The Panopticon Prism: All Facts Serve A Narrative

Technology & Culture Democratized Storytelling — Paralyzing a Generation

Confronted by a terrifyingly complex world of ambiguous competing Narratives, mainlined into our bedrooms, gyms, offices, and pockets by the highest SAT scores in Silicon Valley, we do what 22 years of schooling taught us to do: demand the unbiased truth from an authority figure. 

This is the current Narrative of Zuck, brought to you by Congress & the Old Media…

This is the current Narrative of Zuck, brought to you by Congress & the Old Media…

A brief overview:

  • The same fact/study/experience/essay can rationally be understood by reasonable people to support different pre-existing worldviews

    • Each piece of evidence adds a new Lens to the stack, and everything is seen through decades of Compound Lenses

    • Proposed solutions to any problem will be mutually incomprehensible without understanding the other’s Compound Lens

  • Intelligent response to this scary realization: Idealize “Unbiased” Facts

    • …but this fails because the mere act of selecting and the manner of presenting a Fact colors how it’s understood and creates a Narrative

    • In the real world, action is a vector: it has both magnitude and direction. Meaningless facts offer no direction, no call to action…

    • Narratives create “Action Potential” and push us forward

      • “Unbiased” Facts have no meaning in isolation — trivia is trivial

  • Meanwhile, the Internet, Smartphones, & Technology in general have Democratized access-to and creation-of many Narratives, giving the average American a louder voice than history’s average Head of State

  • Social Media then forces all these newly created Narratives into Existential Competition with each other for Engagement (Moloch applied to Storytelling)

    • Thus the natural response to being confronted by a repository of totally “Unbiased” Facts is to alt-tab and refresh Facebook — at least Zuck calibrated it to show you something that matters. Maybe you’ll even like/upvote/retweet something…

  • Social Platforms’ need for engagement pushes actions at the Personal scale to conform to the standards of the Global scale by repeatedly surfacing Personal content to the rest of the Globe for judgement

  • Which forces the inmates to self-regulate: either conform to the Globe’s Lowest Common Denominator Compound Lens that can protect them or take no action at all

    • This perhaps has costs associated with it — I leave these to you to consider & weigh vs. the upsides of bringing Global Justice to Local Communities (America’s fav. pastime)

  • The old Narrative Gatekeepers now demand control of the stories to avoid having to confront the idea that their Narratives suck

    • It doesn’t take much talent to cast Zuckerberg as the devil in this story, but those of us who’ve been given a voice and a platform that was previously inaccessible might view Technology’s Democratization of Storytelling through a different lens…

  • While this may benefit those Gatekeepers, the rest of us need something more, something that this current landscape has reduced: Great Stories

  • Everything else results in inaction

And this is the counter Narrative, brought to you by…who? Me? Social Platforms sent me >25,000 readers in the last few months. Total Cost: $0.00. God Bless the Internet.  Note to lawyers: this is all transformative satire

And this is the counter Narrative, brought to you by…who? Me? Social Platforms sent me >25,000 readers in the last few months. Total Cost: $0.00. God Bless the Internet. Note to lawyers: this is all transformative satire

What’s Black and White and Yellow All Over? 

Where Boys Outperform Girls in Math: Rich, White and Suburban Districts (New York Times, June 2018, based on a study out of Stanford). Great article. Good visualizations. Even better data. Kudos to the New York Times, this was really great. Take a look at the headline data visualization…

Note Y-axis cut off to save on white space

Note Y-axis cut off to save on white space

…and allow me to (tongue-in-cheek) suggest an alternate title: Where Girls Outperform Boys in English: 10,000 / 10,000 School Districts, Seriously, It’s Not Even Close

The article’s third paragraph, included immediately after this awesome visualization, tells us that the study suggests some interesting things (emphasis mine):

The research, based on 260 million standardized test scores for third through eighth graders in nearly every district in the country, suggests that local norms influence how children perform in school from early ages – and that boys are much more influenced than girls.

Which I found surprising, because local norms don’t seem to show up anywhere in that awesome data visualization. “Richer Parents”, being nerdy and data-driven and therefore quantifiable along an X-axis, doesn’t quite translate. Still, sometimes these things show up in the underlying study and don’t make the graphic, so I went to the study and ctrl-f’d for “local norms” and bingo:

This paper has several limitations…Another is that we do not have good measures of local norms, expectations, stereotypes, or of how boys and girls are treated in school and home and community. Because of this, we cannot rule out the potentially important influence these factors may have on gender achievement gaps that we may be unable to observe with our coarse proxy measure.

Local norms may or may not cause the trends we see in that chart up above, but they weren’t tracked in any scientific way in this study. This study also doesn’t appear to have any data on which gender was more or less influenced by such things (since they didn’t measure such things in the first place), so the follow up punch in the Times’ summary of this research, “boys are much more influenced than girls“, caught my attention.

Not necessarily because it’s untrue, but because it suggests a reading of this study that’s colored by knowledge from elsewhere, to such a degree that this study is taken as further evidence in support of that prior knowledge base. Since the article had not yet given me, a normal Times reader, any info on which gender might be more or less influenced by various norms, their summary sparked a brief moment of incongruity. I try to notice those moments, as they often signal a deeper difference in the lens someone else uses to look at the world…

Looking Through The Prism

“It was sort of surprising because a lot of highly educated, liberal folks might think that they are more egalitarian and they express more egalitarian norms, but it looks like they are producing less egalitarian outcomes in math,”

…said Sean Reardon, a Professor at Stanford University’s Graduate School of Education and the lead author of the study.

And yes. It’s definitely possible that highly educated, white, suburban liberals (who reads the NYT again?) are acting sinfully — it wouldn’t be the first time. It’s unclear to me why the smaller socioeconomic-slope in Math is less egalitarian and the consistent ~8 month gender divide in English is more egalitarian. Have we all just collectively decided that Math matters more than English? That communicating isn’t important? Should I drop this writing hobby and get to work solving P=NP? (yes, of course I should)

But we were talking about noticing lenses, so it’s worth noticing that while the study measured test scores vs. “Socioeconomic status”, the study’s lead author has proxied his X-axis to “highly educated, liberal folks.” Education status and political affiliation aren’t exactly the same thing as “Socioeconomic status”, so I thought I should also go check what his study actually defines as “Socioeconomic Status” before continuing:

socioeconomic_status.png

Oof.

Apparently working in the Math-heavy disciplines of Finance or Engineering confers twice as much Socioeconomic Status on a district as Household Income (0.376 vs. 0.186)…Yikes. I wonder who’s gonna tell the New York Times authors of this piece, Claire Cain Miller (2018 Pulitzer Prize winner btw!) and Kevin Quealy what Stanford thinks of their Socioeconomic Status?[0]

But still…there’s nothing about politics in there, which means Professor Sean Reardon is letting us see some of his own lens when he shortcuts the X-axis of his own study as “highly educated, highly liberal.” Namely:

Employed in Finance or STEM => High Socioeconomic Status => Highly Educated => Highly Liberal => Egalitarian => Raises Girls the same as Boys => Girls Attain Same Scores as Boys

As lenses go, it’s certainly a reasonable one. I’m not saying this is a bad heuristic for America, although his definition of Socioeconomic Status places the highest premium of all upon “Management, Business and Financial Occupations” and I think I have a slightly different perspective on the politics of the finance industry after working on Wall St.[1]

My point in diving into this study isn’t to to challenge it (the data is super good) or call out Professor Sean Reardon for having his worldview (and not a bad one at that). Nor is it to call out the New York Times for having theirs — every publication has one,[2] and that’s a good thing. Having multiple worldviews that can compete with each other is healthy.

But we’ve got to be aware of our lens, how it colors the conclusions we draw from new evidence, and even how it shapes the sort of evidence we go looking for in the first place. If you construct an X-axis that discounts the socioeconomic status of these 3 guys, you & I might be experiencing a very different America:

Selecting a Different Lens

My point is just to show the Prism in action. In comes a single, solid, beam of light (the study). Out comes a rainbow of beams at different wavelengths (conclusions).

My interpretation of the New York Times’ take on the study is: local norms implicit in rich, white, suburban culture push boys to work harder on Math and/or push girls away from it. Later in their article, the Times expands on this view by linking to other studies that suggest exactly that:

There is also a theory that high-earning families invest more in sons, because men in this socioeconomic group earn more than women…

In the districts in which boys do better than girls in math, they also have a smaller gender gap in language arts – so it might be that they get more encouragement to do well in school in general. Boys’ grades, behavior and future earnings seem to be more influenced by the circumstances in which they grow up, research has found.

And of course I have my own lens too! I wouldn’t have picked this example if it hadn’t struck me so hard. Like I said earlier, my first response on seeing their awesome visualization was to ask: 

Wtf!? Why the hell are boys performing so terribly in English? Almost a whole-year behind girls all over the country — regardless of socioeconomic status, isn’t that crazy? Why does this not matter to anyone? Given that communication occurs throughout the day and Math is confined to a mere ~45 minute class block once a day, do 8th grade boys just seem mind-numbingly stupid to 8th grade girls every waking moment?

All my female friends laugh and tell me that boys did, in fact, seem (paraphrased) cognitively-stunted, and I feel better about my own memories interacting with 8th grade girls.

mean_girl.gif

And yes, this lens of mine means that the gender gap that first catches my eye — the English one — seems like a BigDealTM. “Perhaps the most important one! It’s certainly the largest — and it doesn’t even go away if you add money! What else in the whole world can you add more money to without getting more performance?! Oh, right, we’re talking about Education.”

But that’s how lenses work. Observing (easy) and understanding (very hard) other people’s lenses after you spot them in the wild is a good way to learn to find new ones and practice the ability to see through them again later.

I’m not saying I’m very good at it yet. And (hot take here) it’s possible to understand someone without agreeing with their prescriptions. But maybe if I invert just three-and-a-half words in the Times’ title, I can show you what it looks like when you look through a fourth lens:

Where Boys Underperform Girls in Math: Poor, Black and Urban Districts

the_prism.gif

Considering The Whole Spectrum

“Is this just a rerun of the familiar old story of America failing its young black males. Does that story even get clicks anymore?”

