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Anti-Tesla sentiment and the death of optimism (cjohnson.io)
480 points by natural219 on June 12, 2014 | hide | past | web | favorite | 203 comments



I've been thinking of patents as nukes during the Cold War lately.

Superpowers (US/USSR, Apple/Google) acquire very large nuclear/patent arsenals under the guise of protection/defense. These arsenals are relatively cheap for superpowers to build, but they are expensive for small states (small countries/small businesses) to acquire.

The US and USSR were roughly equivalent in their arsenals so it made little sense for either party to act offensively. However, the implied power behind the arsenals gave them a lot of power when dealing with smaller actors. The superpowers benefit greatly from acquiring these arsenals. Even without using them publicly, the threat can always be used behind closed doors (as Jobs has been shown to do).

But there's a third actor; the most universally feared actor: terrorists/patent trolls. These actors behave only offensively because they have nothing to defend. These actors are best poised to benefit from nukes and patents and can send an otherwise orderly system into chaos.

Anyway, just a fun but flawed analogy to play with in your noodle. :)


Interestingly, this analogy works very much at the company level, but reverses at the country level.

For companies, patents represent weapons in an arsenal, in which MAD prevents offensive action, as you've said.

For countries, the reverse holds: a country that jettisons its patent architecture, or never evolved a restrictive one to begin with, will be a bastion for innovators. The stable equilibrium is no bad patents - a lack of shallow protectionism - and the only reason patent law in the US has remained constant for so long is because of the other advantages that have given it technological and scientific primacy.

As those advantages erode, patent law will loosen to stimulate competition. Perhaps there is an upside to the perception of decline?


A nice hypothesis, do you have any examples that show this to be true?

The realist in me bets that innovation has only a weak relationship to IP laws, and rather a strong relationship to a certain world-view that fosters innovation since childhood (go USA!)


One real example is the Netherlands and the rise of Philips: http://books.google.nl/books?id=sfoujAT3b_YC&lpg=PA104&ots=B...


How does the US foster innovation? It certainly puts the rich (Some of which who were innovators) on pedestals, but the education system certainly does not preach innovation for the first 18 years of a child's life. You could argue that it actually penalizes innovation.


I only have two personal anecdotes: My own childhood growing up in Washington State, and my experience in Thailand for the last 7 years.

In the USA, we often hear about how our (USA) school systems are too easy/relaxed compared to foreign countries.

In Thailand, it's the opposite, in the most terrible way possible. Everything is about test scores, and thus "thinking outside the box" is severely penalized.

People in the USA might not have the raw-academics, but the applied problem solving and team collaboration skills absolutely crushes the competition (Though of course that doesn't help manual labor jobs much)


Can you list numerous countries that are examples of not having a restrictive patent system, and subsequently are bastions of innovation?

The US economy has been an extreme bastion of innovation for 200 years, while also having a robust patent system (one that has only recently become particularly stifling). In fact I'd argue there has hardly been a greater bastion of innovation in world history than the US economy from 1800 to 2000 or so, very few countries compete for that title.

I'm very much not a fan of how the US patent system works today, but I'm finding it difficult to prove your claim based on historical evidence.


Im not sure you can take a single thing, the patent system, which also exists in many other countries, and then apply that as the reason for the US to be a bastion of innovation for 200 years.

How do you even know that the US has not been innovative despite the patent system. That if the patent system did not exist, it would have progressed even further than it has.


Adventured was saying that the US is a counterexample to the proposed statement that meant non-restrictive or non existent patent systems will be bastions of innovation.

In no way was Adventured arguing that because of the patent system, the US became a bastion of innovation.


The problem with that reply is that it's denying the antecedent. The original point was regarding a hypothetical country that jettisons its patent architecture, or never evolved a restrictive one to begin with. Using the US as a counterexample is arguing a different question.

As the original comment pointed out, the US has been successful, but it could be for many confounding reasons.


If you place the USA as innovation leaders in the modern world, you make it very difficult to present an example under similar conditions. You can go back in History, though. Countries involved in world discovery in the 1400-1600 were absolute innovation leaders and required no patent law.


They didn't need patent law, because they had princes and armies. The also had a culture in which information couldn't travel faster than a man (usually a man...) on a horse, and patentable information could only be understood by a few hundred individuals in each country, at most.

One of the points of patent law is to distribute the rewards of invention, so individual inventors - not corporations - benefit from their creativity.

Patent protections aren't the only element in this, but they're one element, and a lot of 20th century products would never have appeared otherwise.

It's simply not historical to argue otherwise.

The 21st century works differently, but with the irony that the FOSS people claim their way is absolutely correct, and no other system is workable.

Sharing certainly works if you have a day job that pays your bills. But innovation is not invention. Patents were originally designed for creative inventors, not commercial packaging operations like [insert corporate giant here], or freeware mash-up/YetAnotherFramework projects.

In the US at least, the system has become a joke. But just because it's broken doesn't mean that inventors shouldn't be rewarded and protected somehow.


I think you need to append "for software or business methods" liberally.

For products where development costs dwarf manufacturing costs, patents provide the incentive to do stuff. Would anyone invest a few billion into a drug if anyone with access to a few million bucks could go manufacture it?


Quite; it's only software people that are upset by patents, and they are part of the wider Internet-based anti-IP movement that just wants everything to be a download away.

There is a whole 'nother world out there where people make real, actual things.


I've always enjoyed "Against Intellectual Monopoly" (read free online here: http://levine.sscnet.ucla.edu/general/intellectual/against.h... ), which has a chapter (http://levine.sscnet.ucla.edu/papers/ip.ch.9.m1004.pdf) that specifically addresses this.


I would be wary of taking that book at its word. The authors have an agenda and they are not afraid to twist historical facts to suit their narrative. I mean, their very first chapter begins with a lie which perpetuates the myth that Watt's patent retarded steam development [1].

When the authors of [1] called out Boldrin and Levine on this, the latter responded by fabricating new myths rather than admit that the truth undermined their narrative [2].

The very chapter you cite itself has such inaccuracies. I did not track down all the stuff they cite, but I did find an instance of mischaracterizing references to suit their view points. For instance, when they discuss the German dyestuff industry, they cite a study by Murmann to support their narrative that Germany dominated in that industry due to the lack of patents. But if you look at the actual study itself, Murmann paints (heh) a much more nuanced picture. German dominance in that industry was fueled by close ties with academic research, and later by R&D labs encouraged by, of all things, the newly introduced patent laws:

>When in 1877 German patent law protected dye innovations, a few German firms such as Hoechst, BASF, and AGFA saw the advantage of hiring organic chemists whose sole task was to synthesize new dyes. After these research chemists turned out economically successful dyes, firms hired more and more chemists and pioneered an entirely new corporate function, formally organized research. The birth of corporate research and development (R&D), which today is a standard activity in high-tech industries ... can be traced to the German synthetic dye firms in 1880s. By the 1890s the vast majority of dyes were being discovered in the R&D laboratories of Bayer, Hoechst, and BASF.

> Whereas in the early days of the industry a firm could exist by copying dyes invented somewhere else, patent laws made the systematic application of science within the boundaries of the firm a critical dimension of remaining a leader in the industry.

And elsewhere:

> The most important institution in the early success of the German dye industry was the university system, but patent laws were a second key factor that allowed the German firms to capture a dominant position.

With that many assertions in the study that refute their view, they cherry-pick a few comments and actually cite the study as one that supports their view.

With so many mischaracterizations in there, I find it hard to take anything else they say in that book at their word.

1. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1589712

2. http://econpapers.repec.org/article/bpjrlecon/v_3a5_3ay_3a20...

3. Murmann JP, 2003, "Knowledge and Competitive Advantage – The Coevolution of Firms, Technologies and National Institutions." - http://catdir.loc.gov/catdir/samples/cam041/2003043048.pdf


software is a product where development costs (designing the product, writing the code) dwarf manufacturing cost (compiling the code, deploying the executables).


A developed product is protected by copyright, not a patent. Software patents are for ideas, and the vaguer, the more valuable. Developing an idea like one-click ordering takes virtually no added time; all the better if you can wait for someone else to do the development and then collect the reward.


a country that jettisons its patent architecture, or never evolved a restrictive one to begin with, will be a bastion for innovators.

Like, say, Somalia? Your hypothesis is trivially disproved.


Personally, I see nukes as more ethical than patents. You can make the argument that MAD-based nuclear deterrence has saved us (at least so far) from a third world war. Not everyone will agree, of course, but a strong case can be made.

On the other hand, to defend patents, you have to show that there are things on the market that we can buy that would not have been made available to us if not for patent rights. Nobody can claim that patents have saved us from a catastrophic world war by forcing our leaders to find less destructive ways to disagree. About the most you can say is that without patents, some lifesaving medications for some relatively uncommon conditions wouldn't have been economically feasible to develop.

Musk's comparison of patents to land mines is much more apt than comparing them to nukes. Only a psychopath (or a land mine manufacturer) would argue that humanity is better off because land mines exist. Nuclear weapons are a genuine gray area in comparison.


Two things:

First, you might want to clarify in the first paragraph that you're talking about the existence of nukes, as opposed to the use of nukes. It's clear from reading your entire comment, but I find it's good to play it safe with that sort of topic! ;)

Second, to play devil's advocate, is it possible that landmines could have a net positive impact if they could somehow be properly, globally regulated? For and extreme example, say that only the UN had access to landmines, and they were only deployed as a last resort to enforce DMZs. (Also measures would be taken so that they could be safely removed.) Seems like they could be a positive thing if used correctly. I expect patents are much the same. Certainly overused and abused currently, but not necessarily negative if they could be used 'correctly'.


How's this for "correctly?" http://www.defensivepatentlicense.com/

Kind of like copyleft- but for patents.


Hmm, I can see how that sort of thing makes sense given the current state of the patent system, but personally I don't believe that so-called 'offensive' patents are irredeemable. Rather, it seems to me that they are simply far too broadly granted, and generally for far too long a time period. I have no problem with a patent-enforced monopoly if it is granted for a true innovation, and for a reasonable length of time.

For example, in the smartphone industry, where a product is old in a year and obsolete in three, it doesn't make sense to me for patents to last decades. On the other hand, it does seem reasonable to reward significant innovation by granting a patent for a long enough time period to establish a strong market position, before opening things up to competition. The tricky thing is, that ideal time period would be highly variable based on the industry and even the specific idea being patented. Still, surely there's room for improvement there.


How does the DPL benefit those who have no patents of their own? Copyleft is designed to benefit users above all else, even at the inconvenience of developers.


In case this is the reason for the downvotes, to clarify, I certainly don't believe landmines should ever be placed such that they would be expected to detonate. I'm saying that they might save lives in certain circumstances if used as a last resort deterrent only (with fields obviously clearly marked). Sorry for the tangent.


A strong case can be made that the risk of nuclear war that we incurred is worse than a conventional ww3. Say we had a 1/2 risk of nuclear war and a probable cost of conventional war would be 1/10 of a nuclear ww3.


Also, it's possible that the various proxy wars that have been fought since WWII have killed more people than a hypothetical knock-down, drag-out WWIII would have. But the point stands, you can argue both ways.


>it's possible that the various proxy wars that have been fought since WWII have killed more people than a hypothetical knock-down, drag-out WWIII would have

Mmm, no, I'm pretty sure that's not possible. It would be possible to have some kind of super-low-casualty 'world war' with fewer deaths than those, but not a knock-down, drag out world war.


