Evonomics

Why are echo chambers problematic? Because they prevent us from facing views dissimilar to ours. As a result, we could be led to take falsehoods for truths, become more extreme in our views, and regard others as enemies or adversaries. Part of the value of the right of free speech is that it creates an environment in which our own views are constantly challenged. - Nicolás Maloberti, Echo Chambers and the Prevalence of Motivated Reasoning

Evonomics is designed to discourage engagement in non-lefty ideas and thinkers. https://t.co/3Rwz3w70Ri

— Joe Norman (@normonics) May 18, 2017

Avoiding facts inconvenient to our worldview isn’t just some passive, unconscious habit we engage in. We do it because we find these facts to be genuinely unpleasant. - Brian Resnick, “Motivated ignorance” is ruining our political discourse 

The whole strength and value, then, of human judgment, depending on the one property, that it can be set right when it is wrong, reliance can be placed on it only when the means of setting it right are kept constantly at hand. In the case of any person whose judgment is really deserving of confidence, how has it become so? Because he has kept his mind open to criticism of his opinions and conduct. Because it has been his practice to listen to all that could be said against him; to profit by as much of it as was just, and expound to himself, and upon occasion to others, the fallacy of what was fallacious. Because he has felt, that the only way in which a human being can make some approach to knowing the whole of a subject, is by hearing what can be said about it by persons of every variety of opinion, and studying all modes in which it can be looked at by every character of mind. No wise man ever acquired his wisdom in any mode but this; nor is it in the nature of human intellect to become wise in any other manner. The steady habit of correcting and completing his own opinion by collating it with those of others, so far from causing doubt and hesitation in carrying it into practice, is the only stable foundation for a just reliance on it: for, being cognisant of all that can, at least obviously, be said against him, and having taken up his position against all gainsayers—knowing that he has sought for objections and difficulties, instead of avoiding them, and has shut out no light which can be thrown upon the subject from any quarter—he has a right to think his judgment better than that of any person, or any multitude, who have not gone through a similar process. - John Stuart Mill, On Liberty

Why isn't Evonomics a market?  Why aren't donors encouraged to use their dollars to grade the relevance of the articles?

Compare Evonomics to this blog written by 4th graders... Classtopia.  In both cases...

1. all the products are freely available
2. the homepage has a list of products sorted by their publication date

However, unlike Evonomics... Classtopia also has a list of products sorted by their relevance.

The relevance of Classtopia's products is determined by a market.  The market is currently pretty small. It consists of the students, their teacher and myself. But in theory the market could be as large as everybody in the world.  Everybody could use their money to grade the relevance of Classtopia's (home)work.

So why isn't Evonomics a market?  My theory is that whoever runs the website doesn't quite grasp what markets are good for.  If my theory is correct, then we should be skeptical of Evonomics' plan to become "The Next Evolution of Economics".

The point and purpose of markets is a topic that generates considerable disagreement.   In order for an examination of the topic to be productive, it must be built on common ground.  Here's something that we should all agree on...

Nothing is more important in a cooperative system than communication among the participants. As we’ve seen throughout this book, when people are able to communicate, they are more empathetic, more trusting, and can reach solutions more readily than when they cannot talk to one another. Communication is key to the system’s success.  - Yochai Benkler, The Penguin and the Leviathan: How Cooperation Triumphs over Self-Interest

Evonomics communicates with its readers by supplying articles.  The readers communicate with Evonomics and each other by commenting on the articles.  Readers can also communicate with Evonomics by making a donation.  All this communication among the participants helps them to be more informed.  

It should be clear that Evonomics appreciates that communication is critically important.  Yet, even though Evonomics is in a market... it is not a market.  Therefore, it must not adequately appreciate the informative aspect of people spending their money.  In order to verify that Evonomics is largely unaware of commerce as communication... I googled for "Invisible Hand" site:Evonomics.com and found quite a few results.  Most of the results were along these lines...

It is indeed a monumental mistake to think that unbridled self-interest will robustly benefit the common good. Instead, it can cause dysfunctional self-organization. - David S. Wilson, Here Is Why Economics Is Built on a Monumental Mistake 

Wilson, like Benkler, is concerned with society being ruled by self-interest. Here's how they perceive the Invisible Hand (IH)...

1. Self-interest
2. Common good

The question is.... how can self-interest, on its own, facilitate the common good?  It can't.  Something is missing.  Some essential step has been skipped.  In order to find the missing step we can simply go straight to the source...

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. — Adam Smith, Wealth of Nations

The rise and fall of profit primarily depends on how people spend their money.  When people spend their money they help grade the relevance of things.  Knowing the social relevance of things facilitates the socially optimal division of resources.  In other words, the efficient allocation of society's limited resources depends entirely on people using their money to inform each other of the relevance of things.  It should be readily apparent that communication is the essential step that Wilson has overlooked...

1. Self-interest
2. Communication
3. Common good

Wilson's oversight is based, in some part, on the fact that Smith's passage doesn't contain the term "Invisible Hand".  So how can we be certain that the passage is a description of the IH?  Let's compare it to a passage that does contain the term "Invisible Hand"...

The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. - Adam Smith, Theory Of Moral Sentiments

The two passages are directly connected by the words "divide" and "distribute".   The significance of these words is derived from the most elementary economic problem...

Society's wants: unlimited
Society's resources: limited

This most elementary economic problem means that SOCIETY MUST PRIORITIZE.   Society must somehow divide its limited resources among its unlimited wants.  The division should reflect the fact that society's unlimited wants are not equally relevant/important/valuable...

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.  Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.  - Adam Smith, Wealth of Nations

The three passages collectively have three key elements...

X = the value/profitability/relevance of a want
Y = the optimal division/distribution of resources
Z = the term "Invisible Hand"

These three elements can be used to construct the following matrix...

Passage 1: X, Y
Passage 2: Y, Z
Passage 3: X, Z

The first passage is only missing the term "Invisible Hand".  This minor detail has caused considerable confusion regarding the nature of the IH.  Here's what a Smith scholar wrote about the second passage...

In this metaphoric use by Smith of “an invisible hand”, there are no references to “markets”, “supply and demand”, “price system”, “equilibrium”, “perfect competition”, “the presumption of liberty” or any of the other invented meanings attached in the 20th century to Smith’s use of this metaphor of “an invisible hand” in the 18th century. - Gavin Kennedy, The Myth of the Invisible Hand – A View From The Trenches

He recently wrote... "There is no invisible hand in the market. Just VISIBLE prices. That’s how markets operate."  Obviously there isn't literally an Invisible Hand... but there certainly is a prioritization process of people dividing their limited dollars among their unlimited desires which signals the social relevance of desires and incentivizes a division of society's limited resources that is optimally beneficial to society as a whole.  This is a serious mouthful.  But it's also an incredibly important mouthful.  So replacing it with two words... "Invisible Hand"... or even just two letters... "IH"... is very desirable and wonderfully economical.

It should be clear that the IH depends entirely on communication.  Communication is essential because none of us are mind-readers.  However, since talk is cheap, superficial signals ("Liking", voting, surveys) must be given far less weight than substantial signals (skin-in-the-game, sacrifice, spending).

There's a direct relationship between...

A. substantial communication among society's members
B. the socially optimal division of society's limited resources

B depends entirely on A.  This crucial connection is missing from Wilson's understanding of the IH.  Here's what he says immediately after his passage that I shared...

Nevertheless, biology provides breathtaking examples of invisible hand self-organization.  Multicellular organisms and social insect colonies work beautifully as multi-agent societies without their members having the welfare of their society in mind. We can say that confidently because cells and insects don’t even have minds in the human sense! - David S. Wilson, Here Is Why Economics Is Built on a Monumental Mistake 

And again elsewhere...

Economists were much more closely attuned to common sense and evolutionary theory before the volcano erupted. Adam Smith (1723-1790) observed that people following their narrow concerns somehow combine to make the economy work well, as if guided by an invisible hand. Today we use terms such as emergence and self organization to describe this phenomenon. It is spectacularly demonstrated by social insect colonies. The fabled honeybees and ants definitely don’t have the welfare of their whole colony in mind. They’re just responding to local environmental cues in ways that makes their colonies work well as a whole. They could respond in an infinite variety of ways, most of which would not contribute to the success of their colony, but natural selection has winnowed the responses that work at the colony level. - David S. Wilson, Failed Economics: Tyranny of Mathematics and Enslaved by the Wrong Theory 

What Wilson has failed to recognize and appreciate is that bees are so successful because of substantial communication...

Today’s Mandeville is the renowned biologist Thomas D. Seeley, who was part of a team which discovered that colonies of honey bees look for new pollen sources to harvest by sending out scouts who search for the most attractive places. When the scouts return to the hive, they perform complicated dances in front of their comrades. The duration and intensity of these dances vary: bees who have found more attractive sources of pollen dance longer and more excitedly to signal the value of their location. The other bees will fly to the locations that are signified as most attractive and then return and do their own dances if they concur. — Rory Sutherland and Glen Weyl, Humans are doing democracy wrong. Bees are doing it right

Again, it's necessary to fully appreciate the most elementary economic problem...

The hive's wants: unlimited
The hive's resources: limited

The hive must prioritize.  It must somehow divide its limited foragers among all the different flower patches.  In order for the division to be socially optimal, the hive must know the social relevance/value/profitability of the different patches.  But... the queen isn't omniscient, a bee can't be in two places at once, and none of the bees can read each other's minds.  These limitations/constraints might seem too obvious... but they must be stated and recognized in order to fully appreciate that the hive's knowledge of the social relevance of the different patches depends entirely on the foragers substantially (skin-in-the-game) sharing their information with each other.

Bees obviously can't use dollars to substantially grade the relevance of a flower patch.  Bees don't have any dollars.  But they do have something else that is limited and valuable... their calories.  The harder/longer a bee is willing to dance, the more precious calories it sacrifices, the greater the intensity of its preference for a flower patch.

We can imagine it like so...

Bee: A certain flower patch deserves more attention!
Bees: How much more attention does it deserve?
Bee: It deserves this much more attention... *sacrifices many calories*
Bees: Wow, let's give it the attention that it deserves!

The fact of the matter is that it's really easy for a single bee to overlook a flower patch.  A bee is small while the environment is vast.  The more bees that explore the environment, the more ground that is covered, the less patches that are overlooked.  In this regard it's just like an Easter Egg hunt.  However, in this case the Easter Eggs aren't all the same size.  The larger a patch is, the more bees that will be needed to help collect/carry the pollen.  Recruiting the optimal number of collaborators  depends on accurately communicating the relevance of the patches.  The relevance of patches is transmitted when the bees publicly sacrifice their precious calories.  They spend their calories to substantially grade the relevance of the patches.  By sharing their grades with each other, the bees massively improve the hive's knowledge of the social relevance of the different patches.  This collective knowledge facilitates a socially optimal division of the hive's 1000s of foragers among all the different patches.

The division of foragers isn't static... it's very dynamic.  The dynamism of the division reflects the dynamism of the environment.  Each and every flower patch is constantly changing.  Older patches become less profitable while newer patches become more profitable.  The changes in the profitability of the different patches are substantially signaled by the spending decisions of the bees.  These substantial signals automatically and correctly change how the foragers are divided among all the different sources of food.  Thanks to the sacrificial (skin-in-the-game) communication among the participants, the hive quickly, correctly and automatically adapts and adjusts to the constantly changing conditions.

Just like the blind men and the elephant, each bee has a different piece of the reality puzzle.  The bees substantially share their pieces with each other and, as a result, the behavior of the hive, as a whole, far more correctly reflects reality than if the bees didn't substantially share their pieces.  Reality is super fluid and extremely complex.  Correctly portraying reality, in order to correctly respond to it, has to be a constant and substantial group effort.

