liberalize blood economics

Epistemic status: I vant to suck you blood

Consider the products of human labour.

In a pure farming society, each person (or family) use their own labour to produce all the food and goods they need to live. But as society becomes more complex and economics happens, we develop ways of storing it in banks for later use – first for direct personal use (as in grain silos), then in more abstract ways that allow us to more conveniently trade the value of labour without having to give each other sacks of grain. We develop coinage and banks – first using valuable items or metals to symbolize values, and (as trust and stability increase) switching over to paper or electronic numbers that have no value beyond being a symbol.

This economic abstraction is what allows us to trade values and transition from a world where each person works only for himself to one where we work collectively, using teamwork and diverse talents, in order to increase production and prosperity for everyone. Each person can pursue their comparative advantage, and then trade the excess value created to ensure mutual benefit. Arguably, it is this process of increased financial abstraction that has increased human welfare throughout history

However, labour is only one thing humans both produce and require the use of in order to live. There is another, even more fundamental product that we all create and all rely on. I speak, of course, of blood.

And yet despite how central blood is to our lives, we have failed to financialize it beyond the very basics. Each person produces only their own blood, for their own use. We have blood banks, but they serve only very basic functions – they collect and store blood, and give it to those who need it in an emergency. They act more like a primitive farming village’s emergency grain stash than a real bank. This is a failure, but also an oppurtunity.

We should liberalize blood banks to improve the blood economy.

Fully liberalizing economic systems takes generations, because they rely on repeated abstractions of abstractions (imagine trying to explain derivatives trading to a Babylonian farmer).  However, a few ideas on low-hanging fruit we could get started with:

  • Blood lending: Blood banks should increase their blood supplies by lending blood at interest to people who need it. For example, athletes who need a strong game day performance could borrow blood for that day, then repay with interest once the game is over. In this scenario, everyone wins – the blood banks get a larger blood supply, and the sports industry gets better athletes.
  • Drugs in the blood supply:  We put fluoride in the water supply in order to improve dental health, to generally positive results. It has also been argued that we should also put lithium in the water supply to improve mental health. However, transferring medication through blood is much easier than doing it through the drinking water, and a managed communal blood supply would let us do so much more. All those performance enhancing drugs that athletes take? Since athletes trade so much blood, we’d all get trace amounts of those in our bloodstream, increasing our performance. Medicine or vitamin shortages? Bad nutrition? A story of the distant past, as unimaginable as having to hunt your own dinner every night, once we introduce the communal blood supply. The quality of the community’s blood supply would rise, and over time we would come to treat each individual’s ownership of blood more like we treat money – a symbol of the amount of society’s blood that the person is owed, rather than just the supply currently hoarded in their body.

This system is not without risk, especially of increasing contamination and bloodbourne disease. However, this is also an opportunity – default risk is a common aspect of credit and stock markets, and the financial system has developed ways to price it in, accounting and controlling risk without dismissing it, letting people make risky investments even while they reduce the total risk that people take. However, while this would be a net benefit on the whole, we must keep an eye out for a 2008-style collapse caused by bad estimates of correlated risk (which could potentially be triggered by a new bloodbourne pathogen).

Aliens Destroyed the Moon

Admiral Blanksman walked home slowly. It had been an exhausting day.

He’d had to offer his resignation to the president, and the president had only said he would discuss it with the full security council (except, of course, for Blanksman himself), and then dismissed him for the day. Blanksman couldn’t even really complain – it had been a massive intelligence failure under his command, and public outrage was already in full steam.

It was a frustrating failure for an admiral in an era of relative peace. There had been escalating tensions between the Terran Dominion and the Sorovian Conglomerate for the last few years, but nobody expected it to escalate to any sort of direct attacks on the population, just a few minor outpost raids that were intended to show off each side’s new weapons as much as anything. He’d nevertheless made sure the defensive networks around all the inhabited Terran worlds were up to date and impenetrable to Sorovian technology, but the navy didn’t have the funding to protect every minor outpost and he’d been resigned to losing a few of those. Just not that particular outpost.

Luna Prime hadn’t had any sort of strategic importance. It wasn’t even a tourist destination, and the Navy maintained an outpost there mostly for the rare cases where they wanted to land something on a planet instead of a station, but didn’t want any of the legal overhead involved in landing something in some sectoral government’s jurisdiction. In other words, it was a perfect target for a low-level raid by a fleet that didn’t want to risk escalation. Except, as it turned out, the civilian population of the Dominion’s capital of Earth really liked having it around. He doubted the Sorovians had even realized the cultural implications.

