Video Of The Week: Albert's TEDx Talk
My partner Albert gave this TEDx talk earlier this year. Somehow I missed it until this morning when I was looking around YouTube for something to post. I’ve heard Albert articulate all of these ideas for years. He’s influenced my thinking on them greatly and I’ve gone from dismissive, to skeptical, to supportive of experimenting with them. I suspect you will move in that direction too after watching this short (17mins) talk:
Comments (Archived):
I seem to go in and out of understanding the Basic Income Guarantee rationale, but I like the 2nd inversion idea around the personal bot, and actually, will take that idea further by noting that it’s linked to the future of (decentralized) platforms.These new platforms will be thin at their center (via openly decentralized protocols), and they will start getting built from the outside in, not inside out. When nothing happens without peer to peer users (a user can be a person or biz), then you’ve got a real decentralized platform. [coming soon]
I generally agree, I think the one counterbalancing thought against near complete decentralization is around transaction costs / search costs / negotiation costs. These impediments and concepts were described by Richard Coase in his theory of the firm book. Just became aware of it a few months ago and still grasping full explanation, but I think there are some lessons here. Can’t crystalize well, but short example is craigslist is VERY decentralized right? But the experience can be shitty / shady/ unsatisfying. Vertical integration of certain markets such as short-term rental with airbnb lead to a great experience. It simply just works. I fear decentralization to the extreme is like Linux too… great in concept.. but almost no one uses vs. Microsoft. I understand there are other great open source projects, but usually are mainly techie / insular vs broad based
you mean – Ronald Coase? yes, his work is applicable here, and these decentralized platforms will need to figure out the social / transactional / cost efficiencies required to make this work. good observation.
Yep Ronald 🙂 my bad.
Coase Theorem is amazing when applied to all kinds of things. The problem is people don’t believe it. Mostly because they don’t agree with outcomes, and they don’t have faith that rational humans maximizing their own utility in a free market create better outcomes than centrally planned systems
I think parts of this theory crack with some Internet business models. it’s a long discussion 🙂
Any books / posts you recommend on this concept? Really energized on this concept all day could not thinking about the implications of this with internet business models and certainly an area to examine further and wanted to piggy back off your existing knowledge base 🙂
let’s email, sure. (i’ll email u)
As a starting point here is one succinct scratching the surface on coase. Dude was all over it. Giving meaningful lectures til 80 and still working up until his death at 102.. that means I may have 75 years left… not sure if that is scary or exciting.. I digress. http://www.voxeu.org/articl…
well, Coase’s theories have helped us understand the Internet better, since the mid-90’s.
Yeah. wow, with you and William instantly knowing what I am talking about I do feel strongly then this is a very important concept. I like to think I am a pretty good student of business and economics but never heard Coase’s theorem but really resonated with me. Interesting to see how we can get more people to understand it. Also, isn’t part of the problem in the tech world that the default tech nerd (obviously a stereotype, but relatively accurate) knows little about business and even likes to mock business people / sales / MBA etc. Do you think that is one reason in tech circles we don’t often have these conversations? You and William see many more entrepreneurs than me so curious if my intuition / hunch on this is accurate
A lot of drivers I encounter drive for all three of the majors. there are three variables of interest to drivers, where is the pickup, when is the pickup, where is the drop off and what is the traffic in between. All three services do little to help the driver and the passenger optimize this multivariate optimization problem.
Well, these new paradigms will have a cold start challenge they’ll need to overcome.
I like albert’s thinking on the future a lot. His blog is great (hasn’t been posting much of late, but I think has been travelling. Miss the opportunities to engage on his ideas). The thought that zero marginal cost brings to my mind is this: Really the only MAJOR scarce resource now and perhaps forever will be energy (you need energy to fight entropy). We are moving into an era where the whole game is about “distribution of resources”. The great part is fundamentally this means pretty much everyone can live a very “western, high end lifestyle” (if we figure out and continue to innovate on new energy technologies). The bad part is science challenges have discreet / tangible solutions. Distribution of resources has the problem that 7.3 billion crazy ass people (1 of them right here…) have to work together through markets, govts, individual choices/actors. That is both very exciting and also very potentially dangerous
That resource constraint could be our ultimate undoing.Just maybe the evolutionary pothole we call the dark ages delayed our knowledge-base development just long enough for the population base to swamp our resource base.Oh boy! . . . Aren’t I in a positive mood :-)And adding just a little more cheer if we find a simple/cheap/clean/unlimited supply of energy we would ultimately just over heat the whole damn planet 🙂
I would imagine humans finding technology solutions for energy abundance and hopefully global warming. The question is can we do this before it is too late.
Certainly could be. Personally I think long-term solar power will be able to be produced at an average of 5-7 cents per kwh in 2015 dollars. This is about 50% below retail power, and to produce all current energy world-wide would require about 2-5% of landmass to be covered with solar panels. A massive undertaking, but not impossible. Basically we can probably power a world that uses about 2x the energy we use now. So definitely possible scientifically, but certainly not guaranteed that we will get there. Hopefully we will.. or heat death here we all come (or more realistically humans will in a very bloody fashion reduce humans to an easier to maintain level for 500 million to 1 billion.. I hope nothing crazy like this happens of course.. but always a fringe possibility)
There will be enough energy. There is more than rnou sunlight hitting the earth and I am also cautiously optimistic on nuclear fusion. More posts again in the comint weeks. Have been traveling a lot.
