A Time and A Place

When I was young, I grew up playing civilization games, and watching my dad play them. I have always been a fan of grand strategy, politics, economics, and technological advancements. I was fascinated by how in human history, even after inventing all the pieces and discoveries required to make certain advances, how slowly technology has advanced until recent history. My father, when he played nearly any civilization game, plays the same way, he goes for early science, and then typically goes for the ability to use a republic as his form of government, then goes for a transition into democracy. When he plays, he plays as America, or as Rome or Greece. It doesn’t really matter what he does around that, or what method he uses to win in the end, but that’s the path that he goes down nearly every time. I always thought that it was fascinating that his ideological beliefs led him to never touch communism, fascism, monarchy, even in a video game, when it would lead to an advantage in the strategem he was using to win.

Ironically, this is definitely a form of toxic nationalism, which he would also stay away from, but he would certainly say that a democratic-republic is the best form of government, hands-down, no contest, and that any other form of government is in some way fundamentally wrong. Of course, when I asked him about these other forms of government, why they were wrong, or did not work, I would get non-sequitur answers, such as “because the communists in China massacred a bunch of people”, or “because they starved their people”, or “the Italian fascists were the bad guys of WWII”. While I could see that those governments did bad things to their people, it just never really explained my fundamental questions about their governments, which was how they functioned, and how their functioning could be “wrong” or “bad” in such a fundamental way. To me, all forms of government had sinned, and that governments like the USA’s were also responsible for atrocities.

It even seemed that he couldn’t accept a really basic cognitive dissonance that he had about monarchies and the monarchical language with which he would describe God, and even when I would point out this inconsistency, seemed immovable about keeping both true, that God was a good king, but there are no good monarchies, and that the system was inherently evil and tyrannical. I could never understand the fanatical devotion to his ideal of democracy and republicanism, which has morphed into something unrecognizable.

The inconsistency however, sparked my journey to look back through history, to find what actually makes a good leader. Who were the “good kings”, the “benevolent dictators”, and the “evil prime ministers”? What makes for stable government? What prevents corruption? How do we even judge such things through the lenses of history? What causes empires to fall, and for famine to overtake idealism?

I believe that the best form of government for a country is based on a combination of factors: the available resources, the level of infrastructure development, the level of technological development, and the objectives of the government. Each form of government has its drawbacks that can put it at risk of structural collapse, but with the appropriate combination of applied concepts, most of those risks can be mitigated.

For example, in a government that wishes to have a highly educated populace, with a number of high-value services, such as scientist, doctors, lawyers, programmers, engineers, and others, you would need to have a government that allows for the free exchange of ideas with few barriers, and would allow for educational support to increase the likelihood of any given citizen going into one of those professions. However, the free exchange of information allows for common people to organize, a drawback for a single-power state, as it allows for the creation of rival factions.

On the other hand, if the goal of the state was to generate wealth, you would want to have a government that strongly considers the interests of corporations, though without appropriate redistribution, and the ability for some upward mobility and support of the working populace, you could easily end up exploiting your working class too much. This is often the temptation, to drain resources in the short term, but this is always at the expense of long-term growth, and a nuanced understanding of economies tells us that poverty is a drag on society, and that you actually want economic policies that pull people from poverty to a middle-class standard to keep them content, and to ensure that they are more productive.

Because of this, sometimes the desires of a state and the ability of a state to meet those objectives are limited by the technology available. A government that had some flaws in it, such as difficulty managing bureaucracy, or distribution and allocation of resources across a state, or the necessity to divert segments of the economy towards defense, could work at a different point in history, where the circumstances have changed, such as technology, location, surrounding cultures, and societal norms. An attempt at a centralized state may work on a very small scale, but become impossible to manage without the advanced infrastructure of reliable globalized transportation that has only recently become available by land, air and sea.

It is through this lens which I look at the histories of these political empires, on scales large and small. To see what works, and what does not, and to consider counterfactual scenarios, where we can consider what things could have made it work. It is a somewhat dangerous task, I must admit, to ask questions like, “What would have made Mao’s communist China work better?” Because we must also consider the negative consequences it would have had for our own way of life now, such as a much earlier rise of China as a global power had it had access to the better agricultural and manufacturing techniques of the west just a few decades earlier, or if the state had expanded its educational system earlier, or simply had a better system of distributing resources. Would communism have had the power to sweep the globe?

It is my hope that by looking at the mistakes of governance and their successes through the ages that when the next wave of governmental experimentation occurs during the next wave of frontier exploration (space colonization of course), that we will have a more complete view of governing, and will be ready to evolve governance to its next stage. I predict this will be a hybrid model of governance which will include technology and human oversight as a part of its fundamental functions.

Technology and Integrated Education

I’ve had this idea for a long time now, but really only recently had the language and the knowledge to put into words the idea. It is part of my overall treatise on power and core governing principles, but as I have difficulty getting myself to write long books all at once, a series of notes and essays to later be compiled is a much more straightforward task.

I have for a long time thought that the US system of government was flawed. When I was younger, in the early 00’s, I was excited for a future where we could use technology to assist in governance, and could eventually make life better for everyone. Now, I still desire that future, but I have simultaneously become frustrated by the amount of technology that we have continued to develop, but still have a massive lack of technological integration into our government.

I even understood, back then, that technology has vulnerabilities, and that developing a complex infrastructure to incorporate into society would take time, to work out security, and to perform testing. The systems would need to be well-planned, so they could use cutting-edge technology at the time that would, with some effort, be able to be upgraded in the future, or would be able to be effective before becoming outmoded for a long time.

Alas, there have been few public works projects on this scale, with the most advanced typically being attempts at large-scale transportation infrastructure (trans-continental high-speed rail and the hyperloop are notable examples of this).

