
The Economy - dmnd
http://blog.samaltman.com/the-economy
======
tdees40
I'm not clear on how any of this will lead to a recession. Why will high Debt-
to-GDP or government spending send the economy into a recession?

Q1 GDP numbers were clearly affected by dismal weather (although still bad),
but labor markets are improving markedly, and there are reasons for optimism.
I don't see this as a very convincing bear case.

For the bull case, see this post, from a guy who's been right about everything
since the mid-2000s.

[http://www.calculatedriskblog.com/2014/06/the-future-is-
stil...](http://www.calculatedriskblog.com/2014/06/the-future-is-still-
bright.html)

~~~
Humjob
If government debt grows high enough then an increasingly large percentage of
federal spending will be devoted to paying interest on that debt rather than
on arguably more useful areas which create future prosperity, such as
education and scientific research.

After a certain point this becomes unsustainable and bad things start to
happen, ranging from total political & economic collapse (Germany in the
1920s) to hyperinflation (Zimbabwe) to, in the best of the worst case
scenarios, a large default/restructuring and subsequent downgrading of a
country's debt to junk status (Argentina in the 2000s).

As F.A. Hayek, Milton Friedman and numerous other economists have written,
government spending tends to be more inefficient than the free market because
the government isn't constrained by profits and losses, which are society's
way of indicating whether a company is producing goods and services that are
valuable and desired. Of course, there are some goods and services that only
the government can provide well, and the current left-right political divide
is largely a debate over the point at which government taxation and spending
becomes undesirable and inefficient. However, it's undeniable that at a
certain level (almost certainly a level below our current level of spending in
my opinion) each marginal dollar the government sucks out of the economy is
used less efficiently than it would have been used if it remained in private
hands.

~~~
AJ007
Something to consider is the difference between debt denominated in a
countries' own currency verse that of another country.

In _2010_ Germany finally repaid debt it had raised to pay its World War I
reparations. The reparations never were paid in full but you damn bet the US
dollar denominated debt was.

If a country borrows money in a foreign currency they may have bills due for
an incredibly long time unless the creditors says "ok, you can pay less than
you owe us." The EU members are in this position because the bills they owe
are not in their own currency.

Generally this seems to have the biggest impact on tiny countries. One of the
most interesting opinions I've heard recently is from James Rickards who was a
negotiator for the Long Term Capital Management bailout in 1998. His opinion
is the risks in the banking system have increased, not decreased, and when the
next failure happens the US government will not be capable of a bailout
largely due to the Federal Reserve's balance sheet leverage (which puts
Lehman's leverage to shame) and a lack of political will to write a multi-
trillion dollar check. What will happen is debt issued and denominated by the
IMF, the only bank in the world left with a good balance sheet.

~~~
MaysonL
Next time what should be done (but probably won't) is to take over the
insolvent banks, prosecute the fraudsters, and allow mortgage debt to be
reduced in bankruptcies, perhaps converted to equity. The US federal
government assets are certainly an order of magnitude (possibly two) bigger
than the Fed balance sheet, so to talk of leverage is laughable.

------
pkaler
Almost any argument that relies on GDP numbers to back up its claim is
specious at best.

For example, you could have a tornado destroy a town and the disaster recovery
spending would increase GDP. You could build a teleportation device that puts
all delivery drivers out of work. GDP would decrease but there would be an
overall increase in wealth and quality of life.

Thinking about economics through the lens of GDP is just the wrong way to
think about the economy.

Here's a great Planet Money podcast on the invention of "The Economy" and on
GDP: [http://www.npr.org/blogs/money/2014/02/28/283477546/the-
inve...](http://www.npr.org/blogs/money/2014/02/28/283477546/the-invention-of-
the-economy)

~~~
penguindev
Yep. Heart attacks, perpetual 'diabetes treatment', borrowing a million (or a
trillion) dollars you can't pay back and spending it, promising unrealistic
pension benefits, and depleting natural resources (wood, water, energy,
overfishing, selling your seed corn), fighting losing wars (is there ever a
winner?), paying other people to raise your kids, all grow "gee-dee-pee'.

------
klunger
He just suggested a basic income for everybody.

I just wanted to point this out in case people missed it when skimming.

~~~
moblahbl4hblah
A basic income is a great idea...it would also be a good idea to completely
remove the profit motive from health care. A social safety net that includes a
living wage, guaranteed higher education, and retirement is completely
possible if you don't spend so much on defense and intelligence.

