Tag: Moral Philosophy

Today’s Economic History: Steve Roth: Did Money Evolve? You Might (Not) Be Surprised

Posted on by Brad DeLong

Today’s Economic History: Roth is very good on “money” defined as a unit of account.

But there are, of course, other perfectly-fine definitions of “money”: “means of payment”, “medium of exchange”, “that which you need to hold to take advantage of or avoid suffering from market disequilibrium”, “even store of value”.

To say that the definition attached to how you use the word “money” is the only correct definition and that everyone with a different definition is doing it wrong–well, that’s just doing it wrong yourself…

Steve Roth: Did Money Evolve? You Might (Not) Be Surprised: “The earliest uses of money in recorded civilization were not coins…

…or anything like them. They were tallies of credits and debits (gives and takes), assets and liabilities (rights and responsibilities, ownership and obligations), quantified in numbers. Accounting. (In technical terms: sign-value notation.)

Tally sticks go back twenty-five or thirty thousand years. More sophisticated systems emerged six to seven thousand years ago (Sumerian clay tablets and their strings-of-beads predecessors). The first coins weren’t minted until circa 700 BCE — thousands or tens of thousands of years after the invention of ‘money.’

These tally systems give us our first clue to the nature of this elusive ‘social construct’ called money: it’s an accounting construct. The earliest human recording systems we know of — proto-writing — were all used for accounting.* So the need for social accounting may even explain the invention of writing.

This ‘accounting’ invention is a human manifestation of, and mechanism for, reciprocity instincts whose origins long predate humanity. It’s an invented technique to do the counting that is at least somewhat, at least implicitly, necessary to reciprocal, tit-for-tat social relationships. It’s even been suggested that the arduous work of social accounting — keeping track of all those social relationships with all those people — may have been the primary impetus for the rapid evolutionary expansion of the human brain. ‘Money’ allowed humans to outsource some of that arduous mental recording onto tally sheets.

None of this is to suggest that explicit accounting is necessary for social relationships. That would be silly. Small tribal cultures are mostly dominated by ‘gift economies’ based on unquantified exchanges. And even in modern societies, much or most of the ‘value’ we exchange — among family, friends, and even business associates — is not accounted for explicitly or numerically. But money, by any useful definition, is so accounted for. Money simply doesn’t exist without accounting.

Coins and other pieces of physical currency are, in an important sense, an extra step removed from money itself. They’re conveniently exchangeable physical tokens of accounting relationships, allowing people to shift the tallies of rights and responsibilities without editing tally sheets. But the tally sheets, even if they are only implicit, are where the money resides.

This is of course contrary to everyday usage. A dollar bill is ‘money,’ right? But that is often true of technical terms of art. This confusion of physical tokens and other currency-like things (viz, economists’ monetary aggregates, and Wray’s ‘money things’) with money itself make it difficult or impossible to discuss money coherently.

What may surprise you: all of this historical and anthropological information and understanding is esoteric, rare knowledge among economists. It’s pretty much absent from Econ 101 teaching, and beyond. Economists’ discomfort with the discipline’s status as a true ‘social science,’ employing the methodologies and epistemological constructs of social science — their ‘physics envy’ — ironically leaves them bereft of a definition for what is arguably the most fundamental construct in their discipline. Likewise for other crucial and constantly-employed economic terms: assets, capital, savings, wealth, and others.

Now to be fair: a definition of money will never be simple and straightforward. Physicists’ definition of ‘energy’ certainly isn’t. But physicists don’t completely talk past each other when they use the word and its associated concepts. Economists do when they talk about money. Constantly.

Physicists’ definition of energy is useful because it’s part of a mutually coherent complex of other carefully defined terms and understandings — things like ‘work,’ ‘force,’ ‘inertia,’ and ‘momentum.’ Money, as a (necessarily ‘social’) accounting construct, requires a similar complex of carefully defined, associated accounting terms — all of which themselves are about social-accounting relationships.

At this point you’re probably drumming your fingers impatiently: ‘So give: what is money?’ Here, a bloodless and technical term-of-art definition:

The value of assets, as designated in a unit of account.

Which raises the obvious questions: What do you mean by ‘assets’ and ‘unit of account’? Those are the kind of associated definitions that are necessary to any useful definition of money. Hint: assets are pure accounting, balance-sheet entities, numeric representations of the value of goods (or of claims on goods, or claims on claims on…).

Review of Ben Friedman’s “The Moral Consequences of Economic Growth”: Hoisted from the Archives from Ten Years Ago/The Honest Broker

Posted on by Brad DeLong
“The Effects of Good Government,” painted by Ambrogio Lorenzetti

Hoisted from the Archives from Ten Years Ago: Ben Friedman’s, “The Moral Consequences of Economic Growth”: Ten years ago, my review of Ben Friedman’s very nice The Moral Consequences of Economic Growth was up at Harvard Magazine:

Growth is Good: An economist’s take on the moral consequences of material progress

Economists have always been very good at detailing the material consequences of modern economic growth. It makes us taller: we are perhaps seven inches taller than our preindustrial ancestors. It makes us healthier: babies today have life expectancies in the seventies, not the twenties (and more than half that improvement is not directly related to better medical technology, narrowly defined). It provides us with leisure: eight-hour workdays (rather than ‘Man’s work is from sun to sun, and woman’s work is never done.’) It provides us with enough clothing that we are not cold, enough shelter that we are not wet, and enough food that we are not hungry. It provides us with amusements and diversions, so that there is more to do in the evenings than huddle around the village campfire and listen yet again to that blind poet from the other side of the Aegean tell the only long story he knows—the one about Achilles and Agamemnon. As time passes, what were luxuries become, first, conveniences, and then necessities; what were utopian dreams become first luxuries and then conveniences; and what was unimagined even in wild fantasy becomes first utopian dreams and then luxuries.

Economists have been less good at detailing the moral consequences of economic growth. There are occasional apothegms: John Maynard Keynes observed that it is better for a man to tyrannize over his bank balance than his fellows (a rich society has an upper class that focuses on its wealth as power-over-nature, rather than on its power as power-over-people). Adam Smith wrote about how wealth made it attractive for the British aristocracy to abandon their feudal armies and private wars and move to London to take up positions in society and at court. Voltaire (who not even I can claim was an economist) observed that people who in other circumstances would try to kill each other for worshipping the wrong god (or the right god in the wrong way) were perfectly polite and civil when they met each other as potential trading partners on the floor of the London Exchange. Albert Hirschman (who is an economist) wrote a brilliant little book, The Passions and the Interests, about the eighteenth-century idea that commercial society made humans ‘sweet’: polite, courteous, and civilized, viewing one another as potential partners in mutually beneficial market exchanges, rather than as clan members to be helped, clan enemies to be killed, or strangers to be robbed. But focus on the moral consequences of economic growth has—from the economists’ side, at least—been rare.