That and even if the states that developed them in the first place never intended to use them, they remain in the environment for many years after, poisoning entire regions of the landscape. Sometimes to the point of making those regions uninhabitable.


On the other hand, regions which make it uninhabitable for humans make it habitable for animals. Chernobyl is now a haven for wildlife.


This isn't accurate. The Chernobyl event has severely degraded the ecosystem for nearly all living things.

http://www.smithsonianmag.com/science-nature/forests-around-...

"Birds around Chernobyl have significantly smaller brains that those living in non-radiation poisoned areas; trees there grow slower; and fewer spiders and insects—including bees, butterflies and grasshoppers—live there. Additionally, game animals such as wild boar caught outside of the exclusion zone—including some bagged as far away as Germany—continue to show abnormal and dangerous levels of radiation."

And there are likely plenty more terrible results we don't yet know about.


I'm quite aware microbes are mostly gone, after all radiation deals most damage to fastest multiplying cells.

I didn't say it's all roses, but the wildlife there is thriving because of severe lack of humans. Sure those near the sarcophagus are dangerously mutated, but the scientist in me wonders how the animals will adapt to heightened radiation.

As for fires, there is that, but then again the exclusion zone will spread and there will be more free space for wildlife. People will have to reallocate but on the plus side, more refuge for animals.


That's interesting. I thought thought radioactivity was harmful to all life forms, any source?


> I thought thought radioactivity was harmful to all life forms

The ambient levels of radioactivity are very "livable" in the surroundings of Chernobyl nowadays, plus you have to consider that it's not because radioactivity is detrimental that it prevents animals from breeding and surviving. Only very high levels of radioactivity are known to be fast killers, moderate levels will likely cause more cancers, and low levels are heavily debated (some people saying it causes harm, some others saying it has protective effects on the body as it kills a number of microorganisms).



Good analogy. But you got the countries around the wrong way with "(US/USSR, Apple/Google)". The resemblence to the cold war is even more striking when you realise that this also parallels planned economy vs free market.

It will be interesting to see if we get the same result at the company level as we did at the country level.


human culture is a fractal

relevant xkcd --> http://xkcd.com/1095/


I think it's a terrible analogy:

1) Nuclear weapons are not even relatively cheap. (Certainly not for the Soviet Union.) ~$640B over the next 10y, and this is during a draw-down in weapons.

http://www.ploughshares.org/what-nuclear-weapons-cost-us

2) It's pretty ridiculous to suggest that nuclear powers covertly threatened smaller countries with the threat of their nuclear arsenals, let alone actually attacked smaller powers (unless you count the US bombing of Japan).

Using patents doesn't lead to Mutually Assured Destruction, and there are many cases of large organizations using patents to damage or defeat other smaller (or even large) organizations.

3) Many of the patent trolls are surrogates of big players who simply give them plausible deniability. Again, there's no analogy of a big power giving nuclear weapons to terrorists to conduct attacks on its rivals because the downsides are so immense. With surrogate patent trolls it's merely a matter of some bad P.R.


As a consequence, nuclear scientists/physicists of the Cold War era are analogous to patent lawyers today. Kind of sad don't you think ? :)


That's the point where the analogy breaks down though, because the actors in the patent case are private actors rather than sovereigns. So if you e.g. abolish software patents the whole problem disappears, but nobody can "abolish" nuclear weapons because they're a consequence of the laws of physics rather than the laws of the United States.

If humans had the power to amend the laws of physics to make nuclear weapons impossible and yet nuclear physicists lobbied against it, then they would be in the same position as patent lawyers.


not quite. The scientists didnt like what they were doing and were driven by making sure that thier side was best equipped.

Patent lawyers just make money. Go to trial? Pay up (even if you loose) Need a new patent? Pay up. Want to enforce your existing patent? Pay up. Want to check to see if someone is infringing on your patents? Pay up. The lawyers, more or less are neutral benefactors of the patent wars.


I think nukes are a bad analogy: patents are far more likely to be used because their use is not nearly as destructive. When Apple won a $1 billion judgement against Samsung, it wasn't even remotely damaging to Samsung ($178 billion in revenue in 2013).

Really, it's just the inequalities of large markets. In general, it's a bad idea to start up a company in a field that a $100 billion company is expending a lot of effort in. Because they are established, they have the ability to create barriers to entry for you in a lot of different ways (marketing, supply chain, and yes, patents). If patents are no longer a problem, there are still plenty of ways that Google or Apple can keep you from playing in their backyard.

If you're talking big companies vs big companies, they're just trying everything they can to make their competition spend more money on lawyers, etc. to reduce their margins even further. Apple has huge margins, Samsung does not, so it hurts Apple less to spend $100 million on patent lawyers than it does Samsung.

The patent trolls are a new problem, and one that probably needs a regulatory solution. Technology patents in general are a problem, but solving the patent problem won't instantly change the landscape for smaller companies. They'll still be at a distinct disadvantage in a number of ways to larger companies, and need to pick their battles carefully.


I enjoyed your post. I have a couple of thoughts / suggestions for you.

I got the impression that the underlying motivation for writing the post, and tactic you used for justifying your positions was largely in response to what I would consider the overly myopic hacker news user base. That is, disproportionately white, male, curmudgeoney programmers. I sympathize with your frustration, but urge you not to let their world-view cloud yours, or cause you to search for complicated answers to simple questions.

An example of what I mean:

> I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism.

On this point, I urge you to consider a much simpler explanation: that people are skeptical because there is much to be skeptical of. People like Musk are a rare breed in Silicon Valley. Today's tech "entrepreneur" rarely looks like Elon Musk, someone who genuinely seems to want to do good things for the world. The skeptisism exists because there are a lot of startups doing plain silly things, masked in global do-goodery marketing narrative.

Startups are the new gold rush, today's investment banking. But the west coast has much different cultural norms towards opulent wealth than does the east coast. Put simply, we like to hide it out here, they like to flaunt it out there. Thus, "we're making the world a better place" instead of something like The Wolf of Wall Street.

Still, I enjoyed your post and your choice of using macro-economic theory as a lens through which to view this. Thanks for writing.


Actually, I agree with you more than you'd think. After living in San Francisco for a year or two, I'm absolutely skeptical toward 99% of the stuff that's passed off as "Silicon Valley revolutionary" crap. I'm pretty much only interested in pure technology: SpaceX/Tesla, new hardware manufacturing / internet of things, drones, immersive computing, bitcoin (to some extent), etc.

Which is why, I think, I can enjoy the HBO show thoroughly while still lamenting about "where did all the hackers go"


The hacker has been partly replaced by the hustler, and that sucks. But there are still hackers around.

There's also things that the hacker can learn from the hustler, like how to take something early or minimal and make it self-supporting. In a sense the hustler is a kind of hacker. The problem is that hustlers are often just hustle... not enough substance. But when you have substance and hustle, that's powerful.

I do get turned off by all the self-congratulation coming out of the Valley. It's important to listen to criticism. Sometimes the critics have a point. In particular, a lot of the optimism out of the valley sounds dangerously close to "let them eat cake!" to the rest of America. (News flash! Most of America is more or less in a long shallow depression right now.)


SF is a whole different ball game. Go south on the peninsula and towards the real "valley" and you'll get a more relaxed/grounded viewpoint (most families are priced out of SF unless they're DINKY or DISK [1]).

[1] http://en.wikipedia.org/wiki/DINKY


Cool. Yea, I really enjoyed the HBO show too (especially in the beginning, the writing tailed off a bit mid-season). The satire around "making the world a better place" was the first thing that jumped out at me and hooked me initially.


But the west coast has much different cultural norms towards opulent wealth than does the east coast. Put simply, we like to hide it out here

And from what I understand, use it to hide the beach from poor folks, too.


Zing!


> Today's tech "entrepreneur" rarely looks like Elon Musk, someone who genuinely seems to want to do good things for the world. The skeptisism exists because there are a lot of startups doing plain silly things, masked in global do-goodery marketing narrative.

I would say that it's more of today's entrepreneur genuinely believe that they're doing good, but are just terribly misguided.

Of course, that's just how it feels to me.


Yes, I'd like to see the evidence that someone like Musk, Wozniak, and maybe arguably Jobs, are not just outliers.

As for his mention of the WWW, I don't credit the valley for all that and wonder if Vint Cerf has emoted about his mentality when coding TCP/IP.

> cultural norms

Not sure about that, unless you consider it a very recent 'value.' There was quite a bit of flaunting during the dot-com era.


I know of one person personally and by extension one or two more that are very much like Elon Musk. Joel Gascoigne from Buffer for example. He's taking a very similar approach to things, especially if you look at how transparent he is about himself and his company. They've set a lot of waves in their space.


In NYC, the sharks don't pretend they aren't.


I don't want to start a east coast vs. west coast feud over how rich boys spend their money, but there's a difference. I can spot an east coast transplant, even after they lose the accent--and they think, and spend their money differently too. There are always exceptions, but in my world East coast men are more competitive, less empathetic, and have taken more money out of my pocket than west coast men. Yes--I'm stereotyping, but in my world I try to avoid doing business with people who grew up in highly populated areas of the east coast. It's harder to make money on the east coast. I couldn't imagine trying to compete in New York. I'll get beat up over this post, "down voted", whatever--I've just noticed real differences in people between the two coasts. I'm tired of being so polite--oops I did it again.


Interesting observation. Being a native Northeasterner, I'd love to know more about the spending patterns of East Coast men even if it's a wild generalization.

I was in NYC over the weekend and Los Angeles - for my first time - back in April. Both large cities with large populations. Both trips were for mostly pleasure. In NYC I stayed in Williamsburg; in LA I stayed in Silver Lake. LA had a very laid back feel to it. Maybe it has to do with all the space. NYC is pure congestion. Wherever you are, a few hundred people around you are trying to pass through that same space. It keeps you moving, hustling to keep from being run over or an obstacle. I loved both cities, but they have very different "feels".


LA is also nearly always sunny and comfortable, so there's always a large number of people that just decided to spend the day outside, relaxing.


I grew up in the DC area and lived there for 8 years after college. Moved to SF (now Oakland) 6.5 years ago.

I'm not sure it's truly accurate, but the east coast, DC and NYC in particular, feel like a dog-eat-dog, I'll do anything to get ahead, kind of place while the bay area feels like a much more friendly competitive environment.

Whatever the cause, there is a very real difference in attitude between the two coasts.


Trust is not a binary decision, it is a continuum. And within that continuum, the US is way further to being a trusting society than not. When we sign a contract, we have an expectation that it will be fulfilled, and that if it isn't, the courts will work, albeit slowly. You get a job, and you tend to get paid. Go in a cab, not expect to get robbed, or murdered. If you hire an employee, you expect him to at least attempt to do his job. Is someone does a good job, there's a chance there's some reward behind it.

There's a reason Southern Europe has worse economic outcomes, and that's trust. You get even worse results as you move towards the development world. And many parts of South America make Southern Europe seem downright trustworthy.

It's important to have a high trust society, but it's really more of a systemic trust than anything: About having negative consequences to breaking trust, not about taking leaps of faith to trust companies.


> There's a reason Southern Europe has worse economic outcomes, and that's trust.