Ants also share their puzzle pieces by sacrificing their precious calories.  But instead of dancing, they emit pheromones...

In Experiment 1 colonies distributed a greater proportion of their foragers towards the higher quality resource. This behaviour supports work by Sumpter and Beekman (2003) on M. pharaonis and is typical of this mass-recruiting species (Jackson et al. 2004; Jackson and Châline 2007; Evison et al. 2012b). The stronger allocation of workers to higher quality feeders is most likely due to a greater pheromone trail laying intensity by ants coming from these feeders (Jackson and Châline 2007) leading to faster exploitation of the higher quality food source via positive feedback influencing the decision by nestmates to lay pheromone trail (Sumpter and Beekman 2003; von Thienen et al. 2014). A greater disparity in quality should create greater disparity in foraging effort between two food sources, a simple behaviour that is integral to colony survival (Stroeymeyt et al. 2010), and this is indeed what we found (Fig. 2). — R. I’Anson Price, C. Grüter, W. O. H Hughes, S. E. F. Evison, Symmetry breaking in mass-recruiting ants: extent of foraging biases depends on resource quality

The economic facts are still the same... the colony must prioritize how it divides its limited foragers among unequally valuable food sources, but the queen isn't omniscient, an ant can't be in two places at once, and none of the ants are mind-readers.  In order for the colony, as a whole, to have the clearest and most accurate picture of reality, the ants must spend their precious calories to truthfully and substantially inform each other of the relevance of the food sources that they encounter.  Then, and only then, will the colony's ants be intelligently divided.

Here's a somewhat different passage from Wilson...

Mandeville could not have been more wrong about actual nature of bees. There is a difference between self-organization and self-interest. Beehives and other social insect colonies are indeed self-organized. There is no single bee commanding the troops, certainly not the queen. Each bee plays a limited role in the economy of the hive, just as a single neuron plays a limited role in the economy of the brain. The intelligence of both can be found in the interactions among the parts, which have been shaped by natural selection operating over countless generations. But bee behavior cannot be reduced to a single principle of self-interest, any more than human behavior. There are solid citizens and cheaters even among the bees, and the cheaters are held at bay only by a regulatory system called “policing” by the biologists who study them. - David S. Wilson, The Death of the Invisible Hand: Why the Narrow Pursuit of Self Interest Always Fails

It's not just about self-interest.  Smith certainly did not reduce human behavior to a single principle of self-interest.  Self-interest, on its own, cannot beneficially regulate behavior.  In order for behavior to be beneficially regulated, it's essential to know how much benefit we derive from each other's behavior.  Since none of us are mind-readers, and since talk is cheap, the only truly credible source of information we have about the actual benefit of any type of behavior is people's willingness to pay for it.  Therefore, we all must have the opportunity to easily use our money to publicly grade the benefit/relevance of each other's behavior.

Communicating with cash has logical and beneficial consequences...

The increase of demand, besides, though in the beginning it may sometimes raise the price of goods, never fails to lower it in the run. It encourages production, and thereby increases the competition of the producers, who, in order to undersell one another, have recourse to new divisions of labour and new improvements of art which might never otherwise have been thought of. The miserable effects of which the company complained were the cheapness of consumption and the encouragement given to production, precisely the two effects which it is the great business of political œconomy to promote. - Adam Smith, Wealth of Nations 

"Piketty the economist does not understand supply responses" - Deirdre McCloskey https://t.co/BmDRn69VDJ pic.twitter.com/i26t1cLuOj

— Pragmatarian (@Pragmatarian) April 23, 2017

When by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt so many new rivals to employ their stocks in the same way, that, the effectual demand being fully supplied, the market price would soon be reduced to the natural price, and perhaps for some time even below it. If the market is at a great distance from the residence of those who supply it, they may sometimes be able to keep the secret for several years together, and may so long enjoy their extraordinary profits without any new rivals. Secrets of this kind, however, it must be acknowledged, can seldom be long kept; and the extraordinary profit can last very little longer than they are kept. - Adam Smith, Wealth of Nations 

A producer might derive some benefit from hiding the social relevance (profitability) of his behavior... but it's never in society's interest for the relevance of things to be concealed or distorted.  Imagine how incredibly stupid it would be for ants or bees to conceal or distort the true social relevance of the different food sources.  Without accurately knowing the relevance of the sources, their societies would behave far less intelligently.  Therefore, it should be crystal clear that the intelligence of any society depends on how well it understands the true relevance/value/importance/significance/profitability of things.

Here are a couple more passages related to insects, communication and brains...

The cognitive scientist Douglas Hofstadter, in his book Gödel, Escher, Bach, makes an extended analogy between ant colonies and brains, both being complex systems in which relatively simple components with only limited communication among themselves collectively give rise to complicated and sophisticated system-wide (“global”) behavior. In the brain, the simple components are cells called neurons. The brain is made up of many different types of cells in addition to neurons, but most brain scientists believe that the actions of neurons and the patterns of connections among groups of neurons are what cause perception, thought, feelings, consciousness, and the other important large-scale brain activities. - Melanie Mitchell, Complexity: A Guided Tour 

These actions recall those of ants in a colony: individuals (neurons or ants) perceive signals from other individuals, and a sufficient summed strength of these signals causes the individuals to act in certain ways that produce additional signals. The overall effects can be very complex. We saw that an explanation of ants and their social structures is still incomplete; similarly, scientists don’t yet understand how the actions of individual or dense networks of neurons give rise to the large-scale behavior of the brain (figure 1.2, bottom). They don’t understand what the neuronal signals mean, how large numbers of neurons work together to produce global cognitive behavior, or how exactly they cause the brain to think thoughts and learn new things. And again, perhaps most puzzling is how such an elaborate signaling system with such powerful collective abilities ever arose through evolution. - Melanie Mitchell, Complexity: A Guided Tour  

Again, the intelligence of a society/network depends on how well it understands the true relevance of things.  This understanding depends on...

1. The number of individuals in the network
2. The quantity of communication between the individuals
3. The quality/accuracy of the communication

With this in mind, consider the economic justification for taxes...

But, and this is the point sensed by Wicksell but perhaps not fully appreciated by Lindahl, now it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has, etc. - Paul Samuelson, The Pure Theory of Public Expenditure

Because the intelligence of any society depends on how well it understands the true relevance of things, and because this understanding depends on accurate communication...  garbage in, garbage out (GIGO) is just as pertinent to economics as it is to computing.

False signals are garbage.  If people input garbage into the economy, then the output/supply will be garbage.  If people consistently lie about the relevance of things, if people generally give dishonest/deceptive grades, if people regularly misinform and mislead each other, then society's limited resources will be stupidly divided.  In order for society's limited resources to be divided as intelligently as possible, it's necessary to know the true social relevance of things, which means that signals must be true.  In all cases the goal should be to maximize the accuracy of signals.  The inherent challenge is that, since nobody is a mind-reader... each and every person can only ever truly know the accuracy of their own signals.  Therefore, in order to maximize the accuracy of signals, the system must minimize the incentive to be dishonest.

The free-rider problem obviously doesn't mean the complete absence of voluntary spending for public goods.  I'm sure that some people donate money to Evonomics.  However, in most cases, the amount of money that they donate does not accurately reflect their perception of Evonomics' relevance.  This is simply because there's a strong incentive to be dishonest.  When people donate less money to Evonomics they can still enjoy all its articles but they can also spend more money on other things (ie clothes, games, etc).  So, in most cases we can reasonably suspect that people's donations to Evonomics are less than their perception of its relevance.  Otherwise, there'd be absolutely no point for taxation to be compulsory!

Right now Evonomics and FEE are in the same boat.  They both give away their products for free and rely on donations.  Since both organizations are in the same boat, we can be confident that their revenue reasonably reflects their relative relevance.  Whichever organization receives more revenue is more relevant.  If Evonomics is more relevant, then it can use more of society's limited resources than FEE can.  We clearly wouldn't want less relevant organizations to use more of society's limited resources.

Imagine all the organizations that are in the same boat as Evonomics and FEE.  If we put them on a list and sorted them by their revenue, then we could be confident that the order was reasonably correct.  The most relevant organization would be at the top and the least relevant would be at the bottom.

Other organizations, such as grocery stores and clothing stores, are in a different boat.  They sell their products.  People can only benefit from these products if they pay for them.  If we put all these  organizations on a list, and sorted them by revenue, then we could be confident that the order was reasonably correct.

But what if we combined the two lists?  In this case, we could be confident that the order would be considerably incorrect.  Most of the organizations like Evonomics would be too low on the list while most of the organizations like Sephora would be too high on the list.

Let's say that you have a few bucks that you can either spend on cosmetics or articles.  They both match your preferences, but they don't equally match your preferences.  Articles are more relevant to you than cosmetics are.  Since none of us can read your mind and talk is cheap, you should accurately and substantially inform us of your true priorities by spending your dollars on articles.  You should use your dollars to let us know that knowledge is more important to you than makeup.  The problem is, since your enjoyment of the cosmetics depends on you buying them, while the articles can be enjoyed for free, you have a clear incentive to spend your money on the cosmetics rather than on the articles.  You have a strong incentive to try and have your cake and eat it too.  But if you do decide to spend your dollars on the cosmetics rather than on the articles, you will inaccurately communicate how you want society's limited resources to be divided between cosmetics and articles.  This inaccurate info creates a disparity between...

A. the world you live in
B. the world that you want to live in

You would truly prefer to live in a world with better articles rather than better cosmetics, but this is not what your spending decision communicates.  Of course you're not the only person in the world spending money.  The more people who spend money on cosmetics and other private goods when they should be spending it on articles, the greater the disparity between the two worlds.

We can imagine that one bullshitting bee in a huge honest hive would not cause a perceptible disparity between the two worlds.  The bullshitting bee would still be able to live in a world packed with pollen and honey.  But if all the bees were, on average, 25% dishonest, then this would cause a 25% disparity between the two worlds.  The difference between the two worlds would be perceptible.

It's one thing for the bees to perceive that their world has less pollen/honey than they'd prefer.  It's another thing for the bees to grasp that their world is 25% less wonderful than it should be because all of them are, on average, 25% dishonest with each other about the relevance of flower patches.

We humans all perceive, to some extent, that there's a difference between the world that we live in and the world that we'd prefer to live in.  But we don't know, on average, how dishonest people are about the relevance of things.  We can only know the degree of our own dishonesty.  We can't know whether everybody else is more or less dishonest than we are.  But we can certainly know that it's extremely desirable to minimize the incentive to be dishonest.

One solution is for people to buy articles like they buy cosmetics.  Is this a good solution?  Blendle thinks so.  Except, if more and more publishers charge for articles, then it becomes more and more lucrative for other websites to give their articles away for free and generate revenue through advertising.  Then again, advertisers and ad-blockers are locked in an arms race.

From my perspective, charging for articles is not the best solution.  The best solution is the bee solution.  The bees don't spend their calories to buy a flower patch.... they spend their calories in order to direct each other's limited attention to the best flower patches.  The bees decide how to divide their limited calories in order to help each other decide how to divide their limited attention.

Bee: A certain flower patch deserves more attention!
Bees: How much more attention does it deserve?
Bee: It deserves this much more attention... *sacrifices many calories*
Bees: Wow, let's give it the attention that it deserves!

The bees spend their calories to promote their favorite flower patches.  This is how it could and should work with humans and articles...

Human: A certain article deserves more attention!
Humans: How much more attention does it deserve?
Human: It deserves this much more attention... *sacrifices many dollars*
Humans: Wow, let's give it the attention that it deserves!