~~~
crazy1van
> it would also be a good idea to completely remove the profit motive from
> health care.

If I had a fatal disease with no known cure, I want a system that makes
whoever finds the cure filthy rich. That's my best chance at survival. If
anything, I want a system with even more profit motive.

~~~
tzs
Why would anyone care about curing your fatal disease if they are profit
driven? They should be able to make more money working on widespread non-fatal
problems, like erectile disfunction or baldness.

------
gregoryw
Corporate savings are high across a broad basket of companies like the S&P500
because the earnings of multinationals are parked in Luxembourg, avoiding US
taxes. We've all read about the Double Dutch and other IP licensing schemes
that avoid taxes for Google, Apple and others. I personally feel these funds
are waiting for a US corporate income tax holiday, perhaps under the guise of
creating new jobs and investment domestically. The stock price of companies
like Apple has their cash balance as "money good", meaning the market doesn't
believe they'll pay tax on the $150 billion parked overseas.

Sam's zero interest rate point is the most salient to the startup world. It
forces accredited investors to chase asset classes like technology startups
for yield. You also see it in the midwest in oil, gas and other natural
resource drilling/mining. These are long term 10 year investments for these
investors to park their cash.

~~~
saym
So, the 0% interest is a catalyst for startup investment? Do institutional
investors or big banks directly fund incubators and the like?

I read somewhere recently that global bank income was up 29 billion from last
year, does any of that profit come from startup success?

~~~
gregoryw
Institutionals and investment banks are higher up the chain. Accredited
investors serve as front-line angels that fund would-be entrepreneurs, and
then the aforementioned parties provide them with liquidity (distribution and
marketing of the company's other shares to more sophisticated investors).

------
nostromo
We need to find the next big growth engine. Like "the internet" big, or its
baby brother "mobile" big. (Imagine what the US economy would be like without
those growth engines. Even with them, their effect on the US GDP growth chart
in the article is unnoticeable.)

I have a hard time thinking of things that could be so dramatic in terms of
growth. AI, radical life extension, space elevators, renewables... I'm not
sure.

The sad thing is we only have one Google. Very few other well-monied companies
are taking big moon-shot risks. We need a dozen Googles and a hundred Elon
Musks to find the next growth engine.

But instead we have billionaires buying NFL teams, the government taking money
from STEM to fund entitlements, and corporations too risk-averse to make any
big bets.

~~~
diafygi
I nominate cleantech, energy efficiency, and renewable energy.

Over the next 30ish years, the entire globe will have to transition from
fossil fuels to sustainable energy. The amount of growth that needs to happen
is probably bigger than what we experienced in the internet boom. Already in
California, green jobs outnumber Hollywood jobs, and solar is now profitable
without subsidy.