By now in our history, I would have expected for technology to have radically shifted how governments run. Now, the coronavirus is pushing some aspects of governance and society at large to be moved forward by technological needs, this fast pace of change carries with it great risk, as there is little time to deal with security risks, or to appropriately fund public projects to deal with the issues that we are faced with, instead being forced to rely upon the solutions that corporations have provided, cobbling together a patchwork system of applications, and systems that are becoming increasingly cumbersome and incompatible with each other.

A good example of this is education. I know that I am a pretty decent student when it comes to self-directed learning (it’s how I’ve managed to continue learning so much without access to formal classrooms), but I know that many of the people that I have met my age are not. I know how to find information that I am searching for, and even often how to get around financial barriers to that information, and I am so relentlessly curious that I won’t stop searching for information until my questions are answered, including those I didn’t know that I had until finding the information that answered them. With the power of search engines and the open internet, a person could become an expert in a particular niche, diving into their topic of interest, and gain a high-level mastery of it in just a couple of years, without ever setting foot in a classroom. Without some sort of guiding curriculum, most people’s educations’ would be limited to their areas of interest, leading to what would be an incomplete education, but these are simple considerations that are workable.

When I was in middle school, I was part of a magnet program for rocketry, but the program’s approach to interdisciplinary studies was genius, and I could see it, even in it. Across each of our classes, we had connections to each of the other classes, and at the end of each quarter, had an integrated project, a single project across multiple subjects that connected the things that we learned into something practical and interesting. One example of this was our pyramid project. I don’t quite recall all of the elements of the project, but I recall that it involved physics and engineering to make traps, a presentation that explained our pyramid in the context of history, and the pyramid had to be made to specific mathematical specifications. We had a number of these projects over the years, and each one brought to life the things that we were learning, instead of just learning a series of facts for each class, separated by subject and intention.

I knew that this was important. I had been interested in psychological hacking at this point in my life, and had been doing research on mind hacks, figuring that learning these hacks early in life would allow me to leverage them for the rest of my life. One of the things many of the resources I read taught you is how to create mnemonics, as they are often described as incredibly important tools for remembering things. You connect a new idea to an existing idea, to create multiple neural pathways to that idea in the newly created memory in your brain. Many of the things I read created arbitrary mnemonic systems that, while useful for remembering specific facts, I found became actually cumbersome. However, after reading enough of them, I found that along with reading some more reputable published sources on learning and education, I was able to get to the heart of the issue, and the jigsaw pieces fell into place.

Everything is connected. All of it. This was further reinforced by my interest in economics, and how I realized that economics ends up being a study of everything, as everything, from charity work building farms in Africa, to high-energy physics research, to steel production in China, to the latest viral video trends and creator content, is all within the realm of economics, and connections can be drawn between these elements.

Students don’t care about their learning when it seems that there is no connection to their everyday lives, or their understanding to how a piece of information will be useful in the future. Now, it’s not that those facts won’t be useful, and in fact, things that I thought would be completely useless to me in my adulthood have ended up being surprisingly useful, but if you had given me a few examples of where something like this is actually useful, instead of simple, silly, and unrealistic word problems, or just insisting that it would be useful eventually, I might have been able to more easily integrate the piece of information, instead of rote memorization. Also by connecting pieces of information that are connected, you build a more complete fundamental understanding of the world that is easier to build on.

I could see that the future would be a combination of integrated learning to create a broad but solid foundation, with more advanced integrated learning techniques being able to convey more advanced information at a younger age, we would be able to compress more education, with the other piece being narrow, interest-driven learning, essentially allowing children to begin finding their field of specialization early on. Unfortunately this has not happened, and while the amount that kids know by the time they get out of high school has certainly increased from where it was 20 years ago, much of it is not the result of more advanced curricula, but by absorbing things that they learn on the internet, the focused self-directed branch solely, and not guided by the educational system itself.

There is much that can be done to streamline costs and even the educational gap between wealthier districts and poorer ones, notably a free federal education system. Such a system, I imagine, would be able to be enrolled in completely digitally, with in-person/online supplementary facilities, perhaps placed in already existing infrastructure, where students could advance at their own pace, which would include classes and educational resources for students from K-12 and would include all of the courses required for at least an undergraduate degree, and continuing education for that degree for free through this federalized digital system, and would allow for students to move at their own pace outside of the typical fall/spring school year.

Having a “federal college” would be difficult, you need to create the classes, the curriculum, the paths of advancement, the exams, standards, and determining the requirements for degrees, building the digital infrastructure, and having the supplemental human resources for the program to assist children. Of course this college would probably be seen as less reputable, at least off the bat, so other schools would need to be phased out, simply making it an option for students. By having a digital infrastructure like Blackboard that students could access (accommodations including devices and basic internet service should be provided to low-income families), you provide more broad access to education.

Another advantage to having access to digital resources, and to allow for students to go at their own pace, you can track how quickly students are moving through courses each year, you can analyze when they are doing school work, and adjust resources. This also gives the federal government access to a depth of information on their future labor force, allowing them to more accurately project what the workforce will look like in the next decade, allowing for more informed policy decisions to be made. It can also be used to analyze how students prefer to learn. Do they do more work at night? Do they take the summer off? How quickly do they move through education if unimpeded by the barrier of the school year that we put in place to create even “batches” of students, like a factory.

The real test of such a system is how young will the average age of a degree-earner be? Even with increasingly difficult and dense curricula early on in life, we could still see the average age of a degree-earner drop steadily (or quite quickly for the most advanced students). Without the learning loss of summer and winter breaks, we could see people regularly earning their bachelor’s degrees by the time they are 18, and those who still seek it, but are slower, instead of being forced out of schools, can take things at their own pace and still find success with few financial barriers, and would provide an opportunity for those who were blocked out of higher education to catch-up, or to gain access to ambitions that were seen as out of reach.