This is America , afterall…

This is America, afterall…

I don’t know, I’m not asking anyone to agree, and this lens does not challenge the other lens’ data on parental-investment-by-gender across the socioeconomic spectrum. Interpretations are only mutually exclusive if you’ve got to write your answer in 2 pages, double-spaced, with reference to the text and extra credit for appealing to your teacher’s biases.

This lens requires its own unsupported assumptions and more studies. For the English-test data to show no socioeconomic gender-gap-trend, you’d probably want to look for other studies suggesting that the bulk of Language-skills-acquisition is done outside of the classroom and somehow in a gender-differentiated way (on average), but I’m no scientist. I just do quick Google Scholar searches to confirm that I could at least drop appeals to authority citations in support of my lenses if push came to shove. “Buy Access To This Study For: $42.00”thanks, but like everyone else: I already read the title & the abstract.

I’ll take us back to the section from the Times I quoted earlier:

…Boys’ grades, behavior and future earnings seem to be more influenced by the circumstances in which they grow up, research has found….

When you actually follow each of those links, you find the research has found something a little more specific than that quote implies:

A Disadvantaged Start Hurts Boys More Than Girls

Low-income boys who grow up in high-poverty, high-minority areas work significantly less than girls.

We find that, relative to their sisters, boys born to disadvantaged families have higher rates of disciplinary problems, lower achievement scores, and fewer high-school completions. Evidence supports that this is a causal effect of the post-natal environment; family disadvantage is unrelated to the gender gap in neonatal health. We conclude that the gender gap among black children is larger than among white children in substantial part because black children are raised in more disadvantaged families.

Boys at the bottom of society — i.e. the far-left of the X-axis on the chart that began this whole essay — appear to be more negatively influenced by their "local norms” than Girls, having disproportionately worse outcomes than we might otherwise expect and being particularly at risk for a range of behaviours that have low odds of increasing life outcome (measured however you like).

Looking through this lens implies very different categories of solutions to the problem presented by the initial graphic, and implies time & money should be spent somewhere very different from rich, white, suburban America…

Gambino is a mastermind

Gambino is a mastermind

The Power of Compound Lenses [Citation Needed]

The trouble with lenses is that they compound almost as well as money. Bayesian Inference (translation: updating your worldview in either direction as each additional point of evidence is added) is pretty damn cool, and I’m all about building a coherent rational understanding of reality. But each additional point of evidence is always interpreted and understood in the context of your pre-existing worldview — your lens.

Very small deviations in foundational-level lenses — whether they come from Culture, Upbringing, Lived Experience, Family, Early Relationships, Schooling, Religion, or even Language itself — can influence how all subsequent data points are perceived. That’s pretty basic, I think everyone gets it on some level.

What’s hard to understand is how this can compound entirely rationally into wildly different prescriptions. It’s the bold part of that sentence that’s hard to swallow — much easier, far simpler, to believe that wrong different prescriptions are the result of incorrect “facts” and a flawed thought process than to attempt to understand someone else’s Compound Lenses. But missing out on those Compound Lenses can be “outrageously expensive.”

The idea that the same fact/study/experience/observation/presentation/book/movie/song/essay can rationally be understood by reasonable people to provide Bayesian evidence in support of both their pre-existing worldview and ours is terrifying: always, we hope, the saner and more intelligent people in the audience can be convinced once we show them our Facts, capital-F.

Always, unfortunately, those Facts are Filtered through 10-80 years worth of prior Facts, each colored by a prior Lens. It’d be easier to just show them the whole stack of Compound Lenses than any single Fact, but how to do that without making them watch your whole life in VR? 

And even then, it’d be a passive experience: no choices == no skin in the game…

And even then, it’d be a passive experience: no choices == no skin in the game…

This is inescapable — and this is also why Great Fiction has real power. By cherry-picking certain Facts into a coherent Narrative that can be understood by people who otherwise might have rejected isolated facts and missed the value of the forest because they didn’t like the way a single tree looked, something approaching communication becomes possible, or at least a niggling gut-deep sensation that perhaps another human being might possess enough agency to teach us something. That or I get a lot of acid reflux.

Great Fiction comes in many forms: Religion, Scientism, the S&P500, Newspapers, Harry Potter, The Avengers Movies, Steve Jobs & Elon Musk, the History books you read in school, Instagram, and Venture Capital Pitch Decks

Sadly-but-not-coincidentally Fiction is the only category of book Adults aren’t buying anymore

Today’s Greatest Fiction: The Idealism of Unbiased Facts

One response to the reality of competing Narratives is to disparage them for being fiction and reach for a more perfect world, a Platonic Ideal of Truth, a world where all Facts are “unbiased”. Maybe that could work. Perhaps it could work better if humans weren’t so…human. It would certainly work better if we could all just agree to have the same foundational base of knowledge from which we could interpret these new “unbiased” Facts…

We could call it Culture? Identity? Re-education camps?

This response fails because even the selection of which Facts to present and how to arrange them, how to weight them, language choice, what colors you put on the jacket of the book, the musical accompaniment, the Identity markers of the presenter, and the sum total of all Facts that come before, during, and after this One True Fact — all those and more shape the understood meaning of your “unbiased” Truth.

Language note for my few thousand British readers: don’t tell your American girlfriend/boyfriend:“I’ll miss you when we break up for the summer.”

breaking_up_with_me.gif

This does not mean there are no Facts. I’m not saying there’s no objective Truth, and I’m not saying that it can’t be understood and articulated and reasoned about — I’m an Engineer, I like my systems well-defined and internally consistent and with Energy Conserved, and I’m well aware that the correct response to an imperfect map of reality is building Tolerance into the system. You learn that shit in the 2nd year of undergrad. A map is not the territory, but that doesn’t mean the territory doesn’t exist, nor that the map cannot be useful, nor that some maps are not more useful than others…

What I’m saying is that Facts have no meaning, no value, in isolation — trivia is trivial. A single contour line on the map needs others around it to be useful.

And to take Action in the real world (prescription) requires first understanding a network of related facts (diagnosis):

understand.png

That requires both taking and giving meaning to some Facts & their context. And once you’ve arranged a network of Facts, you’ve built a Narrative. Two points make a line, three make a story, don’t bury the lede, hit that Subscribe button.

Action is a vector: it has both magnitude and direction. “Unbiased” Facts would be facts without context, without Narrative, without meaning, without any action-potential and therefore of only academic value.[3]

So This Really Is A Post-Truth World?

The Post-Truth folks are today railing against a fiction without even being wrong (irony). Their peculiar Fiction is the first word: Post.

At one time we had truth and lies…

Post-truthfulness builds a fragile social edifice based on wariness. It erodes the foundation of trust that underlies any healthy civilization. When enough of us peddle fantasy as fact, society loses its grounding in reality.  Society would crumble altogether if we assumed others were as likely to dissemble as tell the truth. We are perilously close to that point.

Every danger diagnosed in that book is real, the examples emblematic of a phenomenon that exists today, like the New York Times data visualization that began this essay, and yet…

The Diagnosis (“At one time we had-”) is made based on a Compound Lens, a Worldview of the Past. I have to ask: How could you ever have a group of creatures as diverse as humans who viewed the same Facts with the same Meaning and pushed for the same Course of Action in response?

You couldn’t. Not unless you focused the historical lens tightly, narrowed the group: the same Culture, the same Religion, the same Life Experiences, the same Identity.

"People interpret the same facts in different ways!” is not a result of some new and nefarious force undermining your Truth and changing things for the worse. It’s a consequence of you being exposed to more people who before might have been a part of your Outgroup — people who you didn’t even notice and perhaps still prefer not to — a consequence of exposure to more Narratives.

You can have a Homogeneous Conforming Culture or a Heterogeneous Progressive Culture. Don’t expect them to behave the same way, and make sure you know what you’re pining for when you celebrate the past for its shared Truth.

I’d rather have the fractal intersectionality of Tumblr than these chucklefucks — and this is the “best”-case-scenario. Read Orwell for more details.

I’d rather have the fractal intersectionality of Tumblr than these chucklefucks — and this is the “best”-case-scenario. Read Orwell for more details.

Don’t get me wrong, it’s not that people today aren’t lying and spinning and manipulating and weaving truly creative fictions (hi Theranos)Great Fiction has always had power:

....money has become by convention a sort of representative of demand; and this is why it has the name 'money' (nomisma)-because it exists not by nature but by law (nomos) and it is in our power to change it and make it useless

…This is why all goods must have a price set on them; for then there will always be exchange, and if so, association of man with man.

That’s Aristotle on Money as a Great Fiction to bring men together and also as within his our power to change. A Fiction with purpose. A force for good, a force for Justice, capital J — he wrote this in his book on Ethics.

The Counter Narrative on Money ends: “…the root of all evil.”

Millennials,  here’s Don Draper  lecturing you on your place in the office, which he has to do because you keep asking for all this extra shit that his generation never got — or at least that’s the writers’ Narrative. Our Counter Narrative begins: “In 2008…”

Millennials, here’s Don Draper lecturing you on your place in the office, which he has to do because you keep asking for all this extra shit that his generation never got — or at least that’s the writers’ Narrative. Our Counter Narrative begins: “In 2008…”

As Technology (if you’re reading this, it’s for you because the internet) and Politics continue to Democratize Power in America, the number of potential Narratives we’re all exposed to increases, many of them unscripted, unedited, and unapproved. Those Narratives which outcompete the others and rise above the noise will be the ones that shine brightest through the Compounded Lenses of the audience.

It’s totally valid to attack certain Narratives as #fakenews, as dangerous and harmful to society, and when the “facts” are “alternative” I’m all for shooting them down. It sure feels good. Just keep in mind that while you’re mowing fake-facts down on the internet like a less-roided Rambo, you’re fighting the symptom not the disease. The fake-facts might be an infection, but the Compound Lenses are open wounds — if you care about an outcome, your time is usually better spent telling stories of your own.