These are the areas that are going to have the largest growth and innovation
over the next few decades. The next Google is going to be an energy company.

~~~
gfodor
I don't know how you can qualify this as growth. The transition to renewable
energy should be applauded, but at the end of the day it is a displacement of
the fossil fuel industry, which is massive. It seems less like a wealth
creation engine and more like a "we will destroy the earth otherwise"
necessity.

------
natural219
There's a specific mental trap -- I'll call this "scientism" \-- that a lot of
comments here are rapidly falling into. It's in treating macroeconomics as a
"solved" problem, or putting too much faith in specific studies or sentences.

That's not at all the proper way to look at macroeconomics. Our economy is
unimaginably complex -- it's full of hundreds and millions of moving parts,
with each single part (the human brain) driven by an even more complex system
with hundreds of billions of parts (neurons). All of these parts are re-
orienting themselves with new data in real time.

What Sam is trying to say here, is that we don't know if these trends are
"good" or "bad", or if they'll lead to bad outcomes or not, or in what time
frame this will occur. All we know now -- and this I agree with -- is that
_something_ in our economy has changed permanently. And this should be a good
cause to worry, or at least, should be taken as a call to arms to economists
everywhere to try and figure out why our models aren't working as well as they
used to.

    
    
        "Too large a proportion of recent "mathematical" economics are mere concoctions, 
        as imprecise as the initial assumptions they rest on, which allow the author
        to lose sight of the complexities and interdependencies of the real world in a 
        maze of pretentious and unhelpful symbols." - John Maynard Keynes

------
seoguru
I wish everyone (or at least Sam Altman) would read "The Seven Deadly Innocent
Frauds": [http://goo.gl/6a22pX](http://goo.gl/6a22pX) less than 2 hour read.
read it with an open mind and your worldview may change.

watch Stephanie Kelton and Warren Mosler talk about gov debt and deficits: (2
hours!) [https://www.youtube.com/watch?v=ba8XdDqZ-
Jg](https://www.youtube.com/watch?v=ba8XdDqZ-Jg)

Randall Wray on Job Guarantee vs Basic Income:
[http://www.economonitor.com/lrwray/2014/01/27/lets-
compare-t...](http://www.economonitor.com/lrwray/2014/01/27/lets-compare-the-
job-guarantee-to-the-alternatives-not-against-some-distant-utopian-vision/)

Mosler's current prescription: 1) A full FICA suspension, which raises take
home pay by 7.6%, and, for businesses that are competitive, lowers prices as
well, restoring sales/output/employment in short order 2) A $10/hr federally
funded transition job for anyone willing and able to work to promote the
transition from unemployment to private sector employment ...

------
kaonashi
The first sentence prophesies 'collapse', but then reading on you see a recipe
for a continuing mild recession.

Where does the collapse come in? (if it's nebulously caused spike in treasury
rates, I'm not going to be convinced)

------
Shivetya
You would think with all the social spending we do that things would be better
by now for people in this category but its not really. There needs to be a
concerted effort to reduce the number of assistance programs to a single digit
number so that funds are not lost to paying the workers to administer the
programs. There are thousands of assistance programs just at the Federal
level, sure that is not an ideal way of getting help to those in need.

------
001sky
_US GDP growth in real dollars is low (and trending down). It was 2.9% for Q1
2014 after the second official revision [1]. If it’s down again for Q2, we’ll
be in a recession._

Just a nit, but to be clear...

1Q 2014 GDP #s (revised) growth rate was _negative_ 2.9% (-2.9%).

The second sentence in the quote also implies as much, so I think the quoted
text has an oversight/typo.

[http://www.cnbc.com/id/101787838](http://www.cnbc.com/id/101787838)

------
firstOrder
Some of the figures Altman gives are important. There are some more:

[http://monthlyreview.org/2008/12/01/financial-implosion-
and-...](http://monthlyreview.org/2008/12/01/financial-implosion-and-
stagnation)

If you read that article and consult the (mostly government) sources, you'll
see:

* It's not just government debt that is high - household, business, and especially financial debt is high

* The financial sector has been growing much faster than the "real" economy

* Less and less of the GDP goes to consumers in wages and salaries

* Industrial capacity utilization goes down and down and down (so why invest in new capital?)

* Since the 1980s, profits have been an increasing share of GDP, while investment has been going down

Macroeconomic collapse on the scale (or greater then) it happened in the 1930s
will, I believe, inevitably happen.

------
rogerbinns
I believe tax breaks don't show up as government spending. If for example
Boeing is given a billion dollar tax break, then the government has a billion
dollars loss and Boeing has a billion dollars more. But that won't show up as
a billion dollars going to the government, and then spent on Boeing, even
though that is exactly what is happening.

I suspect that if tax breaks were accounted for, then government spending
would be higher. It looks like US corporate welfare is around $200bn/year,
although there are many larger estimates out there (eg count the banking
bailouts). I haven't seen numbers for personal tax breaks, but adding them
will make the number larger.

------
mdlm
Q1 2014 GDP growth was -2.9%. There's no minus sign in front of 2.9% in item
#1 in the article (I'm using Chrome).

------
uptown
Another interesting chart:
[https://twitter.com/hblodget/status/483577150805901312](https://twitter.com/hblodget/status/483577150805901312)

------
fokinsean
Does anyone think we are heading towards an economic collapse?

