Totally Free Market Economics

In totally free market capitalism in which there are economic actors whose sole purpose is to maximize their profits and in which there is no state but is a well-accepted currency, the economic questions, WHAT is produced, HOW is it produced (and distributed and all of the other method questions are combined here) and FOR WHOM is it produced are answered in the following ways:

WHAT:  A collection of economic actors (ie, people who act in the economy) assess the demand (in many ways, in this instance we’ll assume firms assess the average willingness to pay and the number of people willing to pay at that average amount) for a variety of goods.  They then assess the cost of producing a variety of goods.  Based on these best assessments of the uncertain future, firms decide to produce what they believe will bring them the most profit.

HOW: The economic actors will work to assess demand in a way that maximizes profit (ie, they will pay to acquire information so long as they feel that the benefit in future profit outweighs the cost in current expenditure).  They will try to increase demand for their product (through promotion, spreading of information, destruction of competing firms, creation of purchasing contracts, opening of new markets etc.) so long as it is cost effective (again, marginal benefit is greater than marginal gain).  They will acquire the raw material for production in the most cost effective way (ie, buying it where it’s cheapest, using force if that’s more cost effective).  They will utilize labor in the most cost effective way (paying workers the bare minimum in some cases; paying them high wages/salaries and giving them benefits if it seems like that will be more cost effective in the long run).  They will produce in the most cost effective way (utilizing methods of production and capital which maximizes profit; they will reduce pollution or noise or other byproducts of production only to the extent that doing so increases profits).

FOR WHOM:  Goods and services will be “distributed”–ie, they will end up in the hands of–those who purchase them.  The ability to purchase is a byproduct of income.  Income comes as a result of producing something that other people sell.  People devote their time to productive activities in order to earn the money they need to get the goods and services they require.  Those who have the ability to earn more money, perhaps because they live in an area with high capital accumulation that makes their work more productive, perhaps because they are talented or have worked harder and have thus earned more, perhaps because they are owners of the modes of production and have acrued a large amount proportional to the laborers for their work, will have the ability have a larger portion of what is produced.

HOWEVER, the even larger effect that having more money will have is that one’s needs are weighted proportional to one’s expected income by profit seeking firms as they gather information and consider what to produce. Consider the following economy.  There are 1 million people in the economy, one of whom (Mr. A) earns two million dollars a year and the others (group B) who earn one dollar a year.  Mr. A likes sports cars; group B likes food.  A firm enters this economy with absolutely no predisposition toward any type of production with only enough money to produce a sports car factor or a farm.  The firm will first produce sports cars for Mr. A, because he has twice as much income as Group B and thus his desires count twice as much as the desires of Group B when the question of WHAT to produce is considered.

There are many other factors to consider playing into these decisions.  People are far from totally rational economic actors, they derive wellbeing from many other things far more than material wealth (beyond a certain point), and we do not live in a system of totally free market capitalism without any states.  However, it’s hard to ignore the fact that we’re producing Lamborghinis that stay put in garages while billions of people are starving.  I’m waiting for someone to offer me a convincing argument why the status quo is the best thing we can hope for.  Until I hear it, I’m calling out to everyone to start thinking about how we can make our world better.

The Progression of Video Games, or Software as a Medium for New Human Experiences

The types of experiences that video games can offer us are beginning to change.

Software and graphics design tools have become so powerful and easy to use thanks to innovation to meet the demands of the video game market.  My hope is that they’ll begin to be picked up by low budget, creative, indie groups much like producing software has been picked up by indie music producers to make music (art) that’s much more interesting and evocative than the music produced by big studios.

Here’s some artistic stuff:

http://tale-of-tales.com/blog/information/

But here’s something that’s not as emotionally deep, but still different:

www.worldofgoo.com

And finally consider Rock Band or the Wii–both offer new, more interactive experiences.  Some people view the ultimate progression of video gaming to be a point where our current reality is totally reproducible.  I think that we’re moving in a direction where we create an experience that’s as much like reality as we want it to be, but that’s also different in ways that we want to create.  I don’t know what the ultimate progression of that is, or even what that looks like as it grows in the next 10 or 20 years.  Exciting stuff.

A New Way of Communicating

Conversation serves many purposes.  It’s a way of getting to know people or of giving and receiving emotional support. It’s an enjoyable activity in and of itself, whether you’re joking with people or waxing philosophical whilst drunk.