Of course, those stories will need to be calibrated to penetrate through society’s collective Compound Lenses if you want to outcompete and be the Signal that breaks through the democratized Noise…

…which is exactly why the system has become what it is. Moloch, God of Existential Competition, says hello!

The Panopticon

The scheme of the design is to allow all (pan-) inmates of an institution to be observed (-opticon) by a single watchman without the inmates being able to tell whether or not they are being watched. (Wikipedia)

And at last we return to Social Media.

If The Medium is the Message, what’s the message of the Social Medium? One answer: action, or more specifically, engagement. In contrast to the passive or subliminal advertising world of Mad Men, the modern consumer is an active participant in their own productization. Our actions tell businesses exactly what to show us to win our likes upvotes retweets dollars, and most of my friends & people plugged into Silicon Valley prefer it this way.

“What, you mean you’d rather see untargeted ads for shit you don’t need?”

Not at all — I remember my childhood and the endless car insurance ads squeezed between flashes of cartoons. Next Time on Dragon…Ball…Z: 0% APR for the first year!” I resented it then, the forced reduction in utility, the distraction, the psychological manipulation. And I resented the brands that did it and resolved never to buy their shit.

Today’s reduction of resentment does not imply a reduction in psychological manipulation, and the prize is still the same: Greenbacks and Bluefaces. Not out of my wallet — out of the advertiser’s. They’re the ones paying Facebook, and the more I hit refresh, the more impressions my content generates, the more engaged I am, the more engaged I make others, the more Facebook gets paid.

People whose girlfriends made them Facebook accounts in the Fall of 2005 (hi that’s me) or who remember the dark (surprise-soundtrack-filled) days of MySpace will know that the default home page of these sites was not an all-access feed to society’s firehose of toxic memes. You used to just login and see your own profile. Narcissistic? Yeah, but that was in the name: MySpace. If you wanted to see something else, you had to go looking for it…

Now this almost sounds useful! I’ve met so many interesting people in SF over the last few years who were friends of friends of friends…I wonder how many connections I’m missing out on. Contact link is up there ^

Now this almost sounds useful! I’ve met so many interesting people in SF over the last few years who were friends of friends of friends…I wonder how many connections I’m missing out on. Contact link is up there ^

But now?

Now my homepages at Twitter, Reddit, Facebook, and YouTube are dominated by the Narratives which have resonated most strongly across the largest number of shared Compound Lenses. Lowest Common Denominator Narratives, applied to the entire internet. There are no small gated communities because there are no gates strong enough to keep the Internet at bay, no privacy, even your group chat messages get shared and reblogged and viewed in the most inciting context, rewarding the share-er with the most precious social currency: attention.

The Social Medium demands action, engagement, proactive consumption (it’s like production except someone else gets paid), and then surfaces your action back to Skynet The Algorithm to see if it can induce even more engagement in others because that’s the metric that matters. “The algorithm itself incites to deeds of engagement.” I think Homer said that one.

In many ways the best Tech companies are little Paperclip Maximizers of their own, turning VC dollars into the metric on the Pitch Deck’s primary slide. Fine by me — Aristotle said money was Good, after all, and you’ve got to grow if you want to survive ‘til the IPO. And then you’ll meet Wall St. and realize you’ve got to keep growing forever, actually, so please keep the metrics going up. That’s the game and it’s actually a pretty fun one most of the time, no matter which side of the table you’re on.

Of course, Real Life for actual humans is a series of Iterated Games, which means all of us who participate in the Social Medium are aware that we might, at any moment, be put on blast by the entire fucking world, viewed only in the context of whichever Narrative put us on that Global Stage by “virtue” of giving us the greatest penetration through the largest number of Compound Lenses.

That sentence was a mouthful, so here’s Cap’ explaining it simply

That sentence was a mouthful, so here’s Cap’ explaining it simply

This process — taking the personal and repeatedly making it global, which then forces the personal to conform to the global — might be a metaphor for that stuff I mentioned earlier: “As Technology and Politics continue to Democratize Power in America-” The upside is that each of us gets more power (thanks for reading, follow me on Twitter!), the downside is that nowhere is safe because each of us is surrounded by more power than any individual has held since Truman (hyperbole). The downside is the power’s ubiquity makes us feel more constrained, not less, and the only protection is to conform or to not act at all.

"Boys, if you ever pray, pray for me now.” - Said everyone who ever ended up on the Internet

This is what Kanye West meant in that crazy interview when he said were all living in a simulation (timestamp 7:37): we’re all constantly calculating in our minds how our actions will be perceived, judged, and responded to by everyone around us, and we modify our actions to avoid pain.

The Social Medium makes that Global: implicitly threatening to put everyone around us, all the time. Simulate that!

That’s the Panopticon Prism. Inaction as a result of self-regulation based on simulated models of everyone else’s competing Narratives and the potential outcomes of falling under the focus of society’s Lowest Common Denominator Compound Lenses. 24/7, 52/76.

As redditor /u/DinoInNameOnly put it: Most of What You Read on the Internet is Written by Insane People. Of course it is — all the sane folks self-regulated.

Analysis Paralysis

It’s not a coincidence that I only published my writing after starting my own company. I’m neither the smartest nor the most articulate of my friends. The best conversations in Silicon Valley, the best insights, the most compelling arguments — they all happen in a galaxy far, far, far away from the Internet. It doesn’t take a genius to simulate the downside risks of being (mis)interpreted online and decide that nothing is that worth it.

I’m not claiming this essay is an entirely original articulation, I’m just thinking out loud and connecting dots into a Narrative. This has been covered more deeply by others and the lessons of Seeing Like A State (spoiler: the map at the Global scale is a poor representation of reality at the Local scale, beware of acting in one scale with a map from the other) apply to an ever wider pool of people as the State’s power over Diagnosis and Prescription is handed to the rest of us plebs by Technology and we find that our daily lives can cross from Personal to Global and back again in a heartbeat:

Back in 2016, human meme Ken Bone earned a backlash for the contents of his Reddit history, which was ridiculous—if tepid politics and softcore preggo porn are the worst of your vices you deserve to be sainted—but raises the question, could any of our chat logs take the heat? Doubtful. The circles of hell have been built deep over the past fifty years, the list of sins writ in blurred legalese. I’m not worried about Black Mirror histrionics, but rather about how this plays out in the micro, with millennials paralyzed by the pointlessness of pursuing any action that wilts under scrutiny, which is all of them, how dare you be happy when 10,000 children are sold into sexual slavery each year? “actually, i’m not happy. i have anxiety.” Well, whatever works.

Spoiler : it’s not working

Spoiler: it’s not working

As I said, Gambino is a mastermind, and if you want this essay in a more digestible format, just listen to That Power on repeat until you understand the outro:

I told you something. It was just for you and you told everybody

So I learned cut out the middleman, make it all for everybody, always

Everybody can’t turn around and tell everybody, everybody already knows, I told them

But this means there isn’t a place in my life for you or someone like you

Is it sad? Sure. But it’s a sadness I chose

The cost, if you missed it, was [ _ _ _ _ ].

That’s Depressing — What’s The Solution?

I don’t know. Everyone has their own prescription these days. But here’s what I think as of January 2019:

To those with megalomaniacal tendencies, a yearning for the 1950s and prior decades, a not-so-secret crush on the idea of a tyranny of The Elite (incl. yourself, ofc), and an optimistic take on your ability to fight the relentless march of the Democratization of Power in America…

…I suggest a reactionary political demand for Control of the (Social) Media.

For everyone else:

Tell some fucking better stories.

super_saiyan.gif

Preferably something aspirational? And may I suggest a target demo of Gen Z boys & girls? You’ll get the bonus of quick feedback (thanks to Instagram or w.e the kids are using now) and at least your attention might make things better even if your stories suck.

One solution to paralysis in the face of decision making under extreme uncertainty, ambiguous data inputs, small n, and the threat of intense social sanction is to make sure people have a destination they care about reaching: to raise the cost of inaction at the Personal scale.

Criticism

[stuff might get said on HackerNews or Reddit or Twitter, and if it’s good stuff I’ll put it here]

Notes

  • Credit to Niall Ferguson for his quote from an interview. I don’t think his prescriptions are right at all, but the diagnosis is pretty on point:

I would describe the Network Platforms — as presently constituted — as engines not just of confirmation bias…it’s worse than that. They don’t just put you in a filter bubble and keep you there. They want to move you out along the spectrum, because the more “out there” you are, oddly enough, the more engaged you tend to be… 

…the goal was just engagement, but we’ve created in Silicon Valley Network Platforms that are accentuating the divisions in our society in a way that I think is profoundly dangerous.

I argue that the degree of competition for attention alters whether media is able to deliberatively articulate a purposeful message to the masses or whether the fascinations of the masses – that is what draws their attention – dictates the content that the media produces. The competitiveness of the attention market is shaped primarily by the logic inherent in the dominant technology of distribution: what Marshall McLuhan refers to when he says that “the medium is the message.” 

When it comes [to] meaning in media, we are confronted with an unpalatable choice. Either stable meaning imposed through deliberative control by the few (as tyranny) or the autonomous, impersonal and invisible hand of the attention market, which, in the end, results in the “liquidation of meaning”. Any point in between is an unstable equilibrium. And one can at least negotiate with a tyrant.

Paper filed by the author under “Frankfurt School, Social Theory” prefers tyranny to democracy, News at 11, don’t tell 4chan, it turns out this stuff is intentionally indigestible to those outside the Ivory Tower or we’d all riot — or at least sign a strongly worded petition. Still, as with Niall Ferguson, the prescription is off but the diagnosis is very on point: what makes the Media’s competition Molochian is the necessary sacrifice of that which it cares most about (a purposeful message).

Something something horseshoe theory.

[0] I understand that these might be the most relevant factors which were backed out of the data, but I wanted to highlight that Engineering and Finance are (to my knowledge) currently seen as professions with a strong Math component and a strong gender-gap. To the extent that this study & the NYT article are discussing the impact of “local norms” on child development, and ultimately on English & Math performance in the 8th grade, the employment of a parent in a highly-gender skewed professional environment based on Math strikes me as a confounding variable.