Some Knock-on Effects of COVID-19 to Look Out For

So as the coronavirus COVID-19 has been declared a pandemic this week, and has now begun to severely affect the global economy. Sure that today things seem to have started to recover just a little bit from their lows this weeks. However, we should take that touch of green with a grain of salt, and should consider some of the other things that are going on in the economy before saying that everything is going to be fine. The first thing that we need to look out for is the employment rate, which is likely to fall in the following months due to the lack of revenue being pulled in by various sectors of the economy. This would be something that could be managed if there weren’t other factors that we were pushing against.

The main concern of mine is the sheer amount of  debt that exists on both the consumer’s heads, as well as the record amount of corporate debt that has been taken on, a lot of it at junk quality, forcing higher interest rates for companies to have to repay. At the same time, many of the major companies are trying to brace investors for bad news for this quarter at least. Of course, we all know what goes first on the balance sheet when profits are squeezed, labor costs, resulting in fewer jobs, and fewer hours worked for employees.

Now, when people who need to work over 40 hours a week lose their jobs, or whose hours are cut are forced to contend with the huge amount of consumer debt that already exists, with roughly a third of it already in default, and on top of that, the new method of measuring FICO scores is set to come out later this year, it will become impossible for the consumers to, at-large, finance their lives. This will make keeping their heads above water on things like car payments, mortgage payments, credit cards, and even necessities difficult for people to afford.

Now, the worst of these effects are going to be diffused through some parts of the economy, and will take some time for different levels of the economy to feel those effects, but we can start to see the major impacts past share prices once the earnings reports for Q1 begin to roll in for major corporations, especially those with large manufacturing bases in China. Once these reports roll in, companies will need to start taking actions to keep company values afloat, cutting jobs, hours, reducing production capacity, closing factories, selling off assets, or perhaps actions that could anger shareholders, such as  suspending dividend payments, though the fear that shareholders inspire may prevent that last action from being feasible in most cases.

Things are going to get worse before they get better, and the effects just from the beginning of this year to now may not be truly felt until late summer/fall. If you are a poor consumer, I highly suggest saving what you can now, and buying extra canned goods for the next few months of shopping trips, because there are so many people who even a small interruption in their work schedule could result in economic disaster for their household. Good luck out there to everyone, stay safe, and wash those hands!

Some thoughts on the Coronavirus and China’s Economy

Well, it seems that the coronavirus is going to have more impact than what a lot of people initially suspected. Many people started by comparing the outbreak to that of SARS in the early 2000’s. There were a few differences in what set the two apart that are really important though. First, there is the rate of infections from COVID-19, which is significantly higher than that of SARS. Secondly, the rate of deaths from the new virus is significantly lower. Third, the incubation period and the infectious period  for this virus seem to overlap. Together, this makes for a virus that transmits quickly, is transmittable even if a person is not yet showing symptoms, and is capable of being spread easily. Now, the low death rate for the virus is certainly a thing to be thankful for, as a virus with more severe symptoms could have resulted in many more lives lost.

Thankfully, it seems that the virus is on the decline, at least slightly, though removal of quarantine restrictions could cause the rate of infections to bump back up. As a result of the quarantines and sickness though, there will be economic consequences. Of course China’s GDP growth has been speculated to be cut by nearly 3%, down to less than 5%. Of course, this would still be reflecting the state-given numbers. If we further adjust that the inflated numbers that some people suspect are boosted by up to 5%, we can see that in reality, China may be sitting near or below 0% average quarterly growth by the end of 2020. This will unfortunately have knock-on effects for the global economy. We’ve already seen reduced earnings estimations from a number of US corporations, notably Apple. Reduced earnings from service based businesses, especially theaters, being crowded public gathering spaces where illness could easily spread, will be hit particularly hard, as it will be difficult for those businesses to make up for the lost income during this time with consumers. As a result, the global box office numbers for 2020 have been lower proportionally to their domestic takes than what is typical, by nearly 10%. Usually a release in the US, upon international release will earn its domestic gross once more plus 10-30%. So far this year, the percentage is nearly 50-50 for foreign and domestic gross. This translates to tens of millions in lost revenue just for the US film industry.

 

Other industries, such as steel and manufacturing sectors will be hit by the virus, but at least have the ability to recover some of the backed-up production by performing overtime work and increasing capacity to meet the demand, though the longer that the quarantines remain in place, the more difficult it will be for production to catch up. Today’s more flexible supply chains mean that companies can more easily move their supply chains to other low labor cost countries, and will do so to a greater extent, the longer that this goes on.

First, the Chinese companies will absorb the first line of costs, then, the costs that they cannot absorb will be taken on by the US corporations further down the line, in an attempt to not raise prices, which can make margins very slim, before passing the remaining costs onto the consumers themselves. This process will take some time before US consumers really start to see the effects of this stateside. This fortunately means that with the exception of the already hurting US manufacturing sector, and some vulnerable service industries, the US economy likely won’t really feel the effects of this until late this year. However, while the impact that this has overall on the market and the economy might not be huge, it may push the US economy over a critical tipping point that we are approaching, along with the building consumer-debt and corporate debt crises that are looming on the horizon, we may find ourselves at the end of our long-running economic expansion.

Now, China has the biggest capacity to save their own business sectors, and by proxy, parachute this slow-rolling economic disaster. The easiest thing that they could do is subsidize businesses that were shut down during the quarantine. This could be direct subsidies, or it could come with some type of strings attached, but it is already clear that doing nothing would not only hurt the Chinese people and economy, but the downstream effects could be slowing the whole global economy.