Benjamin M. Friedman ’66, Jf ’71, Ph.D. ’71, Maier professor of political economy, now fills in this gap: he makes a powerful argument that—politically and sociologically—modern society is a bicycle, with economic growth being the forward momentum that keeps the wheels spinning. As long as the wheels of a bicycle are spinning rapidly, it is a very stable vehicle indeed. But, he argues, when the wheels stop—even as the result of economic stagnation, rather than a downturn or a depression—political democracy, individual liberty, and social tolerance are then greatly at risk even in countries where the absolute level of material prosperity remains high….
Consider just one of his examples—a calculation he picks up from his colleague Alberto Alesina, Ropes professor of political economy, and others: in an average country in the late twentieth century, real per capita income is falling by 1.4 percent in the year in which a military coup occurs; it is rising by 1.4 percent in the year in which there is a legitimate constitutional transfer of political power; and it is rising by 2.7 percent in the year in which no major transfer of political power takes place. If you want all kinds of non-economic good things, Friedman says—like openness of opportunity, tolerance, economic and social mobility, fairness, and democracy—rapid economic growth makes it much, much easier to get them; and economic stagnation makes getting and maintaining them nearly impossible.

The book is a delight to read, probing relatively deeply into individual topics and yet managing to hurry along from discussions of political order in Africa to economic growth and the environment, to growth and equality, to the Enlightenment thinkers of eighteenth-century Europe, to the twentieth-century histories of the major European countries, to a host of other subjects. Yet each topic’s relationship to the central thesis of the book is clear: the subchapters show the virtuous circles (by which economic growth and sociopolitical progress and liberty reinforce each other) and the vicious circles (by which stagnation breeds violence and dictatorship) in action. Where growth is rapid, the movement toward democracy is easier and societies become freer and more tolerant. And societies that are free and more tolerant (albeit not necessarily democratic) find it easier to attain rapid economic growth.

Friedman is not afraid to charge head-on at the major twentieth-century counterexample to his thesis: the Great Depression in the United States. Elsewhere in the world, that catastrophe offers no challenge to his point of view. Rising unemployment and declining incomes in Japan in the 1930s certainly played a role in the assassinations and silent coups by which that country went from a functioning constitutional monarchy with representative institutions in 1930 to a fascist military dictatorship in 1940—a dictatorship that, tied down in a quagmire of a land war in Asia as a result of its attack on China, thought it was a good idea to attack, and thus add to its enemies, the two superpowers of Britain and the United States. In western Europe the calculus is equally simple: no Great Depression, no Hitler. The saddest book on my shelf is a 1928 volume called Republican Germany: An Economic and Political Survey, the thesis of which is that after a decade of post-World War I political turmoil, Germany had finally become a stable, legitimate, democratic republic. And only the fact that the Great Depression came and offered Hitler his opportunity made it wrong.

In the United States, however, things were different—and not favorable to Friedman’s broad thesis. The 1930s were an extraordinarily painful economic shock to this country, but also a decade during which our nation strengthened its commitment to the liberal values that are its best nature. Admittedly, things might have gone otherwise: consider Huey Long in Louisiana, Father Coughlin over the airwaves, California’s treatment of Depression-era migrants from other states that we read about today only in The Grapes of Wrath, and the white-hot hatred for Roosevelt as a class traitor that puts today’s shrill, unbalanced critics of Bush and Clinton in the shade. (Up until his dying day six months ago, my 98-year-old grandfather would still say the country was lucky to have survived FDR.) All these examples show us signs of an America that could have gone the other way in the 1930s. Yet, as Friedman writes, ‘America during the Great Depression strengthened its commitment to these positive values [of openness, tolerance, and democracy], and, moreover, did so in ways that proved lasting.’ The New Deal was a:

chaos of experimentation…to mobilize the effective energy of government to spread economic opportunity as widely as possible—to include those whom birth and the tide of events had left out of the distribution of America’s economic dividends. Rather than seeking scapegoats to exclude…the route America took in the 1930s was deliberately pluralist and inclusive, seeking input and participation from a more diverse collection of constituencies than ever before. And the intent of all this political activism was not just restored economic prosperity but more equal economic opportunity.

The line I use in my American economic-history lectures starts by suggesting that before the Great Depression, America’s rural, small town, and urban (and overwhelmingly Protestant) middle classes—farmers, druggists, merchants, and so forth—did not really believe that they had interests in common with the non-white rural and the not-quite-white (and Jewish and Catholic) urban-immigrant working classes. The Great Depression impoverished enough people who thought they had it made to convince enough of the middle class that they had enough interests in common with the working class to make it worthwhile to push for equality of opportunity for everyone—or at least for some people who weren’t white, northern-European Protestants. This is my best guess, but it is only a guess. Friedman does not really know why the Great Depression did not make America a less democratic, less tolerant, less free country. But he does not apologize: he concludes his chapter by quoting the noted Harvard economic historian Alexander Gerschenkron—‘Historical hypotheses are not… universal…. They cannot be falsified by a single exception.’

Friedman has not written his version of economic history and moral philosophy just for the sake of antiquarians like me who like to read about the strange and faraway places that are our own past. He takes historical patterns and draws from them immediate and powerful lessons for the present.

Consider China. There are those today in Washington, D.C., who look forward to a future in which China is America’s enemy: they believe it will in some way increase our ‘national greatness’ to wage a new Cold War in Asia—albeit against an enemy weaker than Stalin’s Soviet Union was. There are those in Vice President Cheney’s office who think that trade with China is a bad idea: it creates a pro-China lobby that will stop any attempts by the United States to slow down China’s growth and acquisition of technology. Better, they think, to try to keep China as poor and barefoot as possible for as long as possible.

From Friedman’s perspective—and from mine—this is simply insane. In all likelihood, China a century from now will be a full-fledged post-industrial superpower whatever the policies of the United States. Do you want to maximize the likelihood that that superpower will have a representative government presiding over an open, free society? Then work to maximize economic growth, says Friedman. (And I would add: Does it really improve the national security of the United States for schoolchildren in China to be taught that the United States sought to keep them as poor as possible for as long as possible?)

In fact, the China policy of the Clinton administration was to do whatever we could to speed China’s growth in the expectation that rapid economic growth will introduce the political cuckoo’s egg of democracy into the nest. A rapidly growing, prosperous middle class will be interested in liberty and opportunity, and will be a much more powerful force for democratization and personal freedom in China than a battalion of lecturing neoconservative think-tanks or a host of remotely guided cruise missiles.

