECED people cannot really relate with the poverty of the developing countries. But constant growth means easier ways to repay the mortgage. It could mean higher real estate prices, but with consistent growth, even the now-outrageous costs can be palatable in a couple of decades.

All pension and retirement systems need constant growth in order to be solvent. That's why the Maltusians will call them a Ponzi scheme. And due to the compounding effect one extra percent growth now will be giving for as long as there's growth

[Kartik Gada]

Geoman,

Given we know what works (economic freedom), at what point will some politician point this out?

Female voters (and the 'men' who grovel to them) collectively represent 70-75% of the electorate. Women prefer status-quo stability over the churn inherent to growth (for reasons described in articles linked here). They also innately favor redistribution as they are always the net recipients. 70-80% of all government spending in the US is a transfer from men to women. Democracy puts this preference as the paramount goal of the nation state. This does not mean women are 'bad', just that they have very obsolete biological hardwiring. Men have similarly obsolete hardwiring on other matters.

China may win simply on account of not being a democracy. But Artificial Intelligence may help democracies find workarounds to mitigate this feminine obstacle to dynamic growth. This could include inundating women in media content of their preference (celebrity gossip, relationship advice, etc.) while pro-growth reforms are quietly enacted and feminist anti-growth laws are quietly allowed to expire.

This is an unpalatable truth, but if it were false, this blog would have 100 regular commenters, 25 of whom are female.

[Palamas]

First off, I love the blog additions, kudos to you and the others here throwing around interesting ideas based on varied thinking or vantage points. You may have recalled my earlier postings regarding the previous predictions you made re: 2016 entering a recession 2017. I'm a generally inquisitive guy (as you could have guessed after your comments above, lol) that is quite skeptical at the same time of most of you here regarding action/reaction, timing and predictions --- but I also treasure predictions precisely because they are bold and risky, and extremely hard to be correct on. But that's what men should do, another modern criticism I have of soft moderns, that of not wanting to commit to a position even when there's nothing to lose. I digress,

I came here because of various searches, certainly the misandry bubble was one, and I'm constantly flabbergasted in life about how obvious things such as growth (as you guys often refer to), or common sense (President Trump just does what any fairly smart guy would do, which shows you how destructive and stupid modern politics is, to stop such easy growth and "winning"), or even biological realities at this point have become so hard to face head on. I don't know if it was my upbringing or temperament, but I have always known what was BS. It seems that the BS to me is always a movement of the left with a) an attempt to confuse with language or outright lie and b) lie or deny biological realities. Then it's shifting principles (again, language meaning nothing as a result) when women are 60-40 outnumbering in college, or blacks are 89% of the NBA, etc regarding "equality" or whatever the new lied about term is. Anyway, you get it there are thousands of examples. Is it just that many people know this but the idiots are just the loudest or control the mic still? Obviously, there is a turnback of this going on ...

Getting back to humanity though and biology, one of the things I've noticed is that I suspect, and tell me if I'm right or wrong, you guys are prone to scientism. This is another renovation of the Tower of Babel, where humans think they can do it all on their own, they'll live forever, etc. "Curing" cancer, "curing" aging, etc, living with an uploaded consciousness ... not gonna happen, or at least are super odd pie in the sky ideas.

Also, China is proving the cultural unity prowess and exposing the democracy idol all at the same time. I think you're on to that, though they have and will have more problems. Of course, we'll stay tuned, and I'll continue to pick your brain, so I'll leave with a question:

Since they won't undergo your DUES program, when will the bond market finally collapse and being that they can't use it to re-introduce solvency or buy it back out, what will that reset look like? And how low will it go? Is that the time you say, go look for another high freedom country to live in?

Thanks,

P

[Geoman]

"Getting back to humanity though and biology, one of the things I've noticed is that I suspect, and tell me if I'm right or wrong, you guys are prone to scientism."

Wrong. I am strongly opposed to scientism.

The term scientism generally points to the cosmetic application of science in unwarranted situations. For example, "science says the drapes should be blue." It is science applied to inappropriate subjects. "Science says you have no soul." would be another such statement. The term scientism can also be said to be the dogmatic endorsement of scientific methodology and the reduction of all knowledge to only that which is measured. I believe that is false.

The purpose of this site (named The Futurist) is to try, with the best information available, to predict the future. Some of the predictions, many of them in fact, are positive. But some are very negative. In fact we have very long discussion of the negative consequences of science and technology. I don't think Kartik or anyone unilaterally endorses science applied to all things - where it appears positive we are excited, but where it appears negative we try and craft a workaround or solution to reduce the impacts. DUES is one such workaround, but there have been others proposed here.

And (I at least) recognize that there are values that are not subject to the scientific method. What kind of future do we want? Science can't tell me that. Do I actually want to live forever? Science has no answer. That is a lot of what we debate here - is the direction of the trend line line desirable? What can we do to change it? That is actually anti-scientism.

We are projecting existing trends forward. If the trend ends with "people are immortal by 2050" that is what the trend line is. Doesn't mean it will actually happen, or that I endorse it. But it does mean we should, as a species, should start thinking about it.

"Since they won't undergo your DUES program, when will the bond market finally collapse and being that they can't use it to re-introduce solvency or buy it back out, what will that reset look like? And how low will it go? Is that the time you say, go look for another high freedom country to live in?"

I don't know. Kartik can give a better date than I.

Again I say - we are entering the rapids toward the singularity. No one know what will happen in the next 30 years. We are accelerating toward some very big changes in our society. They are unavoidable.
We have not, as a human race, ever experienced anything quite like what is coming. So to the extent possible we should discuss the trends, and determine what, if any, response we should have based on our values.