I have no idea where you got this impression from. It is wrong, though. I did business in several southern Europe countries, and you can seal a deal with a handshake and be confident it'll go through.


> It is wrong, though.

As an Eastern European, I think he got it right. From my own experience, there's a huge difference in trustworthiness between the Western and other countries/regions.

I have tons of stories to support this, but here's just one: in supermarkets in my own country, you're not allowed to walk in with a backpack (you have to seal it outside or leave it in a locker); I've never had to do that in the US.


We don't have any particular reason to think that trust is high among corporate executives though.


Playing devils advocate, I'd say sure, it sucks that some (or most) people are selfish dickheads leading to mutually degrading situations. But it would suck almost as much to always be at mercy of your competitors good will (that he won't arbitrarily screw you, leave unpunished and with a better outcome), even if it happens sparsely. The obvious solution to this fabricated game theory dilemma is regulation, which is nothing more than eliminating those scenarios which are undesirable for society altogether. Not only it avoids the risk of being screwed, or the costs associated with being screwed, or the loss of optimality of outcomes -- but most importantly it simplifies greatly the game. Markets are quite complex already and the added constraint of having to think hard about your oponents and consider all the scenarios to make sure you're not screwing them is enormous. I think this behavior is distinct from bad faith, it's just a matter of responsibility and scope.

This, to me, is ideal capitalistic behavior: oblivious, but with good faith (not trying to 'unfairly' or 'destructively' bring down your opponent) -- and it should come with swift regulations and laws flexible enough to punish edge cases.

We have a truly unrecognized gift as a species: morality. Not because it's cute or honorable (that would be a circular assessment), but because it allows us to reach those Pareto optimal spots. We just have to use it in proper settings, with proper rules.


In this story, it's regulation that has put some companies at the merci of competitors. Small Startup Y has to hope that Big Corp X wants to license a patent for a fair $ amount. Startup Y has no way to negotiate a large fee down to an acceptable level, pay the expensive licenses or fight in court if they ignore the patent.

Considering two companies with patents, you get the Nash equilibrium where both companies go to court for patent infringement (assuming the plaintiff always wins). The payoff matrix could look like this, where the numbers are the changes in profits in %.

            | court    | not court
  ---------------------------------
  court     | -5 \ -5  |  -15 \ 10
  ----------|----------------------
  not court | 10 \ -15 |  1   \ 1
  ---------------------------------
Assume the profit of the previous year is 14%.

  - If no company goes to court, both profits grow slightly with 1% to 15%.
  - If one company goes to court, and the other doesn't, the plaintiff's profit increases with 10% to 24% and the defendant's drops with 15% to -1% (placing it a loss).
  - If both companies go to court, the profits of both companies drop with 5% to 9%.
If you want a real-life example of this situation, just look at the lawsuits between Samsung & Apple. Probably the only case where they'll evolve to the pareto optimal solution, is when patents no longer exist at all.

A world without patents would allow companies to win customers based on pure attractiveness and features, not by getting competition banned. Note that this isn't the same as giving your key designs away for free. It means I could reverse engineer an iphone touchscreen and create a compatible version, without being sued by anyone. Apple would still have the early mover advantage with existing customers; the consumer would have more/better/cheaper choices and i would have a more attractive product. (Note that this might not be the case for other sectors, like pharma, where it costs a lot to develop a new drug from scratch, rather than the cheaper additive innovations in the tech sector).


The author is seriously mistaken about game theory. The Nash Equilibrium requires every player to be maximizing their payoffs given what the other players are doing. But game theory itself does not say what the nature of the payoffs are: there is no problem in modelling altruistic players who attach a high payoff to outcomes which are good for everyone and low payoffs to outcomes which benefit only themselves.

The Pareto Optimal is not an outcome which is best for both, since the whole point of this concept is to avoid giving a definition of "best for both". Rather it is an outcome from which no player can be made better off without making some other player worse off. So, for example, for two greedy people sharing a cake, any division of the cake, including one which gives the entire cake to one person, is Pareto optimal.

Anyone seriously interested in understanding what game theory really says and avoiding superficial mistakes in its interpretation should read at least the first chapter of Binmore's 'Playing for Real'.


I think when you allow for altruistic players, the core insights you get from game theory tend to vanish.

I think the author had that part mostly right, actually.


But if you really are a selfish player, and you have somehow persuaded the other player to trust you and play "deny" then you should definitely play "confess" to maximize your payoff. With selfish players there is no way to move to ("deny","deny") in a one-shot Prisoners' Dilemma. Cultural change cannot help unless it amounts to a change in payoffs.

[The story would have been different in a coordination game with multiple Pareto-ranked equilibria where a change in beliefs can move you from a bad equilibrium to a good equilibrium.]


In the case of a perfectly selfless person playing with a selfish person yes, that is a place where game theory ceases to be useful. But real altruists are imperfect, and have somewhat different notions of utility and planning horizons. Some games cease to be interesting but others turn from pure conflict to interesting games.

In fact, most of the examples I remember from The Strategy of Conflict are among groups that generally mutually altruistic, like parent and child or soldiers fighting on the same side in a war.

Of course, games played among roughly altruistic players tend to have much better outcomes...


> there is no problem in modelling altruistic players who attach a high payoff to outcomes which are good for everyone and low payoffs to outcomes which benefit only themselves.

Isn't this something of a contradiction in terms?

But say it's not. Aren't such players likely to die out in a lot of ecologies? Deriving utility from helping others won't stop you from starving.


It is not necessarily a contradiction as long as you accept the existence of two different ways of ranking outcomes: one for desirability and one for decision-making. When a cake is being shared I may want to eat the whole cake alone, but I may still offer you half the cake out of a sense of fairness. For the predictions of game theory it is the decision-making ranking and not the desirability one which enters into payoffs.

If you deny the meaningfulness of talking about different ways of ranking then of course any notion of altruism becomes self-contradictory: "He gains enjoyment by starving himself to feed the poor, that's why he does it." But in practice we distinguish between masochists and saints.

Helping others may help you survive if selfish people are ostracized by others (as seem to happen in human societies) or if a good turn today entitles you to a good turn tomorrow. But the evolutionary theory of altruism is not something I understand very well. My only point was that contrary to what the OP suggests, the formal techniques of game theory such as Nash equilibrium are agnostic with respect to nature of payoffs. And both casual observation and systematic experiments in economics show that many humans act out of a sense of fairness and expect fairness from others even when interacting with strangers.


> Aren't such players likely to die out in a lot of ecologies? Deriving utility from helping others won't stop you from starving.

It might, as it gives other (selfish) actors a reason to prefer you to survive over a selfish competitor (other than themself.)


Author is very unfair to the "capitalist environment like America's". Our market-driven society requires, and rewards/trains, a level of trust that's less-common elsewhere. Just two data points:

(1) Americans are "The Weirdest People in the World", per one review of psychological studies, in economic games. They're more willing to punish 'unfair' offers in the 'Ultimatum Game', and offer higher shares against naked self-interest in the similar 'Dictator Game'. See for more details:

http://www.psmag.com/magazines/magazine-feature-story-magazi...

(2) We've had a number of explicitly "anti-capitalist" nation-states in the last 150 years. They haven't been paragons of collective action for the greater good, or protection of the common environment. In particular, the ex-Communist societies and emigrants-from-same sometimes take a while to adjust to new economies where every stranger, government and non-government alike, isn't constantly trying to screw them under false pretense of shared-sacrifice.

The actual games in "capitalist America" are only very occasionally dog-eat-dog zero-sum affairs. More often, they're iterated games rewarding not just consciously chosen cooperation but an optimistic, cooperate-by-default mindset. Politics, with its zero-sum elections and redistributions, is an exception. Its partisanship shouldn't be attributed to market processes, but to electoral/governmental ones.


This explains, at the very least, why rampant partisanship is an inevitability in a large Democracy, despite it being worse off for everybody (including politicians themselves).

Instead of saying "in a large Democracy" it should say "in a large Democracy which uses plurality voting." Some voting systems (for instance Condorcet compatible ones) do not encourage partisanship in the same way as plurality does. In fact other systems actually encourage cooperation and favor candidates that are more in the center.

And I think that points to a flaw in the conclusion of the article: attempting to directly change human nature (or culture, as the OP suggests) is a fool's errand.

Instead, changing the rules of a system, such that the Pareto optimal result and the Nash Equilibrium align more closely, is a much more realistic approach. And I believe that when you do set up good systems where people are rewarded for cooperating, the culture changes with it.

(Regardless I think it is an excellent article and the more people who understand the Game Theory stuff he explains, the better. And I absolutely agree with his sentiment than Musk should be lauded for what he is doing rather than being met with cynicism.)


> In fact other systems actually encourage cooperation and favor candidates that are more in the center.

Actually, single-round winner-take-all democracy induces a race toward the middle, not polarization. (If everyone is aligned on a 1D spectrum and votes for the candidate closest to their position, then both candidates are incentivized move toward the median position.)

What you're really getting at isn't the idea of polarizations versus moderation, it's voting coordination (i.e. political parties) aka collusion. Unfortunately, alternate voting systems don't eliminate collusion, they just push it to a different level (e.g. proportional representative systems still have 51% coalitions at the level of parliament). You might reasonably argue that that's a better level to put that collusion, but it's definitely not eliminated through some simple choice of voting system.

If you really want to eliminate collusion and induce consensus making, you can consider "randomized parliaments". They operate in a way very analogous to the mechanism that makes poker showdowns rare. Although he chooses an unfortunate name of "quantum parliment" (since there's nothing quantum about the randomness), Aerts explains the idea well here: http://arxiv.org/abs/physics/0503078


Arguably, what we've seen happen in practice is both a race toward the middle and polarization - the two parties and their supporters become more and more hostile, aggressive and unwilling to compromise over an increasingly small set of differences between the two.


Yes, I think that's right. I was really criticizing the idea that winner-take-all deomocracy is not a system that "favor[s] candidates that are more in the center". "Polarization" was a poor choice of words; I think "extremization" would have been better.


It's only a race to the middle in the short term. In the long term, you tend to get two parties as a defense against vote splitting.....that's where the polarization comes from. The collusion causes it. That's not to say that collusion always causes polarization, but this particular type does for very direct mathematical reasons. (see Duverger's Law)

Proportional representation is not a great solution, in my opinion, since it actually assumes parties rather than making them unneeded.

That's not to say there won't be collusion under a different system -- there will and that's ok...but there won't be a particular type of collusion whereby the Nash Equilibrium is two diametrically opposed camps.

The main point, though, is that the rules are important. People cooperate better if the rules reward cooperative behavior.


Candidates and parties are not one dimensional. In more dimensions, polarization occurs. http://zesty.ca/voting/sim/


Please note that the post gives an extremely bad impression. First of all, pareto efficiency and nash equilibria exist both in capitalism and other economic systems. And the obvious alternative economic system : centrally planned economies, are very much nash equilibria (if they are stable at all).

But the second impression he gives is also very wrong. By definition, everyone is a "selfish dickhead" both in Nash equilibria interactions and pareto efficient interactions. This is a basic tenet of economy, that people "in the limit" act in their own self interest, never out of altruism. Why ? Simple : if anyone is systematically altruistic, he/she will be eliminated from the game (meaning end up dirt poor, imprisoned or dead or otherwise prevented from participating in the system). The predictions this makes are extremely accurate, and have been for millenia.