But now there was an outraged civilian population and protests in the streets, so tensions would probably escalate and heads would probably roll. The negotiators would have their work cut out for them in the coming weeks, but he doubted he would. It was probably time to spend some time with his family.

Just on cue, his phone rang. He reached for it from his pocket (it would have been nice to just have a neural implant, but that would have been an unthinkable security breach for an admiral) and saw his Cindy’s face on the screen.

“Hi honey”, he said. “How’re things down at the lab?”

“The lab’s fine dad. But there’s something I need to talk to you about.” She sounded worried.

“What’s the matter? Is this a dad call or an admiral call?”

“An admiral call, I think. So we had our lab boating trip this week – Rick was pretty excited about this, and you did say just because they destroyed the moon didn’t mean there was going to be an interstellar war and we should just go on on with our lives, so we decided not to postpone it after all. So we all went to the beach and got on the boat and then, well, the tide came in. Right at 11 am, just like it always does.”

He took a moment to digest it. Cindy was being a scientist as usual, taking something inexplicable and making it sound like an interesting thought experiment. But she was more worried about this than she let on. Hell, they both were.

“I suppose this couldn’t be some kind of tidal momentum, or something weird with some kind of coriolis force?”

“No. We checked with the astrophysics department and the quantum gravity people, just in case, but no one could think of anything. And it’s backed up by measurements all over the world, although so far I don’t think anyone’s even noticed how weird this is. People who go boating are too used to tides.”

He frowned. “You were right, the president needs to hear this. Does anyone else know yet?”

“I don’t think so, but it won’t be long before everyone notices. People would’ve noticed already if everyone wasn’t so worried about war breaking out.”

“Alright hun, I need to call him right now then. stay safe.” He hung up, and took out his other phone, the one for secure calls. The president’s military aide answered him by the third ring.

“Quimby, this is Blanksman. I need to talk to the president. Possible emergency. Urgent response required.” For a relatively peaceful era, he thought darkly, this week was having a lot of new emergencies.

“I’ll have him on once he’s done with this meeting”, Quimby responded. “give it about seven minutes.”

“I’ll hold”. Blanksman wondered if he should have raised the level to “clear emergency” – the president might appreciate having his meeting interrupted for this – but this had already been a problem for at least two days, it could probably wait a few more minutes.

Six minutes late, he heard the president’s voice on the line. “What’s the emergency, General? Another raid, or is this something about the moon?”

“Not sure sir. It’s…something weird. My daughter just called to tell me her lab’s been seeing reports that tides are still happening. And it shouldn’t be happening, sir, not without the moon. She thinks something fundamental in physics may be broken.”

“Well, I-” the president began, and cut off. Blanksman checked his phone screen after a few seconds, but the call was still going. “Sir?” he asked the phone. And then he heard a response, but not from the phone.

SORRY ABOUT THAT, said the voice in his head. LOOKS LIKE WE HAD A LEGACY ERROR WITH THE CHANGE IN ERAS. It sounded like the president, but… not. This wasn’t like the neural implant he’d had before he joined the navy it was more fundamental, more real. It was, he suddenly knew, the voice of God.

“…Sir?” He wondered if that was the right term for God, and suddenly wished he’d listened to his wife and gone to church more.

SORRY, WE KEEP PART OF SOME INDIVIDUALS SOULS FOR MONITORING IN CASE SOMETHING GOES WRONG. THINK OF IT LIKE… THE PRESIDENT CAN LISTEN WITH THE EARS OF GOD, AND RIGHT NOW THOSE EARS PICKED UP SOMETHING THAT NEEDS THE REST OF GOD TO HANDLE. YOU SAID THE TIDES WERE STILL COMING IN?

“Yes sir. What’s… what’s going on?”