First, hope the travels have been going well! Energy is available, Question is energy at what cost (as I commented else where I think long-term solar can be available between 5-7 cents per kwh in 2015 dollars, basically half of retail price currently.. but does it take us 10 years or 50 to get there). What material energy source is their besides the sun that is hitting the earth that comes from outside the earth’s atmosphere? Honestly can’t think of any, so curious where my physics knowledge may be lacking. And yes, nuclear fusion is the magic 8 ball. Cold fusion is basically bunk (agree?), but fusion is in theory controllae. Trouble there is there anyone credible outside of CERN in Switzerland working on it? You seem to be bullish so look forward to your opinions!!
.The promise — currently — of mini-reactors in the 25-300MW range is real and the DOE has been conducting a contest to find the right product.To put that in context, a typical, one off nuke is 900-1,600MW and costs $5-7B to build. A single big wind generator approaches 1MW before line losses to get the electricity where it needs to go.The initial winner has been Babcock & Wilcox which has had a salt based packaged nuke for several years. This is a very safe process and different than the “light water” approach for big nukes.These are packaged nukes which can be built in modular form in factories, transported on trucks and don’t have to be refueled for 30 years. At 30 years, they are simply swapped out. The typical bespoke one off plant tinkers with its fuel every 18 months.These packaged small nukes can power about 20K homes and are installed below ground. They can be used in tandem.Should some calamity occur, the chain reaction is curtailed by simply dumping the guts into a chamber below the nuke.Like many things, this is being held hostage to regulatory oversight. The DOE competition will overcome some of this.This requires almost no new development to make work.The potential for using this as a “plug and play” alternative for small cities is incredible. You could literally cut the grid and insert this packaged plant in its place.Fusion is a worthwhile objective but right now, this technology is tried and true and is, essentially, what powers US Navy ships and has for years.JLMwww.themusingsofthebigredca…
I like the BIG idea if we get rid of every other government program, and the corresponding bureaucracies that administer them. The Bot idea is provocative, and one we will see in our lifetimes.
And speaking of another Ronald…I loved how he expressed clarity in just a few words.“As government expands, liberty contracts.” ― Ronald Reagan“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” ― Ronald Reagan
yup.
Great phrases I agree.As the president who almost single handedly is responsible for the aids epidemic by refusing to act it is honestly hard for me to acknowledge his smarter thoughts.
I didn’t know that. I guess no President is perfect, but I understand that one of their weaknesses can affect how one thinks of them.
How can someone even come anywhere close to being perfect when they have so many masters to serve? People who criticize those in power seem to suggest that that is even possible in a country of our size (or even the size of Canada). It’s ridiculous and naive to not understand that there is a reason why you can’t get pissed off just because everything doesn’t go your way or to your specific beliefs. This is the same type of thinking that kills relationships and marriage. The idea of no compromise and accepting the faults of the other half. It’s a “hero or zero” type thinking. No nuance. No devil in the details. Sometimes certain types of people tend to love or hate “all in” or “all out” and can flip or turn at any event. The proverbial “shit list” or “good answer” type of person.This is not a defense of Reagan and what he did or didn’t do. Separately Nixon did good things as well but is obviously vilified and remembered for Watergate (and perhaps the drug war).
.Actually Nixon was responsible for the dramatic reduction in Federal drug sentences for drug offenses.JLMwww.themusingsofthebigredca…
Quite a weakness my friend.Cost billions of dollars and resulted in uncounted people dying.
Very funny but maybe a tad too cynical :-)But as “Albert” might respond to that dismissal of the democratic governance process”Everything should be made as simple as possible, but not simpler”.Societal governance is an infinitely complex “food-fight” over wealth, power, education and control between millions/billions of player. So it is no big surprise that society has been and still is somewhat stymied about how to incrementally improve that mandatory governance function in any predictably effective way.Society is a living system who’s analogue is akin to the 10-trillion cells in a living human being with its distributive nervous-system/metabolic-signaling governance mechanisms.That is the complexity challenge we are faced with and if one were a pessimist one might simple be tempted to throw in the towel and declare that we have reached the limits of human intelligence to deal with such complexity.But wait . . . SuperNet to the rescue.We suddenly have the facility to construct distributively intertwining Apps with the potential for unlimited adaptive interlay, with all the features required to mimic not only that nervous-system/metabolic-signaling biological governance process but to get there via the same organically emergent incremental pathway.This is where “the right to be represented by a Bot” becomes of paramount importance to any process that could support an incrementally-emergent organically-distributive pathway to some form of adaptively stable social governance(collective digital nervous system). Without that enforced “Representative Bot Right” we will all lack the autonomy of Awareness/Analysis/Action required to meaningfully contribute to such an incrementally-adaptive, organically-emergent, statistical-complexity-driven evolutionary social gradient.The one bone I would pick with Albert is the idea that such “Representative Bots” could meaningfully dig around inside proprietary data/process silos in order to execute a semblance of social autonomy/control.We will need to somehow get most of our collective data-objects and data-processing APIs liberated form proprietary corporate silos before we can effectively ride that remix-pony value-train opportunity.