~~~
zenogais
Seeing as how "natural economic growth" is not infinitely sustainable (I'm
operating under the assumptions that there are finite quantities of natural
resources and human ingenuity is not infinite and infallible). It's
probabilistically inevitable.

~~~
sliverstorm
Natural resources are finite, but so long as we can improve our efficiency
faster than some rate N, we will never run out of a given resource. Thank you
Zeno's Paradox.

(Recycling also plays a part, though I don't know if it should be considered
increasing the supply, or increasing our efficiency)

The only one that is a real problem is energy. Thanks to the laws of physics,
we may not be able to forever increase our energy efficiency, and energy
cannot be recycled.

------
api
I have gradually become convinced by mountains of evidence from many quarters
that the Keynesians are right-- we are in a demand constrained economy.

One of the problems I think is that economists and politicos tend to always be
fighting the last war. In the late 1970s to early 1980s -- the last time the
economy seemed this systemically bleak -- the problem was insufficient capital
available for investment combined with high inflation. This resulted in
"stagflation," something classical Keynesians thought impossible, and thus
resulted in a widespread discrediting of classical Keynesian and economic
liberal thought.

Thing is... in the late 70s the supply siders may well have been right and the
Keynesians wrong. We were in a supply limited economy, and stimulus and other
liberal policies just made everything inflate.

But now I think the situation has reversed. Today looks a lot more like the
1930s, albeit not quite as viscerally nasty. There's a _huge_ amount of
capital available but few good investments. Wages are stagnant, savings are
down, pay and wealth inequality are utterly massive, etc.

So today I think the Keynesians may well be right again. Hopefully it'll come
in the form of something less destructive than a war. I'd personally suggest a
massive program to electrify all transport, huge investments in both renewable
energy and next-generation nuclear power, a medical "war on aging," and a
campaign to establish a permanent human settlement on Mars. All that taken
together would probably end up costing about what WWII did, and so might be
enough. The war on aging would have the added follow-on benefit of helping
with our demographic problems. (As would a more liberal immigration policy.)

Meta question: perhaps there's a new insight here... do modern industrial
economies actually tend to oscillate between demand constrained and supply
constrained failure modes? Perhaps the Keynesians overcorrected for the great
depression, resulting in the 1970s, and now the supply siders have
overcorrected for the 1970s resulting in today. In that case maybe we
oscillate between periods when Keynesian demand-side policies work and periods
when Friedman-esque supply-side policies work.

Edit: the reason I don't think we're hurting as bad at the street level today
as we were at the depths of the Great Depression is simply because we've grown
so far beyond subsistence level. Today the amount of economic pain required to
cause visceral physical pain among large numbers of people in the developed
world -- starvation, etc. -- would be quite a bit larger than what it took in
the 30s. To lead to that kind of thing we'd need the 2008 financial crash
times ten at least, combined with a major political collapse and some kind of
technological train wreck. A mega-sized solar flare or a sudden "oh crap"
worst case peak oil cliff coming to pass might do it.

But compared to a non-slump timeline -- compared to what _should_ be happening
given the technological growth we've experienced -- we are in a depression. We
should be colonizing Mars, conquering aging, pretty much doing all the things
I suggested as stimulus. Instead we are building apps like Yo while people go
bankrupt in underwater houses with underwater student loans. (Not blaming the
authors of Yo either... during the depression a lot of people took up
whittling sticks and other little time-passing pursuits for lack of good work
to do.)

~~~
kaonashi
A large component of 70's stagflation was just supply shocks for oil. Why this
never gets brought up, or is just brushed aside casually is beyond me.

> do modern industrial economies actually tend to oscillate between demand
> constrained and supply constrained failure modes

This is probably a pretty good way to look at it. The solution is something
like
[http://en.wikipedia.org/wiki/Functional_finance](http://en.wikipedia.org/wiki/Functional_finance)

The meat:

1\. The government shall maintain a reasonable level of demand at all times.
If there is too little spending and, thus, excessive unemployment, the
government shall reduce taxes or increase its own spending. If there is too
much spending, the government shall prevent inflation by reducing its own
expenditures or by increasing taxes.

2\. By borrowing money when it wishes to raise the rate of interest and by
lending money or repaying debt when it wishes to lower the rate of interest,
the government shall maintain that rate of interest that induces the optimum
amount of investment.