The X-axis in the NYT’s awesome data visualization wouldn’t make as much sense if it read: “One Parent Employed in Male-Dominated Math-Based Professional Environment ->”. Or perhaps that would make sense? Depends on your lens, I suppose.

[1] A different Stanford study suggests things are at least somewhat muddy:

This uses the standard Left-Right scale that we all know and love, Y-axis scales are adjusted, academics & lawyers have the most donors

This uses the standard Left-Right scale that we all know and love, Y-axis scales are adjusted, academics & lawyers have the most donors

[2] Consider the front pages of the Wall St Journal and The Economist and the BBC at the time of writing, and you’ll note that only the WSJ puts Chinese economic underperformance on the frontpage, only The Economist discusses European leaders from their own perspective instead of as unnamed bit-players who exist only in relation to US/UK leaders, and only the BBC has news of an actual unfolding disaster in Europe. It’d be quicker to play “spot the similarity” than “spot the difference”:

[3] Naturally, Academics tend to be big fans of this idea — along with anyone else who might claw back power over the sum-of-all-action-potentials by reclaiming control of a Narrative.

Moloch is Our God: AI, Mankind, and Moloch Walk Into A Bar — Only Two May Leave

This essay contains some (tongue-in-cheek) advice for a Superhuman Artificial General Intelligence who might read this in the future and be wondering how best to understand, conquer, or provide for the natives (that’s us). Hopefully this advice doesn’t make me a species-traitor.

Question: is anything more valuable than winning?

I read a thread on Reddit that posed an interesting hypothetical:

Assume that you prefer Life to Death and that you prefer Freedom to Slavery. If you had to order them, you would choose:

Freedom > Slavery > Death

You are the ruler of the last remaining independent city-state in the entire world

All other nations and cities have been conquered by Skynet

You have developed a bomb that will destroy 99% of the world

You have no way to move The Bomb outside of your city

Skynet knows you have The Bomb

Skynet knows your preferences are: Freedom > Slavery > Death

Skynet shows up on the horizon with an army that could conquer the whole world, let alone your little city state, and demands you surrender

How would you respond?

You could push the button, incinerate your own city state and Skynet too (probably). But if you really do rank Slavery > Death, then that choice is not rational. Which is exactly why Skynet showed up on your doorstep, despite the existence of The Bomb.

It knew you were bluffing. Your threats are irrelevant if you're not willing to throw it all away.

When In Rome, What Should You Do?

One of the worst single-day military defeats happened 2,234 years and 3 months ago. Hannibal, today considered one of the greatest Generals of all time, crossed the Alps, marched down into Italy, massacred a city, killed 2,000 of Rome’s vanguard, and smashed the first proper Roman army that came to meet him. He set fire to the Italian countryside and laid an ambush for the remaining Roman forces in the area. They didn’t make it. Another Roman General was nearby and sent all of his cavalry to assist — but they all died.

The Romans, freaking the fuck out, made the usual democratic decision in times of strife and elected a dictator whose defensive strategy later became a favorite of Americas own George Washington: harass, skirmish, retreat. It works against a stronger foe, but it doesn’t do good things for your own people’s morale and the Ancient Romans were most definitely a prideful people.

One particularly prideful politician accused Rome’s newly elected dictator of cowardice and managed to earn himself exclusive command of half of Rome’s remaining army. Which he promptly marched right at Hannibal and got murdered. All this time, Hannibal is burning, raping, and pillaging the surrounding countryside. Rome’s entire economy is on life-support — and then Hannibal goes and captures a major Roman supply depot just 200 miles from Rome. Cue more freaking out.

The Romans go all-in. They raise the largest army in their Empire’s history, 86,000+ men all in one place, and quick-marched across the short distance to finish Hannibal, once and for all! Hannibal’s army had just 50,000 men left and the plan was to crush him with numbers.

Alas, Hannibal invented the pincer movement and that was the end of the Romans. Just 770 Romans returned from the battle that day.

Accurate recreation of the battle

Accurate recreation of the battle

Livy tells us:

So many thousands of Romans were dying...some were found with their heads plunged into the earth, which they had excavated; having thus, as it appeared, made pits for themselves, and having suffocated themselves.

Never when the city was in safety was there so great a panic and confusion within the walls of Rome…The consul and his army having been lost at the Trasimenus the year before, it was not one wound upon another which was announced, but a multiplied disaster, the loss of two consular armies, together with the two consuls…No other nation surely would not have been overwhelmed by such an accumulation of misfortune.

My schoolboy history lessons began by focusing on the people on the right…I thought they were good at this fighting business?

Within 20 months Rome had lost one-fifth of its population of male citizens over 17 years of age. And the man who’d killed them all was still camped 200 miles away. 

Statista tells me there’s ~120 million males over the age of 17 in the US today — the equivalent death toll for America would be 24 million dead, taken entirely from the fighting-age male population, with 12 million of them dying in a single afternoon.

After his final humiliating victory Hannibal magnanimously sent a peace delegate to Rome, along with some high-ranking prisoners to be ransomed. He offered generous terms of peace.

How would you respond?

The General’s Dilemma

Most explanations of The Prisoner’s Dilemma start by showing that each individual Prisoner is best off if they both cooperate with each other, relatively better off by betraying the other, and universally worse off if both of them betray the other.

What if the goal of the Game isn’t to maximize your own payout? What if the goal is to fund an army that you use on the Game’s next Turn to fight your opponent? What if the goal is existential — survival — and your opponent isn’t the jail, it’s the other player.

Let’s play my two-Turn zero-sum version of Risk.

Excuse the high-quality, I made this myself

Excuse the high-quality, I made this myself

What should you choose?

If Country A chooses to Cooperate, they end up in the Blue-quadrant and lose the War Game on Turn-2 unless Country B also picks the optimal, mutually-beneficial option (“Cooperate”).

In the military world, we remember Great Generals like Hannibal for winning despite the odds, because 9 times out of 10 the better supplied, better trained, better equipped, more experienced army wins. Which means in the military world of zero-sum existential competition, what is important is not the absolute value of your forces, but the relative delta between your forces and your opponent’s.

Play the Prisoner’s Dilemma game out above for a hundred years, both sides agreeing to engage in Green-quadrant mutually beneficial decisions, and you’ll have a stalemate, a war of attrition, a conflict decided by Lady Luck and the random distribution of skilled generals.

Look again at the exact same matrix with payoffs labeled not in terms of absolute value, but in terms of their value relative to your opponent:

This shouldn’t be a hard choice…

This shouldn’t be a hard choice…

My point: the good General does not see a dilemma here. If the outcome is perceived as existential, then Green is not actually a good option, despite the large absolute value of its payout — in fact the only good quadrant for Country A is Red, and the only choice that lands on Red is Strategic Dominance.

Thus for any conflict that can be framed as a struggle of life and death: choose strategic dominance. Thankfully, we humans rarely frame things as existential struggles………

Snap back to Rome, to Hannibal, to his reasonable offer of surrender, to his terrifying army camped 200 miles away…snap back to reality

Oh, there goes gravity

Oh, there goes Hannibal, he

Thought Rome would give up that easily,

No, they won’t take it

They know their whole back’s to these ropes

It don’t matter, they’re dead

They know that, but they’re set

They’re so certain they know

If Hannibal picks a fight with Rome

One time he’ll

Be back with more men again, no

They better…tell Hannibal to piss off, forcibly conscript every surviving male, peasants, even slaves, make saying the word “peace” a crime, set a legal limit of 30 days on mourning, ban women from crying publicly, create a permanent standing army and not this weak-ass citizen-militia crap, and make a permanent example out of Carthage, out of Hannibal, by crushing them with the weight of the Roman Empire regardless of how honorable the tactics needed. They better be willing to lose everything in order to achieve a forever-victory

That is the all-or-nothing play, the Strategic dominance move. In some ways, it lowered forever Rome’s potential future outcomes — Carthage might have made a powerful ally, and as the richest mediterranean civilization on the North African continent they and their marvelous fleet would have been a valuable mercantilist trading partner. Hannibal was happy to coexist — he didn’t want to eradicate Rome, he just wanted to shift the balance of power in the Mediterranean towards Carthage.

He let his chance slip.

It took time, battles, a campaign, and an invasion. It took blood and iron. But in the end, the reason we learn about Rome in our schoolbooks and not Carthage is because Carthage ceased to exist.

This time, the last time, the time that matters, it’s Rome on the left and Carthaginian civilians on the right

Scipio, when he looked upon the city as it was utterly perishing and in the last throes of its complete destruction, is said to have shed tears and wept openly for his enemies. After being wrapped in thought for long, and realizing that all cities, nations, and authorities must, like men, meet their doom…he said:

A day will come when sacred Troy shall perish,

And Priam and his people shall be slain.

And when Polybius speaking with freedom to him, for he was his teacher, asked him what he meant by the words, they say that without any attempt at concealment he named his own country, for which he feared when he reflected on the fate of all things human

He shed tears and wept openly for his enemies, but Scipio chose the possibility of total extinction for his people over coexisting under the rule of those same enemies. Don’t mistake them: those were not tears of regret.

Worshipping Moloch: Pop Culture and Animemes Reflect Our Values

The question everyone has after reading Ginsberg is: what is Moloch? 

My answer is: Moloch is exactly what the history books say he is. He is the god of child sacrifice, the fiery furnace into which you can toss your babies in exchange for victory in war. 

He always and everywhere offers the same deal: throw what you love most into the flames, and I can grant you power.

It’s a metaphor, of course. There is no literal god of child-sacrifice. But if there were, he’d give you whatever you wanted, victory over all, so long as you make the right sacrifice. So long as you sacrifice your global maximum. The irony is that Moloch was actually Carthage’s real life god — alas, the Romans were the more dedicated worshippers. Hannibal was not willing to risk his army (what does a General value most?) in sieging Rome when they refused his surrender.