“distributively intertwining Apps”- aren’t many apps as such today when they inter-operate with each other?
and the corresponding bureaucracies that administer themWhat will you do with the displaced workers as well as the other money that flows through (for goods and services that produces jobs in the end) from the government bureaucracy?
I read this quote a few years ago, If you want to be successful, stand for something.” I love visionaries who have the guts to present their crazy ideas to the public.
I got my answer a bit, since last few years I am observing things especially business models. Everyone is coming up with cheap price and high-quality solutions, not only in software but now it’s happening in other domains also. Startups like Uber, Lyft, Groupon, Paytm trying very hard to reduce cost for the customer. How would be world after 10 – 20 years, if entrepreneurs keep practicing these kind of business models, then everything will be free and payment medium will be not money, it will also change, what it will be?It is going to be the century of knowledge! Money will not define the person, it will be about his knowledge, which comes from education or directional hard work. That one can do once his basic needs satisfy, so Albert is right, basic needs should be satisfied with certain conditions.This is what Maslow’s law says, so if the government can satisfy up to physical needs level and safety level, then people will be more creative and can able to do cool stuff every day 🙂
When listening to Albert’s speech my mind got to an end-point but not really sure the middle steps to get there. Similarly, the end point is a world where you cannot charge for much. Because I seemed to skip a few steps in the middle I am left with several questions:1) What will define equity value for a company if they cannot generate cash?2) Who will invest into these companies and what are they investing (cash/resources/ideas?)3) If there is no way to generate cash, how do you pay employees?4) If no one is making money — corporations or employees — who do you tax?5) If governments cannot generate cash revenues through taxes then how do we afford BIG?This is a wildly academic exercise. That being said, in the paradigm I am not sure if this would lead to utopia or anarchy.
I completely agree with the importance of knowledge. Will have a post on that coming up soon.
I wonder if someone (Albert?) could elaborate on the basic income guarantee with respect to inflation. It would seem to me that you would have a situation whereby giving people dollars that way would simply drive prices up so that the basic income guarantee didn’t cover what it was intended to cover.If you are now giving someone enough money to cover their basic needs, then the prices of those basic needs (which are not abundant and are constrained like housing) will simply rise and negate any benefit given by the basic income meant to cover that cost.
The greatest expense for the those in the lower 95% is housing. Who does a basis income guarantees help here? Seems like institutional property owners? Unless we can somehow break the laws of supply and demand, the top 5% would reap most of the benefits.
No. Because right now many people can’t move to cheaper places. With Basic Income in place there is plenty of space in the US (and the world for that matter). In Detroit marginal housing is free at the moment.
Sorry if you want to stay alive it is not free in Detroit.
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The key to limiting inflation is taxation, which constrains the supply of money. As it stands today, the poor have negative income tax rates, and there isn’t much inflation, so, presumably, as long as there are taxes on higher incomes, inflation can be kept in check.If you think about it, there’s essentially a basic income guarantee now, except that most of it isn’t in cash (food stamps, Medicaid, etc.), and that hasn’t fueled much inflation.
.In the most complete exposition of the guaranteed minimum income hypothesis, the proponents suggest that current food, medical, housing programs would essentially be subsumed in the new arrangement.Nothing is ever said about the Earned Income Tax Credit.These programs — which are often defended as “targeted” programs, targeted on specific challenges (food, medical, housing) — are constructed the way they are because of how they are delivered.The assumption that a check in the mail will be spent for housing — rather than say, beer — is a little optimistic. Vouchers are given because they are not fungible, not by accident.Part of the supreme goofiness of such an idea is the notion that the government will discontinue programs like food stamps, Medicare/Medicaid, Sec 8 housing and other programs. This is very unlikely.JLMwww.themusingsofthebigrecar…
Agree. And the short answer to “well why not!” is similar to the short answer to why the government simply never just outlawed cigarettes when they were such an obvious and apparent health threat. The reason being “to many mouths are fed from the tobacco industrial machine” [1] and it’s not going to unwind in a hear or two.All that money flowing through the economy (as a result of tobacco) took decades to get to the point where it is most likely not relevant anymore. Back in Mad Men days this was not the case.[1] And we aren’t just talking in tobacco states either. My dad back in the day sold a great deal of brass ashtrays! And some guy had a job fixing the machine that made matchbook covers. And so on.
In his talk Albert notes that the evidence does not support the idea that people might spend their income on beer instead of housing, and such an assertion is completely reasonable. It’s hard to imagine a world where people would prefer to purchase beer to living in a house. I could see beer winning out over coffee where it might serve as a substitute good, but it seems to be a pretty big leap that it’ll beat housing for the majority of people.