Always assume nobody is altruistic, ever, for any reason.

The real difference between nash equilibrium transactions and pareto efficient transactions is this :

nash equilibrium : A and B, both "selfish dickheads", transact. If A gets a good deal, B got screwed.

Pareto efficiency : A and B, both "selfish dickheads", transact. A and B got a good deal.

This is why the "always cooperate" strategy in the prisoner's dilemma game is not actually pareto efficient : it is obviously possible for the other guy to screw you. If it were a pareto efficient strategy, it wouldn't be possible to take advantage of this.

In capitalism, if there is a pareto-efficient strategy to transact, people following that tactic will quickly increase in numbers, and therefore the whole society will become pareto efficient. This happens BECAUSE everyone is a "selfish dickhead", not because some people are morally superior to others. That fact is why every economist is so impressed with capitalism. Capitalism is a system that can succeed, for everyone, in the presence of selfish dickheads. A centrally planned economy, by contrast, necessarily either destabilizes entirely (not good for anyone, unless you truly believe in anarchism), or turns into a Nash equilibrium over time.

Capitalism is a learning algorithm, or a "crowd-sourcing" algorithm with money as "karma" : it makes sure that resource allocations are decided by people who previously made good allocations. That is of course what people really have against capitalism :

1) "abusers"/"power mongers"/... : complain about capitalism because they can't keep abusing the system. If they use their resources to force certain outcomes that wouldn't normally be achieved (e.g. personal power), that can only work for so long.

2) moralists: complain about capitalism because it's amoral, like any learning algorithm. It does not care if any action improves or destroys other people, or which factors determine success, merely if it increases an abstract "value" concept. If they have resources (e.g. because you have an islamist state), it requires a constant large cost to force any non-optimal outcome (e.g. not letting women work). Needless to say this is perceived by the moralists as capitalism fighting allah (when of course it's really reality itself that's at odds with allah), and then they usually just grab the weapons.

If there ever was a "true" religion, it's trivial to see capitalism would quickly grow it, not work against it. "Surprisingly" this has not happened yet, one can only wonder why.


I don't agree that the free market ever produces a pareto-efficient solution. If all market participants act selfishly in an unconstrained market you get a nash equilibrium because there are two avoidable downsides which the fully free market will naturally produce: the tragedy of the commons, and the concentration of resources.

The tragedy of the commons can only be avoided by changing the rules of the market through an external force (lawmaking) so participants must act altruistically to act selfishly.

The concentration of resources is typically avoided through wealth redistribution, another mechanism of mandatory altruism.

So, the thing is, the fully free market is only pareto-optimal if you narrowly look at the market, but if you look at the world as a whole, it is a nash equilibrium, unless you force market entrants to act altruistically (through bribe or threat).


> The tragedy of the commons can only be avoided by changing the rules of the market through an external force (lawmaking) so participants must act altruistically to act selfishly.

You're assuming that the external force will somehow make the "right" rules, the ones that actually fix the problems with the market and force participants to find Pareto optimal outcomes. Experience suggests that this is not the case; what actually happens is that the external force that makes the rules gets co-opted by some of the market participants, and you end up with worse outcomes (i.e., further from being Pareto optimal) because the concentration of power in the external force (the government) makes it easier to corrupt. Look up "regulatory capture".

> The concentration of resources is typically avoided through wealth redistribution, another mechanism of mandatory altruism.

Again, you're assuming that whoever redistributes the wealth will do so in a way that gets closer to a Pareto optimal outcome. Experience suggests that this is not the case; what actually happens is that the rules for redistribution get co-opted by some of the market participants, so you end up with a worse distribution of wealth. When the economy tanked in 2008, wealth got redistributed, by the government, to the banks that had caused the collapse, not to the people who lost their homes and their retirement savings.


Well add to that that you're assuming that "right" rules that are pareto efficient

1) exist

2) are significantly different from capitalism

All non-trivial pareto efficient rulesets I've ever seen involve some form of revenue sharing between both parties. Given what pareto-efficiency is, I think this may be a general property. Obviously somehow both parties need to be bound together for pareto efficiency to happen. Money's one way to do it, and I don't know that many others.


Note that "perfect" capitalism, for obvious reasons (amongst others the ones you mention) does not have a commons. And yes, there are "natural" commons, like the athmosphere, but those are unsolved problems.

> The concentration of resources is typically avoided through wealth redistribution, another mechanism of mandatory altruism.

Again if this works, it's not altruism for the same reason that Ford's actions weren't altruistic. They were a business investment that would force others to make the same investment, and he was gambling that people would invest it in buying his cars. He was right. This is the same thing, only at a country level.

That's assuming it works. While the political advantages of directly promising large amounts of people money are undeniable when it comes right down to it, people work because they're forced to work to an extent. That, sadly, means you can't take that away. You can probably safely take it away for a while, even a generation I think. But ...


This.

The above said, the learning algorithm has flaws that can make Pareto optimality impossible (economists call this market failure). This is where we inject aspects of central planning into the modern economy, with debatable results.

For example, it presumes a level of information symmetry through the price mechanism. Markets begin to fail when people don't/can't understand what they're buying - the "market for lemons". This is why we have an SEC and mandatory , standardized, information filing for publicly traded companies for example.

Another is high levels of uncertainty about the sudden need to buy something, which is so expensive it can wipe you out - eg. Major surgery. Insurance markets cover this. But we all have observed the debates and challenges of managing a sizeable and representative risk pool.

Intellectual property and digitized products (music, movies, TV shows, software) also has a fascinating role here in that it is a public good that is open to free ridership unless (a) the good is a secret and is accessed only as a service or (b) the government enforces a temporary monopoly on an aspect of the product. The latter may be past its prime given the abuse of patents and copyrights leading to non-Pareto outcomes.


Patent discussion aside, I just want to point out that battery powered cars are NOT the solution to global warming, at least not at the current state of technology. Aside from all the environmental damage involved in producing the lithium cells them selves, you have to also consider that to charge those cells we are still burning cola and then transmitting that power over an incredibly inefficient, almost 100 year old power grid (in US).

In fact, given the environmental damage from production of a new car combined with environmental damage from production of lithium batteries, combined with CO2 emissions from the cola burning power plants and nuclear waste from the nuclear power plants, I would argue that the earth is better off if you were to drive an older F150 pickup truck for another 300k miles, rather than buy a new Tesla. If you have an option though, you should choose something more efficient.

But overall, I just wanted to point out to anyone who is honestly concerned about global warming. Driving your current car for longer (assuming it's reasonably economical), and investing the money into fixing it up and getting more miles out of it is way better environmentally than buying a new car. Remamber, repair > reuse > recycle > replace.


This post highlights some persistent myths surrounding electric vehicles:

1) Even if you're using electricity derived 100% from burning coal, you're still causing less pollution than most gas-powered cars. This is because power plants are hugely, massively more efficient than internal combustion engines, and because it's much easier to filter pollution out of one big smokestack than thousands of small ones. Furthermore, even just refining oil into gasoline takes almost as much electricity as you'd need to power an EV directly. In the worst-case 100% coal scenario, certain fuel-efficient vehicles might be better than an EV in terms of carbon emissions, but in most real-world cases any EV is more environmentally friendly than any gasoline vehicle. This gap will only continue to widen as renewables continue to replace fossil fuel generation.

2) The production of lithium ion batteries doesn't cause significant environmental damage beyond what would otherwise go into building a gasoline car. There is some environmental damage caused by mining the required metals, but not nearly as much as the environmental damage caused by drilling for oil and refining it into gasoline. None of the materials involved are particularly exotic or toxic, and they are all easily recyclable, so the long-term damage here is pretty limited. Tesla uses batteries made of lithium, aluminum, carbon, and nickel. Older battery tech used toxic metals like cadmium or lead, and were somewhat less easy to recycle, but this is not the case with modern lithium cells.

Driving your current car for longer might be better than buying a brand new EV, assuming your current car is really efficient, and assuming you don't live somewhere that already uses a lot of renewables for generation, and assuming you don't slap some solar panels on your house (which many EV owners already do). But, driving an old F150 for 300k miles is definitely, unequivocally worse than buying a new Tesla. It would also cost you nearly as much money, when you factor in the fuel costs.

And, even then, you're assuming that your options are "trash my current car and buy an EV" or "keep driving my current car". You could also, say, sell your current car to someone else and put the proceeds toward buying an EV.


The idea is that battery powered cars will become more prevalent and effectively cleaner as the electrical energy used to power them is drawn from more renewable sources, rather than from fossil fuels.


Your point should've been "transportation emissions are only a small share of total CO2 emissions". If you want to reduce CO2 emissions, you should start by becoming a vegan.


> If you want to reduce CO2 emissions, you should start by becoming a vegan.

I'm going to regret this, I have no doubt.

Vegan != no carbon footprint. In fact, I would imagine that when compared to a typical vegetarian diet, it is less carbon efficient.

Isolation from animal (by)products means that food bound for vegans typically requires specialized handling and processing. Loss of efficiency gained from the economies of scale.

Limited food processing means that food can not be easily stockpiled and distributed. This results in more frequent but smaller food shipments - the opposite direction you want to go for efficiency.

The small intersection with the average person's diet also means that vegan foodstuffs don't gain any production efficiency when compared to, say, a vegetarian's diet.

All of that, and vegan-bound foodstuffs still have to be planted, fertilized, harvested and transported.


>Vegan != no carbon footprint.

Well, no sane person has claimed that.

>In fact, I would imagine that when compared to a typical vegetarian diet, it is less carbon efficient.

Your imagination is not consistent with reality/studies.

http://shrinkthatfootprint.com/food-carbon-footprint-diet

>Isolation from animal (by)products means that food bound for vegans typically requires specialized handling and processing.

The average vegan food is a lot more efficient than any animal product. An animal is just a biological machien which converts plant matter to animal products. You could take out the inefficient converter and just eat the plant directly. For example, 99% of soy in the United States is eaten by animals.

>Limited food processing means that food can not be easily stockpiled and distributed.

What? There's no special truck for vegan products. Supermarkets ship vegan and non-vegan products together.

>All of that, and vegan-bound foodstuffs still have to be planted, fertilized, harvested and transported.

Yeah. And because animals eat plants, the average omnivore consumes more plant matter than the average vegan.


"The average vegan food is a lot more efficient than any animal product. An animal is just a biological machien which converts plant matter to animal products. You could take out the inefficient converter and just eat the plant directly. For example, 99% of soy in the United States is eaten by animals."

Not that this destroys your thesis, but some animals happily eat things humans won't. A pig fed leftovers is going to be more efficient than sending those leftovers to landfill. People don't eat much grass. &c. This is, of course, mostly irrelevant to how we actually feed ourselves in the developed world (where, for instance, pasture would serve other uses).


Unfortunately, I don't have time for a more detailed response. http://shrinkthatfootprint.com/electric-cars-green


All else being equal, isn't a large fossil fuel power plant 2x more efficient than an ICE, simply from economies of scale from producing tons of power in one central place?


> A "Pareto optimal" solution is one which, given all the possibilities of action, produces the best outcome for both parties (with some negotiable surplus).

This isn't quite right. In a Pareto optimal solution, there's no way to improve things for one party without making them worse for another party, but there's no guarantee that the outcome is good for everyone. "I get everything, you get nothing" is a Pareto-optimal way of diving things up.