Consider the developing world more broadly. Friedman is—as I am—a card-carrying neoliberal. We economists do not understand very much about how knowledge of modern technologies and effective organizations and institutions diffuses from region to region around the globe. We do know that it diffuses appallingly slowly: there are still three billion people throughout the world whose lives are largely preindustrial (even if theyare far above the Malthusian poverty in which most of our preindustrial ancestors lived). We suspect that maximizing contact—economic, social, and cultural—is a powerful way to transfer ideas and practices. Hence the neoliberal imperative: do whatever you can to maximize economic growth in the developing world, and hope that rapid growth generates in its train the strong local pressures for social, environmental, cultural, and political advance that are needed if non-economic forms of progress are to be stable and durable.

There is a criticism of the neoliberal view that holds that higher material incomes cannot be the cure to poverty, for poverty is also a lack of voice in society, a lack of security in one’s position, and a lack of respect. With all this Friedman agrees. But he adds that faster material progress is the best way to generate pressures to produce voice, security, and respect.

Hence the neoliberal imperative: lower barriers to trade and contact; lower barriers of all kinds; lower barriers in the expectation that faster economic growth will itself generate countervailing pressures that will undo and cure the bad social and distributional side-effects of faster growth. Friedman’s reading of the moral consequences of economic growth provides a powerful piece of support to this neoliberal imperative. (Support so powerful, in fact, that Joseph E. Stiglitz, our Nobel Prize-winning non-neoliberal friend, has an attack on The Moral Consequences of Economic Growth in the November-December 2005 issue of Foreign Affairs.)

Consider the United States today. For a generation now, the benefits of economic growth have been concentrated in those slots in American society that are at or near the top. To the extent that any of America’s working class is richer today in inflation-adjusted terms than the nation’s workers were in the early 1970s, it is because today’s households have fewer children and a greater proportion of their members out earning money. America’s middle class today does live better than the middle class lived in 1970 (and a bunch of the children of the 1970s working class are in today’s middle class). But today the gap between America’s middle class and its upper class yawns extremely wide, at levels not seen since before the stock market crash of 1929.

Friedman is very worried that unequally distributed prosperity is not really prosperity at all. During the past generation we have seen the U.S. government place its thumb on the scales on the side of making the distribution of income and wealth in America more unequal. Some of this has been for reasons of economic efficiency: withdrawing the regulatory umbrellas that allowed some unions to turn blue-collar jobs into occupations with middle-class salaries, or reducing tax rates while eliminating loopholes. Some has been for reasons of moral purity: the replacement of the idea that being a single mother raising children was an important social task that deserved support with the idea that single mothers ought to work. Some is simply a naked wealth grab by the politically powerful.

What will the moral consequences of unequally distributed prosperity be? Friedman fears, and perhaps for good reason, that they will resemble the consequences of economic stagnation. People who feel that they are living no better, or not much better, than their parents will search for enemies: Hollywood writers, foreigners, people of ‘loose’ morals, and Harvard graduates. And America will become a less free and less democratic society. The argument follows the lines of the argument in Thomas Frank’s What’s the Matter with Kansas? Those for whom the American market economy is not delivering increasing prosperity do not reach for the right answer: policies to strengthen the safety net, provide security through social insurance, and improve opportunity through better education. Instead, they reach for the wrong answers: closing down society and denouncing enemies—anti-Hollywoodism as the social democracy of fools, one might say.

I find myself more optimistic. This is not to say that I disagree with the political program for America today that can be drawn out of Friedman’s book: the pro-growth, pro-opportunity, pro-social-insurance policies of today’s national Democratic Party are mother’s milk to me. But I do not think we look forward to the generation of stagnation in the working and the middle classes that Friedman fears. Yes, the past generation has been a distributional disaster for America. Yes, at some point in the future the ‘outsourcing’ of jobs made possible by modern telecommunications and computer technologies will produce enormous structural change in the American economy. But the population of the United States is growing slowly. The desirability of the United States as a place in which to locate economic activity is growing rapidly: the underlying engine of technological progress is spinning faster than it has in at least a generation. I see rising working- and middle-class incomes in America during the next generation generating what is in Friedman’s terms a virtuous, not a vicious, circle.

Must-Read: David Leonhardt: ‘Chicagonomics’ and ‘Economics Rules’

Posted on by Brad DeLong

Must-Read: David Leonhardt: ‘Chicagonomics’ and ‘Economics Rules’: “Adam Smith’s modern reputation is a caricature…

…He was a giant of the Enlightenment in large part because he was a careful and nuanced thinker. He certainly believed that a market economy was a powerful force for good…. Yet he did not have a religious faith in the market…. Lanny Ebenstein’s mission, in ‘Chicagonomics,’ is to rescue not only Smith from his caricature but also some of Smith’s modern-day acolytes: the economists who built the so-called Chicago school of economics…. Ebenstein argues that the message of the Chicago school has nonetheless been perverted in recent years. Many members of the Chicago school subscribed to ‘classical liberalism,’ in Ebenstein’s preferred term, rather than ‘contemporary libertarianism.’…

Dani Rodrik… has written a much less political book than Ebenstein has, titled ‘Economics Rules,’ in which he sets out to explain the discipline to outsiders (and does a nice job)…. Rodrik has diagnosed the central mistake… [of] contemporary libertarians have made… conflat[ing] ideas that often make sense with those that always make sense. Some of this confusion is deliberate… act[ing] as a kind of lobbyist working on behalf of the affluent…

Must-Read: Marshall Steinbaum: Thomas Piketty at the University of Chicago

Posted on by Brad DeLong

Must-Read: It is genuinely surprising to me that Kevin Murphy thinks that Katz and Murphy (1992) is still close to the last word on inequality. And it is beyond genuinely surprising that Steve Durlauf thinks that Bill Gates’s wealth was acquired by merit and John D. Rockefeller’s by monopoly when they are both winners in gigantic winner-take-all natural-monopoly markets–a natural-monopoly created by economies of scale in refining and distribution in the case of oil, and by write-once run-everywhere protected by patent and copyright in the case of operating systems:

Marshall Steinbaum: Free-Market Dogmatism Still Going Strong at the University of Chicago: “A discussion between Piketty and… Kevin Murphy and Steven Durlauf…

…with Jim Heckman acting as moderator…. [Murphy] thinks that his 1992 paper with Lawrence Katz, which tried to explain the dynamics of the college wage premium in the 1970s and 1980s with reference to the supply and demand for skilled labor in the form of workers with a college degree, constitutes the final word… [even though] its model fails at explaining… labor market outcomes… since… [and relies on the residual of] skills-biased technical change: the Ghost in the Free Market Economics Machine….