.I don’t think the only tradeoff is beer v housing — that is an example only. I don’t agree with the “evidence” that Albert proffers.The food stamp program is rife with fraud and inappropriate expenditures.There is another great example of what happens when people are offered a level of assistance that is essentially self-disciplined.When the food stamp program was increased in 2008 — combination of the Congress, in effect, delegating the eligibility for food stamp program participation to the states, the recession and the Recovery Act (Stimulus) — it exploded from about 20MM to 48MM now.The economy in recovery?You could not prove it by the food stamp program which is hovering at all time high levels. Or, is it that having created a government handout people are not willing to forego a “free” benefit?Food stamps are intended to be a “shock absorber” flexing in times of need and contracting when the economy improves and the need disappears.In fact, once received there is no discipline to maintain eligibility standards (lax to no enforcement, a government failure) and there is no willingness to forego assistance without being forced (human nature).When you create a parochial support system that is not enforced, people will take advantage of it.It kills initiative. It becomes a nanny relationship.JLMwww.themusingsofthebigredca…
In a vacuum, I’m willing to concede that the B.I.G. — leaving spending decisions in the hands of individuals — could be better than government-directed redistribution. But you have pointed out the real world flaw in this program, that it would be tacked onto existing policies rather than implemented in a vacuum. Of course leaving aside the problem of *who* exactly is entitled to the BIG, and the possible international mobility of aspiring BIG recipients.
.In the same vacuum, one has to ponder where the line between initiative and nanny state gets drawn.Today we have something called the Earned Income Tax Credit which is essentially a mechanism whereby a substantial number of Americans RECEIVE a check when they “pay” their taxes.This is obviously funded in it entirety by those who do pay their taxes.If a person is able to have their lifestyle supported with NO work, why would they ever work?Said another way — why will the actual taxpayers work hard enough to support themselves and the slackers?From a character perspective what are we telling people? That not working is a viable option?One small historical perspective, if you will indulge me.When Social Security was designed, the life expectancy of a male was 58 years. Today is it approximately 84 years.The eligibility for SS was 65 years, subsequently lowered to partial eligibility of 62 years.As envisioned, it was a very bad bet all in the house’s favor. It was a benefit only for those who outran their coverage and cheated death which on AVERAGE was nobody.Today, a man may pay into SS for 42 years (assumes a 20 year old entry date and working until 62) and withdraw benefits on AVERAGE for 22 years. This is not the outlier number, this is the average.The reason this is important also is that SS — often cited as a core benefit — was an insurance scheme. More would be paid in than paid out.This has a lot to do with how our country approached benefits as this is the single check approach that subsumed food, medical and housing.Subsequently, medical was carved out and funded separately through payroll deductions. Medicare/medicaid.JLMwww.themusingsofthebigredca…
Social Security is an obvious test case, or stalking horse for this discussion. And I think it’s a fair one, b/c even for an individual rights/responsibility proponent, it’s hard to figure out how to replace SSI without doing a lot of short-term harm to kindly grandmothers. Perhaps if we could go back in time, and avoid the New Deal altogether, things would be different.While I agree with the sentiment behind your comment, I don’t entirely agree that free money would remove the motivation for work, or that the hardworking taxpayers would do more than grumble and write angry comments on the Internet.As anecdotal, non-rigorous data, my grandmother continued to work long after she “retired” on SSI, as do many other elderly folk I’ve met. So as much as I’m in your camp on the evils of guaranteed cheese, I don’t necessarily think that most people would be unmotivated to work. There would be a class of government-sponsored hoboes, but not everyone wants to be a hobo.Also, whether we think it’s right or not, taxpayers have already proven to be reluctantly accommodating of redistributive schemes. Would the b.i.g. be a step taken too far, and finally awake the angry farmers with their pitchforks?
.Your grandma proves my case. She worked from young adulthood. She was never tempted not to work. Her habits continued.The basic income guaranty undermines the original motivation to work — effectively unlearning the habit of grandma.JLMwww.themusingsofthebigredca…
re: who is entitled. The only way such a program could work is if everyone gets it. We can’t afford the administrative nightmare or the grey area where we draw a line between who gets it and who doesn’t.
who is everyone? do you mean all citizens, all permanent residents, all citizens of countries who have signed a hypothetical treaty for B.I.G. reciprocity???
Everyone who is legally here and who would be paying taxes if working. Again, implementation details not specified, because I think it’s very unlikely to happen, but there are requirements for immigration and naturalization (i.e. you have a job), and I think it would be reasonable to have a waiting period of 2-3 years after arrival before getting your BIG allowance to discourage the world’s un-employed from moving here to collect it. But, if I’m obliged to pay taxes, it seems reasonable that I would also qualify for the allowance. As I noted in another comment, I’d also want to see some kind of qualification (e.g. 2 years of public service) to be able receive this.Our tax and entitlements system is far too complex, which is why it works so poorly and has so much fraud. Make things simple, kill unnecessary overheads, don’t give bureaucrats power to decide things they aren’t qualified to decide. If you do such a program, the only way to make it work and be fair is to be universal.
Those all sound like sensible measures. In the real world, I suspect the BIG (if implemented) would be a bolt-on to existing entitlements infrastructure. So you could have someone who receives the BIG, as well as UI, medicare/medicaid, SSI, etc. Taxes that fund the BIG would appear alongside FICA on your pay stub.
And, with those conditions, I wouldn’t even support an experiment. You can’t fix things by designing them to be broken.