3\. If either of the first two rules conflicts with principles of 'sound
finance' or of balancing the budget, or of limiting the national debt, so much
the worse for these principles. The government press shall print any money
that may be needed to carry out rules 1 and 2

~~~
TheOtherHobbes
>A large component of 70's stagflation was just supply shocks for oil. Why
this never gets brought up, or is just brushed aside casually is beyond me.

It's politically expedient to forget it - just as it's politically expedient
to forget that the people causing the oil shocks and the people who benefited
from them politically seemed (and continue to seem) to have some interesting
relationships.

Keynes is in danger of being written out of history, in the same way that
dissidents like Henry George were.

I'm not sure how many people realise the extent to which anti-Keynesian
narratives were deliberately promoted and funded after WWII, especially in
Chicago.

The fact that Keynes is no longer considered an orthodox policy source is not
an accident.

------
neuromancer2701
So what is the reasonable response to the future we have at hand. Most answers
are the sky's the limit(stock will just keep going up) or zombie apocalypse.

I would prefer more of a negative income tax.

------
magoghm
"On the positive side, but as you’d expect with near-zero rates, US equities
are at record levels." I'm no so sure this should be on the positive side.
Those equities are artificially inflated by central bank (indirect)
manipulation. Those prices might not reflect the real value of the underlying
assets and could collapse, which would once again put the whole financial
system at risk.

------
josephlord
The private debt levels are just as critical as the public debt levels and
much higher (although down from their 2008 peak still I think). What is
particularly is the total rate of change for public and private debt which
heavily dictates the growth levels. When the economy suddenly switches from
growing debt at accelerating rates to reducing debts is when the major crash
happens.

------
lukasm
It's intriguing that US economy is slowing down since WWII. What are the
reasons?

1\. No significant improvements like agriculture.

2\. Increasing regulations

3\. Big middle class that have no strong motivation to advance further or have
"enough money" for good living (modulo individuals)

4\. Growth in domain which GDP doesn't capture e.g. Open Source

5\. No obvious investments opportunities e.g. Highway

~~~
scoofy
I'd say it's probably just the world slowly but surely becoming less dependent
on the U.S. economy after the entire world economy was destroyed in a War.

And, yes, birthrates and longer retirement are probably relevant.

------
privatedan
A simplified example of what happens when trade deficits occur over a long
enough period of time:

Squanderville versus Thriftville (Warren Buffet) -
[http://www.freerepublic.com/focus/news/1053684/posts](http://www.freerepublic.com/focus/news/1053684/posts)

------
plaxis
But it's not a bad economy VC/PE. It's basically loads of 0% money and no tax
via carried interest. If you disagree, come see the number of entire floor
apartment renovations happening on 5th ave.

<3 NYC

------
pyfish
I agree technology will save us from the mad max scenario that we repeatedly
have read about over the last 5 years. However, it will be interesting to see
how the "Technocracy" plays out.

------
gadders
I'm confused - Sam who held a fundraiser for Obama is now saying the economy
is screwed?

~~~
gadders
To expand further - is there not a certain _tension_ in a) saying the US
economy is screwed, and b) holding a fundraiser for the man that has presided
over it for the last 6+ years?

------
danielweber
This comment section turned out about the way one would predict: politics.