[Kartik Gada]

Palamas,

On longevity, my position has always been that technology will take humans up to about 100 in average life span, but that is it. There just isn't a case for technology-derived human immortality, as only a tiny fraction of humans contribute to the ATOM. Rather, humans will merge with technology and many will exist in VR exclusively.

"Since they won't undergo your DUES program, when will the bond market finally collapse and being that they can't use it to re-introduce solvency or buy it back out, what will that reset look like?

China and Japan have figured out the benefits of high levels of central bank liquidity action, so are propping up the rest of the world for now.

[fatcat]

Since they won't undergo your DUES program
I would say, since the DUES is so far from the business as usual and it is such a radical depart from the usual paradigms, the only way it will be implemented is as a response to some massive and urgent problem and probably as a temporary measure.

For example, the income taxes were introduced as a temporary war measure. DUES still can co-exist with progressive taxes as long the rates are low and the exempt amounts are high enough. But then the compliance cost might eat a significant portion of the growth. For example, now we have so many anti-money laundering laws that a paypal-like system wouldn't even be possible (that's a paraphrased quote from Peter Thiel). Another field that is extremely regulated is the nuclear energy. we have at least 20 startups which are facing an uphil battle. There are also cartel-lobbied laws and industry de-facto standards. One is the DRM protected video signal, which has high tall on the hardware and software and stifles the innovation.

[Kartik Gada]

fatcat,

I would say, since the DUES is so far from the business as usual and it is such a radical depart from the usual paradigms, the only way it will be implemented is as a response to some massive and urgent problem and probably as a temporary measure.

Indeed. QE was started for that reason, but the US was hell bent on ensuring that it was temporary.

By contrast, Japan and China started it as you described, but are keeping it going since they believe it need not be stopped *until* problematic inflation appears. By contrast, the US made that it stopped three times, even when problematic inflation had not appeared (and still has not, 4 years after the US stoppage; they don't even see that without China/Japan/EU QE to this day, there would be outright deflation).

[fatcat]

Hi Kartik,
QE was introduced only after Lehman Brothers went south and everybody was scared of another great depression. However the QE was a neat, albeit controversial, hack to the existing system. To introduce DUES would require even a bigger scare. And usual depression is not enough. Probably when there is a looming unemployment of 30-40% , only then there will be some serous talks. And half of the time the efforts will be misguided like infrastructure projects and job training programs...

[Kartik Gada]

fatcat,

That is the problem. I desperately hope this can be done before millions of people suffer greatly, but alas..

The chance of a more proactive transition rests on a) a small country recognizing the size of the revenue stream that can effectively be captured for free (see the article two articles back), or b) Artificial Intelligence diffuses into policy-level decision-making of enough countries to a sufficient degree that AI makes stupid governments do the right thing for reasons they don't understand.

China is closer to figuring out the whole thing than the US or EU. Many ATOM-thinking people are rightly (if cautiously) recognizing that China is, in fact, becoming a more intelligently-run society than the US. The US is effectively spending an ever-rising share of its wealth (current and future) in an unwinnable campaign to fight nature itself.

[fatcat]

Hi Kartik,
the chances are not that big. All small countries follow the mainstream financial schools and they risk debasing their currencies since they are small by definition and they cannot efficiently capture the money printing rent. If such a small nation had some other form of national income the DUES cold be implemented based on the income of the sovereign fund. Especially, if the such fund is backed by govermental QE.

Probably Singapore or Norway could do some universal base income since they are small, have high enough GPD per capita and have extra income apart of taxing the people.

The problem with the concept of QE is that it is supposed to have an unwind option. At least in theory. And giving people money with no condition doesn't give that option. ...

[Kartik Gada]

fatcat,

Singapore does have a pegged currency.

BUT, the problem you state is precisely why the Sovereign Venture Fund is the right idea, as it gets around all of that. That was just two articles back :

http://www.singularity2050.com/2018/04/a-country-specific-solution-for-technological-competitiveness.html

[Kartik Gada]

HB, are you here?

I wanted to drive closure on the topic of ATOM gains being distributed back to people. See my comment above. In general, if we don't, 98% of humans will eventually be killed off (or kill each other off). Instead, if we do, humans may be a substantial part of the post-Singularity. The analysis of prior extinction events is analogous and instructive.

[Palamas]

Kartik,

Why 98% and why the kill-off? A "nothing more to live for" scenario and constant revolution/war or "nothing to provide" so as to end in starvation?

These are bold predictions given that your projections include our lifetimes.

[Kartik Gada]

Palamas,

See my comment above from July 18 at 7:30 PM.

See further up for HB's belief that ATOM gains should not be distributed evenly among human citizen adults, to which I am responding.

[HB]

Kartik,

Sorry, I'm here. Perhaps not that often...

I'm not sure about the applicability of the past extinction analogy. In those past extinctions humans gain a disproportionate power in a finite world. In those past extinctions humans do not significantly augment total world prosperity/resources. Most of their newly increased competence goes towards taking the resources away from other species (BTW, this adherence to a static world is s significant ideological driver of socialism whereby in a finite world the "haves" have because they have taken from the "have nots" not because they created new wealth). In our world most of our competence does not go towards taking from other species (or other humans as the leftist narrative goes) but rather goes towards creating new prosperity from scratch. Like, for example, growing meat in the lab, or from bacteria. The old mountain gorillas did not have food because indeed humans took their food or outright hunted them down. But the modern human does not have iPads because he took them from the gorillas.