A pause, then finally –

LOOKS LIKE WE NEVER PORTED THE TIDES OVER WHEN THE WORLD WAS CHANGED. WHEN WE CREATED THE WORLD, IT WAS JUST… FLAT, YOU KNOW? TIDES WERE JUST A THING THAT HAPPENED. WE UPDATED THE MOON TO BE SYNCED WITH THEM ONCE WE SWITCHED TO A GRAVITY-BASED SPHERICAL MODEL, BUT IT LOOKS LIKE WE FORGOT TO MAKE THE DEPENDENCY WORK THE OTHER WAY TOO, SO THEY JUST KEPT HAPPENING EVEN WITHOUT THE MOON. SHOULD BE AN EASY FIX THOUGH.

Another long pause, except that somewhere in the back of his head, he could still hear God humming. “Sir, are you saying… are you saying this is all computer code? Like some kind of elaborate simulation?”

The humming paused. NOT REALLY. THE WORLD IS… WELL, IT INVOLVES A LOT OF CONCEPTS YOU AREN’T ACTUALLY ABLE TO COMPREHEND. LIKE HOW THE CHARACTERS IN YOUR COMPUTER GAMES WOULDN’T BE ABLE TO COMPREHEND YOURS. IT’S JUST A METAPHOR, BUT IT’S AS CLOSE AS I CAN GET TO REALLY EXPLAINING THIS TO YOU. some more humming, then –

AH, THERE WE GO. ONCE I RUN THE FIX, I’M GOING TO HAVE TO REVERT TIME TO A FEW DAYS AGO, BEFORE THIS ISSUE CAME UP. YOU’RE GOING TO FORGET ABOUT THIS – SORRY ABOUT THAT, I REALLY HATE HAVING TO ERASE YOU PEOPLE’S MEMORIES. BUT THIS NEEDS TO GET FIXED.

“Sir, I – ” Blanksman began, and then blinked.

 

 

 

Admiral Blanksman walked home slowly. It had been an exhausting day.

A phone call from Cindy soon disturbed his ruminations.

“Hi honey”, he said. “How’re things down at the lab?”

“The lab’s fine dad. But there’s something I need to talk to you about.”

“What’s the matter? Is this a dad call or an admiral call?”

“A dad call. I talked to Rick on the way to the boating trip yesterday, and, well we’ve decided to have another kid…”

Blanksman smiled. It would be good to have another grandchild around, especially if he’d soon be spending a lot more time with his family.

Sharing power through multiple institutions is a good idea, except when they fight or have a vetocracy

Consider the structure of the British government as shown on Yes Prime Minister1. We have two competing power centres (the ministers and the civil service), each with their own incentives. The civil servants wants to increase the power of the service, prevent government policy from changing, and get knighthoods. The ministers want to increase their poll numbers, get reelected or promoted, and, occasionally, implement the policies from their manifesto.

Weirdly enough, this works surprisingly well in practice. In a given episode we’ll usually have a plan proposed by one or both sides, with all sorts of shenanigans as the other side tries to block or manipulate it. The whole process is a giant mess of internal politics and manipulation done by people who aren’t particularly noble and patriotic. But if we look at what they actually do by the end of the episode, they end up settling on the good policies for the country more often than not (and when they don’t, it’s often because they choose short-term benefits over long-term ones).

There’s a couple of reasons for this to work. First, both the ministers and the civil service want to look like (and, to some degree, actually are) interested in advancing British interests. So in a conflict between them, the side that’s actually advocating for British interests has an inherent advantage and is more likely to win out.

Second, both sides are sort-of aligned with British interests. Their interests aren’t exactly the same, but they are both positively correlated. And while the components of each side’s interests that are aligned with British interests add up, the components that aren’t are random and are just as likely to cancel out. For example, the minister wants change for change’s sake (to look dynamic), and the civil servants want to avoid change (they hate all change), so the biases on change vs the status quo mostly cancel out.

This is analogous to the classic problem of guessing how many jelly beans there are in a jar.

SH Dining בטוויטר:
It kinda bugs me that the prize is a free meal voucher, instead of just directly giving you the jelly beans.

The best strategy for this problem is to let everyone else guess first, then take the average of their guesses. This works because each person’s method has a component that’s based on the real information they got from the jar, and a random noise component, so the distribution of guesses is a normal distribution centered around the true number of beans.

And so, we end up with a system of government that’s pretty well (but not perfectly) aligned with actual British interests.2 It has its flaws, but as a system of government it works better than either the civil service of the ministers would by themselves3.