We could and should spend our money to promote our favorite articles.  Doing so is most worthwhile when the amount of money that's spent will primarily determines the amount of attention an article receives.  So there must be a very prominent page that sorts the articles by their relevance to spenders.  The higher on the list an article is, the more attention that it will receive.

With this system, people aren't spending their money to purchase articles.  They are spending their money to promote articles.  The spenders aren't exchanging their money for the articles, they are exchanging their money for the articles to be more widely read.

Right now it's certainly possible to help an article to be more widely read simply by sharing it on social media for free.  It's great that it's easy to freely share articles.  However, there are countless articles being shared by countless people.  The logical consequence is far more information than time to process it all.  In order to optimally divide our limited time among the unlimited information, everybody should have the opportunity to use their dollars to grade the importance/relevance of the information.  We need to spend our money in order efficiently allocate attention.

Clicking the "Like" button isn't adequate to efficiently allocate attention.  The bees don't vote to promote flower patches... they spend to promote them.  The bees decide how to divide their limited calories among the different sources of food.  This substantial prioritization process optimally divides their limited attention among the different sources of food.  We humans do not currently divide our limited dollars among unlimited articles (brainfood).  As a result, our limited resources are not optimally divided...

1. among the unlimited articles
2. between unlimited articles and unlimited private goods

Some people already donate some money to Evonomics.  They do so because they want Evonomics, as a whole, to be more widely read.  Personally, I don't want Evonomics, as whole, to be more widely read.  Most of its articles aren't relevant to my reality.  For sure they aren't equally relevant to my reality.   Evonomics' articles aren't equally relevant to anybody's reality.  Yet, donors aren't given the opportunity to use their donations to promote the articles that are most relevant to their reality.  Allowing donors to choose would, in theory, increase people's incentive to donate.  More incentive to donate would mean less incentive to be dishonest.

In order to fully appreciate this concept, imagine that donors to PETA and donors to the NRA pooled their donations and elected representatives to decide how to divide the money between the two organizations.  Would anybody seriously argue in favor of this bundle?  Of course not.  PETA donors clearly wouldn't want any of their money supporting the NRA and vice versa.  Donors would have far less have incentive to donate, which would mean far more incentive to be dishonest.  Bundling is socially detrimental to the extent that it inhibits truer signals.

Right now everyone is free to decide for themselves how they divide their limited private dollars (as opposed to tax dollars) among unlimited organizations.  People are free to decide how they divide their dollars between PETA and the NRA.  People are also free to decide how they divide their dollars between Evonomics and Sephora.  Even though these two organizations, and many others, are not on a level playing field, people are free to substantially and specifically participate in the prioritization process.  However, anybody who decides to donate to Evonomics is not free to decide how to divide their limited dollars among its unlimited articles.  In this case, they are not free to substantially and specifically participate in the prioritization process.  Donors are free to substantially grade the relevance of Evonomics as a whole, but they aren't free to substantially grade the relevance of its parts (products/articles).  Therefore, as a result of being entirely ignorant of the social relevance of its articles, Evonomics is incredibly less intelligent than it could and should be.

Evonomics would be far more intelligent if it facilitated the substantial grading of its products.  Actually knowing the social relevance of its products would enable it to supply far more socially relevant products.  As the social relevance of its products greatly increased, so would its revenue.  With more money, Evonomics would be empowered to compete more resources away from less intelligent organizations.  Giving donors a choice would launch a virtuous cycle of value creation.

Right now Evonomics and FEE are in the same boat.  Neither organization encourages and facilitates donor choice.  They both fail to fully utilize the considerable and crucial collective knowledge and brainpower of their communities.  As a result, both organizations are far less intelligent than they could and should be.  It would be a different story if Evonomics decided to give its donors the opportunity to substantially and specifically participate in the prioritization process.  Evonomics would supply far more relevant products and its revenue would increase.  Earning more money would give it more power to compete more resources away from FEE.  If FEE failed to adapt it would go extinct.

An organization is a group of people collaborating to serve humanity as effectively as possible.  One inherent challenge is that humanity is constantly changing.  Organizations should change accordingly.  They should evolve as quickly and correctly as possible in order to serve humanity as effectively as possible.  But the optimal evolution of organizations can only be realized if everybody has the easy opportunity to publicly exert specific and substantial selection pressure on every organization's products.  Humanity is capable of exerting an incredible amount of selection pressure.  Shielding organizations from this pressure is harmful to humanity.

Here's a summary of Evonomics...

1. It appreciates the importance of evolution
2. It appreciates the importance of communication
3. It doesn't appreciate the relationship between communication and evolution
4. It doesn't appreciate the IH

This is why Evonomics is not a market.  Should it be a market?  Should donors use their dollars to grade the relevance of the products supplied by Evonomics?  Hopefully the bees and ants already answered this question.  It's such an important question though that I should really hedge my bets.

For most of my life I haven't been very interested in physics.  This means that I've been, and continue to be, rather ignorant on the subject.  But not too long ago I decided to watch Neil DeGrasse Tyson on Netflix.  My decision was primarily motivated by my desire to quickly fall asleep.  But occasionally Tyson failed to quickly knock me out and I ended up spotting some intriguing parallels between physics and economics.

One night I heard this question... "How could distant bodies affect each other across empty space without actually touching?"  What a really great question!  I think the correct answer for celestial bodies is "gravity".  For human bodies though… we significantly affect each other by spending.

Tyson referenced this passage by Newton...

The six primary Planets are revolv’d about the Sun, in circles concentric with the Sun, and with motions directed towards the same parts and almost in the same plan. Ten Moons are revolv’d about the Earth, Jupiter and Saturn, in circles concentric with them, with the same direction of motion, and nearly in the planes of the orbits of those Planets. But it is not to be conceived that mere mechanical causes could give birth to so many regular motions: since the Comets range over all parts of the heavens, in very eccentric orbits. For by that kind of motion they pass easily through the orbits of the Planets, and with great rapidity; and in their aphelions, where they move the slowest, and are detain’d the longest, they recede to the greatest distances from each other, and thence suffer the least disturbance from their mutual attractions. This most beautiful System of the Sun, Planets, and Comets, could only proceed from the counsel and dominion of an intelligent and powerful being. And if the fixed Stars are the centers of other like systems, these, being form’d by the like wise counsel, must be all subject to the dominion of One; especially since the light of the fixed Stars is of the same nature with the light of the Sun, and from every system light passes into all the other systems. And lest the systems of the fixed Stars should, by their gravity, fall on each other mutually, he hath placed those Systems at immense distances from one another. — Isaac Newton, Principia

When I read this passage by Newton it reminded me of this passage by Smith...

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. — Adam Smith, The Theory of Moral Sentiments

Both passages are about systems.  Newton's passage is about the celestial system while Smith's passage is about the human system.  Newton described how celestial bodies are arranged while Smith described how human bodies should be arranged.  Both thinkers recognized and appreciated the natural arrangement of bodies.  Each and every body, whether celestial or human... has its own principle of motion.  Newton described how celestial bodies are mutually influenced by their gravity.   Smith did not describe, in this passage, how earthly bodies are mutually influenced by their spending.  Newton believed that the Divine Hand (DH) plays a central role in the arrangement of celestial bodies.  Smith didn't consider the DH's role in the arrangement of human bodies.  Instead, he considered the control that the Visible Hand (VH) has over the arrangement of human bodies.  Newton wasn't concerned with the limits to the DH's knowledge.  Smith was concerned with the limits to the VH's knowledge.

It seems quite clear that Smith borrowed some of Newton's ideas about physics and applied them to economics.  Smith stood on Newton's shoulders.

Recently I learned that Smith wrote a lengthy essay called the "History of Astronomy".  It is included in a book of his essays.  I read the book and collected/compiled a dozen pages of relevant excerpts.

It is rather surprising that Adam Smith, the founder of modern economics, the fellow responsible for clarifying the benefits of a division of labor, is also responsible for writing a lengthy essay about astronomy.  How surprised would you be if Neil DeGrasse Tyson or Stephen Hawking wrote a hundred page essay about economics?  Did Einstein or Newton ever write anything substantial about economics?

In the "History of Astronomy" Smith used the term "invisible hand"...

Hence the origin of Polytheism, and of that vulgar superstition which ascribes all the irregular events of nature to the favour or displeasure of intelligent, though invisible beings, to gods, dæmons, witches, genii, fairies. For it may be observed, that in all Polytheistic religions, among savages, as well as in the early ages of Heathen antiquity, it is the irregular events of nature only that are ascribed to the agency and power of their gods. Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters. But thunder and lightning, storms and sunshine, those more irregular events, were ascribed to his favour, or his anger. Man, the only designing power with which they were acquainted, never acts but either to stop, or to alter the course, which natural events would take, if left to themselves. Those other intelligent beings, whom they imagined, but knew not, were naturally supposed to act in the same manner; not to employ themselves in supporting the ordinary course of things, which went on of its own accord, but to stop, to thwart, and to disturb it. And thus, in the first ages of the world, the lowest and most pusillanimous superstition supplied the place of philosophy. - Adam Smith, History of Astronomy

The Romans believed, to some degree, that the god Jupiter would occasionally reach out with his invisible hand and alter the natural course of things.

Smith wasn't the first person to use the term "invisible hand".  According to the internet, Shakespeare was the first...

And with thy bloody and invisible hand
Cancel and tear to pieces that great bond
Which keeps me pale. Light thickens, and the crow
Makes wing to th' rooky wood. - Macbeth 

King Macbeth sent some assassins to end the life of Banquo and his son.  Also from Shakespeare (Hamlet)...

There’s such divinity doth hedge a king
That treason can but peep to what it would,
Acts little of his will. - Claudius   

Kings were considered to have the divine authority to arbitrarily alter the course of people's lives.  Resistance to this control is the foundation of liberalism...

When that "divinity" which "doth hedge a king," and which in our day has left a glamour around the body inheriting his power, has quite died away - when it begins to be seen clearly that, in a popularly-governed nation, the government is simply a committee of management; it will also be seen that this committee of management has no intrinsic authority. The inevitable conclusion will be that its authority is given by those appointing it; and has just such bounds as they choose to impose. Along with this will go the further conclusion that the laws it passes are not in themselves sacred; but that whatever sacredness they have, is entirely due to the ethical sanction - an ethical sanction which, as we find, is derivable from the laws of human life as carried on under social conditions. And there will come the corollary that when they have not this ethical sanction they have no sacredness, and may be rightly challenged. 

The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments. - Herbert Spencer, Contemporary Review

It's counterproductive to limit the VH if it does a better job than the IH at dividing society's limited resources.  As Deng Xiaoping was fond of saying, a cat's ability to catch mice is more important than its color.

Right now Evonomics is in a market (white cat) but it is not a market (black cat).  It can't be the case that both cats are equally good at catching mice (optimally dividing society's limited resources).  And logically you'd figure that, in this day and age of science... given the incredible impact that both cats have on our society... so many scientists would intensely perceive the necessity of deliberately and safely testing them.

In theory, Wilson would say, "Classtopia is testing the white cat's ability to catch mice... so should Evonomics!"  But will he say this?

The fact of the matter is that everybody knows that our country has a mixed economy.  The private sector, as a whole, is patrolled by a white cat while the public sector is patrolled by a black cat.  Everybody also knows that even though the private sector, as a whole, is patrolled by a white cat... spaces/places like Evonomics, FEE, the NY Times and Netflix are patrolled by black cats.   Yet, everybody also knows that other spaces/places in the private sector such as Sephora, Vons, Target, Home Depot and The Olive Garden are patrolled by white cats.  In some spaces/places we can substantially and specifically participate in the prioritization process, in other spaces/places we can't.