Piketty started things off by claiming that… globalization and skill-biased technical change… don’t explain the phenomena… closed with what I consider a profound restatement of why Capital in the 21st Century is such an important book:

The gap between [the] official discourse and what’s actually going on is enormous. The tendency is for the winner to justify inequality with meritocracy. It’s important to put these claims up for public discussion.

Durlauf… said, quite reasonably, that the key mechanism of inequality is segregation, because it translates individual inequality into entrenched deprivation, and that its policy implications are therefore to foster integration in a variety of contexts….

Murphy’s presentation was where the wheels came off, intellectually speaking. He declared… by regurgitating his 1992 paper… [saying] “that theory has done an amazing job,” including a cryptic statement about how it explains the rise of tail inequality “if you extrapolate,” whatever that means…. Murphy stepped forward once again to declare that the economy’s “natural supply response of supplying capital” will help workers by reducing the capital share and increasing their productivity…. Durlauf asserted in his JPE review of C21 that no one thinks like Clark anymore, with his quasi-moralistic view of the efficient functioning of capital formation and the adjustment of its rate of return. Unfortunately, Durlauf’s empirical prediction was falsified by Murphy right there on that stage…. Murphy added that in the absence of better education, “The march of technology over time means there’s little for someone with no human capital to do.”… Then things got weird. Durlauf… [said] what mattered was [Americans’] perception of [inequality’s] source: whether justified by merit, as in the case of Bill Gates, or extracted through monopolization, as with John D. Rockefeller. At that, Piketty quipped that Bill Gates certainly agrees….

Murphy[‘s]… idea seems to be that the poor, benighted though they are, will adopt the morally correct position of looking out for their own interest by acquiring an education, so long as the incentive to do so is preserved by avoiding progressive taxation. Usually the fallacy in the moral philosophy of economics… is to argue that whatever reality exists is for the best…. In this case, though, the “ought” is a priori: people should be selfish. For that reason, they probably will be, so long as the status quo is maintained as an instructive lesson in the disaster befalling anyone not born rich…. Durlauf made a final, inscrutable point… saying that we should directly address the harms caused by inequality, by which he was referring to capture of the political system by the wealthy…

Weekend Reading: Diane Coyle (2012): Do Economic Crises Reflect Crises in Economics?

Posted on by Brad DeLong

Diane Coyle (2012): Do Economic Crises Reflect Crises in Economics?: “The problems with economics: (1) Theory…

…There is a well-known joke about economic methodology. Two friends are walking along when one spots a €50 note on the floor. “Look!” he says, “Let’s pick up the money.” His friend, an economist, replies: “No, don’t bother. If it were really there, somebody would have picked it up already.” The joke of course is about the lack of realism in the assumptions economists conventionally make in order to analyse the real world….

In practice, the version of this assumption used in applied analysis is rarely as strong. In practice, it is more like: given the limited information available to them, and the various transaction costs they face in taking certain courses of action, and given that the future is very uncertain, we’ll assume people act broadly in their self-interest, however they would define that. I would strongly defend the use of this contingent version of the standard assumption as it’s a powerful analytical tool…. Modern institutional economics, which is a thriving area of research, is founded on the use of the rationality assumption as a tool of analysis. If people do not seem to be making the rational choice, then looking at the difference between what would happen if they did so and the reality is instructive….

I would defend using the assumption of rational choice as long as one realises that it is not a description of reality. But there is one area where for 30 years economists – and others – have been making that mistake. That is, unfortunately, of course, in the financial markets. Practitioners and policy makers acted as if the strong form of the Efficient Markets Hypothesis held true – in other words that prices instantly reflect all relevant information about the future – even though this evidently defies reality. What’s more, a political philosophy valuing limited government leapt on what was taken as proof that markets left to themselves deliver better economic outcomes. This was translated as the deregulation of markets, especially financial markets, and became entwined with the growing importance of the finance sector in the economy globally. So politics fed the trend. The computer and communications technologies fed the trend as well, by making more and more financial transactions possible.

I think an honest conventionally-trained economist has to at least acknowledge that we grew intellectually lazy…. A particular ideological version of economics became the framework for analysing public policy, and very few mainstream economists challenged that. We got on with our work and ignored the importance of the public rhetoric….

A looser version is that a public sphere founded on the world view of narrow, rational choice economic models has over time led people to behave like the selfish, calculating beings assumed in those models. If regulations assume that you are going to behave in a certain way, there must surely be a temptation to live up to the assumption. I don’t know if this theory of economic performativity is true; perhaps the causality runs the other way, and a period of free-market politics especially in the US and UK changed the character of economics? We can’t test these alternatives, but this criticism is worth considering….

The financial and economic crisis [thus] spells a crisis for certain areas of economics, or approaches to economics. Financial economics and macroeconomics are particularly vulnerable. They are the subject areas where the consequences of the standard assumptions have been most damaging, because they are actually least valid. Financial market traders are not remotely like Star Trek’s Mr Spock, making rational calculations unaffected by emotion or by the decisions of other people. Macroeconomics – the study of how millions of individual decisions aggregate into economy-wide measures – is essentially ideological. How macroeconomists answer a question like ‘What will be the effect of cutting the budget deficit on growth next year?’ depends on their political views. This is not remotely a scientific area of the discipline….

I can’t omit here a few other problems with economics as it has been practised… the economics curriculum in universities… gives too much time to macroeconomics, on which as I just argued there is no professional consensus…. They have little sense of economic history…. Students are also not systematically taught new aspects of the subject…. Undergraduates are also taught as if they are all planning to go on to study for a doctorate and become academic economist…. Finally, many of these under-cooked economics graduates go on to work in government…. There are some good reasons for this special status – I’m about to come on to those – but the influence economists have in government needs seasoning with a corresponding degree of humility. One side-effect of the crisis may be to make economists a bit more humble, which would be a good result.

Trekonomics Panel at New York Comic Con: The Annotated Transcript: The Honest Broker for the Week of September 28, 2015

Posted on by Brad DeLong

: Trekonomics Panel at New York Comic Con (October 11, 2015)

I have been playing with FOLD, and having fun. Here I take the transcript of the New York Comic Con “Trekonomics” panel created by the extremely-productive-on-long-airplane-flights Izabella Kaminska, add to it, and annotate it…

Hey! Why hasn’t the Financial Times paid for her to step back from Alphaville and turn her Beyond Scarcity series of weblog posts into a book?