That still isn't quite right. Pareto optimal better describes transitions than states. A state can be described as Pareto optimal only in the sense that there are no Pareto optimal transitions out of it. So for example, in prisoner's dilemma, all of the states are Pareto optimal because none of the moves are. No matter what anyone does, somebody will be worse off than the alternative.

As another example, "I get everything, you get nothing" isn't necessarily Pareto optimal because there could be something non-rivalrous that the person getting nothing could have without depriving the person getting everything of it.


Agreed. Seems like the author is looking for something more along the lines of "socially optimal." Also seems like he mixed up which outcome is Nash and which is socially optimal. (Deny, Deny) = (Defect, Defect) = Nash Eq. (Confess, Confess) = (Cooperate, Cooperate) = socially optimal.


The idea that the Pareto-optimal situation is the one where everyone freely copies from each other may be appropriate for the market Tesla finds itself in, but is in general directly contradicted by the actual experience of the technology industry.

The experience of the technology industry is that innovation happens in periods of monopoly. That monopoly might arise from first-mover effects, network effects, lock-in effects, or IP protections (patents, copyrights, and trademarks). This has been true from Bell Labs to Xerox to Google to Facebook. Bell Labs had its heyday when AT&T was a government-sanctioned monopoly. The Xerox Alto, which pioneered the GUI, the mouse, and networking, was invented at a Xerox that had 100% of the U.S. copier industry, a few years before an antitrust consent decree forced it to license its patents to Japanese competitors, quickly destroying its marketshare.[1] If another search engine could easily copy Google's data and algorithms, they wouldn't have the money to be working on self-driving cars and AI. Facebook is a textbook example of network effects precluding perfect competition.

In comparison, look at the PC industry, which is based on open standards and an OS licensed on non-discriminatory terms. What has happened to the PC? They have become commodities and innovation is essentially dead. Companies like Lenovo eke out single-digit profit margins, and nobody can afford to spend money on R&D.

[1] http://en.wikipedia.org/wiki/Xerox#1970s


AT&T developed the transistor, but it was government pressure that prompted AT&T to release control of its patents on the invention, and it was licensees like Motorola, Texas Instruments, and Fairchild (which gave birth to Intel) that did the bulk of the work in the transistor market. AT&T wasn't even sure what to do with it; they were just looking for something better than the vacuum tube.

The Alto was first built in 1973, but was used only internally at Xerox and was never made into a commercial product. Meanwhile, a loose-knit Homebrew Computer Club had among its members two guys named Steve. It was a visit to Xerox by one of them, in 1979 -- a full six years after the initial release of the Alto -- that led to the beginning of the modern graphical interface.

Microsoft began developing multi-touch technology in 2001, but it was the iPhone, in 2007, that won the market. Rumors of Microsoft's wall-mounted multitouch displays predate Apple's products, but it was Apple that figured out how to get the products into customers' hands.

What has happened to the PC is that it has become mature. This happens to all technologies. Modern automobiles are not very different from their 1950s counterparts -- just more refined. Refinements in PC technology however has led to things like the Raspberry Pi and a second-generation community of electronics tinkerers.

Not to belabor the point, but the automobile was also patent-encumbered, and it was the development of better production techniques (the moving assembly line, by Ford), that made the automobile accessible to large numbers of people.

The fundamental problem of product development is that those most suited to inventing things are usually not also those most suited to bring a product to market.


I don't see where we disagree. Bringing a product to market isn't innovation in the way developing something new is. You can't bring products to market using technogies that don't exist, and history has shown that monopolies are a fertile ground for developing such technologies. Your Microsoft example is consistent with the ones I presented, so is Intel. Intel heavily relies on trade secrets to ensure that its competitors don't have access to its fabrication technology.

> The fundamental problem of product development is that those most suited to inventing things are usually not also those most suited to bring a product to market.

This is absolutely true. So how do you ensure that inventors get adequately compensated when people bring their ideas to the market, backed up by tight outsourced supply chains and heaps of marketing?


> Bringing a product to market isn't innovation in the way developing something new is.

I think this is where we disagree. I view the technology of production as equally (but not more) important to the success of a new product -- where success means, "in the hands of as many people as possible".

I have a poor view of the importance (and therefore value) of inventions that never reach their markets. Dean Kamen is a great example here; he's an inarguably brilliant man who's developed new technology in a stunning number of fields -- a far better inventor than Musk -- but Deka, the company, consistently struggles to get the technologies to market, so Musk is having a far greater impact on humanity.

> Intel heavily relies on trade secrets to ensure that its competitors don't have access to its fabrication technology.

And I read this part as supporting that point. Intel's processor technology is certainly valuable, but to Intel, its production technology is even more valuable.

I don't know how to ensure that inventors are treated fairly. Perhaps this is one of those things that requires a cultural shift, where inventors begin to realize that an invention without accompanying developments in production technology is not worth very much.

That's why I'm excited by what Tesla is doing. I hope that this is another step in that direction.


I think you've cleverly bundled together a couple of meaningless correlations. Yes, there's a grab bag (but, in my opinion, not much more than that) of important technological innovations which have come from large companies, but so what? You still have corporations with large amounts of disposable cash for R&D in a world without monopolies and intellectual property. The handful of innovations you can mention don't really have anything to do with monopoly or intellectual property, they just happen to have come from big companies - and there's really no evidence that those companies would simply collapse by being slightly more cooperative.

The majority of important software innovations have come from the open bazaar, not the cathedral. The Internet; The Web; Firefox, WebKit; GNU/Linux, Unix; HTTP; SSH, SSL, AES; Python, Ruby, C, C++. Thousands of humble open source projects which have been distributed to and changed by millions of users.

And even when large corporations do spawn projects, those that succeed are those that encouraged at least some degree of openness. Android from Google, Java from Sun. Open standards for computer hardware architectures and software have lasted and stood the test of time.

Open code, projects, and standards have more than stood the test of time. We are actually living in a time of unprecedented open source success. The majority of computing systems run on significantly open source code. Millions of Android phones running Linux. Every serious server on the planet running on Apache or NGINX on Linux or BSD. A landslide percentage of users accessing them using Webkit, Blink, and Firefox. That's just the tip of the iceberg! Millions of lines of code are being updated publicly, in real time, by thousands of people across the world in collaboration. More so than ever before!

Sure, maybe some people are a bunch of VC-backed business-savy Steve Jobs-worshipping iPhone mobile app developers now, but it's still sad to see someone say that tech innovation "happens in periods of monopoly" on HackerNews.


"majority of important software innovations have come from the open bazaar, not the cathedral. The Internet; The Web; Firefox, WebKit; GNU/Linux, Unix; HTTP; SSH, SSL, AES; Python, Ruby, C, C++."

The vast majority of those were not developed by an open bazaar, but rather by focused cathedral organizations: the early Internet, UNIX, C, C++, SSH, Firefox, SSL. The bazaar maintains them or cloned the success of others (SSH).

I also think you're vastly underestimating the influence and power over millions that continues to exist from closed commercial software: Apple iOS, IBM zOS, pOS, and DB2, SAP ERP, Oracle database, middleware, and various HR/SCM/CRM/ERP suites, Microsoft Office and Windows / IIS. The big difference is that there is an order of magnitude more revenue and more people being paid to work with commercial software than with open source.

That you claim all serious servers run Apache or Ngnix on *nix is profoundly ignorant of the millions of Windows servers and IIS servers out there, some of which power very large websites. I think Ngnix is a great server, but most of the large enterprises (banks, Telcos, etc) I've visted in my consulting run WebSphere or IIS and have never heard of HAproxy or Ngnix.

This is not to say this is a static state of affairs. Certainly in many cases the open source alternative is a better technology or better project, sometimes even the better product. Just there's a big difference between an innovative PRODUCT and an innovative PROJECT. There are lots of the latter on Github, but other than saving people some money, they're not having anywhere the economic impact a PRODUCT has.

There is scant evidence that open source leads to more innovative products. There's a lot of evidence it helps to lower the acquisition costs of supporting software for what usually wind up as partly proprietary products. All of the latest software kings: Facebook, Twitter, Amazon, Apple, Salesforce, Google - their primary money making innovations are closed source built on (mostly non GPL) open source . Their contributions of open componentry back to the community is welcome but limited.

The only large and "purely" open company is Red Hat, and even they go through major hoops to make it inconvenient for others (eg. oracle) to use their open source code for their own purposes (ie. Offer a RHEL clone and loss lead on support). They remain innovative. But so is SAP. So is Oracle.


> but most of the large enterprises (banks, Telcos, etc) I've visted in my consulting run WebSphere or IIS and have never heard of HAproxy or Ngnix.

WebSphere is an app server rather than a straight http server. The equivalent to Apache/Nginx from IBM would be IBM HTTP Server, which is an extension of Apache.


I didn't want to really get into the distinction (Apache is an app server too if you consider mod_*). Yes, IHS is common and they will often use that.

As part of my broader point, IHS is a product, one of many Apache-based products. They're not using the open source project code directly. Even if IBM's "innovations" are modest, they're using it because IHS and the WAS plugin work best with WebSphere. I've managed to convince some to avoid this combo in favour of a simple HAproxy, but it's hard.


> The Internet; The Web; Firefox, WebKit; GNU/Linux, Unix; HTTP; SSH, SSL, AES; Python, Ruby, C, C++.

The internet came from the ultimate monopoly: the government. It was a government project developed by government contractors. Unix and C were invented at Bell Labs when AT&T was a government sanctioned monopoly. AES was developed while the authors were at an university research lab. Stroustrup started C++ in his PhD work, and did much of its early development at Bell Labs pre-breakup. HTTP and WWW were developed at CERN, a government research lab, as was the first webserver.

Its odd to use Python and Ruby as examples of the bazaar. They were developed by Matz and GVR, tackling the fundamental design decisions, before they were released to the community.

Development doesn't mean innovation, though its important too. There is innovation in open source, sure, but making another OO scripting language isn't as innovative as inventing Smalltalk in the first place (which was done at PARC when Xerox had 100% of the US copier market thanks to its patents).


So far you've included university research (Google), large public companies (Xerox), state-sanctioned monopolies (Bell), companies taking advantage of network effects (Facebook), startups (Google's big innovation was in search before the company was born), and anything funded by governments in your definition of a monopoly.

If you define monopoly in such a broad way it's really not surprising that most innovation happens there, because your definition encompasses most of human endeavour.


You're misstating the categories. I'm making the distinction between organizations that are insulated from copying and competition and those that aren't. Xerox at the time of PARC wasn't just a large public company. It had 100% of the copier market and was insulated from competition by its patents. It was a large public company monopoly.

Google and Facebook, circa 2014, also aren't your typical public companies. Google is protected from copying because they don't ship a product. Their algorithms are hidden behind a web-API, and they are kept essentially as trade secrets. Facebook enjoys network effects, which provide protection from competition and in antitrust economics are considered a factor that gives rise to natural monopolies. E.g. the Microsoft and Offices monopolies were built on network effects.

It's obvious why government-sanctioned monopolies, and government and university research labs are insulated from competition. It doesn't matter if people copy their work, because they don't need to make profits in the market in order to secure their funding.

I'm purposefully excluding start-ups and public and private companies that don't enjoy substantial protection from copying and competition. These make up the bulk of economic actors.