Robert Moses is famous for launching new roads projects based on falsified budgets, and without having obtained the right-of-way for the intended route. Once started, he would then beg for more money so as not to “waste” the initial effort, and would fight to condemn the right-of-way while construction progressed. This was considered outrageous back then, but now seems like the only way any new policy gets pushed. Like Obamacare, which theoretically is a vast improvement over employer-funded programs. I doubt Obamacare is a perfect, or even a good implementation of this policy. But maybe it can be improved over 20 years? Personally I don’t have the stomach for this kind of politics, but I just kind of throw my hands up and say “render unto Caesar”.
Obamacare is neither theoretically nor practically a vast improvement. It has already resulted in radically increased costs for almost everyone, people being forced out of plans they liked or to drop doctors they’ve used (despite claims that this wouldn’t happen), and millions of people being told that they don’t earn enough by the exchange program insurers to qualify for the plans they want. There are only two “benefits” that have been achieved: people with pre-existing conditions cannot be denied coverage, and somewhat more people are insured today than a couple of years ago due to increasingly stiff penalties for not being insured. It’s the worst of all systems — we still have millions of people who aren’t insured, millions more who can’t afford the coverage they used to have or who are being tossed out of plans they used to have and were happy with because they no longer qualify as eligible plans, and (radically) increased costs for almost everyone who is still with an employer-sponsored plan. The real name (Affordable Care Act) is a cynical joke. It is unlikely to be improved ever, because we are unlikely to ever agree on what improvement means. The best solution would be to toss it out, and simply mandate three things: insurers must cover pre-existing conditions and must spread the cost across the entire pool of insured; everyone who has a job must carry insurance; insurers must be allowed to compete in all states. Specifying what the plans must include should be nixed.The basic problem with Obamacare is that it did not address any of the issues that were used to justify its creation. It did not target any of the things that elevate costs to ridiculous levels (and continue to cause them to rise much faster than iinflation), and it has not resulted in universal coverage.This pattern is true of almost every government program, no matter which party introduced it. If the government does it, it costs a minimum of 15% more than if run privately. Its implementation is political, and neither effective nor efficient. Costs never go down, only up. Rules are overly complex. Oversight is negligible. Nothing is ever “sunsetted”. “Enhancements” are usually the opposite — a patchwork of ill-considered and often duplicate or contradictory reforms. It’s simply the worst possible way to implement any social benefits.
.I could not possibly agree more with you than you do with yourself.For 33 years, as a CEO, I provided health, life, dental, vision insurance plus a wellness program for my employees. It was tax deductible to the company and it was there in good and bad times.I paid 85-100% of the program with company funds which were not income to the employee.Today, that is not possible because it is considered a “Cadillac plan” and thus the employee finds themselves vying for coverage at their own expense in a chaotic market.It is a disaster for them. A freakin’ disaster.JLMwww.themusingsofthebigredca…
Nothing stops anyone from spending their income on beer. Why is it assumed that if you don’t have a regular job, or have a guaranteed income, the money will be spent on alcohol and drugs rather than food and housing? One thing that bothers me immensely is the judgmentalism directed towards those who are dependent, whether short or long term, on some kind of assistance. There are plenty of wealthy alcoholic stockbrokers and business owners, and plenty of thrifty and responsible people living on low income who don’t drink or use any kind of drugs. Even so, do we really begrudge the poorest among us an occasional beer? If so, are we going to tell military personnel no more drinking?Whether you are optimistic or pessimistic about human nature, and the likelihood that the basic income will be spent on beer rather than housing, this spurious argument has little to do with the merits of the idea.
“Nothing stops anyone from spending their income on beer.”Which is exactly why housing, as an example, is a voucher program and Medicare is a reimbursement program.Food stamps, which BTW has exploded from 20MM to almost 50MM participants in the last 6 years, is fraught with abuse for one reason — it is money. It is fungibleWhile I cannot suggest that having a beer is a “bad” thing, having to pay for someone else’s is, in fact, a bad idea. I personally tend toward Angry Orchard hard cider but I pay for my own.The social safety net is intended to catch those falling and unable to get up on their own — not to support a lifestyle. The minimum income guaranty is not a social safety net, it is a lifestyle funding mechanism.The minimum income guaranty is not “income” in the sense of having earned it. It is a subsidy provided by persons who have worked to be able to provide for themselves and others.It is bad public policy and it bad for the development of human potential and punishes the productive.JLMwww.themusingsofthebigredca…
The impact of technology is strongly deflationary. That is what we have seen in prices for many goods. Basic income will help make services such as education and healthcare cheaper as well. Housing costs come down tremendously when people can live anywhere. Eg marginal housing in Detroit is free at moment.
I would think the aggregate impact of mobile, b-i-g spenders would be inflationary. The price only goes down from the perspective of the New Yorker moving to Detroit. From the perspective of the Detroiter, things are getting more expensive as East Coast immigrants drive up prices. Or maybe the impact would balance out in the aggregate, and prices would equilibrate for the new conditions?