FOLD is great fun–it scratches my itch that the web should have been built on hypercard. I have no idea what its chances of survival in the long run are–or what tools will exist for reading exported FOLD files either. The fact that Berkeley is not providing a great deal of assistance with migrating bspaces files elsewhere in comprehensible form as they shut bspace down is thus yet another reason to put the text of my version of the transcript down here, below the fold (ha, ha, ha):

Trekonomics ComicCon New York Panel (October 11, 2015): Transcript

So on an intercontinental flight when I couldn’t focus on anything having to do with my day job, I went back over Izabella Kaminska’s transcript of the Trekonomics panel:

Izabella Kaminska: FT Alphaville Transcript http://ftalphaville.ft.com/2015/10/12/2142030/you-see-money-doesnt-exist-in-the-24th-century/

listening to the tape myself, and seeing what I could add….

Welcome!

Felix Salmon: Hello! Welcome! This is the most exciting and most nerdy panel at ComicCon. So welcome! All of you! And you are in for a treat because we have some of the smartest and some of the most awesome people on the planet to talk about the intersection of two things that most people don’t think about: Star Trek and economics.

It’s psychology, though. Star Trek is all about transporters and warp drives and cool bits of technology. But in fact it’s about the most incredibly mind-blowing stuff. And, in Star Trek, that is the economics.

Very quickly, for few people on this panel require any sort of introduction. We have:

  • Manu Saadia. Manu wrote the book called Trekonomics from Inkshares. Preorder your copy. It is a fantastic, fantastic book.
  • Chris Black, who actually wrote for “Star Trek: Enterprise”.
  • Annalee Newitz of Gizmodo and io9, who I believe Star Trek made a Marxist.
  • Paul Krugman, the one and only.
  • Brad DeLong, the world’s greatest economics blogger.

Trekonomics the Book

Felix Salmon: I think there is no one better than Manu Saadia to try to explain what all of us have in common–what we are going to talk about here.

Manu Saadia: The project for the book–it started out drinking beer with Chris. We were discussing whether there is a book about Star Trek economics because there is a book about everything to do with Star Trek: Physics of Star Trek. Ethics of Star Trek. Holodecks of Star Trek. How about the economics? And Chris said: “Well, you should write it.”

In a nutshell, the book tries to take Star Trek seriously. Usually when watching Star Trek we say: “Oh! How would that work?” and we get into this engineering mindset–the technologies, the gizmos. In the book I’ve tried to step out of that particular mindset, and tried to actually describe how it works. And I’ve discovered some rather surprising things. The biggest thing, I believe, that I got out of researching the book and writing it, is that the post scarcity in Star Trek is not driven by technology but a policy choice. And this is where having such a stellar economic panel to discuss this comes in.

A Post-Scarcity Economy

Felix Salmon: What is post scarcity?

Brad DeLong: 400 years ago, in almost all human societies, being rich relative to your neighbours mattered a lot. If you were poor, especially poor and female, chances were you weren’t getting the calories you needed to reliably ovulate. Chances were your children weren’t getting the nutrients that they needed for their immune systems to be protected against the common cold.

400 years ago the great bulk of humanity lived lives that were nasty, brutish, short. They were hungry pretty much all the time. And when they weren’t hungry they were wet, because the roof leaked. And when they weren’t wet they were probably cold, because damp-proofing hadn’t been invented.

Now we, here, in the prosperous middle class in the North Atlantic are moving into another society.

Gene Roddenberry tried to paint our future by saying: “Wait a minute! What’s going to happen in three centuries? In three centuries we are going to have replicators. Anything material, gastronomic that we want–indeed, anything experiential with the holo-deck we want–we are going to have. What kinds of people will we be then and how will we live?

We are quite far on that transition already. Whenever I go, say, to the middle of the country, I find myself terrified: I’m rarely the fattest person in the room. That means, right now, that here in the United States what used to be the principle occupation of the human race–farming–is at satiation. We are down to 1 per cent of our labour force growing essential nutrients. (Time spent growing eggplants which are harvested when they are four-inches isn’t really spent growing food. That’s art.) We have about three times as many people in our medical and health-support professions working to try and offset the effects of excessive calories as we do growing calories and nutrients. Thus we are now rapidly approaching a post-scarcity economy.

And it is not just for food. If you go and look at containers coming in from China, we are approaching it with respect to things physically-made via manufacturing processes as well. And that’s one of the things Star Trek is about.

Are Robots Free? Is the Federation an Exploitative Colonial Empire?

Annalee Newitz: One of things I find interesting about Star Trek is that it does try to imagine a post-scarcity economy, where there is no money. People don’t work because they have to, but because they want to. However, there are all these hints that we get — especially in Star Trek the next generation, my favourite series — that there’s a lot of ways that the post-scarcity economy is supported by other types of economies. Economies that we might consider to be part of the past.

That’s why one of the most interesting episodes to think about is “Measure of a Man”, from the second season of Next Generation, where the question comes up whether Data, our favourite android with a positronic brain, is actually his own person or is in fact property. This is a question which comes up again in Voyager when the holographic doctor, who is unquestionably an autonomous human being, is also considered property. He writes basically the “Communist Manifesto”, and encourages all his fellow holograms which are being horribly oppressed and enslaved to have a revolution.

This is going on at the periphery of Star Trek all the time. Any time you get off the Enterprise, the wonderful utopian Enterprise, which did in fact inspire me to become a Marxist as a student–because I did believe “wow, we really could get to a world which was better than this one”–we are constantly being reminded that there may be other systems of labour, like slavery, or things that are closer to wage-slavery, which are supporting this wonderful life that the Federation enjoys, and which Picard and team enjoy on their really clean ship.

So that’s one of the things about Star Trek: it allows us to have that kind thought experiment of what would it be like if we did get past capitalism? Or if we did have a system of capitalism which was more restrained by government and regulation–whatever the hell the Federation is, the government, the military, the UN? But at the same time, we are forced to recognise that there are these differences in what people have access to, and hence the labour they perform. And some of them are being treated like property. Some of them are chattel. So that’s always the good part of the thought experiment.

What Were the Writers Thinking?

Felix Salmon: Is that what the writers were thinking about? Or how did people come up with these interpretations.

Chris Black: Yes. Well. It’s funny. We didn’t think about a lot of that stuff consciously. And I worked on Enterprise, so it was at the end of the long-run of the franchise. That universe had been well established. To hear this conversation, to hear this book has been written so thoughtfully and profoundly is really gratifying. There were larger issues that came into play than people consciously thought about.