The way I understand the foundation of your universal income proposal is that the ATOM produces so much wealth that some socialism and redistribution in the form of universal income is now finally warranted.

I'm skeptical on a quantitative basis and even more skeptical that any politician will indeed replace all current redistribution with universal income, that there will not be a runaway universal income in future elections, and that other forms of redistribution will never come back -- now on top of universal income.

In a way, it reminds me of climate change/sustainability activists who essentially say: "we regret all past forms of totalitarianism. They were all wrong. But this one... this one ... our sustainability mandate that controls what you will learn, where you will live, how you'll move around, how you will work, what you will eat, and even whether you are born at all.. this totalitarianism... is so important that it is finally inevitable. There was only one form of totalitarianism that was justified, and this is ours. We regret your loss of freedom but this time it's really necessary". The same devil with slightly different clothes; human-lemmings do not recognize him and welcome him into their houses as enlightened new progressive citizens.

I feel similarly about universal income. Same old socialist redistribution with new clothes, waiting to be embraced by voter-lemmings. Sorry but I'm still skeptical. Otherwise I'm honestly very grateful of your work Kartik. Especially in rationalizing the exponential nature of human progress and the importance of a continued positive second derivative to growth.

[Kartik Gada]

HB,

But it is not socialism when there is 0% income tax. I keep stressing this point. It is effectively the shrinkage of government through automation, and the monetization of technological deflation as a substitute for taxing humans.

As written in the ATOM publication, the gap between well-run countries vs. corrupt ones will widen, as the proclivity of politicians to creep up the payouts will lead to swift justice from the markets.

Furthermore, distributing ATOM gains to people makes them generate data which itself speeds up AI and other ATOM contributors. We have seen how so many companies effectively build immense businesses just from the data of users. The ATOM-DUES pays for itself just from the data that spending patterns of recipients generates.

In your alternative, the winner-take-all nature of technology will lead to the other 98% of humans descending into barbarism. This is where the extinction trends of the past are instructive.

[Geoman]

Let's be honest here - there is a cohort of humans that are functionally useless to our society. They produce no income, make no contribution. As moral beings we support this segment of our society in some form or another. We don't just let them die.

Going forward, with automation and A.I, this cohort, the group that simply does not have the tools to provide any value at all, will grow larger. At some point in the future it my swell to encompass the entire human race.

And then?

Then what? Something will have to change. There are very ugly versions of this future where a dwindling elite basically own everything and the rest of us subsist in abject poverty. I think that scenario is unlikely, but possible. To balance that we subject people to massive taxes, however, since money, and the elite, are mobile, they will just move away.

Kartik is proposing a system wherein we both monetize technological growth as it happens, and provide for the increasing cohort of have-nots. It is an elegant solution, with some problems, but I appreciate that it is honestly trying to address the issue.

To call it socialism is to miss the point. Socialism takes money from one group and gives it to another in the form of benefits. The ATOM monetizes deflation that would be occurring anyway. Imagine - instead of a computer screen costing $200 being deflated to $100, what if it stayed at $200, and the $100 in deflation was handled out to me? In other words, I get to decide how the deflation is applied in our economy, and can use it for my own purposes. I could use it to make the computer screen $100...but I also could use it to buy food, medicine, or make something else cheaper.

Instead of technological deflation, we get cash. It operates more like a trust fund than socialism. The faster technology progresses, the richer we all become. And because we are directing the deflation where it is needed (rather than where it occurs) we are, in theory, accelerating the process.

[Kartik Gada]

Geoman,

Certainly. Plus, I will go so far as to say that if some fraction of the otherwise useless people spend their DUES in a manner that generates valuable data (data that would not be generated if they had no money), than even these people are paying for themselves to varying degrees.

I would not be surprised if China figures this out, and implements a DUES-type, data-collecting program across 1 billion adults with their Central Bank money. Hell, they might pay kids all the way down to age 12. Hence, they end up dominating all AI.

[fatcat]

Even today,
there sectors of the economy with questionable usefulness . The legal industry is the most notorious example. Also one could argue that klingon language courses are not the most needed thing, yet they do exist and some people pay for them...

But what is useless now might provide for precious experience in the future.

For now the welfare is given to the underclass to provide for stability and avoid the criminality and riots. And naturally, the bottom quintile is comprised of people making bad decisions, who naturally tend to be people with lower IQ and bad social skills. It is hard to make a good living if you have poor work ethic, drug addictions, alcoholism, luck education or you are not bright enough and make poor financial choices. A criminal record doesn't help either. Now we can say that for most of them it is their fault and some of them are simply unlucky. We can turn away from the unwashed masses. That's the approach widely adopted the 19th century which lasted in some places of the develped world till the 50s of the 20th century. And it contributed, if not directly leading, to terrible atrocities, wars and suffering.

With the arrival of AI, the bottom quintile will become a quarter; then a third; and after not too long a half. There is a meme that asks you to imagine how stupid the average person is , and then to realize that half (well, not the median according to the meme) are even worse.

Imagine that half of the population is on the dole. The lucky few having lucrative jobs will resent the other half as useless human junk.

But due the the power low of distribution of the incomes the lucky half could be divided half too, where the relative incomes and members usefulness will be comparable to the first two halves. With the difference that the lower half of the upper half will be smart enough to comprehend it and have someone even worse for comparison and an example.

And the top 25 could be divided again in half and probably their relative importance and economic participation would have similar distribution.

Our society is rich enough to feed and cloth everybody, with any significant effort. With some effort we can provide a comfortable shelter too. So why stop here, if we are supposed to be even richer?