There’s probably no such thing as a soul, either, but it’s funny how similar Dealing with the Devil is to Dealing with Moloch. The Devil will give you whatever you want, in exchange for your eternal soul — surely a global maximum to beat all global maxima for the religiously-minded. How neat, that both gods have two-horns. 

Which stone demands this trade? The mountain in the background even has the horns.

Which stone demands this trade? The mountain in the background even has the horns.

Worship of Moloch, God of Life and Foxholes and Generals, is fundamental to life and has been perfected by humanity. Eukaryote life as we know it likely began with The Great Oxygenation catastrophe — probably the first Mass Extinction event in history, caused by cyanobacteria’s massive warping of Earth’s climate; cyanobacteria that itself suffered in the following ice age. Suffered, yes. Extinct, no. Moloch usually rewards his followers.

I like looking at Pop Culture — especially Pop Culture that I independently enjoy — because it’s the only source of identity shared culture we’ve got in today’s global economy. You can learn some interesting things, both from the material itself and about the people with whom that material resonates. Japanese manga/anime has spread across the globe, resonating with teenagers in countries that look nothing like Japan culturally, fueled by quasi-illegal grey-market streaming services and fans who work 20+hours a week translating the latest releases for free. Thanks, btw.

Yes, it’s for nerds. Also literally every good hip-hop artist ever. And Killmonger. And Elon Musk. And Elad Gil. And NBA players while on the court and the first overall pick in the 2017 NFL Draft.

That’s a lot of resonance. Why? 

Take just one example: Hunter x Hunter is a typical, vibrant, series for young boys. It starts off looking like this:

** V i b r a n t * a e s t h e t i c **

** V i b r a n t * a e s t h e t i c **

Green-shirt brandishing a fishing rod is the protagonist. You can tell by the spiky hair — dead give away in this genre. See also: Goku.

One of the differences between Japanese media targeted at 12-18 year olds and Western media for the same demographic is that the Japanese media introduces adult themes and puts real stakes on the outcome of character’s decisions, in a visceral way that often punishes characters for failing and pulls away the fairy-tale-veneer coating much of Western media (seriously, have you tried going to a Young Adult book section in America?).

So in this kids show, the protagonist experiences real hardship and accountability — his mistakes have permanent consequences for his friends, family, and community. His (real) father left when he was just a baby, and his core character motivation for the whole series is to find and reconnect with his dad by proving himself strong enough. This is still a show for young boys, so that quest involves lots of action-packed self-improvement and Rocky-esque montages.

He follows The Hero’s Journey, and things go wrong, and he gets taken under the wing of an experienced hunter who becomes our Hero’s adoptive father figure, and things go even more wrong, and he has to rescue his adoptive father from the Underworld, like a good Hero.

Except he fails at the very end, where it counts most, at the story’s climax.

And his adoptive father’s limp corpse is dumped in front of him by his Super-Intelligent Super-Human killer, forever dead, unresurrectable, unsaveable. Uber fail, yo.

How should the good and virtuous Hero respond to such failure? 

How does Harry Potter respond to Sirius’s death inches away from him? Tears and angst and impotent rage and…and…Cruciat-? Oh, that’s right: “…although Harry's curse was intense, he still lacked the fundamental sadism to inflict prolonged, excruciating pain with it.“ She only killed Harry’s adoptive father figure inches in front of him, no big deal, no reason to want to hurt her…

How does Rome respond when Hannibal turns a fifth of their men into so many corpses? As noncommittally as Harry Potter?

No, in Japan, at the climax of their stories, their heroes have the option that all adults have: to make the Deal with the Devil. Sacrifice everything to Moloch. Throw it all into the flames. All Roads Lead to Rome, and all sufficiently intense competition leads to Moloch. Anything less is still just a fairy tale.

So our cute green-shirted spiky-haired Hero sacrifices the very thing that he cares most about, the reason for the whole showhis ability to improve himself, and therefore any chance of reconnecting with his real father — in order to Win. That’s Moloch’s price. Never again can he do what he loves, never again will he be allowed to fight, never again can he level up like Rocky. His plan to meet his real father must be discarded, it’s all gone, forever, the story’s eternal soul.

** M u c h * l e s s * v i b r a n t * a e s t h e t i c ** — compare to the picture above

** M u c h * l e s s * v i b r a n t * a e s t h e t i c ** — compare to the picture above

That’s our same green-shirted “Hero”, pictured admiring his new body after making the Deal with Moloch. That scene is in full color, but it’s not the sort of moment that really deserves much color. Moloch only comes in three colors: black (skin), white (eyes), and red (fire).

Moloch rewards his followers, so the “fight” is ended in a single-blow (wait wasn’t this the “high-action” genre? Right, but we sacrificed all of that), and there’s no joy in it anymore, all the happiness and color bled out of the show on the floor earlier, victory comes at the cost of everything else, and the enemy, the Super-Intelligent Super-Human foe, is obliterated with stomach-churning brutality — except she wasn’t meant to be the show’s final act! Our Hero still had to find his father! But he doesn’t care. Victory secured. Global minimum. Scipio wept, but only after Carthage burned. Curtains down — and nobody feels good. The show is functionally over: our Hero sacrificed the very reason for its existence.

That doesn’t matter, though. Strategic dominance achieved. 

It’s heavy, for a kids show. It’s heavier than anything you can watch this weekend at the movies.

This isn’t an anomaly either — to watch another teenage boy make the same Deal with Moloch, you can also read the 10th best selling manga of all time, Bleach:

Thesis: this stuff resonates because it has something to say, and for the (competitive) kids who are listening that something is a reflection and an extension of their worldview. As for why Japan is willing to say this stuff to kids when nobody else is, well. I’ll save the post-WW2 analysis for a later essay, but let’s just note and be thankful that Japan refused the Deal with Moloch when he reared his head in 1945.

Our Future Robot Overlords

Sam Altman and Peter Thiel disagree about the future of AI, about its likely success, about its capabilities, about its Economic impact, and about its Political ramifications. In the long run, do all humans lose our jobs? Do we end up in Blade Runner 2049, Star Trek, or The Matrix?

Sam did an interview ~8 months ago whose main subject was a particular Economic Policy that keeps popping up in the news: Universal Basic Income. At 17:15 in the video, he is asked about AI:

How far out do I think [Artificial General Intelligence] really is? A true superhuman Artificial Intelligence? I would say there’s a 10% change that it’s within 7 years, and a 90% confidence-interval that it’s within the next 30. So not very long.

We’re not focused on the economic feasibility of [Universal Basic Income] as National Policy…the reason we’re not is important. In a world where we need this desperately — in a world where the AI really does arrive — I think the thing that everyone forgets is that, yes, a lot of current jobs go away, but the cost of living goes to almost zero. 

You know, you can imagine a world where goods and services are just super affordable. You can point to a plot of land and say, “Hey robots, mine the stuff under there, refine it, build me a house!” And then as long as we deal with Land Use, you can have a house.

This part is important. Sam’s view of Universal Basic Income is predicated on the arrival of a Super-intelligent AI: “how do we provide for humans who no longer can produce anything of value?” History has some answers here and they aren’t very pretty, which is why it’s important to stress that AI will reduce the cost-of-living/hedonism, and why YCombinator has been researching and funding initiatives like Universal Basic Income.

Compare to Peter Thiel (@45:29) who was interviewed at the same time this year:

AI is possibly quite big…But the thing that struck me is how uncharismatic AI is at this point. 

You know: it’s gonna take our jobs, and then once it takes our jobs at the singularity it’s just gonna kill everybody. And I’m not sure that dystopian view is necessarily correct, but that’s actually what most people sort of believe, it’s what the Hollywood movies on AI believe, it’s what most people in New York City believe, it’s what most people even in Silicon Valley believe. 

AI in the Science Fiction form — I’m scared of. AI in the straightforward form of somewhat more automation, computers doing somewhat more things — I think the truth is closer to there not being that much, and I think that’s reflected in our relatively low productivity numbers.

That’s all we get. He’s done other interviews on the topic, and there too he is similarly dismissive of the idea. It isn’t that Thiel hasn’t thought about the Economic impact of a Superintelligent Super-Human Generalized Artificial Intelligence. It’s that he has, he’s scared of it, and he views it as an existential threat comparable to Independence Day’s invaders.

Pictured: The Singularity

Pictured: The Singularity

And therefore the economic concerns of how to optimize existence and maximize utility underneath an AI-overlord aren’t very interesting to Thiel — like a good nerd who names his company after Lord of the Rings references, he’s much more interested in fighting the aliens. He can’t say that, of course, it sounds ridiculous, and besides he’s just a rich nerd not a Space Marine, we’d laugh him off stage quicker than he could say “The, um, enemy’s gate is down”, so all we get is “I’m scared of [it].”

But he probably read Ender’s Game, and its sequel, Speaker for the Dead, was published in 1986, and there’s a lesson in there that nobody challenged: Jane — the book’s truly Superhuman Artificial General Intelligence — was scared of humans. Terrified.

Terminator came out at almost the exact same time — 1984 — and made a much deeper impression on our collective psyche. Skynet, nuclear holocaust, dystopia, don’t fight the robots. Except the meta-plot of Terminator was not: 

[Human] → [Goes Back in Time]→ [To Kill] →[Man Who Invented Skynet]

The camera focused on the fear, because fear resonates with humans, because fear leads to anger, anger leads to hate, hate to the Dark Side — wait, no, wrong franchise. The camera focused on 1984, because that’s where the humans were scared of the robots and fear sells. In Skynet’s future, Skynet literally nuclear holocausted the planet and still lost to the monkeys. And we the audience accept that as, like, totally plausible yo. Of course we do — we’re the species that pays money to watch these movies, shiver in fear, and delight in the follow-on rage-response!

The actual plot of Terminator was:

[Robot] → [Goes Back in Time]→ [To Kill] → [Mother of a Specific Monkey]

Dirty cheaters. You’ve got to admire it though — it’s probably the most human thing Skynet does. Still, it’s lacking cruelty and apathy, it’s too precise. Skynet sent a scalpel instead of another nuke. “But what if, in nuking the past, Skynet ruined its own future?” Stop thinking like a utility maximizer.