This is not a universal truism. The impact of most disruptive innovation is deflationary. The impact of most innovation (which is sustaining) is to increase the cost, creating products which overserve needs.Housing may be next to free in Detroit, but very few of us want to live there (which is why it’s next to free). It won’t stay that way when the Detroit economy improves. Someone still has to build and maintain the housing stock — it won’t simply grow like weeds — and this has nothing to do with where people are able to relocate. Most resources are finite, and many are relatively scarce. You can’t simply dismiss the impact of scarcity — resolving scarcity is what drives us to create solutions which creates abundance.A basic income guarantee would definitely create inflation, but not necessarily an inflationary spiral. I think you could easily project how much prices of basic necessities are likely to rise, and factor that into a 10 year plan such that inflation does not eat the value of the basic income, but rather is distributed across the economy — that’s an implementation detail, not a show stopper. The real question is whether we have the desire and will to implement such a program — I don’t believe that we do.
Albert, you make a compelling case for both of your policy proposals, but your presentation raised two questions for me.1) You note how your BIG might shrink the labor supply and that would be a good thing, because it would raise wages. The same point is true about restricting immigration, and, one would think, a basic income guarantee would make the U.S. even more attractive to unskilled immigrants. Given that, have you reconsidered your position on immigration?2) Your example of a bot allowing a driver to select the best jobs for him from among the different ride sharing platforms made sense, but, given our winner-take-all economy, chances are there won’t be multiple platforms for long. So it seems that, for bots to help people in the way you envision, there needs to be more competition within each industry. Have you given thought to what sort of policy could facilitate that?
1. I have not changed my view on immigration. I think an policy that tries to aim for zero of something that people want to do is bound to fail as in the case of prohibition. We need a sane policy that continues to let talented / motivated individuals come to the US.2. The bot proposal does exactly that. Because it makes it hard if not impossible for a single network to control a market. It would really undo network effects. That’s really the whole point.
About nine years ago, Charles Murray proposed a version of your BIG. Here’s a Q&A with him about it from back then, if you’re interested in his perspective on it: http://www.unz.org/Pub/AmCo…
Was not aware of this work by Murray. Have ordered the actual book that this is based on. Thanks!
NP.
I wrote a fairly extensive piece just for this kind of concern. Reading it will provide a much greater understanding of a great many of the variables involved.https://medium.com/basic-in…
This is a really fascinating idea, the basic income guarantee. I was talking last night with a friend who works with homeless individuals that are 17-22 years old. He’s a 20 year veteran of Morgan Stanley, doing wealth asset mgmt, and he mentioned how much more mind blowing than anything he’s done it was to watch what basic services and housing can do for someone who’s had literally no access or resources in their life. These young men and women he works with, in 12-15 months they’ve gone from barely getting by to having jobs and contributing positively to the community.That’s consistent with my experience as well, that if you really engage a human being and give them agency and ownership in their life, they will pick up and run with it. I grew up dirt poor, section 8 housing and commodity food, and there were families in my neighborhood on welfare. But I have yet to see anyone who, given basic resources, didn’t want to learn something, try something, or create.
An obvious question then is why isn’t there some kind of crowd-sourced or like minded individual solution addressing the potential value of mentorship of less advantaged individuals (who may include homeless but not necessarily limited to homeless).Essentially “Here is who needs help” and “Here is who can help”.Not a place for donations but a place for advice, direction and potentially mentorship. No question that a great deal of people would participate in something like that. Once again, not about money but about advice, help and direction.
As cynical as it sounds I don’t think there is/would be anywhere near enough supply on the mentor side.
Possible but while it is true that people often talk a good game [1] I tend to believe (and this is me talking here) that it is something that would take hold and would work. The societal impact would be quite large. As the movement grew and got publicity more people would get drawn in. This could be perhaps a much more interesting way to spend your time then to sit in Church or Synagogue reading the same passages over and over again.[1] Russian shirt off your back story applies: Essentially a Russian guy tells someone “If I had a million dollars I’d give you half!”. So the person then says “well can I have your shirt?”. Russian guy says “no sorry…” (or something like that).
I agree, and think there are a lot more people who want to give than is obvious. It’s a smaller thing, we help the people we see in our daily lives (online or offline). To your last point, I read something interesting about this the other day, how it’s good to give when people ask, but even better to understand them and offer when you see you can help.
It’s not so much that I think people lack a desire to help, but rather that other obligations prevent them from doing so. In a world where many of my peers work 10-12 hour days billing their hours at law firms or organizing for political campaigns, often on Saturdays and Sundays too, the time to do these sorts of things is simply non-existent, especially if they have families.
Well certainly there are a world of retired people or people in middle age (kids are grown and out of the house) that could be of value given their life experiences.or organizing for political campaignsOff the top this seems of more value perhaps than spending your time doing something like that.I would think that people would find it rewarding to be able to have an actual individual payback of their efforts (that they can touch and feel good about) rather than something that they were loosely tied to, like the church bake sale.
That’s a good Q. Right now the responsibility largely falls on non-profits + faith based organizations (my friend’s is the latter). Be interested to see if anyone has examples of what you’re talking about, I know of a few very small ones but it’s something that does take time b/c you can’t just show up and say to someone who’s been displaced / left out of society “we’ve got your solution”….needs to be self-defined.Also, as Albert addresses in part in the video – that mentorship / information / direction is a lot less effective (and in some cases not effective at all) if a person can’t meet basic needs. I saw a journo recently refer to “poverty mindset” and voice frustration at how narrow minded poor people can be. But I can tell you from experience that if you’re choosing between your gas bill and buying food, someone offering advice isn’t worth much.