[HB]

There's no tax but there's redistribution. I'm obviously using socialism not in its strict definition of collectivizing the means of production but rather use "socialism" as a general term for redistribution. We went through this one before and I pointed out that when people are unconditionally given the benefit of something (ATOM in this case) without participating in its development then somewhere there's redistribution. There are many mechanisms of redistribution, taxes, mandates, forced help, universal income etc. which all amount to non participants or lesser participants enjoying more than they otherwise would in an unfettered market.

The point that many universal income supporters make is that some redistribution is inevitable and that universal income is the least damaging method of redistribution (does not flatten the effort/reward curve as much) so long as it's kept within certain bounds. Fair enough. I cannot argue on the subject quantitatively, whether the universal income levels you propose is more or less redistribution than current schemes and levels.

If markets swiftly punish those nations whose electorates overdo universal income then aren't those countries going to descend into barbarism? Same problem.

I'd like to clarify that I do not strictly separate people into ATOM contributors and non contributors. There are just different levels of contribution -- indeed varying by several orders of magnitude and likely diverging with time. My view is that reward should be proportional to contribution for the most unfettered effort/reward curve, the fastest growth -- and even the fastest path to singularity. So even a dog can be a contributor to the ATOM if the dog keeps its ATOM contributing owner happier and thus more productive long term. Even in the human pet situation the human provides some value, just like pets provide value to us today, and will be compensated proportionately.

People who are simple data sources are useless. Consumers, pure consumers who only consume and never produced anything in exchange ...are useless. They are producing data on what? On how to keep non producers consuming? How does that propel the ATOM? The only utility of truly useless people to the ATOM is the happiness that charity in supporting them provides to ATOM contributors. Again the caveat that people are not strictly divided into contributors and non-contributors.

PS. How do you actually know that HB is a human? He may already be emancipated AI from some obscure advanced lab trying to extinguish the useless human race...

Jokes aside the rest of my post had serious intent.

Geoman,
Lesser contributors will not live in abject poverty compared to today. Lesser contributors may live in abject *relative* poverty compared to the main contributors but will nonetheless live better - far better-- than today given the ATOM's ability to produce prosperity levels several orders of magnitude over today's prosperity levels. Most dogs today have better lives than a sixteenth century king of England. Nathan Rothschild the wealthiest person in the nineteenth century died from an infection. A dog today has antibiotics at his disposal.

If you monetize redistribution the contributors will escape to crypto currencies or other future vehicles. They will put their AI to work on how to evade redistribution to non-contributors.

Giving you a free laptop in the future (through universal income) will be peanuts, similar to buying a dog a can of food. This is not what non contributors will be after. They will want much bigger rewards, something that still takes afford for ATOM contributors to produce, ...and be only a vote away from obtaining these goodies if they only had more universal income.

The system proposed by universal income supporters is no different in principle than the view of socialist hippies in the sixties: "now that the machines will do all the work we can all just live off in our VW vans and be sustained by redistribution [i.e. equal access to the labor of the machines]". Substitute AI for machine and you have the proposed monetary redistribution.

Indeed what is termed "inequality" [of outcome] will increase, not because the bottom rungs get poorer but because the top rungs ascend so much. But I'd rather be the pet in a top rung AI society than a self-righteously dignified middle class human on copious universal income in a slower growing society left in the dust. This is already happening on a smaller scale today. Better poor in cruel Singapore than middle class in progressive redistributive Venezuela, ...and soon better than most of Europe. The redistribution proposal and trajectory is the same here.

[fatcat]

Hi Kartik,

it seems that the measured inflation is going above 2% even despite of QE unwinding. What does your model say about this ?

https://www.cnbc.com/2018/08/10/us-cpi-july-2018.html

[Kartik Gada]

fatcat,

World QE is still ongoing, and China has been offsetting the decline in US QE. China is hence propping up the rest of the world.

Keep in mind that inflation is always highest when the unemployment rate is the lowest. This is found at the top of the cycle.

[Geoman]

Unemployment is unlikely to be able to go any lower than it is right now. The only other option is for an increase to a) wages (which increases inflation), b) the labor force participation rate (which increases economic growth), or c) outsourcing and automation (which causes deflation). Likely all three.

Increasing labor costs will trigger technological deflation. So we have become decoupled from normal economic models. Growth can no longer be checked by inflation or labor market constrictions.

Look at truck drivers - can't find enough? Need to pay more. But that increases inflation, which triggers massive investment in self driving trucks, which reduces the number of drivers, reducing inflation. We are at the point where if inflation takes off, it forces faster deflation to occur.

We are getting to the point where everything we do just accelerates the ATOM - it is like a forest fire, creating its own weather pattern. Trying to stamp it out just fans the flames.

I like to think of it as the "weird" times - where everything we do is likely to have the opposite impact, where we loose control, and the economy will start to defy gravity, and the rules of economics will begin to break down.

In retrospect everything that happens will seem smooth and predictable, like tracing the path of a particle falling into a black hole. But for us, riding the particle, it will seem nonsensical and chaotic.

[Fatcat]

Kartik,
The inflation might be higher at higher employment because the money speed is greater. However, a higher employment rate would imply, caeteris paribus, more wealth created, which would require higher monetary supply. So, that money and liquidity for the salaries had to come from somewhere. Either by some credit grindstone multiplication effect, loans or international transfers. The international transfers would be making the local currency more expensive and exert deflating pressure ( and USD exchange rate is quite high now) yet we have some inflation. Of course even though your model is correct or cannot account for chaotic turbulences and transition effects, since they they are triggered by higher offer of feedback loops.