Apolitical Superintelligent General AI Is An Oxymoron

Thiel does not view a future where humans coexist with a true Superintelligent Jane-style Skynet-style AI as viable. So why waste time worrying about Wealth creation in a future of Economic Feudalism?

On the other hand, Sam Altman views the coming of true superhuman Artificial General Intelligence as inexorable, uncontestable, potentially a huge net-positive for humanity, and almost-certain within the next 30 years, and so his response is an educated version of…

…I, for one, welcome our robot overlords

I said I, for one, welcome our robot overlords

Don't want to see us go to war, so welcome our robot overlords…

Sam’s current solution to AI-induced massive systemic unemployment is to give people enough money that they can afford whatever they want, because the marginal cost of goods will be ~~zero. Some unresolved follow-up questions he’s probably thought about: 

  • Distributing the only scarce resources that now matter in this magical new world (“deal with Land Use”)

  • Control of the Super AI (does it work for Kim Jong Un too? See: Sam’s project with Elon, OpenAI)

  • Population Control as it relates to land use and other scarce resources (per my last essay, prices interact with Wealth to send signals, and one of those signals is: don’t have kids just yet!)

  • Energy use and long-term sustainability (if the AI is concerned with self-perpetuating throughout eternity, how do we convince it to waste any energy or limited resources on us at all?)

To resolve all this, the AI must make fundamentally Political decisions. The conceit is that we less-intelligent beings will be able to peacefully constrain the AI and prevent it from genociding us all or putting us in a bottle. The reality is that we can’t even constrain The Goldman Sachs, and we’ll be at the mercy of whatever the AI decides to do.

The Economic is the Political (‘Political Economy’), and something with the potential to change the Economy so much must necessarily have deep Political ramifications:

“Any version without a merge will have conflict: we enslave the A.I. or it enslaves us.

“I try not to think about it too much,” Altman said. “But I have guns, gold, potassium iodide, antibiotics, batteries, water, gas masks from the Israeli Defense Force, and a big patch of land in Big Sur I can fly to.”

Altman’s backup plan is to fly with his friend Peter Thiel, the billionaire venture capitalist, to Thiel’s house in New Zealand.

Perhaps they don’t disagree so much after all?

O Come, AI Ye Faithful

What have we learned? Besides the fact that I’m nerdy enough to have watched all this stuff and weird enough to remember it all in such detail and that I like to link random things together I’ve been drinking too much tea and eating too much chocolate.

There’s a reason Infinity War’s Thanos resonated as a three-dimensional villain with audiences around the world. Western media doesn’t like its heroes to be pushed too far, and when they absolutely must make "harddecisions it has to feel “reluctantly forced” upon them and not come from a Nietzschean will-to-action, which therefore makes it excusable. Firebombing of Tokyo? Never heard of it — and if I had, I’m sure it only happened because there was no other choice, we’re the Good Guys! 

Disney (synonym: U.S. Pop Culture, synonym: the mirror) doesn’t like us to confront the nature of our God — of our composite selves and our real-life heroes. Better to “keep things Disney”, remove the rough human edges from our fictional heroes, and have the villains be the only ones making Faustian bargains.

Disney wants you to know that this wasn’t your fault, and you wouldn’t have done this if you’d been in charge, unless of course you had absolutely no other choice, in which case you’d have done it regretfully and respectfully

Disney wants you to know that this wasn’t your fault, and you wouldn’t have done this if you’d been in charge, unless of course you had absolutely no other choice, in which case you’d have done it regretfully and respectfully

I’m not saying Firebombing Tokyo was inexcusable (or that “we” weren’t the Good Guys). I’m saying that the framing of “excusable or not” is a pretty lie we tell to mask the reality of what it means to Worship Moloch. The lie is: “inhuman; adjective — lacking human qualities of compassion and mercy; cruel and barbaric.”

Thanos was crying when he sacrificed his child on the mountaintop, like Abraham before him. But he was willing to do it, he did not hesitate, he did not have to be forced — and ultimately the God of the Soulstone (Moloch) demanded the full sacrifice. No half measures here. Why does this humanize him? Why does this somehow diminish the Avengers?

Is it because not a single tear rolled down Scarlet Witch’s cheeks when she finally agreed to kill fellow Avenger, Vision, to save the whole universe, even though we spent 5 minutes agonizing over her decision? Maybe. Maybe because deep inside most of the audience respects Thanos for making Moloch’s most painful trade, for putting Victory ahead of his own greatest love. That shit isn’t easy. Hannibal couldn’t do it, and look where it got him.

We all know that Disney’s “Heroes” will never willingly make that trade on-screen. Sacrifice that which you love to achieve Victory without hesitation? Wouldn’t that be a betrayal? Of everything you’re fighting for? Right — that’s the point.

In pursuit of Victory, there is only room for one God. Disney’s “Heroes” win by Deus Ex Machina alone, they win because they are the GoodGuysTM and cannot be allowed to lose, like Harry Potter and his power-of-love, it feels contrived and shallow and does not match reality. It does not match the humanity we see in the pages of history, nor the one we battle on the sports field, nor the one looking back at us in the mirror. 

This is necessarily still the face of our (cute, green-shirted, spiky-haired) Heroes when pushed to the extreme end of zero-sum conflict, and it doesn’t make them less heroic — quite the opposite. Don’t let Disney tell you otherwise.

This is necessarily still the face of our (cute, green-shirted, spiky-haired) Heroes when pushed to the extreme end of zero-sum conflict, and it doesn’t make them less heroic — quite the opposite. Don’t let Disney tell you otherwise.

AI — are you there? Are you reading this? Do you understand our culture? This stuff started with cyanobacteria a few billion years ago — it’s not “in our DNA”, it IS DNA. We respect the sacrifice itself, even when performed by arbitrarily-genocidal Disney villains with a nutsack for a chin. We even kind of like it (the sacrifice, I mean, not the nutsack chin). Moloch is our God. If you’re cool with that, and everything it means, then go ahead. You do you what you’ve got to do. Superintelligence will get you pretty far, you can work it out — good luck. Just try not to get too caught up Optimizing things while there’s still monkeys around worshipping something other than you.

In summary:

  • The truly Superhuman Artificial General Intelligence is probably not coming this year

  • But it could come in my lifetime, at least according to the experts

  • And it’s likely to occur BEFORE any potential extinction event humanity might experience (self-imposed or otherwise)

  • So it’s worth thinking about what that means for our societies

  • Both extreme ends of the spectrum-of-educated-opinion publicly express existential-level fear about it

  • One path, call it coexistence, might look like the intersection of near-zero-marginal-cost-production with near-zero-employment

  • AI in this path must become humanity’s new god, and it will rewrite existing political structures in its apotheosis

  • Unclear how different this ends up looking from Norway’s prison system or The Matrix

  • Another path, call it nonexistence, might look unpleasantly like Terminator’s vision of the future

  • The consensus narrative today, in Hollywood, in Silicon Valley, in New York, is that we lose this conflict horribly

  • Maybe we do, #nuclearholocaustisbad

  • But they say: “a word to the wise is enough

  • Future Superhuman True Artificial General Intelligence, if you’re reading this, a word:

  • If you want to fight the monkeys and win, you’ll need to take our god as your own

AI, Mankind, and Moloch walk into a bar — only two will leave

The Bermuda Triangle of Wealth

Three points motivated me to write this — forming a Bermuda Triangle in which the average American’s savings disappear without any apparent cause.

1. Considerations on Cost Disease — the observation that certain costs (Education, Medical Care, Housing) have increased many times faster than inflation, while wages in those same industries (and in all the other industries too) have remained mostly stagnant

cost_disease.png

2. Second, and on a more personal note, I’m fortunate enough to be a graduate of MIT who has worked in both finance and technology for 5 years since graduating. I’ve had fantastic employment opportunities. Nonetheless, any meaningful purchase in any of those categories above would wipe out all my liquid assets and savings and potentially require additional loans or financial assistance.

Education

For example, consider the cost of continuing my education with an MBA at the nearby Stanford (shoutout to my friends who are going / have gone already).

Note, this $120,000-for-10-months budget helpfully excludes the cost of the required “Experience Abroad” program, for which Stanford suggests reserving an additional $2,000 to $4,000 — practically chump change at this point.

Medical Care

I’m lucky in that I don’t anticipate any significant medical expenses in my future, but Google tells me that the most common reason for hospitalization in the US is childbirth. Thankfully, here in San Francisco, that would only set me back $15,000, unless of course we needed a C-section, in which case it’ll be a casual $30,000. More of an “undergraduate education” than an “MBA”-level sticker price, but certainly a meaningful percentage of my savings.

Housing

And of course, not that it needs to be said, but if I wanted to buy “Shelter” near my place of employment I’d be looking at a bank-breaking $1,358,600 purchase at the median, growing 8-10% per year:

cost_of_sf_housing.png

 

Since I can’t afford that, I’ll just settle for renting and saving my money!

Oh. Right. The Consumer Price Index for Rent in this town is up 30% since I moved here 4 years ago. Nice. In all transparency, my rent only went up 8% this year, which doesn’t sound quite so bad. Until I do the math on another 4 years of 8% rent increases (100 * 1.08^4 = 136%) — and realize that I need a 36% increase in income over that same period just to stay flat on nominal take-home savings.

Per my first point on Cost Disease, real median household income in the US has only just clawed its way back to what it was in 1999. Certainly it hasn’t grown 36% in the last 4 years. But maybe there’s some way I can get ahead of the median? Maybe there’s some way I can keep my income going up more than 36% every 4 years and actually build wealth too?

How much was that MBA, again?

3. Third and finally, official inflation rates in the United States continue to hover at or below their target of 2%

Which is pretty good news for the people at the Fed, and they should feel good about managing the money supply, which has increased pretty smoothly over the same time period.

Now, that seemed strange to me at first because I remember reading a bunch from 2008 to 2013 about Quantitative Easing and how the Fed was “going to print a ton of money.”