Say, however, you’re having a debate about whether capitalism is good for the world or not.  I actually have this debate a lot and I’m not just doing it for fun; the debate I’m referring to is part of a serious effort to understand the world and the actions I should take as a person within it.  Unfortunately, the debate often goes like this: “Industrial capitalism is bad and needs to be destroyed.” “Okay, what do you mean by industrial capitalism, what do you mean by bad, and what do you mean by destroyed?”  These questions usually get me a look–people think I’m joking or being an asshole or trying to sound smart.  I’m being totally serious though; this issue dramatically effects the lives of everyone on the planet including me and as such demands serious thought.  But it doesn’t get that thought, it gets 45 minutes tops.

There’s a problem here, a problem with the way we communicate when our purpose is to actually generate new understanding about the way the world works.  The root of this problem is the fact that we try to create conversations that are self-contained entities–in other words, whatever quest for knowledge you happen to be on should start and end in the breadth of that one conversation.  The result of this is that we shortcut our way through the process of laying out our premises (ie. we never say what we think is good and bad), we shy away from debates that seem impossible to resolve (for indeed they are when you only plan to give them 45 minutes worth of your time), and we usually walk away feeling like we didn’t accomplish much.

I propose a simple solution.  With people that you often find yourself debating/discussing with, view your individual debates as pieces of a larger pursuit of understanding.  Debate/discuss methodically with the goal of making incremental progress rather than trying to resolve large and complicated issues all in one go.

The other problem I see is that people discuss without giving thought to the best means by which to come to new understanding.  A simple and very effective structure is one in which you lay out your basic premises, then discuss whether they are true, come to a consensus, then derive some implication of these premises, discuss, consense, then derive an implication from these implications and so on.  It’s simple logic (I think.. I’m not formally trained in logic).  If debates last over many sessions, then it’s much easier to be methodical like this.  Even if you’re just having a one time debate–say with a person next to you on the airplane–if you can quickly lay out your basic premises then I think it resolves a lot of confusion.

Now I’m not saying that this is the best or only way to come to new understanding when you discuss.  I definitely do, however, think that it works a lot better than the way most people discuss now.

The Failure and Destruction of Macroeconomics: A New Course of Action Part 3

In my first three blog posts (Ultimate Purpose, Wellbeing, and Valuable Action) I’ve laid out a rough set of fundamental principles that I then expand upon to come to conclusions about what actions I and the rest of the world should take.  If these basic principles are good then they will lead to good decisions.  If they are bad then even the most intelligent thought based on them will be flawed and will likely lead to bad decisions.  I always keep them at the forefront of my discussions and open to debate so that they can constantly be improved.

Macroeconomics is flawed in many ways, but its most damning failure is the inadequacy of its basic purposes. Macroeconomics states that the three goals of a state managing that economy are to increase GDP growth, lower unemployment and lower inflation.  These goals are rarely spoken of and never questioned.  I understand why these are good things in general to strive for.  Jobs and GDP roughly tend to cause wellbeing, my stated purpose, and inflation can often decrease wellbeing.  Still, I believe the ultimate economic objectives of our government should be beneficial in either a more tangible (like energy and other goods) or fundamental (like wellbeing) way.

I feel this because of what macroeconomic theory has caused governments to make many bad decisions in the past and present.  Take the example of a government which is trying to find a way to stimulate its economy out of a depression (GDP decline, rising unemployment and deflation).  It decides to pay millions of people to dig holes and then fill them in again for 8 hours a day for a year.  This accomplishes creates a million jobs and the money spent to pay those people and the money they then spend on goods will increase the GDP.  Inflation will also rise, but that’s actually acceptable in this situation because it counteracts deflation, which is also a goal of macroeconomic policy (it just isn’t talked about much because most countries don’t experience deflation very often any more).  Think about this policy from a wellbeing perspective, though.  Most likely those workers feel terrible because they know they’re doing something purposeless (though admittedly they’re happy to receive a paycheck); the workers digging holes are now away from their families and opportunities to enjoy their lives and improve; the project isn’t creating anything of value like energy or a car that people might want to use; the money to fund the project had to be borrowed and nothing of value is being generated to repay that loan and its interest.  This actually partially  happened in Japan in the 90s.  The government spent trillions of dollars, much of it going to projects like building bridges that no one needed and museums that no one attends.  Jobs were created and money was spent when these bridges and museums were created, but they didn’t generate much value (not enough to justify their cost).