Do your think that China cold be capturing the QE tax for national gain?

[Fatcat]

Hello Geoman,
You are correct at the current compensation and productivity level it is hard to increase the emptying rate.

Why is interesting about the truck drivers is that set have some legally mandated ( and for good reason) restriction on their availability. Instead of driving trucks there might be other much simpler adjustments like allowing longer trailers on some highways. Allow apprentices with lower class license as a "co pilot" to allow the main driver to rest, and other adaptations. Having a longer trailers world be much simpler lobbying effort, than allowing self driving trucks.

Of course truckers are but only an example. There is shortage of nurses, programmers(there the salaries can go high to apparently indicent levels, but at least they are market driven and adjusted) and probably many other professions.

Now if low interests are promoting growth of antithesis 3% why not have even higher growth even if the inflation is double? I was always skeptical at the concept of overheating the economy. Any growth now will be compounded in the decades to come and I would rather risk inflation and have growth than a stable currency and stagnation.

We are trying to peer trough a smoked glass. And see things that the macroeconomics pundits dismiss.

[Kartik Gada]

fatcat,

I was always skeptical at the concept of overheating the economy.

Rightfully so, because the concept is very outdated.

Unless inflation peeks above 4%, it is not to be worried about at all. In fact 1% inflation is worse than 3% inflation.

At the moment, the momentum from the Trump tax reform is still fueling an extra leg of growth. Combine that with the fact that China has more than compensated for the US reversal of QE, and a recession is delayed. It also becomes apparent that the big downgrade in sentiment in August 2008 from the imminence of Obama was lifted from the surprise loss by Hillary, moving things back to the trendline that existed before August 2008 (although note that this is still not the technological trendline, which continues to be well behind where we should be).

Don't forget the impact of an $800B Deficit (4% of GDP) on inflation and GDP growth. That is an extra 4% of the economy spent today but borrowed against the future. If the deficit were reduced, where would inflation be?

Do your think that China cold be capturing the QE tax for national gain?

Partly, yes. They are not maximizing the full potential, but are at least moving in the right direction (unlike the US).

[Kartik Gada]

Under Trump, regulations being cut at record pace :

https://pjmedia.com/instapundit/304857/

This certainly extends the length of the economic expansion, and was unexpected in October 2016.

[Drew]

Hi KG,

Have you reviewed any of Peter Turchin's work? I find him the most credible of the pessimistic predictors with his Structural Demographic studies showing a lowering of wages/over supply of labor combining with a increasing number of elites competing with each other. Two big differences are technology/deflation - how much will people riot if they have food and Netfix as well as the fact that we are overall a much older population than in the past. So it could be instability, but with much less violence. Thanks, Drew

[Kartik Gada]

Drew,

I am not familiar with Peter Turchin's work.

But yes, technological deflation allows relative underperformance to be masked since absolute prosperity is not falling perceptibly. See the Eurozone's and the UK's performance in the table relative to the RoW, and see HB's comments about that. Since there is not a visible decline, they can be ignorant of/indifferent to the relative loss of ground.

We do, however, have some control about whether humanity is ~50% of the post-Singularity world, or just 5% of it, as described in comments above. Hyperconcentration of assets is not a good sign, unless old hyperconcentrations are continuously being toppled by new ones (which is sort of happening, but it should be more).

[Fatcat]

Karthik,
It seems that a fraction of your ideas are percolating slowly to the mainstream people.

https://www.news1130.com/2018/08/25/digitization-disrupt-banking-poloz/

[Kartik Gada]

Fatcat,

That is good. A new idea that greatly strengthens ATOM-DUES is for the government to collect the data that citizens generate simply from the expenditure of their DUES proceeds. Just like Amazon, Facebook, and Google, the nation-state can do this with the DUES it provides. At least the consumer is receiving money for their data (unlike with Facebook, Google, etc.). As the DUES rises exponentially, the consumer generates proportionally more data through spending it.

When I update the ATOM publication, this will be a feature of it. At least people will get paid for their data.

[Palamas]

Kartik,

It seems clear to me that the bond markets everywhere are really trending down and the markets outside of the US have also been going down. There is no doubt that the measures of foreign central banks like Japan and ECB have made America more attractive to invest as rates increase as well as in equities.

People have been doom-saying the US but in reality it's the best looking of the ugly sisters. While global issues can affect the US market prices as well, I don't see how it hurts the overall strength of the US economy, unless the paradox of the USD getting too strong causes it to be jettisoned somehow as the reserve currency. Volatility may increase but is there any doubt at this point the Dow and S&P soar past 30k, and towards 40?

[fooshik]

KG,

I'm finding it painfully difficult to find decent housing where I live. My family is growing, but even the most modest home is out of our reach. It's not that I live surrounded by mansions, it's that people keep buying up everything around me and pricing me out.

What can ATOM do in this case? I'd love to have an actual house.

[Drew]

Hi Fooshik,

Even under ATOM or other "post-scarcity" systems, there will still be some limited items. For example, housing in areas in which new housing is not allowed or available - such as beachfront properties in Malibu. What it should provide is alternatives such as either making it easier to live elsewhere and still do your current work and social life, or a better life within an apartment in that area.

You may have the wealth equivalent to a modern day multimillionaire, but even wealthier people may outbid you.

Under ATOM you will not have mansion in Paris similar to what a Rothschild had at the turn of the century, but you also won't lose a child to infection from a rose thorn as the same Rothschild could. Drew

[Kartik Gada]

fooshtik,

There are a number of mitigatons :

i) Many corporations allow people who live remotely to work there.
ii) Many online-based businesses exist.