It truly doesn't matter if the cat is black or white... but it does really matter how effectively it catches mice.  We have this division of black cats and white cats that everybody clearly sees and knows... and everybody also sees and knows the importance of testing things... yet where are the deliberate and safe tests of these cats?

Last month the economist Robin Hanson tweeted the cover of his new book...

Cover of my book w/ @KevinSimler https://t.co/zOMhKlwBC1 pic.twitter.com/W3ePELrvAM

— robin hanson (@robinhanson) May 9, 2017

The Elephant in the Brain?  Why isn't the title The Elephant in Economics?  Why isn't the book about the fact that the two cats can be deliberately and safely tested but, for some reason, economists have virtually no interest in doing so?  Why in the world are economists so uninterested in testing the cats?

Next time someone says econ needs to be "scientific" like physics, remind them of this controversy: https://t.co/AaFlktIQQt

— robin hanson (@robinhanson) May 10, 2017

One of the recurring themes in Smith's essays is coherence.   Coherence is so incredibly underrated/unappreciated that it's worth it to share all the relevant passages from Smith's essays...

************************

P. 18 Let any one attempt to look over even a game of cards, and to attend particularly to every single stroke, and if he is unacquainted with the nature and rules of the game; that is, with the laws which regulate the succession of the cards; he will soon feel the same confusion and giddiness begin to come upon him, which, were it to be continued for days and months, would end in the same manner, in lunacy and distraction. But if the mind be thus thrown into the most violent disorder, when it attends to a long series of events which follow one another in an uncommon train, it must feel some degree of the same disorder, when it observes even a single event fall out in this unusual manner: for the violent disorder can arise from nothing but the too frequent repetition of this smaller uneasiness.

That it is the unusualness alone of the succession which occasions this stop and interruption in the progress of the imagination, as well as the notion of an interval betwixt the two immediately succeeding objects, to be filled up by some chain of intermediate events, is not less evident. The same orders of succession, which to one set of men seem quite according to the natural course of things, and such as require no intermediate events to join them, shall to another appear altogether incoherent and disjointed, unless some such events be supposed: and this for no other reason, but because such orders of succession are familiar to the one, and strange to the other. - Adam Smith, History of Astronomy

P. 20 Philosophy is the science of the connecting principles of nature. Nature, after the largest experience that common observation can acquire, seems to abound with events which appear solitary and incoherent with all that go before them, which therefore disturb the easy movement of the imagination; which make its ideas succeed each other, if one may say so, by irregular starts and sallies; and which thus tend, in some measure, to introduce those confusions and distractions we formerly mentioned. Philosophy, by representing the invisible chains which bind together all these disjointed objects, endeavours to introduce order into this chaos of jarring and discordant appearances, to allay this tumult of the imagination, and to restore it, when it surveys the great revolutions of the universe, to that tone of tranquillity and composure, which is both most agreeable in itself, and most suitable to its nature. - Adam Smith, History of Astronomy

Let us examine, therefore, all the different systems of nature, which, in these western parts of the world, the only parts of whose history we know any thing, have successively been adopted by the learned and ingenious; and, without regarding their absurdity or probability, their agreement or inconsistency with truth and reality, let us consider them only in that particular point of view which belongs to our subject; and content ourselves with inquiring how far each of them was fitted to sooth the imagination, and to render the theatre of nature a more coherent, and therefore a more magnificent spectacle, than otherwise it would have appeared to be. - Adam Smith, History of Astronomy

P. 39 Nothing can more evidently show, how much the repose and tranquillity of the imagination is the ultimate end of philosophy, than the invention of this Equalizing Circle. The motions of the heavenly bodies had appeared inconstant and irregular, both in their velocities and in their directions. They were such, therefore, as tended to embarrass and confound the imagination, whenever it attempted to trace them. The invention of Eccentric Spheres, of Epicycles, and of the revolution of the centres of the Eccentric Spheres, tended to allay this confusion, to connect together those disjointed appearances, and to introduce harmony and order into the mind's conception of the movements of those bodies. It did this, however, but imperfectly; it introduced uniformity and coherence into their real directions. But their velocities, when surveyed from the only point in which the velocity of what moves in a Circle can be truly judged of, the centre of that Circle, still remained, in some measure, inconstant as before; and still, therefore, embarrassed the imagination. - Adam Smith, History of Astronomy

P. 40 Cleanthes, however, and the other philosophers of the Stoical sect who came after him, appear to have had a system of their own, quite different from either. But, though justly renowned for their skill in dialectic, and for the security and sublimity of their moral doctrines, those sages seem never to have had any high reputation for their knowledge of the heavens; neither is the name of any one of them ever counted in the catalogue of the great astronomers, and studious observers of the Stars, among the ancients. They rejected the doctrine of the Solid Spheres; and maintained, that the celestial regions were filled with a fluid ether, of too yielding a nature to carry along with it, by any motion of its own, bodies so immensely great as the Sun, Moon, and Five Planets. These, therefore, as well as the Fixed Stars, did not derive their motion from the circumambient body, but had each of them, in itself, and peculiar to itself, a vital principle of motion, which directed it to move with its own peculiar velocity, and its own peculiar direction. - Adam Smith, History of Astronomy

P. 54 Thus far did this new account of things render the appearances of the heavens more completely coherent than had been done by any of the former systems. It did this, too, by a more simple and intelligible, as well as more beautiful machinery. It represented the Sun, the great enlightener of the universe, whose body was alone larger than all the Planets taken together, as established immoveable in the center, shedding light and heat on all the worlds that circulated around him in one uniform direction, but in longer or shorter periods, according to their different distances. - Adam Smith, History of Astronomy

P. 55 Neither did the beauty and simplicity of this system alone recommend it to the imagination; the novelty and unexpectedness of that view of nature, which it opened to the fancy, excited more wonder and surprise than the strangest of those appearances, which it had been invented to render natural and familiar, and these sentiments still more endeared it. For, though it is the end of Philosophy, to allay that wonder, which either the unusual or seemingly disjointed appearances of nature excite, yet she never triumphs so much, as when, in order to connect together a few, in themselves, perhaps, inconsiderable objects, she has, if I may say so, created another constitution of things, more natural indeed, and such as the imagination can more easily attend to, but more new, more contrary, to common opinion and expectation, than any of those appearances themselves. As, in the instance before us, in order to connect together some seeming irregularities in the motions of the Planets, the most inconsiderable objects in the heavens, and of which the greater part of mankind have no occasion to take any notice during the whole course of their lives, she has, to talk in the hyperbolical language of Tycho-Brache, moved the Earth from its foundations, stopt the revolution of the Firmament, made the Sun stand still, and subverted the whole order of the Universe.

Such were the advantages of this new hypothesis, as they appeared to its author, when he first invented it. But, though that love of paradox, so natural to the learned, and that pleasure, which they are so apt to take in exciting, by the novelty of their supposed discoveries, the amazement of mankind, may, notwithstanding what one of his disciples tells us to the contrary, have had its weight in prompting Copernicus to adopt this system; yet, when he had completed his Treatise of Revolutions, and began coolly to consider what a strange doctrine he was about to offer to the world, he so much dreaded the prejudice of mankind against it, that, by a species of continence, of all others the most difficult to a philosopher, he detained it in his closet for thirty years together.  At last, in the extremity of old age, he allowed it to be extorted from him, but died as soon as it was printed, and before it was published.

When it appeared in the world, it was almost universally disapproved of, by the learned as well as by the ignorant. The natural prejudices of sense, confirmed by education, prevailed too much with both, to allow them to give it a fair examination. A few disciples only, whom he himself had instructed in his doctrine, received it with esteem and admiration. - Adam Smith, History of Astronomy

P. 57 The superior degree of coherence, which it bestowed upon the celestial appearances, the simplicity and uniformity which it introduced into the real directions and velocities of the Planets, soon disposed many astronomers, first to favour, and at last to embrace a system; which thus connected together so happily, the most disjointed of those objects that chiefly occupied their thoughts.  Nor can anything more evidently demonstrate, how easily the learned give up the evidence of their senses to preserve the coherence of the ideas of their imagination, than the readiness with which this, the most violent paradox in all philosophy, was adopted by many ingenious astronomers, notwithstanding its inconsistency with every system of physics then known in the world, and notwithstanding the great number of other more real objections, to which, as Copernicus left it, this account of things was most justly exposed.

It was adopted, however, nor can this be wondered at, by astronomers only. The learned in all other sciences, continued to regard it with the lame contempt as the vulgar. - Adam Smith, History of Astronomy

P. 58 But there were some other objections, which, though grounded upon the same natural prejudices, they found it more difficult to get over. The Earth had always presented itself to the senses, not only as at rest, but as inert, ponderous, and even averse to motion. The imagination had always been accustomed to conceive it as such, and suffered the greatest violence, when obliged to pursue, and attend it, in that rapid motion which the system of Copernicus bestowed upon it. To enforce their objection, the adversaries of this hypothesis were at pains to calculate the extreme rapidity of this motion. They represented, that the circumference of the Earth had been computed to be above twenty-three thousand miles: if the Earth, therefore, was supposed to revolve every day round its axis, every point of it near the equator would pass over above twenty-three thousand miles in a day; and consequently, near a thousand miles in an hour, and about sixteen miles in a minute; a motion more rapid than that of a cannon ball, or even than the swifter progress of sound. The rapidity of its periodical revolution was yet more violent than that of its diurnal rotation. How, therefore, could the imagination ever conceive so ponderous a body to be naturally endowed with so dreadful a movement? - Adam Smith, History of Astronomy

If the Earth, it was said, revolved so rapidly from west to east, a perpetual wind would set in from east to west, more violent than what blows blows in the greatest hurricanes; a stone, thrown westwards, would fly to a much greater distance than one thrown with the same force eastwards; as what moved in a direction, contrary to the motion of the Earth, would necessarily pass over a greater portion of its surface, than what, with the same velocity, moved along with it. A ball, it was said, dropt from the mast of a ship under sail, does not fall precisely at the foot of the mast, but behind it; and in the same manner, a stone dropt from a high tower would not, upon the supposition of the Earth's motion, fall precisely at the bottom of the tower, but west of it, the Earth being, in the mean time, carried away eastward from below it. It is amusing to observe, by what subtile and metaphysical evasions the followers of Copernicus endeavoured to elude this objection, which, before the doctrine of the Composition of Motion had been explained by Galileo, was altogether unanswerable. - Adam Smith, History of Astronomy

P. 67 Till some reason, or proportion of this kind, could be discovered, the system did not appear to him to be completely coherent. - Adam Smith, History of Astronomy

P. 82 They took notice, indeed, of its inferiority with regard to coherence and connection, expressing hopes, however, that these defects might be remedied by some future improvements.  But when the world beheld that complete, and almost perfect coherence, which the philosophy of Des Cartes bestowed upon the system of Copernicus, the imaginations of mankind could no longer refuse themselves the pleasure of going along with so harmonious an account of things. The system of Tycho Brahe was every day less and less talked of, till at last it was forgotten altogether. - Adam Smith, History of Astronomy