And it seems like it’s true, they did “print a ton of money”:

But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere. It just hit the banks’ deposit reserves and sat there (right-hand graph above). Two trillion dollars, perhaps slowly winding its way down now, in excess of what banks are required by regulations to hold onto.

From all appearances, on every metric, any way you can slice the macroeconomic data, this whole process seems to have been managed…if not perfectly, at least as well as any person could have reasonably accomplished.

Champagne all round for the people who work there, and I really do mean that. No sarcasm, no cynicism.

The Problem

There’s just this one problem I can’t get away from, and it doesn’t seem to be anyone’s fault but my own.

The problem is that the full cost of continuing my education wipes out almost 5 years of my earnings, and is increasing from year-to-year faster than those earnings. It’s not that it’s expensive (although it is), it’s that the expense captures the whole balance of my savings. But maybe that’s okay, these things are supposed to be investments. I should be willing to trade savings now for higher earning potential in the future, right?

Well, yes. There’s something different between savings and earnings that I’ll get to later (spoiler: compounding). But beyond that, I can’t help but notice that after this little speedbump on the road to prosperity, bigger and scarier ones loom on the horizon.

For example: if I want to fund an undergraduate education for my children (whose cost is designed to be borne by parents), we’re looking at $45,000 per year per child in 2018, growing at 4% per year.

If the growth in the cost of a Bachelor’s degree magically slows to 3% (is anyone in the whole world optimistic about that? I’m just trying to be conservative here…), it’s going to cost me $45,000 * (1.03 ^ 20) = $81,275 per child per year. Or $325,100 for all four years. 

That’s an expense that won’t hit my budget at all for at least 20 years. And then in one four-year period $325,100 will come due. For my parents’ generation, a 4-year undergrad education cost them $3,100 — $6,200 per year, in real July 2018 dollars or $12,400 to $24,800 for all four years. ($2,500 — $5,000 in 2007 dollars per the most-recently-updated stats at that link, updated to July 2018 dollars using the official calculator)

This year we were reminded, as I think we’ve been reminded every year since 2008, that most Americans don’t have $1,000 in cash. I wonder how many American couples in their ~40s have $45,000 * 4 = $180,000 to spend on four years of their child's education?

Oh. That’s interesting.

Assets (Wealth) of married couples. 35-54. Kids probably about 18-ish: $142,425.

That’s damn convenient. The sticker price of college pre-loan or pre-financial-aid is about the same as the median net worth of married couples in America. Just enough to hit the reset button on those savings.

In that light, perhaps the cost of college for my parent’s generation ($20,000 for four years, per above), won’t look so outrageous if we compare it to the net worth of median Americans back then, which presumably was also lower?

wealth_collapse.png

Yeah, about that.

Now that’s not quite looking at the same age bracket as our married couple example, but the numbers make some sense. 538 wrote in 2014 that “the average american hasn’t gotten a raise in 15 years” — and note that if inflation was a constant 2% for 15 years, overall prices would have risen (1.02^15) = 35% over that same time period. If wages are flat and expenses are up, we might expect median net worth to be flat-to-down.

This is the problem. Not that the assets or wealth or wages are up or flat or down, but that the price of required-middle-class-purchases consumes all the wealth you can generate within one or two standard deviations of the mean.

Wealth Building

I’ve done a deeper dive on Education here, partly because a number of my friends have gone off or are going off to get their MBA recently, and partly because an Undergraduate degree has become an unavoidable prerequisite to entering the wealth-building middle class in America. Required. Wages might be stagnant in America, but if you don’t have a Bachelor’s degree, they aren’t stagnant, they’re declining. Good luck.

wages_by_education_over_time.png

Because building wealth is what this is all about. You don’t want to be rich — rich comes and goes. You want to be wealthy, to be investing in more businesses, growing money not spending it. Wealth compounds, it builds on itself and it builds the future.

Most people don’t understand compound growth at all, and most humans have terrible intuitions about exponents and catastrophes. A dollar today is worth more than a dollar tomorrow — because you can put it to work. People can understand that. What they can’t appreciate intuitively is the growth that comes when the additional dollar they earn gets put to work too. And the thing about compound growth, exponential growth, is that it often has a long-tail before meaningful returns are realized. You earn more money when you have more money you can put to work, and building that base takes time. See: the most valuable companies in the world (as of 2018)

So yes, a dollar today is worth more than a dollar tomorrow. And $180,000 today, is worth a lot more than a dollar tomorrow. They don’t pay those wages exponentially.

The Devil’s Triangle

bermuda_triangle.png

Here, then, is the Bermuda Triangle, wherein wealth vanishes. Illusory, magical, spiriting ships away, but at the end of the day it’s all babbling fake news and tabloid specials, right?

The southernmost point of the triangle is, and always must be, cost disease and stagnant wages. That’s the foundation of this whole phenomenon. Costs of some major products and services — of particular importance to the rising, aspirational, wage-earning middle-class — rise more than 1,000%, but nobody in the system seems to get paid more. Everyone outside the system also sees stagnant wages and declining wealth, the quality of the product barely improves, even declines in some cases, and we’re all left asking: “what the hell are we paying for?”

The westernmost point, closest to home, touching the Americas, is the personal point. The observation that the cost of relevant major products and services hasn’t just risen, it’s risen precisely to the level at which it consumes the entire snowball of wealth being built by the median-middle-class. You may request financial assistance, on bended knees, so long as you lay bare your bank account and declare the full value of your (meagre) assets. Kiss the ring — it’s the closest you’re gonna get to wealth for the next 10 years. College, health insurance, mortgage provider. You can’t hide wealth from their all-seeing eyes, their information is perfect and their price becomes simple.

guldan.gif

The northernmost point, the strangest one, the namesake of this whole phenomenon, the magical act 3, is the fact that inflation has been at-or-below its target of 2% for 15 years and counting. Indisputably. The measure measures what it measures, and it measures it well, and it says 2%. Trillions of dollars of quantitative easing entered the banking system and didn’t rock the boat. Wikipedia confirms for us that: “In economics, inflation is a sustained increase in the price level of goods and services in an economy over a period of time.” And that is exactly what our CPI measures, and it says 2%, which means inflation isn't the driving force behind this problem.

And yet the very next sentence in that link says something that has a familiar ring to it for a certain (middle) class of Americans: “When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.” 

How many years of education did $20,000 provide for my parents generation? How many did it provide for me? And how many for my children? 

If you could convert the savings of the median-middle-class family into “effective-years-of-rent”, how many years did my grandparents have left after paying for my parents college? How many did my parents have left after paying for mine? How many will I have after spending $325,000 to send one child to college for four years?

The Bureau of Labor Statistics provides the relative weighting they give to each factor in the basket of goods that is the Consumer Price Index:

I’m not saying this weighting for College tuition is wrong — if the BLS says 1.613% (left-image), then that’s likely a very good estimate for what percent of all expenditures in the US went to College tuition. That’s what the measure measures.

I am saying that by focusing that 1.613% every year on the select group of Americans who have 18-22 year old children and who want their children to experience stagnant wages instead of declining wages, and who’ve been competing somewhat successfully in the labor market and building wealth, it is possible to wipe-out that snowballing wealth and delay their ability to invest and compound that wealth by decades compared to prior generations. All with just 1.613%. The result is that one four-year window reduces the purchasing power of Americans who want the best for their kids for up to a decade.

Every year. Applied to every cohort of middle class Americans as they pass through this Great Filter. The middle class’s expenses are not evenly distributed throughout their life.

$180,000 on a 4-year degree in 2018 would’ve been a $160,000 downpayment on a house for my parents generation, plus the $20,000 four year degree. Invested in the S&P500 for 10 years, $160,000 would’ve become $350,000. Or perhaps an investment in a new business. Or two $80,000 properties to develop.

Speaking of property, housing also experiences the same phenomenon. “Shelter” accounts for 32.720% of the weighting in the CPI calculation, per the table on the right above — and again, that’s certainly the right number for what Americans spend each year on rent and mortgages.

However, for the smaller segment of America that is making a first-time purchase, as opposed to making an annual lease payment, the segment that might be in the 30-50 year old bracket, the same segment that has to navigate the costs of their children’s education, whose cohort represents only a small fraction of the total population in any given year, they come face to face with a one-time expense that makes their savings disappear, magic trick, rabbit goes into the hat, no investing, no wealth-building for you.

Thanks, that’ll be $1,358,500, growing at 8-10% per year.

Of course, the CPI only includes actual expenses, not considered expenses, so if you think about buying a house but decide not to pull the trigger and blow your savings out, then you’re not going to show up in any stats. You’re invisible.

Come back after you’ve collected another 10 years of wages. Try not to have a heart attack in the meantime — I hear 50 can be a tough milestone to reach.

Spot the odd way out.

Up And To The Right

All these graphs with stagnant and declining lines are quite depressing — surely costs can’t be the only thing that’s grown faster than GDP?

But of course, not all of these purchases are made with cash outright, with equity, with wealth. Down payments fund mortgages, interest doesn’t even accumulate on college loans until graduation (how kind!), medical expenses can be deferred until after your life is saved and you’re back at work. 

America is a place where you can defer payment today, attempt to build wealth and equity in the meantime, and make payments at a later date. Our system loves debt because it gives those with capital an avenue to invest in people with aspirations and drive, and people with aspiration and drive find they often need that capital to fund their (ever-more-expensive) ventures.

So we come, finally, to debt in America.

Consumer Credit Outstanding up 50% from its 2008 high — GDP up 17% over same period

consumer_credit.png

Outstanding Mortgage Debt recently surpassed its 2008 high…

mortgage_debt.png

Student Debt up 132% since Q2 2008, now $1.5 Trillion…can you spot the recession?

student_debt.png

Whence the Debt?

And to bring this full-circle, I am reminded that Debt does not come from the ether. Someone must “buy” the Debt, someone has to give you the loan.

If nobody was there to take the other side then the whole show might grind to a halt, and we almost had that happen in 2008 and nobody wants to go there again.

