Earlier quoted context omitted.
This is a well thought out macro-finance paper. The space of multiple equilibria models is understudied because it is hard to solve computationally (or rather, it is hard to say that you have actually found all of the equilibria computationally unless you get really creative with the model).
Right. "Multiple equilibria". Like the two branches of the "K" in the K-shaped economy: capital owners gaining, workers losing. So we're trying to prove "mathematically" that the K-shaped economy is "rational", and trying to circumvent the fact that the mathematical rules of economics depend on the social, political, and behavioural substrate by which those rules derive their efficacy. Which is fine if nobody has age…
Speculative Growth and the AI "Bubble" [pdf]
41–50 of 71 posts
Re: Speculative Growth and the AI "Bubble" [pdf]
#42"Workers supply labor, hold no assets, and consume their wage." Ouch. There was a time in the US when most capital was the assets backing workers' pensions. We've seen speculative over-growth with a good legacy at least three times in the last three decades. First was the dot-com boom. Overpromotion made it necessary for every business to have a web site. That wasn't pre-ordained. The Web could have maxed out as a di…
thing is, a few of us (mea culpa, sadly) figured out how to use it, even in 94, to sell stuff. the technology even back then was adequate for this.
Re: Speculative Growth and the AI "Bubble" [pdf]
#43I won't pretend to fully understand the paper, but I did try to read it. A few notes: 1. This assumes that there is notable ROI on 'AI labor'. That is still up for debate. 2. This assumes that the interests are currently falling, unless I misread the paper. 3. This affirms that we are in an over valuated, speculative bubble which will inevitably correct; but it needs to "correct" at the exact right time defined by mu…
> What if we invested half of those trillions directly in socially impactful measures There’s no real “we” in this case. The money is coming from private coffers, people looking for ROI on their hard-earned money. The money isn’t coming from a central planning process.
Re: Speculative Growth and the AI "Bubble" [pdf]
#44Earlier quoted context omitted.
Right. "Multiple equilibria". Like the two branches of the "K" in the K-shaped economy: capital owners gaining, workers losing. So we're trying to prove "mathematically" that the K-shaped economy is "rational", and trying to circumvent the fact that the mathematical rules of economics depend on the social, political, and behavioural substrate by which those rules derive their efficacy. Which is fine if nobody has age…
That is not at all what multiple equilibria means. This has nothing to do with any notions of a K shaped economy (which remember, after covid was describing low wage service workers getting huge real wage increases while white collar layoffs happened in 2022) but rather (to oversimplify) it is describing the idea that you can have multiple economic conditions that are rational to stay in while it is impossible to rat…
So you have it exactly backwards: the K-shaped economy refers to the continued rise of asset valuations as workers real wages decrease.
But I'm not going to keep arguing with you since you seem to be afflicted by "Math brain" (defined here by the belief in homo-economicus where humans can be accurately modelled as a selfish calculator - and please don't correct me on the calculator metaphor, I'm being hyperbolic).
Let's take what we do know from AI and cognitive science seriously: if we accept that humans are some sort of biological prediction machine, that doesn't give us a completely predictive model. There's a sort of "measurement problem" when it comes to self-prediction: while the goal of environmental prediction is clearly accuracy, the goal of self-prediction cannot be accuracy since self-prediction is inherently accurate by virtue of the actualisation of self-predictions. What then discriminates within the self-predictive model between multiple actualizable self-predictions?
If Math-brained believers in homo-economicus are to be believed, then human behaviour is completely determined by what basically amounts to greed. Certainly that's what generally selects for those who occupy positions of power and prestige in our society, and thus based on current political norms has turned into a somewhat self-fulfilling prophecy.
In this since Nietzsche was right: "God is dead." He was killed by enlightenment thinking and replaced with rational self-interested agents governed by predictable macro-economic models... which keep being wrong, because humans are not universally greedy and behaviour, politics, and psychology actually matter a great deal. (Nor is the new god of "rational" selfishly motivated acquisition, expansion, and power-seeking really that new of an invention - he is sometimes called "Moloch", and is in fact perhaps the oldest God, and humans keep discovering he's a pretty shitty God to worship; I have no doubt that he will prove equally destructive and unkind to us if we insist on continuing to and/or reverting to worshipping him dressed up in "rational" mathematical economic language).