P. 91 But of all the attempts of the Newtonian Philosophy, that which would appear to be the most above the reach of human reason and experience, is the attempt to compute the weights and densities of the Sun, and of the several Planets. An attempt, however, which was indispensibly necessary to complete the coherence of the Newtonian system. The power of attraction which, according to the theory of gravity, each body possesses, is in proportion to the quantity of matter contained in that body. But the periodic time in which one body, at a given distance, revolves round another that attracts it, is shorter in proportion as this power is greater, and consequently as the quantity of matter in the attracting body. If the densities of Jupiter and Saturn were the same with that of the Earth, the periodic times of their several Satellites would be shorter than by observation they are found to be. Because the quantity of matter, and consequently the attracting power of each of them, would be as the cubes of their diameters. By comparing the bulks of those Planets, and the periodic times of their Satellites, it is found that, upon the hypothesis of gravity, the density of Jupiter must be greater than that of Saturn, and the density of the Earth greater than that of Jupiter. This seems to establish it as a law in the system, that the nearer the several Planets approach to the Sun, the density of their matter is the greater: a constitution of things which would seem to be the most advantageous of any that could have been established; as water of the same density with that of our Earth, would freeze under the Equator of Saturn, and boil under that of Mercury. - Adam Smith, History of Astronomy


Such is the system of Sir Isaac Newton, a system whose parts are all more strictly connected together, than those of any other philosophical hypothesis. Allow his principle, the universality of gravity, and that it decreases as the squares of the distance increase, and all the appearances, which he joins together by it, necessarily follow. Neither is their connection merely a general and loose connection, as that of most other systems, in which either these appearances, or some such like appearances, might indifferently have been expected. It is every where the most precise and particular that can be imagined, and ascertains the time, the place, the quantity, the duration of each individual phænomenon, to be exactly such as, by observation, they have been determined to be. - Adam Smith, History of Astronomy

P. 92 The Cartesian system, which had prevailed so generally before it, had accustomed mankind to conceive motion as never beginning, but in consequence of impulse, and had connected the descent of heavy bodies, near the surface of the Earth, and the other Planets, by this more general bond of union; and it was the attachment the world had conceived for this account of things, which indisposed them to that of Sir Isaac Newton. His system, however, now prevails over all opposition, and has advanced to the acquisition of the most universal empire that was ever established in philosophy. His principles, it must be acknowledged, have a degree of firmness and solidity that we should in vain look for in any other system. The most sceptical cannot avoid feeling this. They not only connect together most perfectly all the phænomena of the Heavens, which had been observed before his time, but those also which the persevering industry and more perfect instruments of later Astronomers have made known to us; have been either easily and immediately explained by the application of his principles, or have been explained in consequence of more laborious and accurate calculations from these principles, than had been instituted before. And even we, while we have been endeavouring to represent all philosophical systems as mere inventions of the imagination, to connect together the otherwise disjointed and discordant phænomena of nature, have insensibly been drawn in, to make use of language expressing the connecting principles of this one, as if they were the real chains which Nature makes use of to bind together her several operations. Can we wonder then, that it should have gained the general and complete approbation of mankind, and that it should now be considered, not as an attempt to connect in the imagination the phænomena of the Heavens, but as the greatest discovery that ever was made by man, the discovery of an immense chain of the most important and sublime truths, all closely connected together, by one capital fact, of the reality of which we have daily experience. - Adam Smith, History of Astronomy

P. 97 From arranging and methodizing the System of the Heavens, Philosophy descended to the consideration of the inferior parts of Nature, of the Earth, and of the bodies which immediately surround it. If the objects, which were here presented to its view, were inferior in greatness or beauty, and therefore less apt to attract the attention of the mind, they were more apt, when they came to be attended to, to embarrass and perplex it, by the variety of their species, and by the intricacy and seeming irregularity of the laws or orders of their succession. The species of objects in the Heavens are few in number; the Sun, the Moon, the Planets, and the Fixed Stars, are all which those philosophers could distinguish. All the changes too, which are ever observed in these bodies, evidently arise from some difference in the velocity and direction of their several motions; but the variety of meteors in the air, of clouds, rainbows, thunder, lightning, winds, rain, hail, snow, is vastly greater; and the order of their succession seems to be still more irregular and unconstant. The species of fossils, minerals, plants, animals, which are found in the Waters, and near the surface of the Earth, are still more intricately diversified; and if we regard the different manners of their production, their mutual influence in altering, destroying, supporting one another, the orders of their succession seem to admit of an almost infinite variety. If the imagination, therefore, when it considered the appearances in the Heavens, was often perplexed, and driven out of its natural career, it would be much more exposed to the same embarrassments when it directed its attention to the objects which the Earth presented to it, and when it endeavoured to trace their progress and successive revolutions.

To introduce order and coherence into the mind's conception of this seeming chaos of dissimilar and disjointed appearances, it was necessary to deduce all their qualities, operations, and laws of succession, from those of some particular things, with which it was perfectly acquainted and familiar, and along which its imagination could glide smoothly and easily, and without interruption. But as we would in vain attempt to deduce the heat of a stove from that of an open chimney, unless we could show that the same fire which was exposed in the one, lay concealed in the other; so it was impossible to deduce the qualities and laws of succession, observed in the more uncommon appearances of Nature, from those of such as were more familiar, if those customary objects were not supposed, however disguised in their appearance, to enter into the composition of those rarer and more singular phaenomena. To render, therefore, this lower part of the great theatre of nature a coherent spectacle to the imagination, it became necessary to suppose, first, That all the strange objects of which it consisted were made up out of a few, with which the mind was extremely familiar: and secondly, That all their qualities, operations, and rules of succession, were no more than different diversifications of those to which it had long been accustomed, in these primary and elementary objects. - Adam Smith, History of the Ancient Physics

P. 106 In the first ages of the world, the seeming incoherence of the appearances of nature, so confounded mankind, that they despaired of discovering in her operations any regular system. Their ignorance, and confusion of thought, necessarily gave birth to that pusillanimous superstition, which ascribes almost every unexpected event, to the arbitrary will of some designing, though invisible beings, who produced it for some private and particular purpose. The idea of an universal mind, of a God of all, who originally formed the whole, and who governs the whole by general laws, directed to the conservation and prosperity of the whole, without regard to that of any private individual, was a notion to which they were utterly strangers. Their gods, though they were apprehended to interpose, upon some particular occasions, were so far from being regarded, as the creators of the world, that their origin was apprehended to be posterior to that of the world. The Earth, according to Hesiod, was the first production of the chaos. The Heavens arose out of the Earth, and from both together, all the gods, who afterwards inhabited them. Nor was this notion confined to the vulgar, and to those poets who seem to have recorded the vulgar theology. Of all the philosophers of the Ionian school, Anaxagoras, it is well known, was the.first who supposed, that mind and understanding were requisite to account for the first origin of the world, and who, therefore, compared with the other philosophers of his time, talked, as Aristotle observes, like a sober man among drunkards; but whose opinion was, at that time, so remarkable, that he seems to have got a sirname from it. The same notion, of the spontaneous origin of the world, was embraced, too, as the same author tells us, by the early Pythagoreans, a sect, which, in the ancient world, was never regarded as irreligious.  Mind, and understanding, and consequently Deity, being the most perfect, were necessarily, according to them, the last productions of Nature. For in all other things, what was most perfect, they observed, always came last. As in plants and animals, it is not the seed that is most perfect, but the complete animal, with all its members, in the one; and the complete plant, with all its branches, leaves, flowers, and fruits, in the other. This notion, which could take place only while Nature was still considered as, in some measure, disorderly and inconstant in her operations, was necessarily renounced by those philosophers, when, upon a more attentive survey, they discovered, or imagined they had discovered, more distinctly, the chain which bound all her different parts to one another. As soon as the Universe was regarded as a complete machine, as a coherent system, governed by general laws, and directed to general ends, viz. its own preservation and prosperity, and that of all the species that are in it; the resemblance which it evidently bore to those machines which are produced by human art, necessarily impressed those sages with a belief, that in the original formation of the world there must have been employed an art resembling the human art, but as much superior to it, as the world is superior to the machines which that art produces. The unity of the system, which, according to this ancient philosophy, is most perfect, suggested the idea of the unity of that principle, by whose art it was formed; and thus, as ignorance begot superstition, science gave birth to the first theism that arose among those nations, who were not enlightened by divine Revelation. According to Timæus, who was followed by Plato, that intelligent Being, who formed the world, endowed it with a principle of life and understanding, which extends from its centre to its remotest circumference, which is conscious of all its changes, and which governs and directs all its motions to the great end of its formation. This Soul of the world was itself a God, the greatest of all the inferior, and created deities; of an essence that was indissoluble, by any power but by that of him who made it, and which was united to the body of the world, so as to be inseparable by every force, but his who joined them, from the exertion of which his goodness secured them. The beauty of the celestial spheres attracting the admiration of mankind, the constancy and regularity of their motions seeming to manifest peculiar wisdom and understanding, they were each of them supposed to be animated by an Intelligence of a nature that was, in the same manner, indissoluble and immortal, and inseparably united to that sphere which it inhabited.  All the mortal and changeable beings which people the surface of the earth were formed by those inferior deities; for the revolutions of the heavenly bodies seemed plainly to influence the generation and growth of both plants and animals, whose frail and fading forms bore the too evident marks of the weakness of those inferior causes, which joined their different parts to one another. - Adam Smith, History of the Ancient Physics

P. 110 The Stoics, the most religious of all the ancient sects of philosophers, seem in this, as in most other things, to have altered and refined upon the doctrine of Plato. The order, harmony, and coherence which this philosophy bestowed upon the Universal System, struck them with awe and veneration. - Adam Smith, History of the Ancient Physics

P. 116 But it is from the effects of bodies upon one another, that all the changes and revolutions in the material world arise. Since these, therefore, depend upon the specific essences of those bodies, it must be the business of philosophy, that science which endeavours to connect together all the different changes that occur in the world, to determine wherein the specific Essence of each object consists, in order to foresee what changes or revolutions may be expected from it. But the specific Essence of each individual object is not that which is peculiar to it as an individual, but that which is common to it, with all other objects of the same kind. - Adam Smith, The Principles Which Lead And Direct Philosophical Enquiries

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That's quite a few passages about coherence!  Here's a recent example...

“It is often really hard to find consistent solutions between many different observations,” says Barger, an observational cosmologist who also holds an affiliate graduate appointment at the University of Hawaii’s Department of Physics and Astronomy. “What Ben has shown is that the density profile that Keenan measured is consistent with cosmological observables. One always wants to find consistency, or else there is a problem somewhere that needs to be resolved.” - Terry Devitt, Celestial boondocks: Study supports the idea that we live in a void

Here's a recent example from biology...

Medzhitov had been frustrated for years by a finding he could not explain. In experiment after experiment, he noted that infected animals differed wildly in their survival rates — and it didn’t seem to matter how many pathogens or disease-causing microbes they carried. If killing microbes was all that mattered, he said, this differential survival of infected animals made no sense at all.  

“All the standard thinking about how the immune system works,” he said, “was clearly inefficient.” - Usha Lee McFarling, A Radical Approach against Superbugs: Learn to Live with Them 

All the standard thinking about economic systems is also inefficient.  It's extremely inefficient.  But, for some reason, Robin Hanson's mind isn't "thrown into the most violent disorder" by the elephant in economics.  But mine very much is.  The incredible incoherence of our economic system isn't making him crazy.  But it sure is making me crazy.   Either I'm the only drunk guy in a world full of sober people... or it's the other way around.  Both possibilities make me very uncomfortable.  Either I need to sober up... or everybody else does.

Admittedly, Ronald Coase did provide a theory as to why firms themselves aren't markets... "The Nature of the Firm".  Compare his product to this product by Zack Kanter... Why Amazon is eating the world.  Here are some key passages...