 

Anyways, it had been a while since I had contributed anything to the global economic conversation. I can’t gloat about my correct predictions if I don’t write them down!

 

The Paradox of Labor Specialization

In economics, students are taught about the idea of specialization of labor, probably in their first few weeks. It is a concept that in principle, makes sense to us as people, and seems true on its face, but as we have advanced in our modern world, hardly applies on the micro or macro scale. In fact, the “resource curse” that economists use to describe countries’ economies that rely on a single, or handful of industries seem to fly in the face of the virtue of labor specialization that Adam Smith touts in The Wealth of Nations.

We are taught that it is better for countries to focus on the specialized production of a resource or product, and to trade that product with other countries than to have a diverse economy that produces many goods, and should then rely on trade with other countries to produce the most good for both countries. Similarly, on a micro-scale, Smith uses the production of a number of goods to illustrate the productive power of specialized labor in assembly-line type production of goods, comparing the ability for a single person to produce all stages of a pin, and the ability for a person who only completes part of the pin to perform those tasks on hundreds or thousands of pins per day, increasing their individual productivity.

In our modern era though, we have seen enough specialization that many people have become overly-specialized for their specific work, and that we expect too much specialization from people in their fields. This is in contrast to people who do multi-disciplinary work, which has become more important, but which is still severely lacking in attention. An example of multi-disciplinary work that might be useful would be technology ethicists. To create such a job, you would not only need to focus on classes related to engineering and technology, but also to philosophy and ethics. Computer science is another field which would be a good candidate for broad multi-disciplinary study. As advances in the field of programming make it easier for people to learn how to program, and to easily create more and more powerful neural networks, the ability for those to be applied to other fields depends on someone’s knowledge of both of those fields. A text analyzer for certain literary works would be undoubtedly useful, but would require someone who is also familiar with the type of analysis that the project requires. Both to help determine what exactly it is that they are searching for, but also to verify the results of the study.

On the scale of regional economies, what we have learned is that while some areas produce more or higher quality resources than others, or may be more beneficial for a particular industry, that an economy that wholly relies on a single industry is particularly vulnerable to even small disruptions in economic conditions. Things may of course be good while the going is good for their resource, but once the global winds shift (and they always do eventually), then the course that the country goes down can quickly fall apart (see Venezuela). Of course the solution is to diversify economies, and to, while the going is good, to be fiscally responsible, and to be good stewards of the bountiful harvest, so that when the price of oil plummets because there was a spill, or bad trade conditions, that those most affected can be spared the worst of those effects, and that the country can maintain stable rule over its citizenry.

Now, how would we do that, and where do we do that? First we have to reckon with automation. As automation continues to rapidly get more advanced, we’ll need to realize that many jobs that involve physical labor, or certain types of intellectual labor will eventually disappear. As this occurs, more of the uneducated workforce sector will be pushed into service industries and entertainment. This can be dealt with by encouraging those industries, or also by facilitating more higher-level education for their citizens. High-level intellectual work is also one of the fields that at least for now, that seems to have the ability to provide large returns on investment to an economy.

Even on the scale of the individual, however, we no longer want people who specialize in a single task, since automation could easily put the single task out of commission. Instead, our modern workforce needs to specialize in learning new skills, and a large variety of skills, so that when single skills or tasks are automated out, the worker can adapt to the new work, and not be displaced by becoming obsolete. A person who specializes in a single task is now seen as not being flexible enough in a modern environment which prizes flexibility. Now, increasing access to education would also alleviate this problem, as currently, people who are already behind on the skills necessary to function will continue to otherwise fall further behind. Also changing the types of things that we teach, teaching students to think flexibly, and to put more focus on creativity by fostering cultural and artistic expressions in the public. This would also feed more potential talent into the entertainment segment of the economy, helping us move towards that goal.

To do all of this though, requires a recognition that our education system in the US is not what it needs to be, and that fixing it will require a lot of money, and real effort to overhaul our workforce pipeline. We must recognize that if we do not do this, we risk foreign powers overtaking us in the long run, severe labor mismatches for various fields, and difficulty sustaining growth and innovation.

The State Of Education Is Unacceptable

Skillshare, The Great Courses Plus, WikiHow, Coursera, Khan Academy, LinkdIn Learning. It seems that every few weeks there is a new learning site to help master some new skill, learn some new subject, or make yourself more marketable in an increasingly skill-intensive job environment. Just getting a degree isn’t enough, you need experience, and even if you have experience, you may not have the right experience. Sometimes people want to learn something new, or refresh an old skill, or catch up on something that they missed, but for a lot of these companies, their model is to supplement the university learning process, with many of them attempting to gain credibility, and possibly even accreditation.

 

It highlights that there is a huge problem in the American education system in our modern era. Our schools don’t teach children the right information for our modern era, continuing to teach rote information instead of more flexible skills that will translate better down the road. We tell our children college is the only way to truly ensure that you have a chance at succeeding in life, but once they finish college, that is if they even finish, all they are left with is crippling debt, and unsatisfying service work, because they cannot afford to do anything else.

 

At the moment, college is just still so inaccessible to so many people. Now though, there is a large labor mismatch in the economy that only threatens to grow wider, and no flexibility in the labor force to meet it. The expense of education has become exorbitant, even in our internet age, when theoretically, a person could study an entire degree’s worth of coursework from their phone, and receive no recognition for their desire to better themselves.

 

Online colleges, such as the University of Arizona Online provide full undergrad courses where one can finish a degree, however, this is still at an exorbitant cost. Even the cheapest option that you can get, without aid, you can still be paying well over $100 per credit hour. Even this amount, which may seem minuscule for some, represents more hours of expense than many can spare. This along with the transportation costs can make college simply inaccessible to some, and for those who wish to return to finish, can present a high barrier to entry.