The innovation only seems to come from the fact that the monopoly has a large enough war chest but it's the competition that distributes the fruits of that innovation to the public.

Which really seems more like an argument for high funding for centralized research that can be distributed to multiple competing companies.


> Which really seems more like an argument for high funding for centralized research that can be distributed to multiple competing companies.

Yes. I have no idea if that would work, but it would be neat to try.


The author makes some big statements about what Elon is doing and then wonders why everyone isn't guzzling the kool-aid like the author. It has nothing to do with the prisoners dilemma.

First, there is a large portion of the population that doesn't believe global warming is an issue.

Second, there is another large population that doesn't believe global warming can be stopped by a slow transition to electric cars.

Third, there is a large majority of the population that can't afford a 90k luxury car so they fail to see how Tesla will revolutionize the world. This is compacted by the fact that the batteries will need to be replaced in 6-10 years and it will likely cost 20k+. These cars are out of reach for the majority of Americans it's not really going to reduce CO2 output by anything significant enough in time to matter.

Fourth, Elon made a fat stack of cash selling PayPal to Ebay. With that being his primary historical success story, it doesn't make it sound like he is doing just what is optimal for humanity. SpaceX is great for space exploration, but that's not really optimal for humanity considering our current problems.

The article had a nice write up on pareto optimal solutions and the prisoner's dilemma but they are completely irrelevant to the skepticism observed here.


You've alluded to "things which are optimal for humanity" and "our current problems". Could you elaborate?

What do you think is optimal for humanity?

Which current problems are more significant than planetary-level challenges like global warming and confinement of our specifies to a single planet?

These put the existence of our civilization at risk. I would really love to hear which other problems are more significant than those.


Cut the melodrama. Your post reeks of first-world privilege.

Confinement of our species to a single planet is much lower priority than the suffering caused by violent governments, starvation, diseases, and drug problems. Colonizing another planet might be optimal for spreading of our species, but it does little to reduce the suffering here.

Global warming is a problem. However, making luxury electric cars is a drop in the bucket compared to convincing China and India to crack down on things like unfiltered coal power plants.


It'd be great if we could first make everyone on this planet happy and then move on to the next one, but it's just not going to work that way. Long tail of human unhappiness will be very hard to eliminate.

Your mix of problems is highly heterogeneous. Starvation and diseases are serious challenges we have in fact been making a lot of progress on. However, they pose more limited and localized danger than global warming or planetary confinement and so must be given a lower priority.

Violent governments and drug problems are political and so out of scope. Gating space exploration on all politician playing nice and all people staying clean and sober is the best way to doom the project.

Making electric, environment friendly cars be perceived as luxury and something one can aspire to is a small step in the right direction. Also, they're luxury because the technology is expensive. Cells phone began as luxury product, too. Eventually, they'll become mainstream.


Violence and starvation are not a 'long tail' of human happiness. The market that can afford Teslas is much further down the tail than people subject to these problems.


I really don't think that Elon selling his paypal stake to Ebay is his primary success story.

SpaceX and Tesla are much bigger stories, and they are an ongoing affair. The only reason you can make the statement you made is because you added 'historical', but what use is that if it is only used to eliminate the present which is by far the more interesting portion.


"historical success story". I meant one that has played out.


Elons success story will play out when he's dead. Until then it does not look like he will stop. The only reason why PayPal is no longer a concern of his and which allows us to call it 'history' is because as far as he was concerned it brought what it could so it was time to move on. And move on he did.

The only two ways the others can 'play out' is by failing or succeeding. For SpaceX to succeed means a totally different thing to Elon musk than to you or I, for him success is not to make money but to put foot on Mars. Tesla is a sideshow (but an important one at that), with much more impact than PayPal or Ebay. If Tesla 'succeeds' that will likely mean that it will own a substantial portion of the car market at some point (imagine a budget tesla within 5 to 10 years), if it fails the only thing that I can imagine would be a total shut-down or being bought out to stop it from folding.

Effectively the whole patent thing is a very interesting approach to this problem, it says 'we will not be bought at any point'.

I'm not one of the 'gushing fanboys', I just look on in total amazement at what one guy with sufficient drive can accomplish and I'm just as amazed at how many people are ready to trip him up.

The least the naysayers could do is shut up and wait it out, in the meantime, Musk is going places and PayPal appears to have been (with our present knowledge) but a small step on the way. One thing is already fairly sure at this point, Elon Musk's name will be one that will very likely be part of the history books, whether as business tycoon, first man to set foot on Mars (or die on Mars) or as the man who tried to change the world for the better but failed remains to be seen. Regardless, it will likely be in a very positive light, all creativity with no destruction is a worthwhile attitude.


"These cars are out of reach for the majority of Americans" - I don't think these are the last, cheapest, most efficient and advanced cars that Tesla plan to build...


Perhaps, but I fear that even if you build a $18k electric car, you will still have a hard time getting a lot of people on board due to the limited lifespan and high replacement cost of batteries (at the moment at least). I've never paid more than $5k for a car, and I see a lot of people in my (pretty poor) state driving $1k clunkers. My current car is 18 years old, meaning if electric it would be nearing the end of the useful life of the second set of batteries. ICEs well maintained, can have a very long lifespan.

I'm not saying that these issues can't be overcome, but I think it will be a much longer time before these types of vehicles trickle down to the lower 50% of the US customers, let alone, poorer nations, given that the current state of electric cars doesn't even begin to meet the needs of many people in the less dense parts of flyover country (yes range!)


Exactly, it not within the expectations we have with Musk. Hence why would people not question the motive or gesture?


  I believe the current skepticism around Silicon Valley's
  "Make The World a Better Place" mentality is deeply rooted
  in historical anxiety about institutional capitalism. 
OT rant here: I don't think this is related to Tesla opening up at all. "We make the World a Better Place" is self-important bullshit in 99.9% of cases. The most likely outcome is that what you are doing has no measurable impact on the "goodness" of the world. In most cases, what you are doing matters only to a tiny fraction of the world's population. "Making the World a Better Place" is simply self-important hyperbole to the extreme.


Addendum: The fact that your fancy new app is only for a tiny fraction of the world's population is totally fine. Most products are like that. Just don't pretend it's anything more than it is.


The only hope is cultural change.

The only hope is cultural trust, and the only way to achieve that is to allow like-minded individuals to separate themselves into autonomous political units.

This is dangerous thinking Chris, if you start following these thoughts through to the end, rather than spinning off into happy-clappy "change the world's heart" wishing...


Did you not see the link at the end of the article to Balaji's talk on exit?

(Genuine question. If you haven't checked out that talk, its about opting out as an option for pursuing change and it sounds like what you're alluding to!)


Like he said, dangerous thoughts. Think warring city-states. Think StarCraft.


Or you could just learn to live with people who aren't exactly like you. You know, like everyone on the planet except for wealthy and reactionary enclaves of the United States.



That is stupendously naïve.


> The only hope is cultural trust, and the only way to achieve that is to allow like-minded individuals to separate themselves into autonomous political units

...and the reason why you're separating is because you don't trust anyone else.

Nice.


You are being melodramatic. There is no anti-Tesla sentiment, at least here on HN. People were simply asking why didn't Tesla release the patents under an irrevocable, royalty-free defensive patent license instead of just blogging about it, which is a perfectly legitimate concern.

Also optimism has never been as high as it is now with all this talk about full automation of the economy and people living happily ever after with their guaranteed basic income.


If Tesla did this in the early game, would they still be in the position they are today? I think this open source movement works but only if you have the next thing in hand or after you've taken your fill and are ready to move on. In Tesla's case, I think both are true.

If a hunter goes out, learns out how to kill an animal, and then teaches everyone else in the tribe how to do the same, he is shooting himself in the foot because he is no longer useful. The tribe can get their own food and his specialization is no longer special. So he dies off. Unless, he's ready to retire the hunting business and/or holds the monopoly for creating the weapons.

In Musk's case, he seems more interested in what SpaceX is doing and just built the largest electric car battery factory.

It's amazingly philanthropic and evil genius at the same fucking time!


> If a hunter goes out, learns out how to kill an animal, and then teaches everyone else in the tribe how to do the same, he is shooting himself in the foot because he is no longer useful. The tribe can get their own food and his specialization is no longer special. So he dies off. Unless, he's ready to retire the hunting business and/or holds the monopoly for creating the weapons.

This ignores competitive and first-mover advantages. Maybe he's the best hunter (because of experience or talent), or maybe no one else wants or is able to be a hunter (especially if it's dangerous or physically-demanding).

Essentially, you're arguing that the sole hunter should keep a strong grip on the hunting monopoly by keeping everyone ignorant. In practice, this never works out well.


Your argument only makes sense if you ignore the fact that Tesla is a company made up of a large number of employees, not literally Elon Musk personally designing, building, and selling electric cars.


"Of course, this applies way beyond Tesla. I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism."

silicon valley really needs to get over itself. the only thing different about silicon valley and other companies is that silicon valley is to naive to realize they are just like every other company, no matter how much they doth protest.

companies dont set out to make the world a worse place for the most part, even hated companies like BP have good intentions. but if you want to be a publically traded company, and if you want to make money, you have to make profit.

i mentioned on HN before that its funny how Amazon is loved and Walmart is loathed. all the reasons why walmart is loathed Amazon has in spades.

i also feel your view on how capitalism works in the western world. in fact, it has always been a prisoners dilemma / golden rule do onto others as you would have them do onto you economy. thats actually a reason why capitalism has worked so well for the west, and one of the reasons why it took longer in places like China.


The thing about capitalism, and our dismal history with capitalism-at-large, the "assume the other party is a shitbag" idea is so fundamentally ingrained in our cultural

What's that got to do with Capitalism? Correct me if I'm making a straw man, but the alternative to capitalism is to remove negotiation from individual interactions by implementing more State-heavy mechanisms like Communism. Isn't creating a crap-ton of government bureaucracy, rules and regulations to tell people exactly how to live and interact with each other institutionalizing the idea that people are shitbags and shouldn't be allowed the freedom to behave freely?

I liked your original HN post and tend to be similarly disappointed in the lack of giving some people like Musk his due for trying to do the right thing... not to mention the nit-picking posts that assume that Musk and his people are too mentally deficient to properly allow use of their patents.


Honestly, what does regulation have to do with capitalism - where did this meme start and how can I kill it? Capital markets are a tool for allocating resources. They're pretty good at it in that they tend to work better than e.g. palace economies and mostly everything else humans have tried. But there is absolutely nothing to the way that capital markets work that suggests regulation somehow breaks it or whatever other brain-damaged Koch-inspired bullshit they're selling on Fox News nowadays.

It's like looking at a hammer lying on a table, stating 'that is for pounding nails', then leaving the room and expecting the hammer to pound nails for you.


There are known problems of markets in the form of externalized costs. Global warming might be the greatest example of capitalism and markets being the worst thing humanity has every done in distributing resources....


How so? India and China are huge societies and have historically been much less capitalistic yet have been horrible polluters. More recently as they've embraced capitalism, their increase in pollution has more to do with their standards of living than with capitalism specifically. Yeah, they're polluting more, but then again they have a significantly reduced amount of starvation.

If anything, capitalism tends to spur the types of innovation that seems most likely to innovate us out of the possible problems of global warming.


Koch-inspired bullshit they're selling on Fox News nowadays

Please avoid these types of overtly political inflammatory arguments on HN.

