Facebook’s Travails and the Decentralized Future

Facebook is in the unique position today to face both the problems of centralization and decentralization. On its centralized core platform it is confronted with making content decisions, while on WhatsApp it struggles with slowing down the spread of rumors and calls for violence. Just to be clear, I have no sympathy for Facebook which has been arrogant about these issues and has put growth above anything else. Nonetheless everyone who is building new decentralized platforms would do well to think about these issues NOW.

The Internet itself is quite decentralized relative to Facebook. That’s of course why InfoWars and many other conspiracy websites are out there. Facebook has long wanted to convince people around the world that it is effectively the Internet (after all time spent outside of Facebook is a lot harder to monetize). But of course it is not and it can easily censor content on its Continue reading "Facebook’s Travails and the Decentralized Future"

Uncertainty Wednesday: Updating (Conclusion)

The last few Uncertainty Wednesdays had us look at how to model beliefs using probability distributions and then update those with a specific example of using the beta distribution. You may have noticed something odd about the way we updated the parameters of the beta distribution: add 1 to α when we observe heads and add 1 to β when we observe tails. This wipes out any and all ordering information. So let’s say you have a total of 100 observations. With this update rule the only thing that matters is the total count of heads and tails respectively. Let’s say that happens to be exactly 50 each, which gives us this beautiful looking distribution:

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Which is quite tight around the probability 0.5 for heads.

Yet clearly there is a huge difference between observing some fairly random sequence of heads and tails versus say first 50 heads and then 50 Continue reading "Uncertainty Wednesday: Updating (Conclusion)"

World After Capital: Limits of Capitalism (Self-Conservation)

NOTE: Today’s excerpt from World After Capital rounds out the section on limits of capitalism. We already saw the issue of missing prices, the problem of power laws and today talks about how the self-conservation of capitalism through the political system keeps attention trapped in the job loop.

Self-Conservation

Toward the end of the Agrarian Age, when land was scarce, the political elites came from land ownership. Their influence really wasn’t substantially diminished until after World War II. Now we are at the end of the scarcity of capital, but the political elites largely represent the interests of capital. In some countries, such as China, this is the case outright. Senior political leaders and their families own large parts of industry. In other countries, such as the United States, politicians are influenced by the owners of capital because of the constant need to fundraise.

A study conducted at Princeton Continue reading "World After Capital: Limits of Capitalism (Self-Conservation)"

Principles (Introduction)

While I am working on my book World After Capital, I am also collecting ideas for an important project that I want to tackle afterwards: a compendium of principles. Before you think, oh Albert is going full on Ray Dalio, let me provide the definition of “principle” the Oxford Dictionary:

(1) A fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning.

(2) A general scientific theorem or law that has numerous special applications across a wide field.

I am interested in principles that represent a “fundamental truth” that serves as the “foundation” of all knowledge and hence has “numerous special applications.”

What is an example of such a principle? Feedback: entity A influencing entity B, which in turn influences entity A. There are quite a few truths we have figured out about both positive feedback and negative Continue reading "Principles (Introduction)"

Uncertainty Wednesday: Updating (Beta Distribution 2)

Last Uncertainty Wednesday, I introduced the beta distribution to model our prior belief about the probability of Heads in a coin toss. We saw that for the parameters α = β = 1 the beta distribution gives us a uniform prior, which expresses the highest degree of uncertainty (you may want to revisit the earlier post on entropy for that). 

Now I will toss an actual coin while writing this post. Wait. It came up tails (i.e. not heads). What should our new values be for α and β? 

As it turns out the updating formula is super simple. If we observe heads we increment α and if we observe tails we increment β. Here is what the Beta distribution looks like for α = 1 and β = 2, i.e. after we have observed tails:

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What does this picture tell us? Going from a uniform prior, the observations

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Continue reading "Uncertainty Wednesday: Updating (Beta Distribution 2)"

World After Capital: Limits of Capitalism (Power Laws)

NOTE: Last week’s excerpt from World After Capital described how prices cannot exist for many of our most important attention allocation decisions. Today I describe how production functions with network effects result in power law distributions that have bad social and economic implications.

Power Laws

Economics is not normative when it comes to the distribution of income and wealth. Many different outcomes are possible and what is realized depends a lot on the underlying production functions. Consider first a fairly manual production function such as was common pre-industrialization. If you were a cobbler making shoes by hand, there were only so many shoes you could produce. I don’t know if such data is available, but the output of cobblers likely formed a normal distribution, with even the most productive cobbler making only a small multiple of the number of shoes of the average cobbler.