I think advice can go a long way from someone who the other person respects as being a solid accepted member of some community they are trying to reach. (You can argue whether that’s a good thing or not of course).Let’s take you for example. You said you were living in Section 8 housing and dirt poor. My guess is if some “smart or rich guy” (and I will use “guy” here) drove up and offered to give you advice on what to pursue and some things that you could do to improve your situation, you would jump at the chance to listen and follow that advice, right?Remember the story about Fred’s mother in law? She told him to get his MBA that’s a small example of the same exact thing in a way.
Well, that’s an interesting query. The answer depends on a) whether or not that person understands what I’m dealing with and b) if I’m in a stable enough position w/basic needs to actually act on their advice.If the answer is yes to both of those, I would definitely take the advice. But if it’s no to one or no to both, maybe not.Right now I’ve got the mindset, experience, and stability to take the advice, and even if it’s wrong I’ll parse it out. But for a younger me (and for some of the teens I mentor) the answer may be no. I don’t really know how to explain that other than that if someone showed up with advice and you were hungry and freaking out over having your heating disconnected in the dead of winter, or where you were going to sleep that night if you are homeless…your brain is thinking narrowly by necessity. Does that make sense? I don’t live day to day for survival right now, but I have done it so it might be difficult for me to explain…
.What screams out in your observation is “…having jobs…”Herein is the solution to almost everything challenging America today — jobs.We are defined by our work. When you ask someone “What do you do?” — they respond with their work. “I am a carpenter.”They do not say “I am a philosopher but I pay my bills by being a wood butcher.”We need work, hard work, to define ourselves and to develop a sense of self-worth.It has always been so.JLMwww.themusingsofthebigredca…
Yep I agree, and that’s why the phrase “hand up not handout” matters… it does require actively helping and understanding people, in the context they come from. Which doesn’t play well with soundbites and politics, unfortunately.
.No revolutions were ever started on a full belly and no great social programs were ever articulated by fat cats with full larders — including myself in that description.Our country was built on aspiration, inspiration, personal motivation and old fashioned greed — in the nicest sense of the word. Capitalism has delivered the best standard of living in the history of mankind. Capitalism is competition and competition is all about hard work.No great country was ever built on good upholstery, indoor plumbing, handouts, redistribution and assurances of a well stocked larder. Assurances of well stocked larders as a result of the work of others in particular.Our personal sense of self worth is defined completely by our work.”What do you do, my friend?””I am a carpenter, a VC, a lawyer, a plumber, a soldier…”We need hard work and the beauty of that is hard work rewards us both with financial consideration and a sense of accomplishment.So, knowing what has historically worked why are we tinkering with the process, the formula?Because it often entails hard work. Getting up early. Staying late. Working hard.Goofy ideas like the minimum income guaranty are based on the notion that the takers will allow the makers to provide not just for themselves but for the takers also. To work, it mandates that the makers — the taxpayers — will continue to shoulder their own burden and that of the takers and not change in the process.Why would anyone assume that would work forever?This creation of dependencies is anathema to the driver of excellence, capitalism, success — independent action.Want to drive the country forward? Divert all the money being thrown at unemployment into education — the great leveler between the rich and the not yet rich — for jobs that are in demand, real jobs with real pay checks. No more poets, thank you.How can anyone trust government to dismantle itself? It is not going to happen. Further there is not a jot of evidence that the Federal gov’t has ever reduced its size. It is as immutable as the law of gravity.Why not just adhere to what has made us great?JLMwww.themusingsofthebigredca…
The bread basket and cost of housing will rise accordingly with a basic income guarantee. You’d just be raising the bar on the lowest common denominator. Why does anyone believe pricing on bare essentials would remain static, hence affordable?
Because food is necessary for survival we don’t live in a world where people who previously were not consuming food are starting to consume food. Sure the cost of some foods may rise once more people can afford them, but it would defy biology to believe that the demand for food in aggregate is going to explode. If you’re alive you’re eating something somehow. Plus rising prices would then tempt more producers into the market to meet the demand. AgTech and its use of Big Data, GMOs, specialized fertilizers, harvesting robots, etc. would increase capacity.Housing is a tougher thing to tackle. However one interesting wrench in this problem is that if you are receiving a basic income you may be more agnostic to your location than someone with a job who has to commute. Creative developers could suddenly create profitable housing in communities that were previously depressed because they can buy-in at low property prices and then would have to price rents to be affordable in some manner in relation to the basic income because they otherwise would not see any renters given the people with jobs still need or prefer to be in the cities.
The idea of “Abundance Thinking” can be applied to so many new places:- Abundance of life, and living to 100, 200, or 1000- Abundance of travel, the hyperloop, and some day the transporter- Abundance of space, traveling beyond the atmosphere of the EarthThe inversion from scarcity to abundance really is one of the most forward thinking concepts that will affect humans into the future. Thank you for sharing!!
I had the same knee-jerk reaction to basic income guarantees but the more I read about it the more I like the concept. Solves so many problems. My only worry is that it could exacerbate the trend of top-tier women opting out so that most leadership roles continue to be held by men. Could help with that, of course, by making it easier for men to stay home and care for children. But given the strong societal pressure on women to make that trade off, that would be my worry. But overall the idea of decoupling work and basic income is a really good one.