 

This raises a quite simple and obvious solution, which is to establish a national online university system, with the goal of providing free or nearly free continuing education for anyone who wants it. The ability to gain an education that can allow for them to perform their desired work, better work, or to move from one type of work to another due to automation, will be necessary to successfully navigate the murky waters of the future economy. Of course, this by itself certainly won’t be enough to stem the tide of problems that will be caused by the advances of technology in the next few decades, but taking such a step would not only quickly increase the quality of life for many who desire to be students now, but will act as a bulwark against some of the worst effects of poor economic conditions in the future.

 

A single national online college system certainly would not be able to completely replace the traditional educational institutions that are already in place, but they could certainly help meet some of the demand for education, reducing applications to universities overall, and hopefully causing those increasingly expensive institutions to bring their prices more in line with what students and their families can actually afford. An online national university system would be able to cut down on the administrative overhead that is often involved. Of course, dealing with student tutoring needs could be difficult, as the service would likely become highly used quickly. However, as our ability to create AI has advanced, we should now be able to create AI tutors that can handle most basic coursework, and then still have some number of humans who can handle more advanced needs.

 

Similarly, a national university online, would provide the opportunity to create a new curriculum, and to have an all-digital set of learning materials, further reducing costs to students, as books for a single class, especially those related to math and science can cost upwards of $200 per student. Finally, it will hopefully reduce the power of private interests in education, which at the moment have themselves embedded at every level of the educational system, raising the costs to private citizens.

 

Once again, as I wrap up, it seems unreasonable to me that with how far we’ve come, that this still has not yet become the new normal, and the creation of such a system would help bring the US back up to speed in education with many parts of the modern world that are pulling ahead of us in that department. If we fail to cultivate our intellectual capital, we risk losing out to other countries, such as China, and eventually, losing out to technology itself.

A Deal With The Devil?

So I’ve been thinking about Trump calling for China to help him dig up dirt on his opponents. I predicted that we would discover additional countries that he attempted with, and China certainly was near the top of my list of guesses, though I’m still waiting to hear that he asked MBS to “jokingly” take care of one of his political opponents. Might be waiting for once the Democratic primary is over.

In any case, I think that China giving into Trump’s request to manufacture dirt is the wrong move for China. Trump will of course float the idea that it would be a bargaining chip in a trade deal, though it will be through his mobster language that is incredibly transparent, yet allows for Republicans to pretend it’s opaque. China shouldn’t fall for this though, as first, these things tend to get out, and may damage international standing, which China is still working hard on accruing, and second, Trump will not follow through on his promise, even if the Chinese managed to get it in writing, or him saying it directly.

There is a terrible stereotype that ALL the Chinese do is plagiarize from others, which has some truth to it, but isn’t all there is to their technology. This however, is an opportunity for China to put that stereotype to use. China has been practicing image maintenance through the use of state-owned Twitter accounts on issues like the Hong Kong protests and the Uighur detention camps, but if they were to copy the Russian methodology, as conveniently laid out in the Mueller Report, but with ten, or a hundred times the funding (still a paltry $10 million for such a large economy), they could employ a propaganda hurricane that could sweep through the Western media, and possibly damage Republican enthusiasm enough to allow for at least presidential victory for the Democrats.

So, while Trump’s inability to follow through on contractual agreements is an excellent reason not to support him in this way, why would they specifically want a Democrat to win in 2020 over Trump? First of all, whoever it is will make efforts to repair the global economic damage that Trump has done by doing things like stabilizing trade. Secondly, it will give China continued access to our market for their technology, and may still be with enough time to be competitive in the U.S. Third, the continued economic integration with the west will allow for China to continue exerting its influence on American corporations, with the most important of those being producers of American culture, which is now conveniently and explicitly more pro-Chinese, and is exported across the globe. With a fractured global economy (you have to remember that China may force the states that it exerts soft power on to retaliate against America as well), China may lose its ability to hijack the influence of American media, and easily export their values through secondary level propaganda. Lastly, if the tensions escalate, scientific and educational materials that are produced in the U.S. may become inaccessible to China. Cooperative labs may lose their funding, or find that their contracts mysteriously aren’t given renewal for their funding. Exchange programs between the two countries may end, limiting access to new technologies, and stifling scientific progress across the board.

China, I know you’re listening, you’re always listening, so listen, I may have a whole different set of reasons to support a Democrat, and I may be incredibly concerned about the advancement of the authoritarian state in China, but that doesn’t mean that four more years of Trump is something that China actually wants, despite how much of a kiss-ass Trump is to authoritarians.

A Couple of Thoughts About China and Bitcoin

On October 25th, the president of China Xi Jinping  announced that China should seize the opportunity to adopt blockchain technology. Now this announcement came as a surprise to many, considering how tightly the Chinese government has previously cracked down on cryptocurrency transfers. Now though, it looks as though the Chinese have had a sudden change of heart regarding blockchain, but why?

 

Personally, this change came as no surprise to me. China is developing what I like to refer to as Laplace’s economic demon, a twist on the classic French though experiment developed by Pierre Laplace in the 1800’s. His version of the demon knew the momentum, position and spin for every atom in a room, or in the universe, which would allow for the demon to be able to calculate the state of the universe at any other point. My version of the demon is a little bit different. My demon knows every transaction made in an economy, which allows allows for the demon to predict where resources should be allocated in an economy.

 

Now the math for such calculating something so complex and multidimensional as the economy seems far beyond the predictive power of our current mathematical models of it. Additionally such a demon would require being able to track the amounts and contents of nearly every transaction in the system. A human may not be able to accomplish this (though economists certainly love to try), but I certainly believe that it is possible for artificial intelligence to be able to manage it.