Capital markets are a tool for allocating resources

In the modern sense, when someone on HN is advocating capitalism, they're talking about Free Market Capitalism. http://en.wikipedia.org/wiki/Capitalism#Free-market_economy

Fundamentally, it's the freedom to trade with others based upon supply and demand without the government intervening to dictate what to provide, how to provide it, and at what price to provide it.

The only way to counter that market freedom is to create rules (laws and regulations) to restrict how actors in the market are allowed to conduct themselves.

Honestly, what does regulation have to do with capitalism

If you have another way besides laws and regulations that can force all actors in a market to not act according to their own free will, what is that thing called?


>Please avoid these types of overtly political inflammatory arguments on HN.

Don't tell me how to post.

>If you have another way besides laws and regulations that can force all actors in a market to not act according to their own free will, what is that thing called?

I think I'm not getting your point. Your false dichotomy there between "capitalism" and "remove negotiation from individual interactions" did set some alarm bells off in my head though. Specifically "this person is, at the very least, heavily flirting with anarcho-capitalism and it may develop into a serious relationship if it hasn't already". I'm not a fan of overbearing government bureaucracy either, I'm not a fan of a government that can't steward capital markets effectively, I'm not a fan of the brutal police state America has turned into, basically I'm not a fan of a lot of things. But that doesn't mean I think we should neuter government in the hopes that everything will turn out for the best. The problem with American government is not that it is too big - broadly there are areas where it does way too damn much, and there are areas where it fails through inaction - no the main problem with the American government is that it fails utterly to represent the will of the nation of people it governs. It's been hijacked.

But that doesn't mean I want to get rid of it. Well, perhaps I do this particular government, but not the idea of effective government. Believe it or not humans can do politics well - it is always nasty in a sense but you'd be surprised what can be accomplished via politics, provided a balance of power is kept. Sadly, balance of power doesn't exist in American government right now, nor American society really. Even more tragically, one of the most ubiquitous and sophisticated propaganda campaigns in human history - spanning decades across the public and private sectors - has left Americans mostly unable to fix their problem.

And no, I don't have another way to besides laws and regulations to force actors in a free market to behave according to their own free will. And, I don't think I need one - laws and regulations will do nicely.


I don't think I need one - laws and regulations will do nicely

Okay, then we agree that laws and regulations are the only tool we have to restrict free will and thus behavior of actors in the free market?

If you'll look back at my original post, all I was saying is that Capitalism (Free Market) is orthogonal to whether or not people are shitbags and if anything, you could say that the laws and regulations (the State) are put in place because the assumption is that people (and our society in the aggregate) need to be restricted from being shitbags. If anything, Capitalism is inversely related to the assumption that people are shitbags.

Well, perhaps I do this particular government

So basically you want to stay married to a woman even though she's horrible because somewhere out there is a different woman worth being married to? I'd rather be single for a bit and peruse govermenteharmony.com.

but not the idea of effective government

Once again, we're in agreement. Believe it or not, I would replace our government and culture with some Scandanavian country's tomorrow if I thought it could work. Sure, raise our taxes if there's markedly less corruption and the money is going to good use. But that isn't going to happen. Give more power to the State and they will just be validated that they've been on the right path for the past century.

one of the most ubiquitous and sophisticated propaganda campaigns in human history

Not sure which campaign that is, but I could guess based upon your comment about the Koch brothers. What do surveys like this say to you about who is spending the most on controlling the government and where they see the biggest bang for their bucks? Just look at the top 20 and explain to me why I should worry about minority contrarian voices in the messaging out there like the Koch brothers?

https://www.opensecrets.org/orgs/list.php

The Koch brothers are a red herring.


> But there is absolutely nothing to the way that capital markets work that suggests regulation somehow breaks it

I don't think anyone is claiming that regulation necessarily breaks capitalism. It just tends to. Most regulations have very obvious innovation-stifling or friction-causing side effects that are deleterious to the free market.


The American government does this, but it mostly does it on behalf of the same folks trumpeting, to the masses, the virtues of capitalism as an ideology and end in itself. Anarcho-capitalism, really, or nearly so, although the ruling class itself is certainly not anarcho-capitalist of course. The ruling class has a clear interest in subverting free markets to keep the established players in power and any rivals out, and right now in America they are pretty much getting everything they could possibly want.

But contract enforcement, private property, impartial justice systems, and yes even intellectual property, copyright, and wealth redistribution, all contribute to more effective capital markets, and they are all borne of government regulation and laws. That the American government happens to be so thoroughly corrupt that it can't do a single thing right, doesn't change that.


You know, I don't think that you and I are in that much disagreement on some of the basics.

I think we'd both agree that Capitalism can be good. Government serves a purpose in maintaining the framework of items you listed. We also agree that the corrupt ruling class combination of the Government and Capitalists (along with way too much of the media these days, I'd add) is a disaster.

Where I'd imagine that we differ is that I think that the pendulum has swung way too far in the direction of the State. With a debt that is now bigger than our GDP and the last hundred years of mostly one-way growth of government and its agencies, the Government is a huge black hole for money that encourages, institutionalizes, and legalizes ever-increasing degrees of corruption.

The best way forward that I see is to cut back the size and scope of Government. Get it back to doing the basics that it was commissioned to do (The Constitution) and not much else unless there's enough impetus for those functions that would drive Constitutional Amendments. If the incentive to sway law-making power would be reduced, much of the cronyism that exists today would disappear. The ruling class would be significantly diminished.

Sure, Wal Mart might have more economic power, but its lobbying and legislative power would be drastically reduced. At the end of the day, I have a choice to shop at Wal Mart or to not shop at Wal Mart. I don't have a choice regarding paying taxes to feed the behemoth of a Government that does not provide expected reasonable value for those taxes... not to mention the negatives of crippling public education, moving to a lowest-common-denominator-but-still-expensive healthcare system, etc.


>Where I'd imagine that we differ is that I think that the pendulum has swung way too far in the direction of the State. With a debt that is now bigger than our GDP and the last hundred years of mostly one-way growth of government and its agencies, the Government is a huge black hole for money that encourages, institutionalizes, and legalizes ever-increasing degrees of corruption.

Also, I don't think there really is a pendulum. As though you can swing back and forth between "too much government" and "not enough government", and then, by finding some balance between the two, get back an equitable, productive, and stable economic and political system.

I don't think the ruling class is so dependent on the government to survive as you believe. In many ways it's the other way around. You can talk about reducing the scope of government all you want, but it will only ever be talk since you have no way to achieve it because you have absolutely no power over your government. None at all. And in fact, for the ruling class, the more people agitate about reducing the scope of government (or, on the other side, reducing the influence of big banks) the better, because it means they aren't paying attention to the power brokers in Washington, nor the capitalists Wall Street actually serves.

Sorry if I'm getting too red pill / blue pill. My point is this: like it or not there is already class war being fought in America (and most everywhere else for that matter, but it's getting pretty dire in the US right now). One side though, for the most part, isn't fighting. Which is good for the side currently winning, because that's only way they can win. And if you don't believe me you can just observe the results: most Americans agree the US government needs to fuck off and quit doing a lot of the stuff it does, and most people understand that having a few megabanks holding a large fraction of the assets of the world is a pretty fucking dumb idea. How close are we to achieving either of those goals, do you think? Do you reckon it's time to be smart about achieving those goals, rather than pontificating about The Way Things Ought To Be if everyone would just be nice and play by the rules?


the more people agitate about reducing the scope of government (or, on the other side, reducing the influence of big banks) the better

The problem isn't that people are agitating about the wrong issues. The problem is that voters are suckers. They believe the leaders of their political parties that tell them that they're going to reduce the size of government or restrict the power of banks. Then when Republicans and Democrats get together to both dramatically increase the size of government expenditures and bail out the banks that failed the hardest, who is held accountable? No one.

Do you reckon it's time to be smart about achieving those goals, rather than pontificating about The Way Things Ought To Be

Pot/Kettle? We're sitting here arguing about this stuff on HN. We're not accomplishing anything. Worse, you actually tried to diminish me as a person by throwing out that red meat of "Fox News and the Koch brothers" when factually I haven't found how you disagree at all with my original point. Let's face it, we're just entertaining ourselves by going back and forth on a Friday. :)


The Koch brothers remark was not meant to apply to you personally, but this is the third time you've mentioned it so I reckon you considered it a personal attack. It wasn't meant as one.


Much of the "invisible hand" idea about how free markets run, and more specifically how they run efficiently, relies on the axiom that people in the market will act rationally towards their own self-interest. As with the Tragedy of the Commons, a capitalist model (generally at least) assumes that people will act towards their own self-interest even when those actions work to the detriment of the group. People that fit that description are certainly selfish (if rightfully so) and in that sense may qualify as "shitbags."


There are plenty of alternatives to Capitalism that do not involve State-heavy mechanisms. For instance, in Communism, despite your assertion to the contrary, there is actually no state at all.


Can you name a historical example where such a system has been successfully implemented?


All cultures prior to the invention of the modern state. Basically all current "native" cultures, including but in no sense limited to: the Bemba, the Nuer, the Iroquois, Polynesians, Melanesians, etc. etc. etc. Almost all day to day interactions (familial, friendly, etc.).

And that's also honestly not relevant to the discussion at hand. OP stated "the alternative to capitalism is to remove negotiation from individual interactions by implementing more State-heavy mechanisms like Communism" and asked if (s)he was making a straw man. I responded that (s)he was on many levels -- there are plenty of alternatives to Capitalism other than Communism, and Communism is also the opposite of a "state-heavy mechanism" given that it literally has no state.


> All cultures prior to the invention of the modern state. Basically all current "native" cultures, including but in no sense limited to: the Bemba, the Nuer, the Iroquois, Polynesians, Melanesians, etc. etc. etc. Almost all day to day interactions (familial, friendly, etc.).

Do those scale to populations of millions?


Just because Marx and Engels put that in their manifesto doesn't mean that any system that has the features of Communism would even theoretically be possible without force (a state).


I don't think "theoretically" is the right word to use here -- it is literally the theory of Communism that it is without a state.

Semantic quibbling aside, there are, as stated in my other comment (https://news.ycombinator.com/item?id=7887756), plenty of decidedly non-"theoretical" cultures which have very Communist features and no entity which fits most conceptions of a state (certainly not your original stated concept of a state as something with a "crap-ton of government bureaucracy, rules and regulations to tell people exactly how to live")

Additionally, there is plenty of theory about how one would have a system that has the features of Communism without a state: http://en.wikipedia.org/wiki/Anarchist_communism being the most direct and pure version. Frankly, asserting flippantly to the contrary makes your whole line of reasoning in these threads very hard to take seriously. There are piles upon piles of books, research, etc. about the intersection of the market and the state, and none of them really try to say, as you have, that without a state there must be private property. Indeed, most works in the space (including the original Locke, etc.) assert precisely the contrary -- that one of the main reasons the state exists is to enforce private property.

More broadly, of course, it really depends on how you define "state". Are all systems of non-interpersonal power a "state"? Is even organized interpersonal power a state? Is it even at all possible for there to be no state? etc.


One of the inherent assumptions of neo-classical economics is that we're all selfish, rational, utility maximizing, humans. That's built into our understanding of markets and how they function.