Both of these have ATOM characteristics.

Now, the fact that some locations disallow most new construction (a very anti-ATOM behavior) will cause some locations to remain expensive, but these are outnumbered by the exurb and small-town locations that are inexpensive.

[fatcat]

fooshtik,
and the self driving cars are just around the corner. Waimo was supposed to start limited roll-out to the paying customers by the end of 2018. Once there are self-driving cars, you can afford longer commutes, since you would be able to have a nap in the car, or do other useful things. The fact that the commutable distance is longer means that you have almost square increase in the available land and eligible properties. If you double the acceptable commute distance, the reachable surface area goes up 4 times. And most of the newly acceptable properties are outside of the prime locations and hence cheaper.

Now the building jobs didn't get automated for the last 30 years. At lest not significantly, but there are options too. Like pre-fabricated modules, which can be assembled on site. ATOM will give more options. You might not like all of them, though (like the option of cheaper flights but reduced legroom and checked bag fee) and by the mass market forces they might displace the options you actually preferred (you might be not allowed to drive the car yourself anymore). But still you will have more options, which are superior in some ways.

[Kartik Gada]

The effect of self-driving cars on expensive but not truly Platinum-tier real estate could be quite dramatic. However, as discussed in prior articles, this vision will take until 2032 to fully manifest, as diffusion of self-driving cars has to not just be for the top 1% or top 10%, but the top 80%.

[Fatcat]

Kartik, we will know better when the first version hits the market. The median population could be exposed to automated buses, on demand vehicles and car pooling very fast. And it doesn't need a huge percentage of the people to cause downward pressure on the real estate prices... Still at least 7 years (my guestimate) until that really happens

[Kartik Gada]

Fatcat,

Recall this older article where we examined all aspects of this disruption :

http://www.singularity2050.com/2017/08/atom-award-of-the-month-august-2017.html

Of the four technologies involved (on demand, EVs, autonomous vehicles, and e-commerce), the disruption moves at the pace of the slowest of the four, which happens to be autonomous vehicles at present.

Plus, remember that Americans are still buying ICEs by the millions (18 million in the last 12 months alone). The existing fleet has to transition without owners bearing too much of a loss, otherwise the government will enact yet another ill-designed bailout (Cash for Clunkers x 10).

Hence, 2032.

[Geoman]

Exactly - the backlog of old technology holds sway.

I love visions of the future that have people living in glass and plastic monstrosities. maybe they would, but only if all the old buildings are torn down first. Which requires someone to retire the capital value within them - build something of greater value than what was there before. It is why the empire state building still stands, and is still in use - endlessly easier to refurbish than reconstruct in most cases, and the marginal value increase is less than what was lost.

All cars will become electric 20 years after electric car sales hit 1 million. That is how long it will take the turnover to happen - new cars, but also new repair shops, new tooling, new charging arrangements. All of that change costs a bundle as Elon Musk has discovered.

Same thing with power plants - they are built to last 30 years - retiring them sooner is a capital loss, which has to be balanced by some sort of materiel gain. Environmentalist seem to think we as a society can just take the hit and keep moving - but the people advocating that position are typically the same people who are least likely to suffer.

[fatcat]

@Geoman
There is a reason the third world countries leapfrog and skip whole technological generations like transitioning directly to mobile internet and skipping the landlines completely. But even if the technology is working fine, and has huge sunk cost it might be still displaced when maintenance cost + capital cost is more than the newer options. There could also be some regulatory push in either direction.For example, like banning the incandescent light bulbs or all ICE vehicle sales... Or to make the compliance rules to be fit for the incumbent technology, like requiring safety record for the last 15 years, which will make a radically new approach non-compliant.

[Geoman]

Absolutely. And yet I often wonder if "forcing the future" ever really works. Government types like to think they are in charge of the future, caretakers of tomorrow. They introduce all sorts of rules and laws...but does the technology arrive any faster? I always say that if a technology is clearly superior, and the advantages outweigh the the switch over costs, nothing can stop the switch form happening. Conversely nothing can cause the switch if the tech is not ready. You can make all the laws you want mandating switch over to smart phones in the 1980s, wouldn't have done a lick of good.

Electric cars are a good example. People don't realize we've had electric cars since English inventor Thomas Parker built the first production electric car in London in 1884. In 1897 in New York City, the Samuel's Electric Carriage and Wagon Company began running 12 electric hansom cabs. The company ran until 1898 with up to 62 cabs operating. Car companies have been noodling around with the idea ever since.

Now we have electric cars. What law or rules mandated their creation? Nothing - better batteries and electronics were needed to make it work. Until and unless that came along, nothing changed.

[Kartik Gada]

Geoman,

All of the perverse incentives around Solar and Wind power fall into that description too. The government places subsidies that do little to move the needle, even as the natural technological trendline enables these technologies to become widespread through cost declines.

Solar will cross a tipping point no later than 2022. All the subsidies to make it sooner than that had no effect (they instead introduced too much volatility in the market).

[Geoman]

Exactly. A perfect example. I actually see the subsidies and favoritism as detrimental to the roll out, since when you make something artificially economical, then it is inherently unstable, and tends to collapse when the subsidies are withdrawn. Instead of focusing on building a better mousetrap, companies are focused on lobbying congress. The boom and crash due to variations in laws and subsidies serve to taint the technology, and reduce investment and interest.

Or is there anyone that think the renewable fuels market is smart, economic, or sustainable?