 

Now what could an advanced, centrally-planned economy do? Such an AI could serve poor families household necessities, it could react to job losses to provide financial or food assistance to those families. An example of this would be a government version of Walmart’s grocery delivery service, but combined with the predictive power of Amazon’s product re-ordering recommendations. The government sees that you are low on groceries, and need assistance, so they send someone to your home with staples, while the AI searches through the economy to find replacement work for your particular skill sets.

 

To some, such possibilities may seem like a dream, but to others, it is a dystopian nightmare. The ability for the government to have a full view of every consumer’s discretionary spending  becomes problematic when the government decides that people aren’t spending money the way that they think the people should, and decides to interfere. Now, some people would say that such a thing would be impossible, or that even if it was possible, that it never could happen, because people would not stand idly by and allow for such a system to be put in place. It would require too much data, it would require a way to track nearly every transaction, and would require an intense surveillance state, the likes of which have been unseen by society.

 

Back to China, who is currently in the process of building this system. Now, do the upper elites in China already have this laid out as their plan? It seems fairly unlikely that this is the specific plan that they have, but it does seem that they are putting together all the individual pieces of such a system separately. Let’s step through the major steps that China is taking towards this goal, and how these steps could come together, shall we?

 

The first thing that would be required would be for the government to have the ability to observe its citizens as they live their lives, on a granular level, that would allow for any given citizen to be tracked wherever they go, as they move throughout the economy. Now, China doesn’t have a system like this set up across the whole of their country, but that doesn’t mean that they are not working on it. The Chinese government is currently testing the technology, and setting up the initial systems on populations that they want to suppress, most recently their large population of Uighur Muslims. They have begun by setting up an enormous amount of cameras on street corners, and placing mini police stands all over the place, creating a system of checkpoints that make it impossible to leave one’s house without being tracked.

 

Now, how do they track you specifically, instead of just having a general idea for your location? Between location tracking on phones, the camera locations, and the boots on the ground state agents, they can create a fine-grain map of movements, from your home, to the store, to your work, and of course where all of the people you care about live. China’s state facial recognition software may be on par with Facebook’s, or even better by now, due to the enormous amount of facial data that is being fed through the tens of thousands of cameras they use.

 

However, even with over a billion faces, and untold numbers of cameras, without sufficient knowledge of how to create the algorithms that process them, you would have an ocean of data, with only a paddle-boat to navigate it. Unfortunately though, the Chinese are working on the tools necessary to process this enormous amount of data with AI. For years, I’ve heard from people that the Chinese aren’t a threat because of the large amount of plagiarism in their academic work. Now this may have been true a decade ago, but the tides have changed, and the field of AI research has advanced enough that AI’s created in other countries have been able to create entirely new products. Who needs to be creative, when you can create an AI to do even that for you? China has opened thousands of universities in the past few decades, and is continuing to ramp up its production of AI research papers at a faster rate than any other country. It’s only a matter of time before the Chinese government takes this technique steps further.

 

Artificial Intelligence is unique as a field of intellectual study, and advancement, as AI acts as an intellectual capital multiplier, as opposed to many other technologies, which were labor capital multipliers. Assembly lines allowed for a single worker to perform the same specialized task hundreds or thousands of times faster than without the use of manufacturing equipment, but an algorithm that specializes in intellectual labor can invent hundreds or thousands of times faster than a human, and can create designs that a human mind would be far too limited to even comprehend.

 

This brings us back to cryptocurrency, and China’s adoption of block-chain technology. Of course it’s possible that it could allow for a more transparent economic system, but the possible metadata that could be collected by the state could allow for a whole new level of control, with absolute control over every citizen’s assets. No more cash in your mattresses. I think that those who like the liberal, or libertarian values associated with bitcoin, liberty, fairness, anonymity, freedom from governmental control, they should take this adoption of a new technology with a grain of salt, and be wary of where this may be headed, because if China manages to be successful, they will export their success to other countries.

 

Lastly, it is important not to simply dismiss China’s growing economic and technological threat. Simply because they are not as big of a threat in these regards yet, doesn’t mean they won’t be soon. These endeavors take time, and only now are the fruits of their long plan beginning to come to fruition. We cannot assume that democracy and freedom and capitalism will win the day simply by their own virtues. The twisting of Hong Kong’s capitalist origins, leveraged for the benefit of China has not produced revolutions like was guessed when trading was opened with them, nor did the introduction of the internet spread truth and knowledge as had been hoped. Instead, each became a tool for their agenda, and AI is simply the next step, and they know that if they can get far enough ahead on this, no one else will be able to catch up.

Technological Governance: Token Benefits (Encouraging Good Behavior)

It’s quite a mouthy title, to be sure, but the idea in and of itself is actually fairly straightforward. People work best under positive incentive structures, but setting up those structures in such a way as to encourage people to use them without abusing them is tricky. The benefits to cryptocurrency tokens though, is that you can pretty much put any restriction one could imagine on them.

I was considering the problem of roadside trash, and how much of a blight that it is, both aesthetically, but more importantly, ecologically. Part of me just wanted to pull over on the highway, grab a trash bag out of my car, and pick up some of the debris. However, I was presented with a number of reasons why it just wasn’t super feasible, the largest of those being that I did not have a trash bag in my car. Among others though were the sheer inconvenience of trying to pull over to park on the side of a busy, traffic-laden highway, and the one that caught myself off-guard, I had no tangible incentive, other than vague notions that my actions would “help save the environment”. However, that last reason, the lack of tangible incentive, gave me an idea. A cryptocurrency token, distributed to citizens, that had a unique property, it could not be used by the individual who receives it. A bizarre idea, to be sure, but here is the gist of how such a currency token would work.