Now I understand where the author is coming from, and I agree there is a terrible lack of trust in modern America. I just don't agree that the cynical view, that all humans are untrustworthy shit-bags, is all that terrible. Cyncism causes parties to make explicit their assumptions about future behavior. We can then codify this assumed behavior in contracts.

If I was a battery manufacturer and I wanted to use Tesla's patents, I would approach Tesla and ask for a contractual agreement whereby Tesla agreed not to use those patents against me. If Tesla were unwilling to enter into this sort of contractual agreement with me, I would assume they were reserving the right to later use these patents against me.


Just having the right culture is not a solution. You can have a culture that routinely goes for Pareto optimality. If that's not an evolutionary stable strategy, the moment you introduce agents that choose the Nash equilibrium instead, they would start winning and gaining ground.

I wonder about a different solution though: can you design a mechanism that transforms the Nash equilibrium of a Prisoner's dilemma game into the Pareto optimal outcome? Something similar to escrow?

[1] http://en.wikipedia.org/wiki/Evolutionarily_stable_strategy


Elon Musk's response: https://twitter.com/elonmusk/status/477223079421046785

"Apparently, lots of confused media inquiries about blog title. Look, we just to make sure they don't set us up the bomb."


It's "up us" dammit.


Comment to claim in that large scale democracy automatically becomes more partisan.

In large scale democracy partisanship is not necessity. American system has some specific methods to cause it, compared to Finland where it isn't really a problem. And its really these TWO issues that make the american politics more partisan than rest of the world.

A) Election system is strongly geared towards creating two party. When new party has gained enough support it replaces one of the previous two parties at the control, and there is new TWO parties which compete each other. Compare that to systems in which allows smaller parties to get seats. For examble in Finland there are 3-4 big parties that total 60-70% of seats and rest goes to smaller parties. That means to pass anything you pretty much have to have two big parties agreeing on the matter and either third big agreeing or some small parties agreeing.

B) Executive branch is Winner takes all. In Finland the parliament(legislative branch) selects Executive branch and because no party has half or near half seats there is need to be enough parties agreeing on the matter. So if you are REALLY uncompromising you NEVER get to be part of executive branch EVEN if you become the biggest party of elections, since you didn't get more than half the seats anyway in multiparty system. The biggest party gets first attempt to create the cabinet, but they still need to get enough others onboard. The cabinet pretty much needs majority of legislative branch to support it. They need a program which over half the legislative branch supports and usually give seats in the cabinet to enough other parties that have over 50% of parliament. If biggest party fails to create agreement of the program the responsibility of trying to form the cabinet goes to next largest party. And if all else fails parliament may agree a minority government OR even putting some professional bureaucrats instead of politicians in top positions of executive branch. Both are extremely rare situations in here.


Anti-Tesla sentiment certainly wouldn't have anything to do with Tesla's defrauding taxpayers, would it? http://doubtingisthinking.blogspot.com.es/2013/10/tesla-carb...


This article expresses perfectly why:

a) I'm very cautious about working with American companies b) Why my contractors nearly all bitch about working with American companies (I use a lot of contractors on oDesk and they tell me the same thing).

America's great but the lack of trust in business is the one thing that really grates on me.


As someone who has done lots of work for both EU and US companies I agree. The amount of times American companies just say "trust us" versus EU companies definitely grates on me. The US is not all terrible, but there is tons of work force exploitation going on in the US. Especially in the bay area.


> under the assumption the other player is a selfish dickhead. In a capitalist environment like America's, with no social controls or other factors besides ruthless logic, this is the default behavior.

Sigh. One of the most prominent features of capitalism is that it relies on mutually beneficial exchanges.


Ideal capitalism. Much of modern capitalism is about getting the person on the other side of the table into a desperate enough situation, that they have to take your 'mutually beneficial' offer. I present as Exhibit A Greenspan's speeches on lowering worker mobility during his tenure.


That's the theory. The implementation must take into account search costs and due diligence costs. In a low-trust society due diligence costs rise, dramatically shrinking the number of possible exchanges, which then raises search costs, shrinking possible exchanges all the more.


Reputation should solve this problem given that life is a repeated game as long as we also are able to be long-sighted. A more formal argument can be found here: http://economics.mit.edu/files/4754

That suggests the cultural problem is decline in longer-term thinking or more likely a decline in arbitrary codes of behavior without a concomitant increase in longer-term thinking that would recreate many of those same norms.

American business used to place a high value on trust: "A man I do not trust could not get money from me on all the bonds in Christendom. I think that is the fundamental basis of business." -J. Pierpont Morgan

As another example, Warren Buffet seldom does diligence to determine an offer; he trusts those from who he buys to deal and report honestly.


Any company would be stupid to develop car manufacturing based on another company's held patents. But just ask your lawyer to talk to Tesla's lawyers to buy a very cheap, almost free license. Then we'll see if they're serious about this or not.


Obviously you would do more than just trust a web page as a licence to the patents, but I imagine it would be hard for Tesla to win an infringement case after publishing this. This is no "Sun CEO blogs congratulating Google on android" level of plausible ambiguity.


Interesting article, but the font is very difficult to read. I had to change it using the Web Inspector before I could finish reading.


I think he's making a grave error to attribute mistrust to capitalism; in any other system dishonesty is also possible.


There is a body of literature on the subject how self governing groups escape the tragedy of the commons. For example: http://www.amazon.com/Governing-Commons-Evolution-Institutio...

This is all empirical studies.


In the prisoners dilemna, you know the outcomes - mostly because the game has a short life span. In life, you don't know the outcomes since the game has no end. So you never know if you've ultimately chosen the right solution. It's all about your own moral at some point.


Got to love this.

I'm reading the comments on the earlier thread and thinking 'shit, people are really negative'. I refresh the page and this thing shows up. Nice to see that at least on HN people possess Second Thoughts or would this be Thirds Thoughts?


> The Prisoner's Dilemma demonstrates that a Nash equilibrium solution is not always Pareto optimal. The "confess-confess" solution is the Nash equilibrium. You will always be better off screwing the other person over, whether they are honest or dishonest. The "deny-deny" solution is Pareto optimal. If both parties can somehow trust each other, they will both be better off selecting this solution.

This part is very confusing to me. I've always understood that deny was the screw-over move in the prisoner's dilemma. But this segment suggests that confessing is a local optimum. Have I misunderstood the prisoner's dilemma all these years?


>> deny was the screw-over move in the prisoner's dilemma. But this segment suggests that confessing is a local optimum.

The competition is between you and the other prisoner, not vs the state. Confessing screws over the other prisoner.


Isn't the ultimate socially-optimal answer for the "guess 2/3rds of the average" game be to convince everyone to answer 0? Because 2/3rds of 0 is 0, so everyone wins.


Really great post. There's another angle here that has implications around the notion that the Nash Equilibrium is the norm: Path dependence. Getting out of this mess may be less possible because of that notion because how we can proceed is path dependent upon all of us thinking that, underneath it all, Musk is also a shitbag.

We've got a lot of problems facing humankind right now. The stakes get higher every day. Whatever it is we have to do to solve the toughest one we need to do _whatever it takes._


[deleted]


If you want to just serve this one page quickly, you can take the result and save it as static page. Add a specific routing rule just for the url you submitted. (the page looks completely static anyway)

You can play with varnish once you don't have thousands of people who will actually want to read the contents you posted :) (a.k.a don't upgrade anything the day of the release)


Haha. It's static. I've never actually written anything that anybody's read before, so I have no idea what point I need to start looking into a cache.


If it's already static (ie. served from a generated static file), cache won't help you much (if at all). All reads will already come from the memory. Unless you have some crazy routing rules in the webserver, varnish is unlikely to be faster than direct serving.

some old comparison for static files: http://nbonvin.wordpress.com/2011/03/14/apache-vs-nginx-vs-v...


Thanks, this is a great read. I feared since my nginx configuration looks like this[1], something isn't being cached properly in memory, but it looks like I'm being overly paranoid.

[1]https://www.dropbox.com/s/x2k7ms057xh7zkm/Screenshot%202014-...


> OP here. I'm working with a 1GB DigitalOcean box. Didn't expect hacker news haha.

Umm, you posted this article yourself to hn. You also plastered links to hn on the article.

It's very hard to believe you in this instance:)

Having said that, great article, keep them coming!


It would be awkwardly phrased, but he probably meant by that the effect of his submission doing well.

It's best to read charitably when someone is under stress. When my site is down due to load, which has happened maybe a half dozen times in my career, you're lucky to get complete sentences out of me.


So first off I also want to say I found this a great read -- I studied poly-sci and business and work in the tech scene, and when they all collide it gets really interesting.

This raised a lot questions for me though. I was trying to draw the payoff matrix for adopting Tesla technology. How would this look? How to estimate relative gains for each player? I was hoping he'd go through it a-la Khan Academy.


It's a lack of leadership, and it's endemic to society. The Prisoner's Dilemma highlights this. Trust on both sides isn't the only Pareto optimal solution. A leader dictates the correct outcome and does not require trusting a subordinate's decision. If both sides were leaders, they would reach the optimal outcome.

Elon Musk is one of the few leaders in the world.


Thanks Chris - a superb article, deeply meaningful.


Testa try new battery design now: CarbonBattery The Ryden dual carbon battery developed by Power Japan Plus is balancing the energy storage equation of performance, cost, reliability and safety. http://powerjapanplus.com/


Individuals and corporations are not rational machines. Things are much more complex then an equation.


Great article. Very well articulated.

If you haven't seen it already, there's a BBC series called "The Trap" which raises interesting questions too around game theory reflecting human behaviour versus game theory driving human behaviour through modern capitalism.


"I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism."

I am sorry, but that statement shows misunderstanding the issue at such level it is hard for me take his argument as something based on facts.

No. The skepticism around Silicon Valley has always been because of its coziness with the gub'mint. From internet to Siri, DARPA funds large parts of our research. And when this research reaches the public via SV, it automatically divides people into two groups - those who can use it and those who have been replaced. The group which can trump this research, though, keeps disappearing.

It doesn't, by definition, follow the principals of capitalism. That institution in 'institutional capitalism' is the government and it cannot be whitewashed over.


While a Homo economicus plays the Prisoner’s Dilemma, a Homo sapien plays Calvinball.


really like this article... but your font (or font weight) hurts my eyes :(


Same here, I had to disable the font-family css command in order to read it.


I'm just generally skeptical of Musk. He is great at putting out blog posts that people don't treat like the press releases they are.


I'm willing to overlook that horrible font because I learned what a "Keynesian Beauty Contest" is. Excellent article.


I wonder if a foundation of multiculturalism is why America's business culture is so distrusting.


Relies too heavily on Prisoners Dilemma, should read Governing the Commons by Elinor Ostrom


So much win in this! Let's move together towards Musk's Pareto Optimal solution!


> between 1 and 100

I think this should be between 0 and 100 (for the Nash equilibrium to work, anyway.)


making anti-tesla looks like supporting everything that is wrong with establishment and patent system is exactly the kind of connection he wants people to make. Just another PR gimmick there.


So if we could all just trust Elon Musk and never question anything about him or his companies we could save the environment, and capitalism and our culture and all of humanity?

OK then.


Great piece.


<place holder for skeptical comment>


David: What is the primary goal? Joshua/WOPR: You should know, Professor. You programmed me. David: Oh, c'mon. What is the primary goal? Joshua/WOPR: To win the game.




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