[Fatcat]

@Geoman,
I like renewables. That's a very cool concept. Photovoltaics were my favorite since early 80s. And they do have their place, especially when the price drops. However, here
upnord we need
Some 6000 KWh a month to keep a small townhouse warm. At night. Or is a pity that nuclear is too expensive, as it would be a perfect baseline load source. But unlike nuclear, solar has several ATOM non-atomic ( sorry for the pun) advantages. It has low barriers to entry. Guys public perception, no legal not proliferation issues. And can start on an extremely small scale. On top of that, it relies on the same knowledge base as the semiconductors industry. But solar is limited by the insolation, which is poor most of the times. If there was a space based solar production, we world be talking a completely different business. It would require, huge capital investment and several breakouts in the enabling technologies, though...

Wind is intermittent and not all locations are good. Hydro already users the breast locations, so no much room for growth is left there...

Biomass... That one combines the drawbacks of solar, coal, and requires farming.

Therefore, for the moment having cheap methane from fracking is the best and optimal option. In fact, switching cars to methane ( compressed natural gas) is fairly easy and would reduce the pollution, if the required infrastructure switch wasn't so expensive.

[Geoman]

I was referring specifically to renewable fuels such as ethanol. Say, wen't we supposed to turn some sort of corner here, long ago, and get rid of all subsidies for ethanol? Funny how that never happened.

I love renewables as well, unfortunately math and the laws of physics don't seem to favor them. We'd all be in paradise right now if we could just repeal the laws of physics and economics!

[Drew]

Hi KG,

Why can't subsidies like Germany's shift timelines? If it is increased production that drives down costs, why can't a subsidy increase production and thus move the timeline forward? Isn't is the flip side of an energy cost increase such as might occur due to embargo or war, which may also drive research and implementation, such as your prediction of long term oil prices?

If "animal spirits" aka nominal interest rates impacts investment and technology progress, why not subsidies? I'm open that it is short term impact in the greater scheme of things, sort of like the "great man" limited impact - if reusable rockets are the natural form, the presence of someone like Elon Musk may cause them to occur a few years earlier than they would otherwise, but not otherwise impact the technology progression.

Cheers,
Drew

[Geoman]

These are very good questions.

If increased production drives cost reductions, can't subsides impact that by reducing costs and artificially inflating production? Not really. But there is some math involved here. The rule of mass production is that costs decrease by 10% by doubling production. That is to say, if I am charging $100 each for 1,000 units, I can charge $90 each for 2,000 units. I can charge $81 for 4,000 units. For 8,000 units I can charge $72.9. 16,000 units will cost $65.61. And so on.

What you can see here is that the cost is decreasing less and less with each doubling of sales (it is 10% on the new lower cost), and the number of units I have to sell starts increasing exponentially.

When we decide to subsidize a product, it is not usually at units = 0. The are already manufacturing hundreds or thousands of units, and we want it to be millions. So we need to subsidize a LOT of units to get even small decreases in prices. Also my subsidy works against me. Reducing prices increases sales. But if that price reduction is due to subsidies, the manufacturer has little if any incentive to further reduce costs as he reaps the profit on the higher sales volume.

Say I'm selling units for $100 each for 1,000 units. I make a 10% profit ($10) on each unit. Now the government desires to subsidize $50 a unit. Now I sell at $50, but it still costs $100 to make. My sales double to 2,000 units. What is my profit?

Well, I was making $10 on sales of 1,000 units, so I made $10,000. But with the subsidy I'm making $10 from sales of 2,000 units, so $20,000.

I guess I could drop my price to $90. That would translate to $40 to the consumer. By my profit would be $18,000 (10% of $90). I might make that up in additional sales due to the price drop. But maybe not. Maybe sales are not sensitive to a $10 drop?

My profit is on the cost prior to the subsidy. What incentive do I now have to lower costs at all? Why not ignore possible costs savings from mass manufacturing, and just pocket the extra money? My sales are going up without me having to do the hard work of reducing production costs.

[Drew]

But if there are a tens or hundreds of you competing among yourselves for the additional millions in sales? By your description, subsidies will work to reduce costs if there is a competition to supply the subsidized goods. Thanks, Drew

[Geoman]

We typically subsidize immature markets - markets with only one or two players. If there were dozens of competitors in a vigorous market, why would we subsidize it? Wouldn't competition itself cause the price declines? You can't have it both ways - lots of competition reducing prices and subsidies. They rarely coexist.

[Kartik Gada]

Another example of the failure of subsidies was the Concorde.

It was subsidized for 27 years (1976-2003), only to be discontinued altogether, since they could not bring the costs down to expand the market for supersonic travel even after decades.

Despite this, it is almost certain that by 2030 we either a) have widespread hypersonic (i.e. much faster than the Concorde) commercial air travel that was not helped by the long-discontinued Concorde subsidies in any way, or b) have an even more ATOM-pure disruption, such as ubiquitous low-cost telepresence or even holograms, that dramatically slashes many types of business travel outright.

The time and cost associated with business travel is immense, particularly since it falls on some of the most productive people (200,000 miles/year is typical for most executives), and workable holograms may be invaluable in speeding up the velocity of business.

[Geoman]

Great example - we subsidized the concord to solve a problem that went away with improved telecommunications. It points out the basic flaw in the subsidy argument - that we KNOW what comes next. we don't, not really.

What DARPA-e is doing right now with the supercritical carbon dioxide generators is what I would call an appropriate subsidy - they are subsidizing the research to get to a prototype of the device. After that, it is assumed, someone else will pick up the ball for commercialization.