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If Amazon Connect is a complete commercial failure, Amazon’s management will have a quantifiable indicator (revenue, or lack thereof) that suggests their internal tools are significantly lagging behind the competition. Amazon has replaced useless, time-intensive bureaucracy like internal surveys and audits with a feedback loop that generates cash when it works — and quickly identifies problems when it doesn’t. They say that money earned is a reasonable approximation of the value you’re creating for the world, and Amazon has figured out a way to measure its own value in dozens of previously invisible areas. - Zack Kanter, Why Amazon is eating the world

The key advantage that Amazon has over any other enterprise service provider — from UPS and FedEx to Rackspace — is that they are forced to use their own services. UPS is a step removed from backlash due to lost/destroyed packages, shipping delays, terrible software and poor holiday capacity planning. Angry customers blame the retailer, and the retailer screams at UPS in turn. When Amazon is the service provider, they’re permanently dogfooding. There is nowhere for poor performance to hide. Amazon has built a feedback loop as a moat, and it is incredible to watch the flywheel start to pick up speed. - Zack Kanter, Why Amazon is eating the world

I’m on the email list for updates from AWS, Amazon Marketplace, Amazon’s Vendor program and a handful of customer-facing programs — they are systemically productizing the entire company, honing what works, fixing what doesn’t and killing off everything else. - Zack Kanter, Why Amazon is eating the world

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Whose story/product is more coherent... Kanter's or Coase's?  Whose product is more relevant to your reality?  Does it matter?  Whose product is more relevant to our reality?  Does it matter?  How would you divide your limited dollars between the two products?  Does it matter?  How do you want society's limited attention divided between the two products?  Does it matter?

Coase's product has been cited 36,283 times.  So we know it is very popular.  But just how valuable is it?  We can certainly see that JSTOR is selling it for $43 dollars.  This is the price of Coase's product.  Does the price accurately reflect the true social relevance of his product?  Does it matter how relevant his product is to society?

Let's juxtapose the economist Peter Boettke.... Papers VS Products

Papers

Here is a conundrum in signaling quality in economics folks -- there are low quality journals, and there are under appreciated fields of inquiry. Low quality journals publish standard economics, but it just isn't for a variety of reasons very good. But in under appreciated fields, the best work in that field could be being published in the top field journal but just because it's an under appreciated field the journals ranking doesn't signal that fact. This would be true in economic history and history of economic thought and methodology, but also fields like Philosophy & Economics, Constitutional Economics, Economic Sociology, etc. So this requires faculty and administrators to step up and demand that journal rankings acknowledge field specific rank ordering. Note, if you don't do that, then under appreciated fields become extinct fields. I can see why some want exotic boutiques fields to disappear, but do you really want economic history and history of thought to have no place in the curriculum let alone the research community? This has been going on for years, but the journal rankings have become more formal in a weird way and with the proliferation of journals easier for editors to steer articles to more 'appropriate' journals at the same time as the signal to noise on quality has gotten worse.
Think about it. And if you agree, do something about it. If you disagree, just think all the way through the implications and be willing to live with those consequences. - Peter Boettke, Facebook Post

Products

Prices guide us; profits lure us; losses discipline us — this is how we learn. This is how markets work. This is how civilization progresses. - Peter Boettke, Israel M. Kirzner on Competitive Behavior, Industrial Structure, and the Entrepreneurial Market Process

Prices are necessary to determine the relevance of products, but they are unnecessary to determine the relevance of papers?  Because... ???  Because papers aren't products?  What about books?  Are they products?

The NY Times has a list of bestselling books.  Should we care how many times a book has been sold?  If so, then why don't we care how many times an academic paper has been sold?  Why doesn't JSTOR have a list of bestselling papers?  Why doesn't the Times have a list of bestselling articles?  Why does the Times have a list of most viewed articles?  Why does it also have a list of most e-mailed articles?

The Times is in a market.  This means that you can use your dollars to grade its relevance.  But you can't use your dollars to grade the relevance of its products... so it is not a market.  The same is true of Evonomics.

JSTOR is also in a market.  But, unlike Evonomics and the Times, you can use your dollars to grade the relevance of its products.

Sephora is also in a market.  But, you can't subscribe to Sephora like you can subscribe to the Times.  And you probably aren't going to donate to Sephora like you can donate to Evonomics.  Just like with JSTOR, but unlike Evonomics and the Times, you can use your dollars to grade the relevance of Sephora's products.

Unlike Sephora... the Times, Evonomics and JSTOR do not have limited shelf space.  But they do have a limited amount of time and talent.  All their time and talent that is spent examining inequality can't also be spent examining the elephant in economics.  This is just as true for readers as it is for writers.  Which system is better at dividing people's time and talent... the VH or the IH?  Is the black cat or the white cat better at catching mice?

Marshall Steinbaum is an economist at the Roosevelt Institute (RI).  Last month an article of his was published in the Boston Review... Why Are Economists Giving Piketty the Cold Shoulder?  Here are some key excerpts...

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It is as though the central facts, controversies, and policy proposals that have consumed our public debate about the economy for three years are of little-to-no importance to the people who are paid and tenured to conduct a lifetime’s research into how the economy works. - Marshall Steinbaum, Why Are Economists Giving Piketty the Cold Shoulder?

As an appeal to the public to resolve, or at least have a say in, what the experts consider their own domain, Piketty appears to have questioned the very value of having a credentialed economics elite empowered to make policy in the name of the public interest but not answerable to public opinion. - Marshall Steinbaum, Why Are Economists Giving Piketty the Cold Shoulder?

For the latter, unfortunately, it is all too easy to keep looking the other way. It is increasingly possible to have a comfortable and rewarding life as a professional economist and never even consider the broad issue of inequality or the controversial explanations for and consequences of it that Piketty offers. Social norms used to require economists to at least take on broad public sentiment and to consider the issues of the day when setting their agendas, but the amount of money available for economics research and teaching has never been higher, no matter the esteem (or lack thereof) in which economists are held by the public. High officials in government, in corporate boardrooms, in courtrooms, and in university administrations, alumni bodies, and boards of trustees still want to hear what economists have to say (or at least to make a point of ostentatiously seeking out their advice and approval), and to have that approval validated in public.

All of which avoids the crucial question: are we actually doing or saying anything to make the economy serve the people who inhabit it? Economists could very easily spend their individual and collective lives avoiding that question as the economy crumbles around them, with Piketty’s book serving as little more than a cry in the wilderness. Right now, there is no assurance it won’t end that way, but by reading between the lines, my suspicion—and hope—is that Piketty is not one in a series of pop–social science fads. Rather, his work on inequality is an agenda-setting and generation-marking intellectual achievement, potentially as explosive (albeit with a longer fuse) in academia as it has been outside of it. - Marshall Steinbaum, Why Are Economists Giving Piketty the Cold Shoulder?

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With Steinbaum's argument in mind, consider this discussion that I had last month with another guy from the RI.  I asked Eric Harris Bernstein whether it's a good idea to allow their donors to use their dollars to grade the relevance of the RI's products.  He said that it was a bad idea because their donors' priorities are wrong.  Yet... here is Steinbaum strongly rebuking economists for ignoring the public's priorities.

From Steinbaum's perspective, what the public truly wants most is for economists to deal with the issue of inequality.  But what, exactly, leads him to believe that this is truly the public's priority?  Is his conclusion based on the fact that Thomas Piketty's book was a bestseller?  If he genuinely believes that priorities are accurately revealed by society's willingness to pay (WTP), then he should really love the idea of donors grading the relevance of the RI's products.  If he doesn't love this idea... then perhaps he believes that priorities are accurately revealed by cheap-talk surveys?   Or maybe he agrees with Bernstein that the public's priorities are incorrect, and only experts such as themselves can truly discern the public's correct priorities?

I have lots of questions!  Is Steinbaum at all obligated to answer them?  If not, should he be obligated to answer them?

Coincidentally, the economist James Bradford "Brad" DeLong recently provided the opportunity to try and find some answers.  On his blog, which he has wonderfully titled, "Grasping Reality with All Tentacles", he shared a video and transcript from an expert discussion about inequality.  I read through their discussion and found their thoughts on the amount of attention that has been given to Piketty's book, and inequality in general...

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Our overarching goal is to contribute to and to deepen the complicated national conversation about economic inequality that has received so much attention in the last half dozen years. - Janet Gornick

Third, the book was insanely popular, with record-breaking sales topping more than 2 million copies, translations into over 30 languages, countless public events, reviews, and scores of academic and popular venues—and a film is in the works. - Janet Gornick

As we started this project Brad and I compiled all of the different reviews that we could find on Piketty. It was over 700 pages. We felt that there was there was a lot of talk out there. But it didn't seem that the economics profession and economists we're taking it the core ideas as seriously as we wanted them to. We wanted more serious critique and engagement. - Heather Boushey

I want to say a lot of things about that part of the book, which I think has not received the attention that I think deserves. - Branko Milanovic

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Clearly, to some degree, it matters that so many people were willing to pay for Piketty's book.  It also matters how many people were willing to discuss his book.  It also matters that, from the perspective of the panelists, the topic of inequality deserves more attention and higher quality discussion.  It matters what people want...

What was interesting—and this is maybe the last word—is the poll that came out I think this morning—Quinnipiac—showed people with very center-left views on almost everything. The one piece of the current administration's tax agenda that people do approve of is abolition of the estate tax. 

So it turns out that people want a strong welfare state, a strong middle class, and patrimonial capitalism. - Paul Krugman

Let's take another look at the most elementary economic problem...

Society's wants: unlimited
Society's resources: limited

The fundamental task is to optimally divide society's limited resources.  Which is the best tool for the task... cheap-talk or spending?

The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. - Adam Smith, Wealth of Nations  

The Soviet Union outspends us on defense by 50 percent, an amount equal to 15 percent of their gross national product. During the campaign I was asked any number of times: If I were faced with a choice of balancing the budget or restoring our national defenses, what would I do? Every time I said, "Restore our defenses." And every time I was applauded. - Ronald Reagan

We should really use applause to divide society limited resources?  The division of everybody's brainpower should be determined by people clapping or booing?  This is what Krugman seriously believes?

A few months ago the experts in charge of Hypatia decided to publish a paper by Rebecca Tuvel... In Defense of Transracialism.  The experts obviously believed that the paper was adequately relevant to be published.  Some people strongly disagreed.  They insisted that the paper be retracted.  Their request prompted this response from Jason Brennan... Burn the Heretic!  Unsurprisingly, he isn't a fan of experts being overruled by angry mobs.

Adam Gurri, who is also more or less a libertarian, channeled his inner Robin Hanson and posted this contrarian piece on the controversy... You Were The Thought Police All Along.  According to Gurri, it's perfectly acceptable for the haters to combine their shouts in order to convince the experts to retract Tuvel's piece.  Here's a key passage...

Making use of our freedom of association in order to try and knock some ideas out of the main body and into the long tail—and ushering better ideas into the mainstream—is not censorship. It is perfectly consistent with freedom of speech. - Adam Gurri

This is just like creative destruction.  Except, it's backwards.  With creative destruction... the creation of superior ideas destroys inferior ideas.  But with Gurri's version... the destruction of inferior ideas somehow creates superior ideas.

Gurri's approach to ideas is exactly the same as liberals' approach to employment.  The destruction of sweatshops will somehow create superior workplaces.  Banning inferior options will somehow create superior options.  Eliminating inferior products will somehow create superior products.  Outlawing horse-drawn carriages would somehow have created cars a whole lot sooner.  Outlawing cars will somehow create ________ a whole lot sooner.  Retracting Tuvel's paper will somehow create much better papers.

What is it, exactly, about Tuvel's paper that prevents better papers from being created?  How, exactly, does her inferior product block the creation of superior products?

Preventing, or even hindering, the creation of superior products does not benefit anyone.  The real issue is how the quality/value/relevance of a product is determined in the first place.