According to macroeconomics, paying workers to dig holes and fill them in again is a very beneficial way to stimulate a depressed economy, but according to goals of wellbeing it is horribly destructive.  The worst part about macroeconomics is that it works on unimaginably large scales.  Macroeconomic thinking informed Barack Obama’s stimulus bill and is the reason why wind farm projects were scrapped (it doesn’t take many people to build and maintain a windfarm, ie, it doesn’t lower unemployment much) while subsidies to the purchases of things like cars and TVs were added and increased (consumer spending is vital to GDP growth).  787 billion dollars could have generated huge amounts of value for the U.S., its people and the world.  Instead it was squandered in order to achieve the never examined goals of macroeconomics.

GDP growth, low unemployment, and low inflation are often effective ways to bring wellbeing to people.  We have to keep in mind that they are a MEANS to the more fundamental objective of wellbeing.  When these become the ENDS, then wellbeing is forgotten and these goals are accomplished in destructive ways.  And when we’re talking about the dominant ideology of the U.S. and the rest of the world, the destruction is massive.

Valuable Action: Energy (A New Course of Action Part 2)

So, keeping in mind the stated goals of survival and an increase in wellbeing, which I’ll limit to an absence of thirst, hunger and sickness, I’ll say that value is something that accomplishes our stated goals. What sort of actions could humanity undertake that we can feel will have a high probability of generating value?  I’ll start first with what I feel is the simplest to describe but also the most important: harnessing energy.

Let me start this by talking about an idea very fundamental to wellbeing: entropy.  Entropy is the process by which all matter and energy tend to break down into their simplest forms.  Your cell walls are constantly trying to break down, the heat is constantly trying to leave your body, the water in you wants to escape… if entropy had it’s way, you would be a thin cloud of carbon, oxygen, nitrogen and other trace elements and, by extension, very very dead (and you probably would die in an agonizing way).  This is what would happen to you if you were suddenly sent into empty space.

Luckily, you live on a planet that is constantly being hit by energy from the sun, which envelops you constantly in a survival allowing blanket of oxygen and heat.  Now, this blanket is not invincible; actions humans take can and have begun to seriously disrupt this blanket and make life a lot more difficult.  It’s conceivable that we could create a life-support system like exists on Earth by ourselves, and later I’ll say that we should do exactly that on other planets, but the one we have now works so well in so many ways without any human effort that it would be monstrously detrimental to us to harm it.

This life-support system is not enough to keep us alive, though.  Our bodies need a constant supply of specific kinds of chemical energy (ie, food) to maintain homeostasis, our body’s own personal fight against entropy, which, even with the atmosphere around us, would still make us freeze to death if we weren’t getting constant sources of energy.  Maintaining homeostasis is the other side of the coin of keeping our wellbeing high by fighting hunger.  Thus, actions which generate food generate value (note: though I’m not talking about sustainability now, I think that it’s very important; I DON’T think that we should just turn every acre we can find into a farm just to generate as much food as possible), because food keeps us alive and keeps us from suffering hunger (it also provides satisfaction and pleasure if it’s good food and communal joy if it’s eaten in a good crowd, but I’ll talk more about that later).

Similarly, humans need a constant supply of water in order to keep vital life processes going.  In many ways that water is provided to us with very little effort by the constant energy we get free from the sun, which drives the water cycle, providing rainwater which fills streams, rivers and lakes from which we drink. However, energy still plays a very important part in providing us with water.  Even if it’s just energy from the food we eat, we need energy to go to streams, to stick our hands or buckets in the water and to drink.  The energy requirements increase dramatically as we pump water into people’s homes.

Problems with water are really problems with energy.  There are far more H20 molecules in the world than we need at any one time for all of the combined uses on the planet.  The real problem is getting that water where it needs to be in a form that is usable.  With infinite energy (and, to be truthful, the necessary technology, infrastructure and political systems), there would be no water scarcity or water stress; what water we couldn’t get from the water cycle we could desalinate from the ocean and pump to wherever it would be needed and there would still be plenty of water left in the oceans so as not to cause problems with the biosphere.  When people talk about upcoming water scarcity issues, they’re talking about the depletion of groundwater supplies, which is really an issue of depeleting water that doesn’t take much energy to use.  Thus, in order to achieve the goal of survival and limiting thirst, we can generate value for society by generating more energy and using it to provide ourselves with more water.