I’d be interested to read more data analysis on social security. That program, for all its regressive structure and other flaws, does keep millions of elderly Americans in conditions of some basic dignity. And I haven’t heard any realistic proposals for replacing it anytime soon. I don’t think turning SSI into a defined contribution program to be managed by Wall St. works at a macro scale, for instance. If there’s a better solution than the b.i.g out there, does that solution also work for SSI in the real world?I hope that there is a better solution, b/c my instinct is that the b.i.g. = the road to serfdom. But Albert has done a lot of work to flesh out the rationale behind b.i.g. I’d like to see some equally well-researched criticism from a compassionate libertarian.
Loved this—thanks to Albert and Fred for sharing.Question: a lot of the USV folks have spoken about / pointed towards a future where networks may have less power or need to be more cooperative with their participants (like in this post about the Mutual Company: http://avc.com/2014/01/the-… )——what does that do to the USV investment thesis around networks?
reduces the power of networks and means we would have to accept lesser economics from them
I’ve been reading AVC for 5 years, and this is my favorite video I’ve seen here. Thanks for posting. I’m heading to continuations to read more about BIG. I hope it can be part of the 2016 debate.
As good as the daily thoughts, observations and writings of Fred are and the brilliant comments that always follow, mine won’t be in the former or latter. I just have to express my gratitude to Alex Wenger for laboring on the idea of, presenting with such skill and clarity and advancing these fantastic ideas.
I would like to see this topic debated by Albert with an economist and a neuroscientist. It must take a lot of courage to bring this theory to the public and as much as it warms my heart, I think it is a theory that ignores how our minds function, so it couldn’t work out.I wish as a species we were like this – being given an easy ride, we would become sources of continuously added value, but it doesn’t seem to me this is who we are. We seem to need strong and continuous motivation to be active and in the absence of this motivation/duty, we seem to easily fall into depression. Take an example with free online education, people just don’t complete the courses. Money earned feels so different to money handed out.Yes, the advance of technology is a big issue, but personally I don’t think subsidizing people is the solution. It is a beautiful idea, but for the wrong ‘candidates’. And also I not sure if ease of access is the same thing with abundance.
The problem with Albert’s polyanna thesis is that abundance doesn’t just exist, or spring from the ether, it has to be created. And, someone has to invest in creating it. And, it’s far too easy to extrapolate the zero marginal cost of digital distribution and imagine it applying to everything — maybe that’s a VC perspective, since so much of what VCs invest in is about digitization of content. Until we have abundance in food, clean water, energy, transportation, healthcare, education and service quality — to name a few things for which there is highly inelastic demand — the notion of inversion doesn’t really scale.Moreover, scarcity thinking is what drives us to create abundance — precisely because the inversion from scarcity to abundance is what creates disruptive innovation, which is what creates wealth and economic prosperity (and the means to pay for BIG ideas). In fact, even though we have relatively much more than 50 years ago, let alone 100 or 500 years ago, each new generation resets its expectations and definitions of scarcity. For example, even though communications technology is relatively abundant if you are over 50, and recall what it was like in the 1970s, to those under 20, there are still relative scarcities that create opportunities for innovation and improvement. There will always be scarcities, no matter how much we have, and we are wired to solve those scarcities, not to wallow in abundance.That said, I would rather we had a basic income guarantee than all the social welfare programs we have now, which are dignity destroying. In fact, I couldn’t support it unless every other program was abolished. We could attach a requirement, such as needing to perform 2 years of public service to earn it. I think the likelihood or tendency to abuse it and do nothing is not great — most people will do something productive with their time that benefits others, even if they don’t feel the need to perform mind-numbing work just to survive anymore. I’m not sure we can afford it, but a localized experiment is unlikely to do much harm, and may well provide benefit even if the idea is a complete failure.
Is AVC portfolio company Kik Dead Now?facebook used its monopoly to take over instant messaging in a matter of monthskik has been all but killed buy ithttp://betakit.com/waterloo…i am surprised Fred Wilson, the AVC, venture capitalist isnt screaming about it———-facebook is a bigger abusive monopoly in both USA and Europe.i am american. glad to see the EU do the right thing against Google.now they need to do so against Facebook.The EU needs to take action against all law breakers.Thats having a referee in business.We need referees in business just like we have them in sports or the players cheat.1. Facebook should not have been allowed to buy Instagram.That is coke buying pepsi. Its against anti-trust law. It hurt consumer choice, privacy, features developed, etc…2. Facebook also should not have been allowed to use their monopoly Social Network to dominate and take over Instant Messaging with Facebook Messenger. This is also against anti-trust law.Without using their monopoly in Social Networking Facebook could never have taken over Instant Messaging as it has.Read more: http://www.businessinsider….
Kik is doing great. No change in usage over the past six months
ok. sounds good. if over the next 6 months usage changes I hope you will come out against Facebook having used its monopoly in social networking to enter and dominate Instant Messaging. we need referees in business and, imho, the FTC isnt cutting it.
Albert’s BIG idea reminded me of Daniel Kahneman’s finding he shared during his excellent TED talk http://www.ted.com/talks/da…