Then along came industrialization and with Continue reading "World After Capital: Limits of Capitalism (Power Laws)"

Happy 4th of July: Climate Edition

Independence Day is a cheesy summer action blockbuster. And yet, after watching it one can’t help but feel good about humanity defeating an existential threat using courage, technology and science (and doing so under American leadership). The irony today is that we face such a species level threat. It just happens to be invisible and slow moving. I am talking about the greenhouse gases that are slowly but steadily warming up our planet (in particular our oceans) and our atmosphere. Climate change is the defining threat to humanity and we should be fighting it using all the courage, technology and science we can muster.

Here is the latest reporting from the Washington Post on all the heat records being broken in the last week leading up to this 4th of July. And here is a chart I just generated using the University of Maine Climate Reanalyzer, which shows departures

Continue reading "Happy 4th of July: Climate Edition"

World After Capital: Limits of Capitalism (Intro & Missing Prices)

NOTE: Today’s excerpt from World After Capital starts to explain why capitalism cannot solve the problem of allocating attention which is scarce at the individual and collective levels.

Limits Of Capitalism

Capitalism has been extraordinarily successful. So much so that even communist countries like China, that had long sought a different path, have embraced it. But capitalism cannot solve the scarcity of attention without significant changes in regulation and self-regulation. That’s due to three important limitations. First, there are prices that will always be missing for things that we should be paying attention to. Second, capitalism to date has limited mechanisms for dealing with the power laws arising from digital technologies. Third, capitalism acts to preserve the interests of capital over those of knowledge. Put differently: we need to make changes now, precisely because capitalism has been so successful. The important problems that are left over are the one’s it Continue reading "World After Capital: Limits of Capitalism (Intro & Missing Prices)"

Uncertainty Wednesday: Updating (Beta Distribution)

It’s been six weeks since the last Uncertainty Wednesday, so I strongly suggest you go back first and read that post which provides an introduction to the idea of updating. Take your time, this new post won’t go away!

The distribution that we will use for modeling our coin is the Beta distribution. Why choose that one? Because the beta distribution when combined with likelihood function for a coin toss gives us another beta distribution. This is known technically as a so-called conjugate prior. That all sounds very technical but the idea is simple: when our prior is a beta distribution and the observations are of the 0 or 1 (head or tails) variety, then our posterior distribution after updating is once again a beta distribution.

Now the beta distribution has two parameters, which are commonly referred to as α and β. These parameters can take on lots of

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Continue reading "Uncertainty Wednesday: Updating (Beta Distribution)"

World After Capital: Getting Past Capital (Attention Cont’d)

NOTE: I am resuming publishing excerpts from my draft book World After Capital. Today’s section continues the discussion of why attention is scarce. Since it has been five weeks, I recommend first rereading the prior section which introduces attention scarcity.

Collective Attention Scarcity

At the same time our collective attention is also scarce. How so? Humanity as a whole is not devoting nearly enough attention towards moving knowledge forward with regard to a variety of threats and opportunities.

On the threat side, for example, we are not working nearly hard enough on how to recapture CO2 and other greenhouse gases from the atmosphere. Or on monitoring asteroids that could strike earth, and coming up with ways of deflecting them. Or containing the outbreak of the next avian flu: we should have a lot more collective attention dedicated to early detection and coming up with vaccines and treatments.

Climate change, “death Continue reading "World After Capital: Getting Past Capital (Attention Cont’d)"

Personal Responsibility in the Age of Trump

Yesterday, I tweeted that I considered Sarah Sanders tweet about being asked to leave the Red Hen restaurant an abuse of government power. Since I got quite a few questions on Twitter about that I want to elaborate the argument in a blog post.

Sarah Sanders is currently the White House Press Secretary. This is a role that she has chosen voluntarily. In this role she has time and again repeated and defended the many lies of President Trump, most recently the lie that separating children at the border was a law for wich the Democrats were responsible, when in fact it was a policy decision by the White House.

Sarah Sanders was asked by the owner of the Red Hen to leave. She was at the restaurant as a private citizen and not on any government business. She then used her official United States government account to Continue reading "Personal Responsibility in the Age of Trump"

Back (Well, Almost)

After nearly four weeks of not posting due to shoulder surgery I am almost back. I am saying almost because even though I can type very well again, I am spending a fair bit of time every day on physical therapy. That is time I would have spent writing and, well, something has got to give. So for now I am planning on one post per week instead of the usual three, but let’s see where it goes.