In so many other ways, energy is crucial to our survival and our ability to increase our wellbeing.  I’ll talk much more about the other ways that energy enables us.  For now, I want you to think about the nature of energy.  Change is impossible without energy.  We exist on a planet that exists at the perfect distance from an unimaginable source of energy to allow for life, and we recieve that energy constantly.  We haven’t even come close to fully utilizing that gift; much of the energy simply bounces off of our planet and back out into space or is absorbed and contributes to global warming.  If we want to make our lives better, we should look first to the sun and ask ourselves how we can better take advantage of its bounty.

Note:  I’m not by any means trying to say that this is the only way to generate value, just that it is a powerful way that clearly generates value for nearly all people.  I also don’t think that generating energy (or any action for that matter) is simple and doesn’t have costs associated with it.  We generate energy from fossil fuels, and I don’t advocate for that at all, especially considering the far better alternatives we have available.  Even solar and wind power take up land and cause negative environmental impacts.  I think, however, that there are many ways to generate energy, such as sustainable farming and the aforementioned wind and solar, where the benefits far exceed the costs.  As always, please feel free to attack parts of the post that you disagree with.

Hunger, Thirst, and Sickness: Wellbeing Part 2

In the first post, I identified a state of wellbeing as being my ultimate purpose and what I believe humanity’s ultimate purpose should be.  Before I write further posts about how to achieve this goal, I’m first going to delve deeper into the nature ofwellbeing .  To do this, I’m going to employ my version of probabilistic thinking because I think it will help us better approximate the nature ofwellbeing.

What is probabilistic thinking?  It’s a way of looking at the world that recognizes its inherent uncertainty and attempts to find meaning despite this.  So for instance, anyone who’s ever taken a philosophy class (or seen The Matrix) will have been left with an awareness of the uncertainty of perception (optical illusions are often used to demonstrate this).  “How do I know if what I’m looking at is really there?” you’re taught to ask and the answer your given is that you can’t know for certain.  Yet you still have certain objectives you want to accomplish, and if you felt completely uncertain about everything you saw, it’d be very difficult to make your way in the world.  The way you reconcile perceptive uncertainty with a desire to accomplish goals is to use probabilistic thinking.  You make some best guess assessment as to the probability that what you see if really the way youperceive it–I personally figure there’s a ~99.9% probability that I’m seeing things in a way that is ~99.9% close to how they really are.  For me, 99.9% is close enough to certain that I feel comfortable acting as though I’m certain that the computer I’m looking at now isn’t just an illusion, but I also keep in the back of my mind that I am not totally certain of this.

So, to apply this to wellbeing, I want to find the states of being that have a high probability of causing high wellbeing when they’re present and low wellbeing when they are not.  To help me with this, I look to evolution and examine its probable role in our wellbeing.  It seems very likely that evolution has tied wellbeing with states critical to survival.  A species which took pleasure in self destruction would seek self destruction and thus not pass on its genes and thrive; conversely, a species that suffered when it was being harmed would avoid harm and thus likely thrive.  This leads me to the conclusion that hunger, thirst, and sickness will take awaywellbeing while satiation (of hunger and thirst) and health will add to wellbeing .  To further confirm this, I know that this is the case for me and that most of the world also considers hunger, thirst and sickness to contribute to suffering and tries to stop them.

Based on this, I’m not going to say that I’m certain that hunger, thirst and sickness are bad things and that, in every case, they should be fought.  Rather, I say that there is a high probability that hunger, thirst, and sickness take away fromwellbeing in a high percentage of the population and, since my goal is to increase wellbeing, I’m going to and others should fight these things.

Final thoughts:  It’s uncomfortable to make decisions based on uncertain views of the world. However, there’s no way to not act, not make decisions.  Therefore, we either act to help something, to fight it, or to ignore it and which decision we make should be guided by the best guess we can come up with.

Also, the process I went through to come up with my best guess about what causes wellbeing and what takes away from it was very, VERY rough.  When we’re talking about the lives of people, I don’t think it’s acceptable to allow our estimates to remain this rough.  For the timebeing, please call me out if you think that I’ve made a guess that’s too rough or just wrong.  Eventually, let’s come up with a better way for making these assessments.

Finally, I know it might seem like I’m sitting in my western bubble ivory tower and dictating what is good for the rest of the world.  I guess in a way that’s true; in this instance I’m trying to determine universal sources of human wellbeing.  However, I also believe a lot in the idea that many forms of wellbeing come from WILDLY different states of being and that there is NOT one path to happiness.  Ultimately I believe that people become happiest when they spend a lot of time reflecting on what makes them happy and then are allowed to (your parents let you drive) and enabled to (your parents give you a car) seek out whatever they’ve determined will make them happiest.  I just ultimately think that most people, when thusly enabled, will avoid hunger, thirst and sickness and so society should seek first to allow people to choose not to exist in those states.