This is from a (possibly realistic) TV show, but the dynamic of splitting power between differently-incentivised institutions into a system with somewhat-better incentives has some real examples beyond the British government where it works (and some where it doesn’t):

    • The social democratic model of a free market + a government that gives regulations and a safety net. In this case we have the free market, whose incentives are to maximize profit locally for each individual person, and the welfare state, which is mostly incentivised to do things that sound good to the median voter. Neither of these is exactly aligned with the goal of maximizing social welfare, but between them they end up working reasonably well.
    • Unions and competition: We have two methods for protecting workers’ interests in companies. The simpler one is competition – workers that aren’t paid or treated well enough can leave and go work somewhere else, which gives companies the incentive to pay workers what they’re worth. This has some failure modes – for example, companies with monopolies can be difficult to leave for a competitor, and this gives companies no incentive to give employees job security or severance pay.The alternate method is unions. They do pretty well with things like job security, but have their own failures. Union organizers have their own politics and can have conflicts with their own members, or just be corrupt. Strong unions can also have devastating effects for the companies that employ them, or even society at large.
      Whether unions make the system better or worse overall is a bit unclear. They seem to work well in Scandinavian countries and may work well in some sectors in America, but they’ve also had some truly catastrophic failures. The problem here seems to be that they override instead of challenge their competing systems, so there’s nothing to cancel out their flaws.
    • Power centres in running a city: To list just a few power centres in New York: The rich people who run the finance wold, the UMC people who between them own most of the money and property, the social activists, the people who grew up in the city and have all the connections, the city council, the mayor, the unaccountable military dictatorship NYPD, and the state governor. The net effect is a mixed bag – the actual running of the city is a vetocratic nightmare of incompetence, but the city mostly functions impressively well despite that. Some of that is because of legacy systems that still mostly run well (like the subway), but a lot of that is just because the city has so many different things going on that even some of them working is enough to make up for a lot of the things that don’t.

Going through the examples, there’s a few things we see that make multiple systems work better: The first example works pretty well because the systems are mostly independent – and it generally works better the more independent the systems are (that is, when the government provides its own competing services rather than mostly acting through regulating business).

Another failure mode is when the competing systems are hierarchical – when one system effectively has the power to override other systems, we lose independence. We end up getting most of the flaws of the overriding systems, and maybe a few of the flaws of the other one – but the secondary systems can’t really correct the flaws of the overriding system, so it only goes one way.

Another way to lose independence is hostility – if one or more power centres see themselves as being in a zero-sum competition with the others, they can end up spending most of their effort trying to work against the others’ goals instead of towards their own. This ends up being the exact opposite of what we want – every system works in the opposite direction to someone’s interests, so we end up making progress in the exact direction that makes everyone worse off.
Examples of this are negative political partisanship (this is one of several reasons high partisanship is really bad), and the housing crisis – once NIMBYs started to see blocking construction that could benefit other interest groups (young people and newcomers) as an end-goal in itself, we had at least one power system that was motivated by the inverse of someone else’s goals instead of their own positive goals, and the total system inevitably ended up going out of alignment.

Finally, we have the NYC government’s vetocracy – when you have a million different systems, each of which can block others from doing things (but not help them do new things), then even if the net system is well-aligned (which in New York it mostly is), you end up with so much friction that it’s just too hard to get anything done.

Yes Minister | TV fanart | fanart.tv
I feel like I should have some nice conclusion paragraph, but I can’t think of anything. So here’s a picture of the inspiration for this post instead.

1. This scene may be my all-time favourite discussion of the interaction of morality and government, because every crazy-sounding thing they say on both sides of the argument is both true and vital.

2. The thing it’s aligned with isn’t exactly British interests – it’s British interests with a Bias towards short-term satisfaction. (A good example is the episode where they avoid appointing a competent head of the Bank of England, because in the short term he’d uncover a major corruption scandal which would create a run on the pound). This happens because both the Civil Service and the Ministers have a bias towards avoiding short-term upheavals over long term benefit, so these biases don’t cancel out. We could add a third segment of government with a long-term focus – in theory, this is what the Crown or the House of Lords are for – but these institutions also create a whole bunch of noise and in practice we’ve mostly decided to disempower them.

3. Jury’s still open on how it compares to strange women lying in ponds distributing swords.

How we should talk about outdated statues

Epistemic status: This is meant as a criticism of the specific conversation about tearing down statues, which I think is wrongheaded, not the general hot-button issues of the day. For my opinion on those, I endorse this list of ideas.