~~~
thathonkey
This comment section turned out about the way one would predict when so few of
the participants have ever studied economics.

~~~
danielweber
Unfortunately there seem to be two distinct groups that each think the other
has never studied economics.

It's possible to have good discussions about this, but it requires a _lot_
more moderation than HN wants to do (rightly, in my estimation). And probably
a different format: the threaded discussion format leads to all sorts of weird
tarpits.

------
michaelochurch
It's a dismal situation. Low interest rates mean cheap money in theory, but
the "people" best equipped to take advantage of it are corporations. It's not
like average people are able to start businesses just because the interest
rate is low. However, low interest rates mean the penalty (to companies) for
hoarding and for general risk aversion is also low. This means that lousy
executives don't get a lot of investor pushback (companies don't have to do
much to beat the risk-free rate) and can stick around indefinitely. The only
thing that changes is that their exorbitant salaries go up (as do housing
prices, college tuitions, and healthcare costs).

Meanwhile, for the 99%, this debt/poverty cancer just keeps growing inside the
country, making it weaker every day: it's not just government debt-- although
that is a real problem-- but student debt and credit cards as the replacement
for Fordist wage increases.

The macro picture is bad, but the micro picture is even more dismal. Corporate
management is becoming more self-serving and corrupt, internal policies of
corporations are becoming more mean-spirited (many companies now require
employees to use vacation when sick, and open-plan <50 SF allotments of office
space are becoming the norm). When you see the reality of work life for most
Americans, you realize that the corrosion is organic, inevitable, and really
quite deserved. Our country has become a patchwork system of slapped-together
corporate garbage, whether you're talking about its healthcare coverage or the
way most of us have to work. What used to be a country is now a phalanx of
uninspiring, mean-spirited organizations not worth caring about.

 _I think that startups and venture capital will continue to do well._

Ouch. Sorry to disagree, but... what's pushing people into startups is not
that this VC-funded game is so great (it ain't) but that corporate employment
has become such a raw deal. Now that big companies have ceased doing the right
thing when it comes to investing in their employees, avoiding layoffs unless
absolutely necessary, etc., we've reached a point that shoestring long-shots
called "startups" look like a good idea in comparison. The startups haven't
improved. (In fact, they've become worse.) The alternatives, however, have
gone to shit.

VC-funded startups are notoriously cheap, and stinginess leads to mediocrity.
For example, they don't pay relocation, don't pay for education, and usually
involve 80+ percent "employee contributions" on health insurance. Some even
make people _take fucking vacation days_ to attend conferences. If you look at
it honestly, "we're a startup" is usually just used to justify being a
terrible company.

Now, the proper strategy is either to bet big on someone, or not hire that
person, and (in general) to be very selective. (If you're not willing to pay
full relocation, you shouldn't be hiring that person at all.) The problem is
that these VC-funded startups are so weak in terms of technical talent that
"hire a few strong people and bet big on them" isn't a viable strategy,
because they can't get the first part down. So they have to hire large (as in,
a large number of people... like 30 before they even launch) and so they offer
crappy salaries, dogshit equity, and nonexistent perks in the hope that one of
the clueless 22-year-olds who takes their offer will be an undiscovered
talent. Occasionally, it works out that way. Most of the time it doesn't.
Hence, the high failure rate of VC-funded startups.

VC has been, and will continue to be, an underperforming asset class and
there's a clear reason why. The main players aren't optimizing for the
performance of their portfolios but their careers (and, to be fair, I can't
blame them; I'd do the same in their shoes). Their career goals push them to
over-collaborate (read: collude) and that creates that disgusting culture of
co-funding. But as soon as you have important decisions made by committee,
mediocrity is a result because you're now biased in favor of mediocre/never-
offends-anyone people instead of high-variance people who actually do the
fucking work.

 _Personally, I think that innovation and new technology is what will save
us._

Eventually, yes. But I think we're going to see things get a lot worse before
they start getting better. I don't think that the US or the world economy is
in terminal decline, but I think we have another 10-15 years of ugliness
before things start to improve.

~~~
pchristensen
Just to be clear, pretty much every point you made about startups directly
conflicts with the sample of ~10 SF/SV companies I talked with during a recent
job search

\- base salaries at funded startups are good. Equity could vary greatly
depending on how much salary you asked for \- insurance is 100% paid for
employees and 50%+ paid for family \- I didn't discuss relocation but I was
relocated to SF 2 yrs ago by a startup \- Very, very smart and capable co-
workers \- Vacation days were untracked or 15+, and there was a separate
allotment of sick days \- Most teams were < 10 developers well after launch \-
Much easier to find jobs as an experienced senior developer than a junior
developer

The one point you nailed is all open-plan offices, everywhere, all the time.

I don't know what you're basing your statements on, and maybe it's different
in other parts of the country, but in SV/SF right now, if you're a
demonstrably good developer, you're in extremely high demand and many, many
excellent companies are competing fiercely to hire you.

------
lexcorvus
In this context, I hope at some point sama has a chance (if he hasn't already)
to read the post "Sam Altman is not a blithering idiot" by Mencius Moldbug:

[http://unqualified-reservations.blogspot.com/2013/03/sam-
alt...](http://unqualified-reservations.blogspot.com/2013/03/sam-altman-is-
not-blithering-idiot.html)

 _The basic problem with our society is a disconnect between consensus reality
and actual reality. We actually have no shortage of natural leaders. But they
cannot actually lead us anywhere. They are operating in consensus reality
rather than actual reality. Their joysticks are not plugged in. When the
consensus is nonsense, sober good sense is nonsense. Nonsense is no use to
anyone._