The experts decided that Tuvel's paper was relevant enough to be published.  But then their expert judgement was challenged by cheap-talk.  So the controversy is about experts versus cheap-talk.  The controversy is not about experts versus cheap-talk versus demand.  But it really should be... so voila!

In economics, supply and demand is pretty basic stuff.  It's very elementary that demand isn't cheap-talk... it's WTP.   Supply should be based on what people are willing to pay for, it should not be based on what people simply say they want.  People's unlimited wants aren't equally important.  In order for society's limited resources to be optimally divided, people must divide their limited dollars among their unlimited desires.  How people divide their dollars should determine the supply.  People's true priorities should determine the supply.  Demand should determine supply.

Let's consider the example of "cauliflower rice" (CR).  Have you ever heard of it?  Evidently it's a newish alternative to regular rice (RR).  The producers of RR aren't happy with their word "rice" being used to describe a product that's made from cauliflower...

But the cauliflower side isn’t worried. “Using the FDA to combat merchandising efforts? That’s a story they’re telling their retail partners,” said Gina Nucci of the California-based produce company, Mann Packing, which sells cauliflower products. “Every section of the grocery store is fighting for the same food dollar. Same share of stomach. Consumers are smart. I don’t think anyone is going to mistake regular rice for a riced cauliflower product, frozen or fresh.” - Chase Purdy, The rice industry is furious at the existence of “cauliflower rice”

In the market there's this incredible potential for a fair fight between RR and CR.  CR has recently stepped into the ring (the market) to fight RR.  It's up to each and every consumer to judge for themselves, with their own money, whether CR is superior to RR.  The proof is in the pudding.  Each and every consumer has the opportunity to try both products.  This opportunity allows consumers to make an informed decision about how to divide their dollars between the two products.  Consumer choice, rather than expert choice or cheap-talk, determines the relative relevance of CR and RR.

Of course CR and RR will cheat as much as they can.  But everybody else wants a fair fight.  Any cheating by either product will subvert the will of the people.  The more cheating that occurs, the more subverted the people's will, the less optimal the division of society's limited resources between RR and CR.

The competition between CR and RR is very different compared to the "competition" between Tuvel's product and its alternatives.  The CR and RR competition is a fight that takes place, more or less, in the ring.  The Tuvel "competition", on the other hand, is a contest that occurs outside the ring.  Perhaps we can say that it occurs on a stage.  So its more akin to a beauty pageant... except, according to Gurri, the audience should have the power to boo any of the contestants off the stage.  There's nothing inherently wrong with booing or cheering.  The issue is when cheap-talk, rather than spending, determines who the winner is.

Cheap-talk and spending are two systems that we use to determine the quality/relevance of a product.  But these two systems are completely different.  Therefore, they can't be equally good at optimally dividing society's limited resources.

Thomas Piketty put his product/book into the ring.  Some people booed it.  Other people applauded it.  But most importantly, many people purchased it.  His book was indisputably a bestseller.  It fairly beat a ton of alternatives.  But did it fairly beat Adam Smith's Wealth of Nations?  I'm sure that far more people have recently purchased Piketty's book.  But I wouldn't say that the fight was fair given that everybody can read Smith's book for free.  Because the fight wasn't fair, society's limited time and attention has been suboptimally divided between the two books.

Imagine if Quartz, or Evonomics, sponsored a fair fight between both books.  Everybody in the world would have the wonderful opportunity to spend any amount of money on their preferred book.  This is the bee method/market.  The spenders wouldn't be buying their preferred book.  They would simply be using their money to help determine the relevance/importance/value of each book.  Participants would spend their limited dollars to substantially signal how they wanted society's limited time and attention to be divided between Piketty's book and Smith's book.  It would be like a survey but with spending rather than voting.

Which book would win?  Would it win by a little... or by a lot?  How much money would Steinbaum, Bernstein, Gornick, Boushey, Milanovic and Krugman be willing to spend on Piketty's book?  Does it matter?  If Piketty's book was annihilated by Smith's book... would Krugman's camp agree that the IH is far more important to the public than inequality?  Would they agree that economists should devote far more time and talent to the IH than to inequality?  To be honest, I'd be surprised if Krugman's camp would even be interested in seeing a fair fight between the two books.

The relevance of Piketty's book/product was determined by demand.  Should the relevance of Tuvel's paper/product be determined by demand?  Or by cheap-talk?  Or by experts?

Consider this passage from Deirdre McCloskey's book... "The Applied Theory Of Price"

Geoffrey Hellman wrote for the New Yorker magazine for a long time and had incessant quarrels with its editor, Harold Ross, about how little Ross paid a man of Hellman’s seniority. Ross insisted that he paid what each piece of writing was worth:  

“You say that you have been here eighteen years and are not treated better than a good writer a couple of years out of college would be, so far as pay for individual articles is concerned… My firm viewpoint is that we ought to pay what a piece is worth, regardless of age, race, color, creed, financial status or any other consideration. I don’t know how, in an enterprise of this sort, one in my position can take into consideration anything beyond the actual value of the things.”

McCloskey knew, for a fact, that her book's actual worth would be ultimately determined by demand.  So why didn't she explain in her book that an article's actual worth can only be truly determined by demand?  If she had made this argument 30 years ago, would we still have had the controversy about Tuvel's paper?

Does it truly matter how much Tuvel's paper is worth to McCloskey?  Does it truly matter how much Tuvel's paper is worth to us?

Compare McCloskey's thoughts to these thoughts by Paul Smalera...

So how does this all work? First, the Ideas staff is having a never-ending conversation about the news and notable developments in the fields covered by our Quartz obsessions. And we regularly meet with our other editorial colleagues to hear what’s on their minds. But the Ideas team numbers five, so we know we can’t be up on everything going on in the world. That’s where you come in. Tell us something we don’t know, or something new about a thing we already know. That’s the first step to writing for Quartz. - Paul Smalera, The complete guide to writing for Quartz Ideas  

Back to topics for a moment. If you’re asking yourself what you should write about for Quartz, the answer is always to write what you know. We have a staff of hard-working reporters who spend their days chasing down stories and breaking news. What we don’t have is you, your experiences and expertise. Whether you’re a CEO, a Navy SEAL, or a seeker of high office, the things you’ve lived have changed the way you see the world. So, please, share them with us. - Paul Smalera, The complete guide to writing for Quartz Ideas 

Wow!  Just wow!  All of these nicely worded and very accessible thoughts are so incredibly relevant to what markets are good for.  Yet... Quartz is not a market.  So what Smalera doesn't know, but should know, is the necessity of people spending their money to inform each other of the relevance of things.

What happens if I share this idea with him?  Will he decide that it's worth sharing with Quartz's readers?

Even the experts, with much at stake, have difficulty picking winners. Columbia Records turned down Elvis Presley in 1955 and the Beatles in 1963. They turned down Bob Dylan in 1963, and almost rejected “Like a Rolling Stone” in 1965, which was later named the greatest rock ‘n roll song ever by Rolling Stone magazine. 

Or consider Sixto Rodriguez, the subject of the documentary movie Searching for Sugar Man. Rodriguez recorded two-and-a-half albums from 1970 to 1975, which were commercial flops. But he was a huge success in South Africa, and his music became the battle hymn of the anti-Apartheid movement. And – amazingly – he was unaware of his fame and influence. - David Vandivier, Rock and Roll, Economics, and Rebuilding the Middle Class

Larger markets are always better than smaller markets at correctly determining the social relevance of things.  In other words, larger markets are always more intelligent than smaller markets.

A few weeks ago the NY Times published this piece by David Leonhardt... A French Lesson for the American Media.  He compared the French media's coverage of Macron's released e-mails to the American media's coverage of Clinton's released e-mails...

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Despite the mundane quality of the Clinton emails, the media covered them as a profound revelation. The tone often suggested a big investigative scoop. But this was no scoop. It was material stolen by a hostile foreign government, posted for all to see, and it was only occasionally revealing. It deserved some coverage, but far less. -  David Leonhardt, A French Lesson for the American Media

That’s a pretty harsh indictment of the coverage (and Gallup’s research was done well before James Comey wrote his infamous letter). It is a sign that Clinton’s private server and the hacked emails crowded out everything else, including her plans for reducing inequality, addressing climate change and conducting a more hawkish foreign policy than Obama. It’s a sign that the media failed to distinguish a subject that sounded important — secret emails! — from subjects that were in reality more important. - David Leonhardt, A French Lesson for the American Media

French journalists rightly did not focus on what seemed like big news, because the emails surely did. They evaluated what truly was major news. Material released by a hostile foreign government, with the aim of confusing voters and evidently without significant new information, failed to qualify. Van Kote said reporters are continuing to read the emails to see if they warrant future stories. - David Leonhardt, A French Lesson for the American Media

The two cases obviously are not identical. (And van Kote wasn’t criticizing American journalism; the criticisms are mine.) But they are similar enough to say that the French media exercised better, more sober judgment than the American media. - David Leonhardt, A French Lesson for the American Media

The media cannot always ignore that information, tempting as it may seem. But it also should not pretend that the only two options are neglect and sensationalism. There is a middle ground, one where journalistic judgment should prioritize news over the whiff of news. - David Leonhardt, A French Lesson for the American Media

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I love all the different ways that he said the same thing... the inefficient allocation of attention.  Let's compare Leonhardt's words to Smith's words...

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. — Adam Smith, Wealth of Nations

A. Cosmetics
B. Clothes
C. Computers
D. Articles about Clinton's emails
E. Articles about Clinton's plans to reduce inequality
F. Articles about Clinton's plans to combat climate change

The IH divides society's limited resources between A, B and C.  The VH divides society's limited resources between D, E and F.  Does Leonhardt truly believe that the IH is less effective than the VH at dividing society's limited resources?  If so, then I'd love to see his sources.

Again, larger markets are always better than smaller markets at correctly determining the social relevance of things.  Larger markets are always more intelligent than smaller markets.  Yet...

Well, I voted on each of these hires. I voted for them. For a lot of them, I was on the hiring committee. Robin Hanson’s a good example. When we hired Robin, he was much older than a typical assistant professor would be. And of course, we don’t practice age discrimination, and neither does anyone else, but . . . - Tyler Cowen, Patrick Collison has a Few Questions for Tyler 

The decision to hire Hanson was not made by a large market.  It wasn't even made by a small market.  The decision was made by a small group of people superficially signalling their preferences.  Is a committee or a market better at determining the true social relevance of Hanson?  Is a committee or a market better at determining the true social relevance of his books?

Amazon is a market.  George Mason University is not a market.  Neither is Quartz.  Neither is the New Yorker.  Neither is the Times or Evonomics or FEE or the Roosevelt Institute (RI).  Why aren't they markets?  Bernstein, to his great credit, at least attempted to explain why the RI should not be a market.  From his perspective, their supporters have the wrong priorities.  But what evidence fuels his distrust?  Why does he not trust people to use their money to grade the relevance of the RI's brainfood, but he does trust people to use their money to grade the relevance of books and food?

Bernstein, Piketty, Krugman, Steinbaum, Wilson and I disagree on many things.  But there are at least two things that we should all strongly agree on...

1. the importance of communication
2. the importance of evidence

My theory is that the white cat is far better than the black cat at catching mice.  I want to use Evonomics to test my theory.  Does Wilson want to use Evonomics to test my theory?  Why wouldn't he?  Either my theory is incorrect and the experiment provides some evidence that the white cat isn't better at catching mice.  Or my theory is correct and the experiment provides some evidence that the white cat is better at catching mice.  Why wouldn't Wilson want to know whether or not the white cat is better at catching mice?  In this day and age of science, how could he possibly argue that ignorance is bliss?  How could he possibly claim that coherence is overrated?  How could he possibly have no desire to uncover the truth?