There’s a meta-level argument against tearing down statues:

In general, we can think of society as some kind of oscillator that goes between valuing different virtues. At any time, it’s likely to overvalue some things and undervalue others. If it overvalued the wrong things too much (and pretty much any virtue has a “too much” threshold), things go incredibly bad – famous over-the-top examples include Mao’s cultural revolution, McCarthyism, or the Salem witch trials at worst, but there’s plenty of lower-key examples of dysfunctions, like America’s housing crisis or Japan’s low birthrates.

At a given point in time, we’d expect a society to have at least some virtues it overvalues and some that it undervalues. And since values move around, we should expect these to be the values where we’re most different from the past1.

A society puts up statues to whatever virtues they value at the time, meant to be lasting representations of these values. These statues are probably worse than useless at the time, since if anything they’re likely to reinforce society’s current excesses. But once a generation or two have passed, and those values have gone out of fashion – that’s when it helps to have statues to other ideas, to remind you of what it feels like to have different values than what we have now2.

It’s always hard to see what our own society’s doing wrong (by definition, most people believe in whatever ideals are most widespread in our society), but this is obvious enough when we think about the Taliban blowing up Buddha statues – the Taliban had an excess of militant Islam, and the statues were a reminder of a non-Muslim component of Afghan culture, which, from our outside view, it was clearly a net benefit to have.

1. This is kinda similar to the idea of Chesterton’s fence, but not exactly – there’s no particular reason to assume past values are better overall, just that the areas where we have dangerous excesses would be expected to be the ones where we’re most different from them.

2. There’s the argument that statues of Robert e Lee or Christopher Columbus were made to glorify slavery and genocide, which are bad virtues that evil people in the past liked but we’ve since learned are wrong. Except that while the historical figures may have done some awful things, those aren’t the things we remember them for – for their fans, Columbus is a symbol for the spirit of exploration and Lee was a symbol of grit and loyalty to your hometown. The “kindly general Lee” may be a myth about a person who never existed – but the statue’s there to celebrate that myth, not the actual historical figure.

What happened to King Midas?

Epistemic Status: My knowledge of Greek mythology is limited to that one kids book my parents had and the Percy Jackson series, but I’m pretty sure everything here is 100% accurate.

The biggest open questions Greek mythology leaves us is, what the hell happened to king Midas? he had a magic golden touch that could turn anything to gold, presumably once he learned not to touch his daughter with it he got super rich and ruled the world. What happened then?

There’s only one answer that makes sense: He died of a heart attack, was skinned alive, then his skin was stuffed into a glove that got put in a hidden castle on a magic robot turtle the size of an island  in the Sargasso sea. The hand was eventually found by NASA and sent to the moon with Dr. Eugene Shoemaker’s cremated remains.

The first part is obvious: He couldn’t be killed by weapons (they’d turn to gold on touching him), didn’t conquer the world (and therefore didn’t live long after getting his powers), wasn’t old (he had a young daughter), and didn’t starve to death (since only his skin had gold-making powers, he could eat by having someone carefully put food into the inside of his mouth). He was however fat, greedy, and gluttonous, so it’s not too surprising that he died of a heart attack.

What happened then? Presumably he fell into a wheelbarrow, so that the rest of the garden and kingdom didn’t become gold. His daughter, having had her brush with being turned to gold, wanted no part of it, so she removed his skin with a (golden) knife (no way could she trust a servant with something like that). She must have then put it into a disguising object of some kind. But what object could that be?

The next we hear of Midas (historically speaking) is in the legend of Aladdin, where the king of the forty thieves seeks out the “hand of Midas”. They find it (inevitably) floating in an empty castle on the back of a magic robot turtle. This isn’t too surprising, when you think about it – if I were the daughter of king Midas (princess Midas?), I too would hide his skin in an ornate gauntlet, put it in the top of the castle, and ask my friend Daedalus to build me a magic robot turtle to carry the castle far away from me).

So far so good. But what then? In the end Aladdin throws the magic hand into the ocean, and the water starts turning gold. But we know it never reached a shore – there are no credible reports of beach water turning into either solid or molten gold. This tells us two things – first, the magic goldifying power, like HPMOR transfiguration, has a time limit after which the transformation reverts (since there aren’t any golden islands floating around). Second, it must have fallen into a hydrologically distinct sea region with no shores – and the only known sea with no shores is the Sargasso Sea (which is in the west Atlantic, explaining why an Arabian sailor had trouble finding it without magical help).