Solving the problem of revealing what we don’t know we want

I’ve talked a lot about the very important distinction between the things we know we want and the things we don’t know we want.  There are thousands of products and pieces of information out there that would greatly benefit me and I should want them.  But I don’t want them, because I don’t know about them.  An example of such a thing would be a product that I recently found out about that for 30 bucks and 15 minutes of install time allows me to control how much water goes down the toilet when I flush (allowing me to use a lot for solid waste and little for liquid waste).  I don’t have one yet, but I want one because I know it can save me a lot of money and help the planet.  A month ago though, I still would want one if I knew about it, but I didn’t until someone delivered an important piece of information about it to me.

This response to the Edge 2009 question “What Will Change Everything” describes a fundamental shift that would come about if computers began to be able to guess the things we want but don’t know we want and then revealed that information to us and gave us the opportunity to get the things we now knew we wanted.

Ultimate Purpose: A New Course of Action Part 1

Every day we are forced to make decisions.  Getting up and eating is a decision; NOT getting up and eating is also a decision.  Every way that every second of your life is spent reflects a decision.  For many, these decisions have no apparent purpose; they never ask themselves “why am I doing this.”  Even fewer take the answer to that question of why, and ask it why again.  The result is that most people go through life acting to accomplish many purposes, most of which are unknown and unchosen by them.  Many act to accomplish purposes that evolution has hardwired into their brains, such as having a lot of sex with many different people.  Others act to achieve culturally determined goals, like earning as much money as possible.

This is not how I want to live my life.  I want to have one guiding set of purposes that I have chosen and that I know explicitly.  I then want to work to determine which actions best accomplish these purposes.  Then, I want to do them.  And so I will write my first post on my ultimate purpose, the fruit of many hours spent asking myself why, and then why again, and so on until I reached this answer.

My ultimate purpose is to increase my wellbeing and to live as long as possible so that I can continue to experience wellbeing.

Wellbeing is a general term that I use to encapsulate as best as I can the set of experiences that feel good.  It’s a combination of the experience of pleasure, satisfaction, a lack of worry, a feeling of control, a feeling of empowerment and freedom from limitations, a feeling of connection to others, the opportunity to experience at times competition and triumph, an understanding of grief, pain, suffering, desire and other things that are generally not pleasant but yet add richness in small doses, the opportunity to be creative and many other experiences make up wellbeing.

This post is meant to serve as an introductory chapter to the idea of wellbeing.  In further posts I plan to examine in MUCH further depth different states of wellbeing, different ways to accomplish wellbeing, the way probabilistic thinking is absolutely essential to assessing how much wellbeing different states cause and much more.  For now, simply ask yourself whether you’d rather be reading this post right now, or whether you’d rather be being tortured and see how the two different states of being correspond to different levels of wellbeing (you’d rather be being tortured right now because it doesn’t feel as bad as reading this post… haha, I hope not).

Survival is the other goal because it seems unlikely that we will continue to be able to experience wellbeing after we are dead (though I have examined this issue in much depth and plan to eventually post a series of thoughts on the matter).  Survival isn’t necessarily always desirable.  For instance, if you know you are dying of cancer and will likely be dead after 12 hours of intense pain, you might decide that life offers you no further opportunities for wellbeing and decide to take a heavy dose of heroin and end your misery.

In subsequent posts, I plan to introduce different general actions people and humanity should take to best achieve the goals of wellbeing and survival for all.

A final note:  I don’t like or believe in certainty; however, I believe very strongly in greater and lesser degrees of certainty.  I’ve worded this post strongly because I believe strongly in the ideas here.  However, I also have an ulterior motive of being provactive.  I want you to be slightly irked at the presumptuousness of a college student claiming to have found the ultimate purpose of humanity and I want that to generate challenges and new ideas.  What I DON’T want is for people to disregard the whole notion of an ultimate purpose as ridiculous (unless you’re really ready to back your ideas up), because I think that kind of thinking has lead humanity to act aimlessly.  And when we’re talking the scale of humanity, aimless action means people suffer and people die.  So please join me in this debate and let’s work to give humanity direction and chosen purpose.