In the meantime though I want to thank everyone who kindly reached out, inquired how things were going, and wished me a speedy recovery. I appreciated every note! Hearing from friends and strangers helped a lot, especially in the early days post surgery when I was quite miserable. If you ever consider shoulder surgery for rotator cuff, just mentally prepare yourself for a really rough first week. You may wind up questioning Continue reading "Back (Well, Almost)"

World After Capital: Getting Past Capital (Attention)

NOTE: Today’s excerpt from World After Capital is about attention. It argues why attention is scarce in the sense of scarcity introduced earlier in the book. This section sets up the demands on attention and then talks about scarcity of attention for the individual (next time will look at scarcity of attention for society as a whole).

Attention

There is a limited amount of human attention in the world. We have 24 hours in the day and we need to spend some of that time eating and sleeping. For many people in the world much of their waking time is occupied by the job loop (both the earning and the spending parts). That leaves relatively little time for attention that we can freely allocate. This hard limit also exists in the aggregate, since—as I have argued earlier—we are headed for peak population.

At the same time that our attention is

Continue reading "World After Capital: Getting Past Capital (Attention)"

World After Capital: Getting Past Capital (Attention)

NOTE: Today’s excerpt from World After Capital is about attention. It argues why attention is scarce in the sense of scarcity introduced earlier in the book. This section sets up the demands on attention and then talks about scarcity of attention for the individual (next time will look at scarcity of attention for society as a whole).

Attention

There is a limited amount of human attention in the world. We have 24 hours in the day and we need to spend some of that time eating and sleeping. For many people in the world much of their waking time is occupied by the job loop (both the earning and the spending parts). That leaves relatively little time for attention that we can freely allocate. This hard limit also exists in the aggregate, since—as I have argued earlier—we are headed for peak population.

At the same time that our attention is

Continue reading "World After Capital: Getting Past Capital (Attention)"

Uncertainty Wednesday: Updating (Intro)

Now that we have spent the last few Uncertainty Wednesdays on modeling beliefs as probability distributions, we can now get to the topic of updating. Updating is what we are supposed to do with our beliefs when we have new observations. We first encountered a similar idea in the extensive example of a cancer test which we used to derive Bayes’ theorem.

In that post I wrote that “[Bayes’ theorem] relates the probability of the world being in state B *before* we have observed a signal to the probability *after* we have observed signal H.” Now in that quote and in the example we used probabilities and not probability distributions. We had found the following formula, which is known as Bayes’ rule:

P(B | H) = [P(H | B) / P(H)] * P(B)

As a reminder P(B) is the probability of event B before we have observed Continue reading "Uncertainty Wednesday: Updating (Intro)"

Uncertainty Wednesday: Updating (Intro)

Now that we have spent the last few Uncertainty Wednesdays on modeling beliefs as probability distributions, we can now get to the topic of updating. Updating is what we are supposed to do with our beliefs when we have new observations. We first encountered a similar idea in the extensive example of a cancer test which we used to derive Bayes’ theorem.

In that post I wrote that “[Bayes’ theorem] relates the probability of the world being in state B *before* we have observed a signal to the probability *after* we have observed signal H.” Now in that quote and in the example we used probabilities and not probability distributions. We had found the following formula, which is known as Bayes’ rule:

P(B | H) = [P(H | B) / P(H)] * P(B)

As a reminder P(B) is the probability of event B before we have observed Continue reading "Uncertainty Wednesday: Updating (Intro)"

World After Capital: Getting Past Capital (Labor)

NOTE: Today’s excerpt from World After Capital is about labor. In it I describe what I call the “job loop” and how it has become central to both the economy and sadly also our view of human dignity.

Labor

Before we can get to attention, though, we need to discuss the changing role of labor in the economy. Thinking about labor is hard because of an odd interweaving of cultural beliefs with economic history that I will try to disentangle. Over the last couple hundred years we have convinced ourselves that employment is essential both for the functioning of the economy and for individual dignity.

Let’s start from the perspective of production. If you want to make products or deliver a service you require a series of inputs, including buildings and machines (capital), raw materials or parts (supplies) and, historically, human workers (labor). For much of history, capital and labor turned

Continue reading "World After Capital: Getting Past Capital (Labor)"

World After Capital: Getting Past Capital (Labor)

NOTE: Today’s excerpt from World After Capital is about labor. In it I describe what I call the “job loop” and how it has become central to both the economy and sadly also our view of human dignity.

Labor

Before we can get to attention, though, we need to discuss the changing role of labor in the economy. Thinking about labor is hard because of an odd interweaving of cultural beliefs with economic history that I will try to disentangle. Over the last couple hundred years we have convinced ourselves that employment is essential both for the functioning of the economy and for individual dignity.

Let’s start from the perspective of production. If you want to make products or deliver a service you require a series of inputs, including buildings and machines (capital), raw materials or parts (supplies) and, historically, human workers (labor). For much of history, capital and labor turned

Continue reading "World After Capital: Getting Past Capital (Labor)"