Up til now we’ve traced it with some confidence, but the last part is hard to be sure about. We do know that, as an object of power that periodically turned entire seas to gold, the hand of Midas was unlikely to stay hidden. We also know that no one has used it to become crazy rich, buy out the entire gold market, and take over the world, as would inevitably happen if it became readily accessible. Therefore, it must have been launched beyond the reach of man.

If we look at the history of space burial, an interesting result is that the first person buried on the moon is one Dr. Eugene Shoemaker. This is clearly a fake name, both because you’d have expected the first person buried on the moon to be a space celebrity like Neil Armstrong or John Glenn, and because Eugene Shoemaker is a ridiculous name. But why would NASA put a fake person’s ashes on the moon? Because they were trying to hide the fact that they were burying the remains of a real person – king Midas – by giving him a fake name.

(This leaves open the question of how NASA found the hand of Midas in the first place, but we know they have a history with naval exploration).

This concludes the story thus far. If you hear the news of someone making it back to the south polar region of the moon and then returning to Earth, I suggest shorting gold.

Public Health is essential, Healthcare is nice to have.

Epistemic status: Not a medical doctor, But this seems correct.

Let’s say someone challenges you to a game of Russian roulette. But, he says, if you pay him a hundred dollars, he’ll let you play with just one bullet in the gun instead of two, doubling your chances to live.

The first thought through your head when you hear this offer is probably something like “a hundred bucks to double my chances to live? Sounds like a great deal!”. I’m guessing the second is “wait, I still don’t want a one in six chance of dying. Is there any way I can avoid playing Russian roulette in the first place?”

Let’s get back to The Virus. It’s hard to get exact estimates on Corona survival rates, because it’s new and research is ongoing and there’s like a million contradictory studies. But the rough estimate going around is that it has a 1% mortality with good healthcare and a 5% mortality rate without it. I’ve seen a lot of calls for more ICU beds and ventilators, so that we can avoid overwhelming the healthcare system – but it seems like only about half the people who go on ventilators survive. Assuming everyone who needs a ventilator would die without one and most people who dies (so far) get on a ventilator first, that (lower-confidence) estimate gives us that hospitals double survival rates. So overall, the healthcare system, using expensive equipment and highly-trained doctors and nurses, reduces the death rate between 50% and 80%.

Estimates for the total death rate (in the US) I’ve seen go from 30 thousand to 1-2 million Americans. This is a far larger difference – by orders of magnitude – and mostly depends on how well measures like quarantines and distancing work to stop the spread.

So in essence, healthcare lets you play Russian roulette with fewer bullets. Public health, if you do it right, lets you avoid playing it in the first place.

This isn’t limited to the Coronachan. Most of the increase in life expectancy over the last few centuries hasn’t been caused by healthcare, it’s been caused by removing Smallpox and Polio and helping people have enough to eat. Washing hands and sanitation has done more for longevity than cancer drugs.

Which brings us to the obvious question – what haven’t we done that we could still be doing? In a normal year, America spends about 18% of GDP – 3.5 trillion dollars – on healthcare. What are the public health interventions we can still do? Assuming they’re an order of magnitude more effective, they’d cost about 350 billion a year for the same effect as we get from healthcare, which would be totally worth it but still high enough to give us sticker shock. Where are the areas?

Globally the obvious answer is “Just contribute to Givewell, they already did the research (which mostly leads to third-world public health interventions).” If we’re thinking in terms of large-scale domestic spending projects instead of individual actions, the top priority is probably limiting or removing cars where possible – between crashes and pollution-caused illnesses, cars account for about a hundred thousand deaths a year, right up there with the lower-end estimates for Corona. If Corona is worth this kind of effort to address, we should probably be willing to spend a tenth of that to address car deaths. Try to imagine what spending a tenth the effort to limit cars  every year as we are now to limit Corona (promoting alternative transport measures, congestion prices, gas taxes, red light cameras and intersection redesigns all have a history of working, for a start).  It’d be an almost unimaginable amount, compared to what we do now – but if you assume our Corona measures now are reasonable, that would be worth it too. If you assume we’re overreacting to Corona by an order of magnitude, well, spending 1% of the effort on cars as we do on Corona would also be a lot more than what we do now.