Re: Speculative Growth and the AI "Bubble" [pdf]
#45Earlier quoted context omitted.
This is a well thought out macro-finance paper. The space of multiple equilibria models is understudied because it is hard to solve computationally (or rather, it is hard to say that you have actually found all of the equilibria computationally unless you get really creative with the model).
Right. "Multiple equilibria". Like the two branches of the "K" in the K-shaped economy: capital owners gaining, workers losing. So we're trying to prove "mathematically" that the K-shaped economy is "rational", and trying to circumvent the fact that the mathematical rules of economics depend on the social, political, and behavioural substrate by which those rules derive their efficacy. Which is fine if nobody has age…
As much as you may want to move from the low to high equilibrium, it would be pretty hard in an ancient society. In the modern world, with enough exuberance, it seems much easier.
Re: Speculative Growth and the AI "Bubble" [pdf]
#46"Workers supply labor, hold no assets, and consume their wage." Ouch. There was a time in the US when most capital was the assets backing workers' pensions. We've seen speculative over-growth with a good legacy at least three times in the last three decades. First was the dot-com boom. Overpromotion made it necessary for every business to have a web site. That wasn't pre-ordained. The Web could have maxed out as a di…
Re: Speculative Growth and the AI "Bubble" [pdf]
#47I won't pretend to fully understand the paper, but I did try to read it. A few notes: 1. This assumes that there is notable ROI on 'AI labor'. That is still up for debate. 2. This assumes that the interests are currently falling, unless I misread the paper. 3. This affirms that we are in an over valuated, speculative bubble which will inevitably correct; but it needs to "correct" at the exact right time defined by mu…
> What if we invested half of those trillions directly in socially impactful measures There’s no real “we” in this case. The money is coming from private coffers, people looking for ROI on their hard-earned money. The money isn’t coming from a central planning process.
Re: Speculative Growth and the AI "Bubble" [pdf]
#48Earlier quoted context omitted.
Right. "Multiple equilibria". Like the two branches of the "K" in the K-shaped economy: capital owners gaining, workers losing. So we're trying to prove "mathematically" that the K-shaped economy is "rational", and trying to circumvent the fact that the mathematical rules of economics depend on the social, political, and behavioural substrate by which those rules derive their efficacy. Which is fine if nobody has age…
Yeah, that clarifies that you're missing the core idea here. Brett Deveraux is pretty popular here, so maybe you'd like the analogous discussion of high-equilibrium and low-equilibrium ancient economies? https://acoup.blog/2020/08/21/collections-bread-how-did-they... As much as you may want to move from the low to high equilibrium, it would be pretty hard in an ancient society. In the modern world, with enough exuber…
Because we definitely seem to be in a world where GDP inflation is getting more and more divorced from incentives to actually produce things.
With respect to AI and the paper being discussed specifically, all evidence I've seen is that AI's primary applications are within military and intelligence and that the escalating arms race in those domains is actively undermining things that people would generally like to see being produced (food and housing specifically are illustrative here).
Re: Speculative Growth and the AI "Bubble" [pdf]
#49This reads like a propaganda piece aimed at mathematically inclined knowledge workers to try to stave off risk perception as their economic and political power is undermined by the US shift towards kakistocracy. "workers operate with a larger conventional capital stock and wages rise even as the worker share falls." Liberal Democratic capitalism splits power into two primary buckets: political and economic. Marx prov…
Re: Speculative Growth and the AI "Bubble" [pdf]
#50"Workers supply labor, hold no assets, and consume their wage." Ouch. There was a time in the US when most capital was the assets backing workers' pensions. We've seen speculative over-growth with a good legacy at least three times in the last three decades. First was the dot-com boom. Overpromotion made it necessary for every business to have a web site. That wasn't pre-ordained. The Web could have maxed out as a di…
I'm curious about the "if traffic was billed, it wouldn't have happened" part... are you saying that if traffic had been billed per [unit]byte, there would've been no incentive to build fiber networks?
So in that world, we would have fiber, but not (much) international spam.