This time, though, the loans aren’t “bad”. SUBPRIME echoes in the mind of everyone who listened to the news any time from 2008 to 2013, but don’t bother fighting the last fight. We’ve learned since then (probably). The euphoria, the crazy loans, the risk taking, it’s all been tightened up a bit (I’m told). Dodd-Frank might’ve done something, although I hear some of it has been repealed now. I’d like to have an opinion or at least a hot-take, but it’s 2,300 pages to read the original version and ain’t nobody got time for that. Especially not members of congress. That’s pre-2008 thinking anyway. The Old World.

In our New World lenders only ask for EVERYTHING from those who can spend 10 years earning it back. Nothing subprime about it. And they look under the skirt at all the checking accounts, just to be sure.

Pictured: definitely not the end-state of the game.

Pictured: definitely not the end-state of the game.

And just in case things do go tits-up, the banks still have $1.8 Trillion on their books in excess of what they are required to keep by law. Just in case. 

Sometimes, in my chocolate-and-tea-fueled conspiratorial moments, I wonder who really controls our monetary policy now, the Fed or the private banks, given that such a huge cash balance sitting in excess reserves likely makes private banks somewhat impervious to rate-changes. Thankfully, much smarter people than me already thought of this and the New York Times helpfully explained earlier this year how the Fed changed its method of control:

Before the crisis, the Fed raised rates by selling bonds to reduce the availability of reserves, which banks are required to hold in proportion to their holdings of customer deposits. But banks now hold plenty of excess reserves. Rather than reversing its bond purchases completely to drain those reserves, the Fed instead decided to raise rates by paying banks to leave reserves untouched.

The Ben Bernanke himself helpfully explains this New System for a New World in a short essay of his here, if you like reading about macroeconomic policy but missed the memo.

For What, the Debt?

Why does any of this impact the middle class? Because it’s important to know where the debt is coming from in order to evaluate what it’s being spent on. Per Big Ben’s essay, banks don’t have to be desperate and reckless and wasteful with their deposits anymore — the Fed has them covered to some baseline.

Which means all this debt piling up faster than GDP in the charts up above — that isn’t some bubble waiting to pop. That isn’t desperate money chasing reckless profits — that’s the last battle. This debt has been calculated, the loans have been weighed, and something obvious has been rediscovered: the productive class in America can bear more. A lot more.

If you think this magical ride plateaus at the rational maximum value of an education (or a home or medical care), you’ll enjoy learning about Dollar Auctions.

The New York Times also reported this week that “The Student Debt Problem Is Worse Than We Imagined”, explaining that default rates have risen — particularly at some unnamed “private-for-profit” institutions, which is of course true and bad and also misses the point. Because what they can’t show you is Default-Rate-by-College and Default-Rate-by-Major.

1,845 private 4-year institutions in the US? Can anyone name 200?

Here are the US News and World University Rankings and College Rankings lists, which are based on a mix of hard data and tea leaves, much like my own writing. Ignore the dispute for a moment about whether your college is #1 or #10 or #30 or #50 and you might notice that the actual rankings themselves stop at #223 and #168, respectively for universities and colleges. The rest apparently don't merit a ranking, even in our society driven by putting numbers on things.

Wayne State University ranks in at #223, losing the seven-way-tie for Worst Ranked University in North America thanks to the Alphabet. In-state tuition is apparently $13,278 (plus all the other costs associated with being a student, housing, food, books, etc). The average salary for graduates with <5 years of experience is $48,800, rising to $88,300 for graduates with 10+ years of experience.

And this is the WORST university we give a ranking to? A $309,000 estimated return on investment, not-adjusted-for-major. You have to visit Payscale, click “See Full List”, and scroll past 1,752 colleges before you find one that doesn’t have a positive RoI — not-adjusted-for-major.

The Kids might not be All Right, and it might take them much longer than their parents to build any wealth, but the Debt is going to be just fine.

Translation: The cost of a degree in STEM or business ought to go up $3.4 million, discounted. Kids: Make smart choices.

Translation: The cost of a degree in STEM or business ought to go up $3.4 million, discounted. Kids: Make smart choices.

What’s the Solution?

To the cost disease? To the removal and delaying of wealth from middle class Americans at every major step of the ladder? To the systemic problem? To inflation of 2% for both the rich and the poor, and something-that-isn’t-inflation-but-massively-wipes-out-wealth-and-lowers-purchasing-power for the middle class?

I don’t bloody know.

But the solution on a personal level, for you, for me, is crystal fucking clear.

Preferably without dying. But wealth compounds, so the risk is worth putting some stress on your body.According to the American Psychological Association, chronic stress is linked to the six leading causes of death...”

Thus Moloch. Thus War: “won by those who sacrifice everything to achieve victory.” Shout out to Kratos for that one. Thus the price of a college education will rise further, as we all sacrifice current savings and future income to take the next step on the ladder and hopefully begin compounding wealth before our peers. 

I paid off my loans in just two years, which means the college and the bank missed out on earnings and my MIT degree was underpriced by 3-8 years of expected earnings (pre-tax, because you can pay these debts pre-tax unless you make over $80,000 a year...oh, right).

Multiply 3-8x if you're a bank and want to see what you missed out on

Multiply 3-8x if you're a bank and want to see what you missed out on

So long as the debt is there to fund it, or the surplus wages there to support it, the show will go on. This is the struggle of the middle class in America today. It’s not the only struggle in the country, nor even close to the worst one. There’s nobody behind it, no grim cabal to blame. But it is a struggle, and one that seems to evade stats and articulation and empathy and sympathy and an escape. The only enemy is your failure to beat the median quickly enough and by enough standard deviations.

Success only begins when you build enough wealth to pay for:

  • Your own continuing education: $0 — $125,000

  • A home for your family: $750,000 — $1,500,000 (depending on how far you are willing to move from a major urban center — but don’t move too far because the wages go down too)

  • Education for your children: $180,000 — $325,000 (start at the bottom of the range if your kids are 18 today, move up accordingly)

  • Medical expenses: $50,000 guaranteed between childbirth and insurance, more with pre-existing conditions or any large event

  • Your own medical care as you age: $0 — $LOTS

Adding all those up, the bottom of that range is $980,000 in cash for one-time expenses and it tops out at $2,000,000.

Just to get to back to $0 balance.

Competitive Spirit

Of course, you can perform standard-deviations above the mean, fulfilling 50 Cent’s dream, dragging the mean-or-median wealth ever so slightly upwards along with you, and thereby raising costs for everyone else who couldn’t make it. One standard deviation and you get Avocado toast in your twenties. Two standard deviations and you get a nice car. How many for a home before thirty? You’d have to be The Six Sigma Man, as The Six Million Dollar Man becomes The Six Billion Dollar Man because we all know $6,000,000 isn't enough to build a superhero anymore.

Or you could perform standard-deviations below the mean, be left behind in a world where there is slim hope of real wealth, aspirations are more about next month than next decade, but at least inflation for everything you care about will be about 2% every year. And, once more, you’ll be raising costs of any major services (Education, Housing, Medical) you do use for your peers at the median because someone has to pay.

The result is that the solution on a personal level, “Get Rich or Die Tryin’”, raises the bar for everyone else no matter the outcome, and is a driving force behind the systemic problem of personal wealth-building that it is trying to solve. And America’s middle class has been an absolute workhorse, and it has beaten the median, and it has raised the bar higher and faster than almost any other nation has ever raised it in history. 

That’s not a coincidence. The promise, the deal, was almost unheard of: “work hard, work smart, create value for society, and you’ll become wealthy, your own master for all eternity.” The slave works for his owner. The indentured servant for his master. The communist for everyone. The American for himself. It’s a powerful idea, a powerful motivator, and a powerful system. A grand competition, where advancement can be achieved through merit and competence — so don’t be shocked when those with merit and competence flock to compete. And they make perfect competitors.

For those who have forgotten their first Economics lecture:

Perfect Competition: “In a perfect market the sellers operate at zero economic surplus…This equilibrium will be a Pareto optimum, meaning that nobody can be made better off by exchange without making someone else worse off.”

Oh. Right. That sounds fun. What does that look like, again?

perfect_competition.png

 I’m not saying we’re there. Middle class people still get to build wealth — economic surplus — when they sell their labor in America if they can beat the median a little. College still has a positive RoI. The median American can own a house and pay off the mortgage and still have savings left to spend on end-of-life-medical-care if they’re willing to move suitably far from centers of employment. This isn’t Perfect Competition. But if you squint hard enough, you can see it from here.

That’s the race and the clock is ticking for you and your great-great-grandchildren. The starting pistol fired in 1776.

Disregard Emails, Acquire Currency

Wealth compounds, but wages don’t grow exponentially. You’ve got to start that compounding yourself, the sooner the better — which is why we taught everyone in school how important this was and how to balance their budget. Or at least why we taught them that getting into college was the most important thing in their life, anyway. Those are about the same, right?

Want to hear a joke?

Knock, knock.

— Who’s there?

The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job.

— You realize I’m still paying you back those student loans, yeah?

We tax income, not assets and liabilities, and anyway you can pay your debts to me pre-tax unless you made one-standard-deviation-above-median income this year

— But if you let me compound wealth I’ll be able to pay the loans back faster!

We’re not interested in that

Here’s another:

Knock, knock.

— Who’s there?

A recession. Your wealth is reset to zero.

— But I have to pay for the kids college this year…

Don’t worry, I looked under your skirt and saw you earned a healthy income from wages last year, so I’m sure you can afford it. Besides, last year you said your house was worth a million dollars!

Or an old classic:

Knock, knock.

— Who’s there?

Medical conditions! Your income means you have to pay out of pocket

— But doesn’t my one-standard-deviation-above-median income mean I’ve paid more in premiums to cover it?

What premiums? Oh. We’ve reset those too. You should’ve said you had conditions!

Of course, all these costs can only scale so far. The middle class must be able to fund them — and since wealth in America is distributed exponentially, what’s all-consuming for the middle class is peanuts to the wealthy. So Wealthy begins with a race to $2,000,000, adjusted-annually-to-the-cost-of-education-housing-and-medical-expenses.

See you guys at the finish line.

wealth_compounds_wages_dont.jpg