The one other thing I can think of is food stamps – making them easily accessible enough that we remove all barriers to getting them (probably at the cost of giving them to a lot of people who don’t really need them) also seems like it would easily pay for itself.

Corona shows Markets are hard (but not impossible) to beat

There are three levels of conventional wisdom on the stock market. Level zero (naive reasoning) is that you can win and make money by buying stock in successful companies like Amazon. Level one, the Efficient Market Hypothesis, is that you can never beat the stock market because all available information is already priced in. Level two says that you can beat the market, but only by putting in commensurate talent and hard work. Top hedge funds, for example, do seem able to consistently beat the market by having a lot of smart researchers and going through high-quality data. But even then, they can’t consistently do it by a lot.

This brings us to Corona, which seems like a solid argument against the EMH. Covid was blindingly obvious for weeks and the stock market basically ignored it. And given that providing information about the future is arguably the entire point of the stock market, this is a miserable failure. Jacob, in the above post, mentions that he saw this coming and was smart enough to sell stocks just before the crash. So to what degree is this evidence that we can beat the market by being smart and going against herd mentality?

First, let’s calculate the profit here. Jacob sold 10% of his stocks just before the crash. Assuming they were trailing the S&P 500 and that he sold at the peak (around 3386), he made a 41% profit on them compared to current prices (this… this dropped a lot). Multiplying by the 10% he sold, that gives us about a 4.1% profit.

4.1% profit is significant – it’s about a year’s worth of safe withdrawal rate. But this is basically an ideal scenario – rationalists, as a group, think about tail risks to society constantly (AI is the most frequent one, but pandemics are up there). Having a historically unprecedented pandemic that shatters the market, that almost exactly matches scenarios you and your friends (but almost no one else) regularly talk about is pretty much the investment opportunity of a lifetime. And we see that even in this scenario, your profit is… just over 4%. Pretty damn impressive by stock market standards, but not market-breakingly impressive. This matches our Level 2 understanding on the market – it can  be beaten, if you’re smart and prepared and have comparative advantage. But not consistently, and even in an ideal scenario, not by that much.

Thoughts on Corona and the decline of the West.

Epistemic status: Going to try for one post a day while I’m bored and stuck at home. Let’s see if it works.

It seems like the covid response is where the US passed the line from “we talk about it having bad institutions, but really it’s only bad considering how rich the country is and when you make the right adjustments it’s still doing pretty well” to “the institutions here are legitimately dysfunctional on an objective scale”.

Consider healthcare: in the past, we could say that healthcare here is expensive, but good when you can get it – and while it is expensive, most Americans are rich enough to afford it, so given the priorities and organization of the country it still works pretty well. Over the last few years, that’s been slipping – life expectancy and health have been falling behind, and the best we could say for the healthcare system was “okay it’s not as good as some places but still okayish most of the time”.

But now we can’t say that. America’s response to the pandemic isn’t nearly as good as Italy’s, let alone Taiwan or South Korea. It’s basically been complete paralysis of all institutions that should be able to deal with it, both elected officials like Trump and de Blasio, and organizations like the CDC.

And this is most obvious in an acute crisis like a pandemic, but we’ve been seeing this a while now in slower-moving crises like housing and transit construction. America’s lost the ability to react to things.
But from another perspective, one thing I do find reassuring is this post about the Roman empire, specifically this bit:

Pop history has a nasty tendency to compress all of that into one idea of ‘Rome,’ which rises once and falls once, as opposed to the reality of a Rome which rose, fell into civil war, then rose some more, then had a crisis, then stabilized, then fragmented, then fell in some places while remaining stable in others. And so, for example, Sallust’s complaints about Roman decadence – which date to the first century B.C. nearly five centuries before its ‘fall‘ – are often quoted as somehow explaining Rome’s eventual demise, but Rome wasn’t even done expanding at that point.

Devereaux makes the point that Romans wrote about Roman decline pretty much throughout the existence of Rome, and were usually wrong – but even when they were right, Rome was more likely to see a resurgence than a collapse after a period of decline. So from the outside view, America’s more likely to eventually come back from the current crisis than collapse.

Not that that helps much right now, anyway. Stay healthy and quarantined out there everyone.