The practical reality of trying within the production schedule of producing 24 hours of network television a year. You were constantly scrambling to get good entertaining scripts written to place in front of the camera. We were, first and foremost, trying to write what we thought were thoughtful exciting adventure stories for Captain Archer and the crew. So we weren’t consciously thinking about how these characters were being motivated by the needs of a post-scarcity economy. But, because that universe had already been established, we all wanted to be respectful of that universe. We were all very grateful and privileged to be invited into this universe.

So we took the responsibility of keeping Gene Roddenberry’s vision intact and moving it forward. We took that very very seriously. We were very conscious of not violating those rules. We were very conscious of doing our best, not always succeeding, in keeping those characters in the world that had been established.

But at the same time no.

This is a very long-winded answer to the question, but the answer is no.

Are the Catering Carts of Hephaestos Citizens?

Felix Salmon: Paul, how do you analyze the Star Trek universe in an economic perspective? Does economics even make sense in conditions of post-scarcity?

Paul Krugman: I am a bit of a ringer here. I watched the original series when it came out. I watched a fair amount of Next Generation. Then I dropped off afterwards. I’m an Asimov guy more than a Star Trek guy. What can I say?

Do we accept the premise of a post-scarcity society? That’s a boring point, which then leads to a more interesting point. First of all, there’s a long history of people saying: “We’re much richer than our ancestors were, and if you go just a little bit further you’ll get to the point where there won’t be an ‘economic question’–post scarcity.” John Maynard Keynes wrote an essay about that saying that if the world got as rich as it is right now, people would no longer be interested in money. John Kenneth Galbraith wrote in his New Industrial State that the standard of living of the average American worker is already so high that it’s only propaganda that makes them want more. To this, Robert Solow responded: “Well, it doesn’t look that high to me. But maybe things look different from Gstaad, where Galbraith vacations.”

In Star Trek they have a replicator that can make any thing you want. But it can make any thing you want. Even now, we spend only 30% of our income on goods. We spend the rest–70%–services. Replicators won’t help with that. We have essentially no farmers. We have fewer and fewer manufacturing workers. But we have lots and lots of nurses.

Here is the more interesting point: We can imagine a world where all services are provided as well. We have robots or something to do the services. But in order to do the full range of stuff we want they have to be very intelligent. In which case, aren’t those then people? The actual issue is: A world where you have servitors of some kind who will give you everything you want is a world where it’s very hard to tell the difference between servitors and slaves. So I think there’s–arguably–a dark side to the abundance theory.

The other thing to say is this: There’s this great show where Jean-Luc Picard lectures a man from the 21st century, saying: “We’ve moved to a world where people don’t seek money they seek reputation and honour.” Well Brad and I live in the academic world, where pretty much that’s how it works….

Status-Based Meritocracy and Its Discontents

Felix Salmon: That’s absolutely true. So the post-scarcity economy is not utopian. It’s actually not that pleasant–this meritocracy of the Federation?

Manu Saadia: It’s horrible.

It’s not horrible horrible. But I always thought Star Trek looked like a weird cross between the MIT Faculty Club and the Red Cross. It’s very humanitarian. But at the same time I know for a fact–the professors here know what I’m talking about–that the world of meritocracy and academia is extremely harsh and cutthroat. You’re on top one day, but you’re always afraid and watching your back, because someone else is going to come and unseat you.

So what you see on the show, in the Next Generation, is really the 1 per cent. Those who are the ultra-achievers in that society. You barely see the other side of it–the 99% who lead lives of comfort and abundance, but not necessarily the most interesting. So it seems to me to be very harsh.

As a kid watching the Next Generation, I always identified very much with Wesley Crusher. He lived in a world where he had to achieve. He had to become the person that the adults wanted him to become. He actually didn’t want to. That’s the part that’s hard. You’re driven to achieve. But it’s not at all clear you will achieve. Which is the problem of a meritocratic world. It’s not all fun and games.

Scripting Drama with a Harmonious Starship Crew

Felix Salmon: On the one hand Star Trek is that rarest of beasts–utopian science fiction. On the other hand, it’s meritocratic and people work very hard for reputation. It’s very hard for a meritocratic world to be utopian. A meritocracy is a horrible place to live in. So what about the 99% of people in the Federation who live in places like earth–are they happy?

Chris Black: Are they happy? I don’t know. I look at this through the lens of the show. What people wanted to see, and what we focused on, was the adventures of the people on the ship. This doesn’t exactly answer your question, but in terms of the meritocracy of it all you are seeing people at the top of their game. This is the 1/1000th of the 1 per cent who get to crew the first experimental warp 5 spaceship and get to go to out of space. Look at Apollo: 400,000 people worked on that program. The stories you hear again and again are the stories of the dozen guys who went to the moon.

That was the mandate of the show.

The funny thing was that there was an inherent conflict in trying to write the show. You had a group of people–Starfleet officers–and this was a mandate given to ud–that these people have a singular purpose in mind. They get along. They don’t get into petty conflicts and arguments.

That immediately took 90% of the drama out of the show.

Everything had to come from an external source. And you didn’t exactly want every threat, every week, week in and week out, to be about some hostile, greedy, or malicious alien race. What you wanted was for the drama to come from within the ship–from conflict between these characters that didn’t always get along.

Look at the original series. Spock and McCoy didn’t get along at all. McCoy would sometimes say the most outrageous racist things to Spock. There was mutual respect and friendship at the end of the day. But there was also amazing conflict. And that was what made those ST:TOS shows so amazing and so entertaining to watch.

We were constantly trying to balance that storytelling–how to get these characters, this crew, on this ship, in conflict with each other, and so fight this mandate from above. I don’t know how many times I sat in the producer’s office and heard him say: “They’re Starfleet officers, they get along.” And I would say: “Then there’s no scene!”

Manu Saadia: There is a brawl between Star Fleet officers on “Deep Space 9”. But you don’t see the brawl–you just see the result of the brawl.

Chris Black: What I was always trying to fall back on was that “Enterprise” was hundreds of years before ST:TOS. So people weren’t getting along yet.

Scarcity: Survival vs. Status

Felix Salmon: Brad, you are an academic in a meritocratic world. Is there anything utopian about meritocracy? 2016 is not the only anniversary of “Star Trek”, but also the 500th anniversary of Utopia by Thomas More. Are we as far from utopia today as we were 500 years ago? Or is it just this thing–that there’s always going to be this conflict, as Paul was implying. Or is there something different now? Thanks to Star Trek, can there be policy choices which mean we can get through it?

Brad DeLong: First let me put in a plug for hyper-intellectualised prosperous academic meritocracy.

The status insult of having Larry Summers look at me across the table at the Treasury in early 1995 and said: “How did you get what demand for pesos would be after NAFTA so wrong, Brad?” I think that was my career nadir. It was the worst analysis I have ever conducted as an economist. That status insult burns.