These “Samaritan” tokens would be connected to contracts on the blockchain, which would be created by citizens. These contracts would include things like roadside trash pickup, park maintenance, or other issues that citizens desire to have taken care of. Citizens could place a “bounty” on the task, which would be searchable by location. Multiple citizens can place bounties on the task, raising the value of the task, until someone accepts the contract, and performs the work. They would then provide proof-of-work in some appropriate form (most likely photos from the contract location), and then the people who placed the bounty (some percentage or numerical threshold) would release the funds to the person who performed the work. With the tokens transferred, the individual would be able to use the tokens for anything the main governmental currency would buy.

So, what would be some of the benefits of such a type of token be? The first is that it facilitates community change from the ground level. People in communities see the needs of their communities most closely. This creates a sort of market for public works, which would be able to be undertaken by an individual, a group of individuals, or an organization, with the greatest needs in the community rising in value, to the point where it would attract the attention of those who could complete the task. The cleanup of a particular street, for example, may raise $20-50 before it becomes worth it for someone to take the contract. An pothole, on the other hand, that a city has neglected, or has been unable to fill, though, because of what it requires to fix, and depending on the severity of people’s annoyance with it, may reach hundreds of dollars before it is taken care of. The other beauty of such a system is that these numbers may be reached through the annoyance of a few people a little bit (hundreds of people putting up small bounties), or by a large annoyance by a few (a handful of people putting up $100 or more bounties).

This model is somewhat a reflection of the flexibility of the gig economy, but with the government as the issuing entity. These contracts could also be applied to privatized tasks, such as providing cleaning service for someone. Each task would be the equivalent of a tax-funded small-scale gofundme campaign. A benefit of this is that tax payers would actually see the benefits of their tax dollars at work, this would also help areas with a lot of general labor that is unused, and would be a boost to the un/under-employed. Another benefit to such a system is that it would highlight areas that need more general laborers, and would also highlight areas that need a lot of work. Areas that need a lot of work, but with little available labor would have contracts that could reach such high bounties that they could attract labor from surrounding areas, or even distant areas, which could help revitalize some communities.

Of course, there are some potential drawbacks to such a system. The first is that tax payers could end up paying more for some services than they would if those services were just performed by government maintenance on some level. This is certainly possible, though the point at which some people will perform those tasks is a lower threshold than others. This would lead one to believe that , so long as the labor efforts were not 100% coordinated, that there would be equilibrium prices that would come about for certain tasks, based on willingness to perform them, the needs of the individual, etc. Since also there would be the ability for anyone to take the contract at some point, it would be difficult for forces to extort money out of the system, unless they had a monopoly on labor. Even then, these projects would include things like, “planting trees in the local park”, or “cleaning up the streets”, “help so-and-so with their lawncare”, “host a local hobbyist group”, or other acts that aren’t necessary to continue running society. There could be some instances of trying to cheat the system that could occur, such as trying to create contracts within a family, to then give the contract to another family member. The problem with such an idea is that this could happen, but since the contract would show up to compete with the entire labor market, the amount would either be small and insignificant, or the project would be snatched up by an outside force. Even in a more complex situation, for example, a group of construction workers/families, who put their tokens into a project to fix a road or sidewalk, and then take that work themselves, yes may get the benefits of their own tokens, but they of course would also need to complete the work (assuming that they were not the only contributors to the contract), meaning that the area would get the benefit of the contract being completed anyways.

Of course, the benefit to attaching the proof-of-work and the contracts to a blockchain is also that it becomes much easier to investigate and suss out fraud in such a system, as pretty much anyone would be able to find that contract, and would be able to verify that the contract had been valid in the first place, then that the work was actually completed as stated. This reduces the amount of fraud and the scale of corruption possible under such a system.

As for how much should be actually given to citizens each month to allocate to these tasks, and what should be done about benefits that are unused over long periods of time, those are problems for a system that is more seriously considering the proposal, and would need to be based on the amount that individuals would receive in other benefits. However, a number around $100/month in current year terms would probably have enough distributive force to allow for this to work on at least small-scale projects, as would be appropriate for the general labor projects that these would likely cover.

What do you think? Would you clean up your streets if your neighbors paid you to? Would you use such a benefit? See anything I missed? Tell me what you think.

How China is Developing its Communist Vision

I remember several years ago, when I got into an argument with my father. At the time we were talking about audiology, specifically I was discussing some of my economic policy ideas, and at some point in the conversation my dad simply shut me down, saying my ideas were “Communist Bullshit”. at that point I asked my father if he had ever read The Communist manifesto to which he replied that he had not. I have not read it either, so I had managed to make my way through the translation notes for the different editions, but I had never actually made it through the text of the manifesto itself. The argument was noteworthy in that it was the first ideological argument where my father ran out of counterarguments first, I specifically recall we were discussing minimum wage and the employment rate. It was also the moment that I realized that my father was blighted with poor critical thinking faculties, and that while he knew what I thought was a lot, his ability to reason through his ideas were limited by what he was told about those ideas, and that he hadn’t ever really thought about those things more deeply. It was this that caused me to reflect on much of what I was told by him and my mother while being raised, and could see how deeply this had permeated into our family. So, at that point I began to work even harder examining exactly what I believe about a number of subjects and precisely why I believed those things. After spending a great deal of time learning about more advanced economic principles, political systems, and historical background, I felt adequately prepared to read the text with a critical eye, so I dug into it.

And wow, I gotta say that I learned a great deal. First was that I was unaware that the manifesto discusses various types of socialism, in their historical and geopolitical contexts, differentiating Communism from each of them. Of particular interest was Germany’s “True Socialism”, which Marx criticized because “it ceased in the hands of the German to express the struggle of one class with the other… not the interests of the proletariat, but the interests of Human Nature, of Man in general…” He goes on to describe the philosophical conditions that would allow for German Socialism to become co-opted by German Fascism later in the form of the post-Night of the Long Knives Nazi party.