It's a long post, but if you're interested in examining the problems we face
from a fresh and unusual perspective it's worth reading the whole thing.

~~~
ef4
It's also critically wrong in understanding technology:

"one run of a time machine, with a printout of Wikipedia, would be pretty much
all the real 1950 needed. Send the technology back to 1945, and you'll have
iPads by '55 at the latest. Those guys got things done."

That kind of thinking betrays a common misunderstanding. The limiting factor
on what we can build at any given time is very rarely _ideas_. In 1950, people
already knew enough physics to build an iPad. The idea of integrated circuits
had already been proposed. The first one was demonstrated in 1958 -- only
three years later than Moldbug's alternate history.

And yet no iPads in 1960. Because there's a vast global capital structure that
needed to evolve first. Technology is not an external factor. It makes no
sense to argue whether society is better after factoring out technology,
because technology _cannot be factored out_. It's all part of the same web of
interrelationships.

Edit to add:

I had to add this, because it's so wrong it's perverse: "At the base of the
pyramid are air, water and food. How does 2013 do at supplying oxygen,
hydration and nutrition? How did 1950 do? Just fine. Gentlemen, a draw."

Only if you limit yourself to the wealthiest 10% of human beings. Out here in
reality, global food security for everybody else is dramatically better than
it was in 1950. Much of the developing world is starting to worry more about
obesity than starvation. Moldbug is simply ignoring the biggest economic story
of the last 40 years, presumably because it didn't happen in The West.

~~~
yxhuvud
Not only capital structure, but lots and lots and LOTS of various minor
improvements in all areas.

They would not be making iPads, because simply having one around doesn't
automatically create the production technology to create it. That would still
take a whole lot of work. It may well be that it would be more efficient to
send them a bunch of C64's if you simply wanted them to improve faster, since
the gap between the technologies are lesser.

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moblahbl4hblah
"Entitlement" is a dog whistle that is used in place of "welfare".

[http://rationalwiki.org/wiki/Entitlement_program](http://rationalwiki.org/wiki/Entitlement_program)

~~~
snowwrestler
Arguing about terminology is a great way to avoid arguing about tough fiscal
realities.

~~~
thenmar
I think it's worth mentioning. Propagandistic terms such as "entitlements"
frustrate discussion and make it even more difficult to communicate. It
belittles and trivializes the opinion that poor people are entitled to things
like healthcare or food, making people who hold that opinion unwilling to
discuss it.

~~~
ef4
It's the government's own term, used by nonpartisan entities like the CBO.

If anything, "welfare" is now used as a more politically loaded term. It's
almost never used anymore without attaching a negative connotation -- whether
by the right in the old way, or by the left when decrying "corporate welfare".

------
moblahbl4hblah
The defense budget has gotten smaller as a total percentage of the economy
since WWII, but the economy was smaller and the entire country was mobilized.

We currently spend over a trillion dollars a year on defense and intelligence.
"Entitlements" are not the problem.I love how they are entitlements even
though you pay for them...in fact, let's start calling it the social safety
net instead.

The main problem is that the wealthy, corporations and individuals, don't pay
enough. Cut defense by half and stop letting the wealthy walk all over us and
all of a sudden you don't have a crisis.

~~~
doyoulikeworms
I thought that they were called entitlements precisely because we pay for
them.

~~~
moblahbl4hblah
They are called entitlements to make people think that some undeserving class
is getting over...they think they are "entitled"...is the way that is put. It
was done on purpose by conservatives. Its a dog whistle.

~~~
ericd
I don't think that comes from where you think it does. I think it comes from
the fact that people are literally entitled to that money via the legal
contract we've set up - it is spoken for.

~~~
VLM
Too many mixed metaphors.

Aside from employees, .gov gives people money two ways:

1) Contracts. 200 F-22 for $100B or so. $1M for the service contract for that
server for a year. Usually involves a psuedo competitive bidding process, a
lack of one is unusual enough that you get the phrase "no bid contract"
because its an oddity.

2) Entitlements. If you meet these requirements, you get this money, or income
tax credit, or whatever. You're entitled as a member of a class where that
class is poor dudes or historic property investors or hybrid car owner or
whatever. Usually doesn't involve competitive bidding or auctions at all.

You're just going to confuse people by mixing contracts and entitlements in
the same line.

~~~
ericd
Sorry, didn't mean to confuse. "Contract" is used metaphorically in relation
to the government all the time, though. "Social contract", for example.