Or look at Bigelow Aerospace. NASA did research on the transhab (basic science and prototypes), the design of which was eventually bought by Robert Bigelow, who has continued development.

[HB]

As the pace of growth accelerates (not only is growth exponential but the exponent itself is growing) our ability to see and predict the future, our horizon, also shrinks. We are thus becoming ever less capable to pick technology winners and losers, therefore we should refrain from trying to influence the trajectory of the ATOM through subsidies and its reciprocal: punitive taxes.

Virtually all predictions about the future, even those made by enlightened scientists (not to mention subsidy deciding politicians) prove wrong. When it comes to technological details a roulette provides just as good of a prediction of the future as the scientific pundits and politicians do (even before one accounts for the self-serving incentives that these top down design command and control mechanisms create). Therefore we should refrain from distorting both the markets and the ATOM with grand plans for subsidies and punitive taxes conceived at the government level.

I would simply observe empirically the exponential nature of things and refrain from making specific predictions about specific technologies. Yes, more specific predictions make for interesting and welcome conversation, but this mental exercise should not motivate coercive subsidies and regulatory punitive taxes.

[Kartik Gada]

HB,

We are thus becoming ever less capable to pick technology winners and losers, therefore we should refrain from trying to influence the trajectory of the ATOM through subsidies and its reciprocal: punitive taxes.

YES! The cost of income taxes is more than the actual dollars collected, at this point. This would be less true with a simple, flat tax, but even that is not ideal. 0% income tax by 2025 is possible under ATOM-DUES (just not politically possible).

This could make the difference between humans being no more a part of the post-Singularity world than Amphibians were after the 255M BC extinction event, vs. humans being a significant part.

[HB]

What do you mean post-Singularity? Are we going to even survive this long as a species? By the time we get to the singularity the world will be half a degree hotter and if we don't subsidize solar and penalize fossil fuels then that post-singularity world is going to be 1C hotter than today and we are going to face a post singularity disaster. Can't you just see past the singularity?

Yes, that's supposed to be a joke to illustrate how short sighted are those who supposedly think long term -- and, worse, coercively impose their plans on a global scale thus slowing down the ATOM.

[HB]

I'd also like to add that I'm not quite so sure that the singularity will happen. I think it's more likely than not. However, the singularity represents infinity while the chance that it will happen is finite (perhaps fifty percent in my mind?). So still the product of say a fifty percent probability times the infinity benefit still represents an infinite opportunity cost in delaying the ATOM even by a small amount. That is the rational quantitative case for not doing anything that will slow down the ATOM whatsoever.

But singularity and infinite opportunity costs aside, even a four to five percent average world growth rate will, by the time the century ends, compound to a magnitude that will render climate change and other such ephemeral petty concerns irrelevant. Of course, even more so, the singularity will quickly vanish such concerns into nothingness.

[Kartik Gada]

HB,

That the Singularity happens is a certainty. Too many exponential, accelerating trends are already underway, and it is hard to envision where they would take us even after 2040 under just the current trendlines, let alone when the Singularity happens (2060-65, in my estimation).

What we don't know is what form it will take. It could be a wide range of things. The welfare and participation of humans is what is the variable, and could be adversely impacted by poor government decisions now.

Again, what if an asteroid had not hit the Earth 66 million years ago? Intelligence might be exactly where it is today, but most of the large fauna (including the intelligent species) might be more reptilian than today. If the asteroid 252 million years ago had also not hit, things might be more amphibian today.

[HB]

Yes, on one hand I also see several exponentials leading to singularity. On the other hand I also see the extreme probability of the singularity's timing. Why now? Why this century? After three billion years of evolution I'm just born decades before the singularity? That is a one in thirty million ratio. When one encounters such extreme odds one must also be open to the possibility that something else is going on. What? I honestly don't know.

On a side note, to those who have any thoughts whatsoever about slowing down growth by whatever small amount, I'd like to remind them that if indeed the singularity is near then they may be the last generation of humans to actually die. How motivated are humans to survive past that threshold?

[HB]

BTW, this is a side detail, however, if indeed an asteroid had not hit the earth sixty six million years ago then life would be radically different today. A mere ten thousand year slowdown in growth (over sixty six million years, a tiny change) would still have us (or our reptile apex species) in the Stone Age. On the other hand, an even tinier acceleration of a mere one hundred years would already have us past singularity : Say good bye to cancer, strokes, heart diseases, and most ailments. Indeed quite likely say goodbye to death itself.

[Geoman]

HB - you note the paradox of rare events.

The chances of me, individually, winning the lottery is 0.00000001%. However, the odds of any lottery winner occurring each year are 100%. Think of the last several billion years as a lottery, and you are the lucky winner. There always was going to be a winner, it just happened to be you. Nothing too crazy about that.

But actually, the odds of you winning were always quite high. the singularity could not occur until intelligent life evolved. Therefore, in the billions of years prior to the evolution of intelligence, there was zero chance of a winner.

A total of 107 billion humans have EVER lived on the Earth. However, for a long period of time our population was very small. 7 billion of that 107 billion are alive right now. So your odds of being alive during the singularity were probably around 6.5%. Considerably better than the odds for a lotto winner - and we know that happens all the time. You are lucky - but not THAT lucky.

Your second point - treat your kids well, because they are likely to be immortals. Heck, I might even make it - I have good genes and can expect to live to 80. That is 25 years - it gets me to 2043. By then, well, I don't need much of a life extension to make it over the hump. Actuarial escape velocity to infinity!