But that burns considerably less than watching your children starve to death because you don’t have the resources to feed them.

We are problem-solving, puzzle-solving, advantage-grabbing, status-seeking mammals. Fortunately, we also very much like to get involved in gift-exchange relationships with each other. And so we can all hang together, mostly, in a 7.2bn-person society.

We will find puzzles to solve. We will find and make sources of stresses and conflict and striving. But the sharp point of what we’re most worried about–that is is very different in a post-scarcity society.

The plutocrats of New York are more interested right now in who happens to have the best apartment with a better view of Central Park than in where the next meal is going to come from. That is a considerable gain.

We will make our status differences important and powerful to us psychologically, but we should be able to move beyond that. As Adam Smith wrote, the interesting thing about humanity and the strivers is: The strivers work like dogs for their entire life, so that when they are retired they can sit in the sun–and be happy and comfortable in the parks of central London. But they could have done that anyway in their 20s. They could have sat in the sun then, and they would have got more fun out of it.

What Do the Simple Folk Do?

Felix Salmon: Are we always going to be competing for positional goods? Or could a post-scarcity world of abundant goods and services and no money somehow change human psychology so that this constant search for positional goods just evaporates?

Paul Krugman: When listening to Brad, I think of the old line about how fights in academia are so bitter because the stakes are so small. And the stakes are small–whether you are considered to be the 3rd best or the 15th best international-trade economist in the world is, aside from ego, worth nothing at all. And that is a good thing. And that status-competition is always going to be for ego-status only in a really restricted universe.

The people who are engaged in ferocious status competition–these are the people that are going to be featured on a TV show because it’s interesting, but the 99.9% of the Federation are people who are doing other things. What is that exactly? I’m not sure it makes good drama.

It’s kind of interesting to ask, however: What exactly would they be doing? Where Picard explains what motivates us, that’s actually what motivates people like him. And there are very few people like him. So what is the rest of the civilised universe doing? I suspect that they are enjoying life–probably doing cosplay and things. That would probably be an interesting thing to explore.

Colonized by Vulcans

Brad DeLong: But even cosplay would be a source of status. Have you seen the costumes Annalee Newitz and her minions have been posting from here?

Annalee Newitz: And I’m cosplaying as an economist right now.

One of the things that’s really interesting about what you were raising, Paul ,with what happens with ordinary people, is that there’s this really funny story about the timeline in Star Trek. It is established in the Next Generation shows. What happens is that earth is plunged into a war–maybe it’s the Eugenics Wars, maybe it is something else. In the first episode of next generation Q torments the crew by saying: “We’re going to go back in time” to the world of our future, which is a medieval world, ruled by religious creepozoids. There is this cyclical view of history. This highly-industrial organisation has fallen back to a medieval state. They’re living in extreme poverty. There’s disease and famine. It is evil. And, then, some white dude figures out how to build a rocketship by the skin of his teeth, erupting out of this medieval world of scarcity–not coming out of a hyper-industrial society.

And then the Vulcans arrive.

So I am left wondering: What really happens to humans as we transition to this post-scarcity world? Basically we are colonised by Vulcans. So really it’s not that humanity evolves, it’s basically we’re colonised.

Brad DeLong: It’s not colonisation, we’re the Vulcans’ pets.

Annalee Newitz: That’s colonisation, buddy.

Felix Salmon: I was colonised by my cat a long time ago.

Are We the Vulcans? Who Are the Vulcans?

Manu Saadia: I always took the more optimistic view that we are the Vulcans, or we have to become the Vulcans. There is something about humanity that has to be changed.

If we are going to be colonised, I’d rather be colonised by Vulcans anyway.

Brad DeLong: Vulcans are not idealized, but rather extreme versions of Vulcans in both directions. Leonard Nimoy always said that he played Spock not as a being without emotions, but rather as a being whose emotions were so terribly and completely strong that he could not give into them at all–could not react emotionally in any situation, because then after the mood swing had passed he would greatly regret whatever he had done. The Vulcans were a civilisation desperately trying to figure out how to behave in a civilised manner.

Gorillas–you know you cannot keep more than one adult male gorilla in a zoo enclosure. With chimpanzees in zoos–admittedly a very artificial environment–you really cannot keep more than ten adult males in an enclosure. We humans are doing somewhat better. I think Roddenberry’s point in creating the Vulcans–creating the character of Spock–was that we are not doing well enough.

Felix Salmon: Chris?

Chris Black: I think the interesting thing about Spock was that he was only half-Vulcan. You had the best of both worlds, this character in conflict. This sense of what humans wanted to be, and what they were fighting against being.

We would cast Vulcan characters on “Enterprise.” The actors would come in, and they often-time would read the part as very robotic. And we kept having to give them the note that this character is not devoid of emotions, this character has emotions but really needs to keep them under control, needs to keep them in check. This was a somewhat subtle distinction, but we found it a very important distinction when actors would try to play Vulcan characters.

Felix Salmon: Is that utopian or not? This world where we have emotions but we are constantly trying to keep them tacked down and never showing them–that doesn’t sound very utopian to me.

Brad DeLong: It does have a certain appeal to pubescents, especially perhaps males, trying to figure out what is happening to them…

Chris Black: Conflict is the source of drama, and Spock was continually in conflict with not just the other characters on the ship, but most of all with himself. That was what made him so interesting.

Brad DeLong: God! Leonard Nimoy was great!

Paul Krugman: People have an amazing ability to be unhappy. That is most of why utopias do not work if you try to envision them. You imagine that if only you could get people to accept things and take glory in the goodness of everyday life. Some people will do that. But not all.

Looking at utopias in our imagination, there are not that many. There are a few. Ursula K. LeGuin’s The Dispossessed comes to mind. But even there there is a lot of hidden hierarchy.

The point is that if you look at utopia–the problem isn’t scarcity, it’s people.

Manu Saadia: The Dispossessed–it’s horrible. It really is horrible. The pettiness and the conflicts…

Brad DeLong: She was a U.C. Berkeley faculty brat. I’ve often wondered if PDC is California Hall…

Iain M. Banks’s Culture Novels

Annalee Newitz: The Iain M Banks Culture novels are another example of a post-scarcity world. In them, we see a lot of the same problems we see in Star Trek. There are these beautiful ships. But at the edges, there’s slavery and imperialism and racism. People are constantly struggling with those issues–even though they can transcend them at any time.

Paul Krugman: Iain M Banks–I hope lots of you have read them. If you have not, you really should. The Culture novels are amazing. Everyone should read them. And in some ways he does take on these issues.