Annual mopey birthday post

This is my annual birthday post, where I let myself get unabashedly mopey about the last year.

I read most of Brandon Sanderson this year. I started reading the Stormlight Archive last February or March, then left off for a while, then started reading Mistborn a few months ago when a guy left it (and the rest of Sanderson’s Cosmere books) on a bookshelf at work. I read it, then wound up going through the rest of his books (including, now, going through Stormlight again. Oathbringer is long.)

Sanderson’s books are, at the core, about survival in genuinely hopeless cases. It’s a subtle distinction between that and just incredibly difficult: They’re not just up against impossible odds, they set out against something that’s already ground them down. There’s an important difference between a classic fantasy story about an outsider who comes into the story, realizes things are wrong, and fixes them despite the difficulty – and an insider already worn down by the system trying to deal with it. From the description of Kelsier,

He forced himself to smile-not out of pleasure, and not out of satisfaction. He smiled despite the grief he felt at the deaths of his men; he smiled because that was what he did. That was how he proved to the Lord Ruler-and to himself-that he wasn’t beaten. No, he wasn’t going to walk away. He wasn’t finished yet. Not by far.

And this has been important to me this year. In a way, it’s been about survival for me. I didn’t start out strong or optimistic. Google had worn me down, and so had some relationship failures. I wasn’t doing too hot at my new job either. And there wasn’t much I could do except, well, survive. So the Sanderson perspective meant a lot to me, the idea that just surviving and putting one foot in front of the other until you got somewhere could be enough for a good story.

Things did get better over time, in some ways. I learned to be more hopeful. I started feeling better at work, and moved to a different team where I started feeling respected and useful. Eventually I got a new job in New York – not my dream job, not even my top choice among the places I interviewed at, but a decent offer. I just started it this week – I’m still not sure how I feel about it. I’m not sure I like finance culture, although the work itself seems more interesting. And, well, I can survive it for now, until I learn to like it, or leave. The other Mistborn quote that got to me:

“You want to be like Kelsier? Really like Kelsier? Then fight when you are beaten! Survive!”

Another way that it’s been a very Sanderson year is that it’s been similar to his writing: It hasn’t been my most brilliant year. It didn’t touch the depths of tragedy and brilliance that some years have. But it involved a lot of hard work, and it came together to something pretty impressive in the end.

Scott used to have this yearly list of questions, back when he did his livejournal. I remember one of them being “did you fall in love this year”. I didn’t, for a change, although I had to deal with two past women that involved strong feelings, which was pretty brutal in some ways. I tried to cope with it emotionally by setting my feelings for both of them against each other, but I’m not sure that actually helps. In the end I had to do what I always do – make the choice to stop caring and move on. I’m not happy about it. It feels wrong. I don’t know any other way to deal with things like this.

I moved to New York, less than three weeks ago now. I miss San Francisco. I even miss Pure. I don’t miss the South Bay much, even though I haven’t found much content to replace it in New York yet (hopefully, that’s just a matter of time).

I got summoned for a Green Card interview in March this week, although now that I moved there’s a chance I’ll have to reschedule it. I hope I won’t, or that the delay won’t be long if I do. I’ve had enough of the Visa problems saga, and I’m more than ready for it to end.

I would like to have a relationship, now that I’m in New York. Getting dates here seems easier, although it’s harder to meet women I actually like. Hopefully that part’s just a matter of time.

That’s it for this year. I don’t know where I’ll be next year, or what I’ll be like. I don’t have as many plans as I used to.

Song Translations: The Pyjamas Opening theme

 

Original song, Hebrew lyrics.

They’re not that great, I know, they’re not too pretty.
And playing rock alone,
it’s pointless, it’s such a pity.
But they came here from far away,
on a long and winding road…
That just the way their town is,
the traffic never flows.

Each night they play a show, I always go.
I’m usually alone,
I guess no one is too surprised, though.
Playing down in the burger bar,
dreaming of crowds and fancy cars…
It doesn’t even matter,
they have no songs so far.

So,
If things are bad and you are hurting,
and you’re tired of escaping.
You can sit down and relax,
for a moment just replacing
all the emptiness around you
all the silence of the night…
The Pyjamas’ rockin’ party
shuts the city down tonight.

So just come down, and join us, in the Pyjamas party…