The remainder of the text actually discusses Communist beliefs, and how those beliefs could be put into practice, and how it differs from Socialism. The primary differences are simply the methodology by which each is brought about, and the extent to which each goes. Socialism seeks to bring class inequality down significantly, while keeping institutions in place, essentially placing patches and fixes on the institutions, while never changing the core structure, and maintaining a capitalist economic system. Marx on the other hand, makes it quite clear he believes that these are simply half-measures, and that the working class will simply continue to be oppressed until they rise up, and tear down the capitalist distribution of resources. A common misconception about Communism is that Marx does see not the value of money as a medium of exchange between individuals. To an extent, Marx does actually see the need for money, at least in such a society where resources are sufficiently scarce.

Now I would like to diverge from my reading of the text for a little bit and instead go on a bit about related thoughts, but more practically applied. As I was reading the text, I could not but help think of the current states of Russia and China. Russia as the example of kleptocracy disguised as socialism, and China as the prime example of the power and influence that a continuously reforming communist state can achieve. Russia on one hand is small and weak when it comes to economic power, and is forced to rely on cheap, though still quite effective espionage tactics, though the turmoil in the upper echelons does mean that corruption is rampant throughout the government. In contrast, China has recently been working hard to, it seems, refine their system to more closely reflect the communism seen in the manifesto, and to learn from the mistakes of the past, even if that means that they occasionally over-correct for those mistakes.

To really figure out where China stands in relation to its objective, increased influence and power in the upcoming decades, one must see where the shortfalls of early communism were most prominent. To boil it down to what could be described as the major factors, we can attribute it to: poor infrastructure/supply chains. insufficient data and data processing capacity, and lastly, a poor knowledge base to draw upon. Corrupt officials are a source of failure as well, though I am going to be generous in this regard, and chalk much of it up to incompetence on the part of those running the system. In this way, we will give ourselves the freedom to think a bit more critically about the history. Why does democratic-socialism work so well in a number of European countries, but has so many difficulties in 20th century China? Also, when we consider China today, what has China done more recently, and what does it mean for the future?

The first question was actually a trick question, the reasons that the European countries succeeded was for the same reasons that China failed. Powerful bureaucracies with anti-corruption measures, effective supply-chains capable of handling large influxes of resources, a generally more educated labor class with the ability of the governments to monitor the reactions and general feelings of the populace, and a fairly well-established education system that encourages high levels of education gave rise to a more educated working class that was actually immunized from the fascist propaganda that permeated much of the continent at the time (see the Dutch resistance to Nazi occupation). China, with the exception of an extended bureaucracy, lacked the rest of those components, with until the 1979, when China implemented what could be considered its modern economic plan.

How has China changed since that turning point? Well, of course it has not been all roses, as things like the one-child policy have been controversial, however, in regard to those key indicators mentioned previously, there has been significant changes. China has opened thousands of private universities since the first opened in 1985, and now is considered to have the second-highest number of top universities. In the manifesto, Marx talks about the importance of the proletariat to be educated to have the tools to work the machinery of the capitalist. This has led to more urbanization, and a generally more educated work force, with in recent years much focus being placed on the advancement of AI and biotech research, with just recently, it being announced that they had produced the first person from a gene-edited embryo, and even managed to be the first country to land a probe on the far side of the moon.

In regard to their economic development, it was during the implementation of their new economic plan where two major changes have helped expand China’s economic power arguably the most. The first is the change in the distribution of wages, from a common rate, to a rate based on the productivity of the worker, and moving from being a consumer economy, to becoming a producer economy. The first change allowed for a more authentic market for growth, and the second allowed for the development of the vast network of supply-chains that stretch not only across China, but across the world at large now.

So, they’ve expanded their economy, and they are the producers of a huge amount of the world’s consumer goods, so what? They haven’t made many new moves on other territories that haven’t already been fight over, unlike Russia, who annexed Crimea within the last decade, and is fighting proxy wars in the Middle East. What’s more concerning is that China has not needed to. Now that China has managed to work out some of the kinks in their system, they’ve acquired enough wealth to begin to throw it around, using their new tools to peacefully subjugate a large portion of the world to Chinese colonial rule. With this I’m of course referring to Africa, which, despite the slowing of China’s GDP growth, has continued to pour massive amounts of money into infrastructure projects across the continent. Like many of the endeavors of the Chinese state, many of the early projects have had difficulties in their executions in their early years. Now though, compared to the scale of their investments from the early 2000’s, shows the greater confidence China has with choosing key infrastructure projects that are likely to pay off, and are more conscientious as to the extended range of factors that might make a good investment.

At the moment, the Chinese government does not meddle with domestic affairs of the countries that it lends to. However, should the next rounds of infrastructure projects that the Chinese invest in go well, the level of interdependence between China and African nations could become problematic, as China by proxy gains control over the vast amounts of raw resources that as of yet remain undeveloped on the continent.

What is the solution to this? Well, the United States, along with the EU, could increase aid investment spending on African projects, or could work on funding that more efficiently impacts socioeconomic development. It’s important that we maintain our funding and influence in the region however, as failing to do so could lead to authoritarian interests dominating the region. Will President Trump do this? It seems he would be likely to try to remove this funding, if he was aware of it, though, given the recent developments about his administration, I feel that he is too distracted to pay any mind to an issue so far from his mind, which means that any efforts to catch up, will only be exacerbated by time until a president comes into power who is capable enough to deal with the threat of spreading  authoritarianism.