Brad DeLong: Do not read Use of Weapons first. Do not read Use of Weapons first. It should only be read by a trained professional…

Paul Krugman: Use of Weapons is extraordinary.

All of the Culture novels are really concerned with the fringe of the fringe of the fringe. Special Circumstances is that the one part of society which isn’t functioning like the rest. It does what Star Trek does–it has someone who is recruited from outside who gets to wander around one of these ships and gets to see what life is like for ordinary people. And they do have a solution to the problems. But the solution to the problem of limitless abundance without slavery is that there are in fact these super-intelligent Minds. They supply all the needs for the mere organic guys by basically–it barely requires a finger nail’s worth of attention. They can give you everything you need without them worrying about it. And that solves it.

People do seem to be somewhat more balanced in that kind of environment than they probably would be in practice.

Annalee Newitz: But also everyone’s a cyborg. They all have neural nets.

Paul Krugman: And they have built-in drug-dispensing mechanisms in their brains–I could use that.

Annalee Newitz: They can restrain their emotions.

Isaac Asimov’s Robots, Earthlings, and Spacers

Manu Saadia: To understand Star Trek’s economics you need to go back to Asimov. It’s very much very directly connected–not so much the Foundation part but the robot stories. If you read The Robots of Dawn and the later novels, Asimov describes a society beyond earth where robots take care of everything. You have these people living on their gigantic estates. They are enjoying life and not doing much.

Paul Krugman: And they’re completely neurotic screwed up people. The books are all about luxury and isolation.

Annalee Newitz: It’s also made the robots moronic too. The robots are so tightly constrained by the rules of submission imposed on them by the Three Laws.

Manu Saadia: I believe Asimov wanted to make the case for humanity. The people on earth are hard-scrabble. They are counterposed to the dissolute spacers who live with every comfort and do not accomplish much. Asimov was this Russian immigrant. There is something strong about the morality of hard work.

Paul Krugman: It is so obvious that earth vs. spacers is Brooklyn vs. Scarsdale.

Manu Saadia: The structure of the society of the spacers is, if you look at the Federation, especially in the Next Generation, very close. It seems to me that this is the logical thing: you have robots that take care of almost everything, and people are kind of floating around not doing very much. Except for the sociopaths who want to become Starfleet officers.

Felix Salmon: But they do not become like the blobs from Wall-E. That is what many people think would happen to us if we could have anything we wanted. We would just become fat blobs on Lazyboys. There are not any fat blobs on Lazyboys in Star Trek–at least not on the Enterprise.

Regency Romances

Brad DeLong: What of those who are not the maladjusted people who become Star Trek officers, who go off and put themselves in real danger by facing challenges at the fringe of the society as they compete for status?

If we want to be looking at what post-scarcity life is really like, perhaps we should be looking not at Star Trek but at Regency Romances. The Regency aristocracy is a historical previous culture of material abundance where people neverthless find very important and interesting things for themselves to do. There is no serious material conflict or scarcity in a Regency Romance novel.

You could say there are three standard focuses of narrative conflict: fear of violent death, scarcity of resources, and who is going to sleep with whom. In a society of abundance, like in a Regency novel, who is going to sleep with whom becomes the focus of the plot. Plus there is a secondary focus: the demonstration of human excellence, via proper appreciation and display of fashion.

Maybe that is what all the people in the Federation who are not Star Trek officers are doing.

Paul Krugman: Regency Romance society is cosplay, just a slightly different version.

Annalee Newitz: But don’t you think it’s possible, Brad, that what most ordinary people are doing is living on Bajor. After having been screwed over by the Cardassians, they are now being screwed over again by the Federation. Maybe that’s more what the rest of the society is like?

Brad DeLong: Add in Bajor, and what we have is no longer Roddenberry’s dream of a society of abundance.

Instead, Federation-plus-Bajor is a metaphor for the world we actually have today. That is the world in which we have the upper-middle class of America, plus others–700mn approaching post-scarcity. But the rest–out of our 7.2bn people living today, we have:

  • 2bn of us lead lives which are, frankly, indistinguishable or barely distinguishable from the lives of our pre-industrial ancestors.
  • 4.5bn of us live lives that look to us here like the standard of living people had in the 1970s and 1950s, 1920s and 1880s. But on all of their TVs and smartphones they can see us 700 mn of the Lucky 10%.

I got off the plane today from Lima, Peru. A wonderful city, marvelous culture, lots and lots of people–all of them working at least as hard as anyone in New York. Only about 1/8th as rich. We may be approaching material abundance in terms of manufactured goods, and calories and nutrients.

They are very far.

We Have a Short Amount of Time for Questions

Felix Salmon: We have a short amount of time for questions. I give the first question to Izabella Kaminska because I can.

Brad DeLong: Abuse of power via social networks in a post-scarcity society!

Annalee Newitz: This is a meritocracy, right?

Izabella Kaminska: In the 24th century, will the Federal Reserve have raised interest rates?

Brad DeLong: Social credit! Quantitative easing for the people! Monetary policy via direct crediting of seigniorage to everyone’s bank account, in equal shares!

Izabella Kaminska: My real question: Perhaps we are moving into something we could call a post-scarcity world–or at least post-scarcity of material goods. If not Star Trek, in the Q Continuum. In that world, how do you account for positive forward interest rates?

Brad Delong: The Q Continuum–where they can make anything they want, even entire universes, by exerting their minds. What’s the Wicksellian natural rate of interest?

Paul Krugman: I think that in a world without prices of any kind, you do not have interest rates. It’s the reward for accepting the delay of your gratification. But everyone is totally gratified.

Izabella Kaminska: So there just is no interest rate?

Paul Krugman: That’s right. But I do not believe that ever happens. No matter how productive we get, there is always something else that people are going to want.

Brad DeLong: And how hard are you working so you can have an apartment on rather than just off Riverside Drive?

Paul Krugman: I actually do have an apartment on Riverside Drive–but the windows look east rather than west.

[Thereafter the file is inaudible…]

“Your Mom Isn’t Here” Jobs…

Posted on by Brad DeLong

Live from (Outside of) New York ComicCon: We Have (Close to the Equivalent of) Replicators: So Why Do We (Still) Have Non Personal-Service Jobs?

We grow things–but fewer and fewer of us do. We make things–but fewer and fewer of us do. We provide personal services–non-information and information. What else do we do?

It strikes me that a huge proportion of jobs these days are really “your mom isn’t here!” jobs.

What proportion of jobs wouldn’t it be necessary if people would only behave–if people would reliably and properly drop the money they owe into the jar, would clean up if they spilled something, leave the place in the clean state it was when they arrived, would not break machines by trying to operate them when they do not understand them, and so on?