It amazes me that Copernicus hid a far more coherent cosmic system in his closet for 30 years.  Was he scared or prudent?  Discretion is the greater part of valor?

If Copernicus hadn't hidden the truth, what real and tangible difference in people's lives would it have made?  Would people's lives have been better?   Nope.  Their lives would not have been any better because virtually nobody's life would have been significantly different.

It's a completely different story when it comes to the truth about economics.  Mao Zedong failed to see the truth about economics and, as a result, everybody's life in China was significantly different.  The difference was not positive.  Millions and millions of people starved to death.  All their immense potential was wasted simply because their leader failed to see the truth about economics.  When Mao Zedong was replaced by Deng Xiaoping, people's lives were significantly improved.  Deng's far superior understanding of economic truth supplied, and continues to supply, the entire world with the fruit of China's incredible talent.

I'm definitely not trying to argue that uncovering the truth about physics isn't beneficial.  It certainly does have its benefits.  But these benefits are virtually nonexistent when compared to the benefits of figuring out the truth about economics.  Progress with physics, like progress with everything else, depends entirely on economics.  Economics determines the amount of brainpower that is allocated to figuring out physics and everything else.  The progress made in each and every area of life depends on how society's limited resources are divided.  It should be readily apparent that figuring out the best economic system is infinitely more urgent than figuring out the best physics system.  Even a blind person should be able to clearly see that nothing is more important than uncovering the truth about economics.  Economic enlightenment should be our number one priority.

Does this mean that Neil DeGrasse Tyson should write a 100 page essay about the elephant in economics?  Of course!  It should be turned into a Netflix show... that will knock people out?  Ideally it would do the opposite.  It would wake people up!  It would open people's eyes!

But honestly I'd be surprised if Tyson will even read this entry.  I know who he is but he doesn't know who I am.  He has over 7 million followers on Twitter... I have 30.  The disparity in our influence is considerable.  But is it correct?

Do we worry whether the celestial bodies in our solar system have the correct amount of influence?  Well... the correctness of their influence is the only reason that it's even possible to consider the correctness of influence!  Our planet isn't too far from, or too close to, the sun.  Voila!  Here we are!  We exist!  Which reminds of this poem by Stephen Crane...

A man said to the universe:
“Sir, I exist!”
“However,” replied the universe,
“The fact has not created in me
A sense of obligation.”

The man got it really backwards.  Our existence is the result of our planet being in the Goldilocks zone.  This fact should create in us a sense of obligation to the idea of bodies having the correct amount of influence.  We should recognize that there's an infinite number of beings who don't exist for the simple reason that their planets were not in the Goldilocks zone.  In their case, the celestial bodies did not have the correct amount of influence.

No matter what type of bodies we're talking about, it's crucially important for their influence to be correct.  It's a problem for any body to have the wrong amount of influence on other bodies.

My concern is the correctness of influence.  Krugman's concern is the equality of influence.  As if it's inherently problematic that Tyson has far more influence than I do.  As if it's inherently problematic that the sun has far more influence than some tiny asteroid.

With celestial bodies, we currently have very little control over their influence.  We can't visit a distant solar system and move a planet into the Goldilocks zone.  Not yet at least.  But it's a very different story with human bodies.  We can have considerable control over people's influence on each other.  The grocery store gives consumers considerable influence over producers.  Sephora gives consumers considerable influence over producers.  Evonomics can give donors considerable influence over producers.  The Roosevelt Institute can give donors considerable influence over producers.  Netflix can give subscribers considerable influence over producers.  The government can give taxpayers considerable influence over producers.  Economic systems determine how much influence we have on each other.  The best system is the one that will ensure that everybody has the correct amount of influence on each other.  What this best system produces will be far more valuable than what our solar system has produced.  Eh?  In any case, systems with correct influence create more value than systems with incorrect influence.  It's the difference between a planet with abundant life and a planet completely devoid of life.

In order to help explain our economic influence on each other, Adam Smith felt it was useful to borrow some terms and ideas from physics.  Not sure if you noticed, but I like to do more substantial borrowing...

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That is, how is it that two bodies that are physically separate from another, possibly hundreds of millions of miles apart if not more, nonetheless influence each other's motion? - Brian Greene, The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory

Newton's view of gravity might be called the great equalizer. He declared that absolutely everything exerts an attractive gravitational force on absolutely everything else. Regardless of physical composition, everything exerts as well as feels the force of gravity. Based on a close study of Johannes Kepler's analysis of planetary motion, Newton deduced that the strength of the gravitational attraction between two bodies depends on precisely two things: the amount of stuff composing each of the bodies and the distance between them. "Stuff" means matter—this comprises the total number of protons, neutrons, and electrons, which in turn determines the mass of the object. Newton's universal theory of gravity asserts that the strength of attraction between two objects is larger for larger-mass objects and smaller for smaller-mass objects; it also asserts that the strength of attraction is larger for smaller separations between the objects and smaller for larger separations. - Brian Greene, The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory

A massive body like the sun, and indeed any body, exerts a gravitational force on other objects. - Brian Greene, The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory

The force of gravity pervades everyday life. It keeps us and all of the objects around us fixed to the earth's surface; it keeps the air we breathe from escaping to outer space; it keeps the moon in orbit around the earth and it keeps the earth bound in orbit around the sun. Gravity dictates the rhythm of the cosmic dance that is tirelessly and meticulously executed by billions upon billions of cosmic inhabitants, from asteroids to planets to stars to galaxies. More than three centuries of Newton's influence causes us to take for granted that a single force—gravity—is responsible for this wealth of terrestrial and extraterrestrial happenings. But before Newton there was no understanding that an apple falling to earth from a tree bore witness to the same physical principle that keeps the planets revolving around the sun. With an audacious step in the service of scientific hegemony, Newton united the physics governing both heaven and earth and declared the force of gravity to be the invisible hand at work in each realm. - Brian Greene, The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory


************************

The only reason that I found these passages is because, in that last one, Greene used the term "invisible hand".   It's an economics term used in a physics passage.  Here's the opposite...

Economic forces are transmitted in a mechanical way courtesy of Smith’s invisible hand, which acts like an economic force of gravity and gently guides prices to their natural place. - David Orrell, Roman Chlupat, The Evolution of Money

I really like the comparison... but it feels incomplete.  Let me try and complete it.  Gravity guides celestial bodies to their natural place... the IH guides prices to their natural place... and prices guide human bodies to their natural place.  As Greene said, "everything exerts as well as feels the force of gravity".  For the IH, every human exerts as well as feels the force of spending.

Am I qualified to use my money to try and influence David Orrell and Roman Chlupat?  Should I have the freedom to use my money to grade the relevance of their work?  What grade would I give their passage anyways?  Substantial grading is a lot harder than superficial grading.  It's relatively easy to decide that their passage deserves a B-.  Deciding how much of my money it deserves is a lot harder.  It requires more brainpower.  Perhaps 25 cents sounds pretty skimpy... but if I gave 25 cents to every passage that I'd give a B- to, then that would be a lot of money!  I suppose that I'd be willing to give them 10 cents for their passage.

While I'm at it, I might as well substantially grade the passages that I found when I searched Evonomics for "Invisible Hand".  Here they are sorted by their relevance to my reality...

In its ideal form, therefore, the free market is a device for creating networks of collaboration among people to raise each other’s living standards, a device for coordinating production and a device for communicating information about needs through the price mechanism. Also a device for encouraging innovation. It is the very opposite of the rampant and selfish individualism that so many church men and others seem to think it is. The market is a system of mass cooperation. You compete with rival producers, sure, but you cooperate with your customers, your suppliers and your colleagues. Commerce both needs and breeds trust. - Matt Ridley, Who Created the Economy? 

Grade: 70 cents
Reason: In theory, Ridley should be a huge fan of Evonomics becoming a market.  I say in theory because, as far as I know, he doesn't argue that Evonomics, or the NY Times, or Netflix, or the Roosevelt Institute, or the Cato Institute, or the government should allow the relevance of their specific products to be substantially graded by their sponsors.

The idea of information also found its way into the social sciences, and in particular into economics. Friedrich Hayek, an Austrian economist and a contemporary of Shannon, argued famously that prices transmitted information about the supply of and demand for goods. This helped reveal the information needed for Smith’s “invisible hand” to work. As Hayek wrote, “In a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of different people.” - César A. Hidalgo, A New Perspective on Economic Growth: What is Information and Why Does it Grow? 

Grade: 50 cents
Reason: Highlights the essential role of communication.

How much to produce? At what price to sell? Is this really for the overall good? Shouldn’t somebody decide? This is the process of the Invisible Hand. “By directing that industry in such a manner as its produce may be of the greatest value,” Smith wrote, “he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention.” - Jeff Madrick, How the Invisible Hand Was Corrupted by Laissez-Faire Economics 

Grade: 15 cents
Reason: People use their money to grade the relevance of products.

In addition to the problems just cited, there is another major gap in the explanation of how the Invisible Hand functions. The main claim is that price sends a message to buyers and sellers on how they can adjust their consumption and production. But the countless buyers and sellers must communicate with each other, after all—in effect, bargain. This is no easy task. - Jeff Madrick, How the Invisible Hand Was Corrupted by Laissez-Faire Economics 

Grade: 10 cents
Reason: Bargaining, as an economic concept, logically contradicts the economic concept of signal accuracy.  Getting a deal (consumer surplus) means that the amount of money that you spent on a product is less than your perception of its relevance.  Less accurate signals, less intelligent division, less relevant supply.

This is the consequence of the fatal conceit that we can design a society from the top down. “The curious task of economics,” observed the Nobel laureate economist Friedrich Hayek, “is to demonstrate to men how little they really know about what they imagine they can design.” Hayek understood (more than most economists) that Darwinian evolution is a self-organized bottom-up process of design without a designer. “To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.” Hayek called this the “extended order,” the result not of planning and design but of a system that “constitutes an information gathering process, able to call up, and put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control.” The fatal conceit of socialist planners was tested experimentally over the course of the twentieth century and it failed in every case. Presciently, Hayek’s The Fatal Conceit was published in 1988, just before the crumbling of the Berlin Wall and the collapse of Communism, so this was an experimentally verified prediction. - Michael Shermer, Would Darwin be a Socialist or a Libertarian? 

Grade: 8 cents
Reason: Good information about information, but missing the information about how, exactly, information is transmitted in markets.

So yes, assigning a dollar value to aspects of nature and the social costs of the built environment can be controversial and limited in its ability to capture the relevant intrinsic values. But embedding the process within a solid evolutionary framework and involving multiple voices and perspectives in the process of assigning those values, will help ensure that natural capital and the built environment’s social costs/benefits aren’t treated as merely “subsidiaries of the corporate economy.” - Marcel Harmon, If We Say That Nature Is Priceless, Do We End up in Effect Treating It as Valueless? 

Grade: 5 cents
Reason: To be clear, everybody spending their own money really isn't the same thing as pooling everybody's money and allowing everybody to vote on how it's spent.  The group's priorities can only be accurate to the extent that each member prioritizes with their own money.

No one wants to live in a society in which behaviors are restricted simply because others say they don’t like them. That’s why I also stressed the importance of relying on objective measures of harm when evaluating proposed taxes and regulations. In economics, the time-honored approach to measuring the strength of a preference is the so-called hedonic pricing model. If we want to measure how strongly people feel about peace and quiet, for example, we can compare the price of a house in a noisy neighborhood with that of a similar house in a quiet one. If we want to know how strongly people feel about avoiding risks to life and safety, we can compare wages in risky jobs with those in otherwise similar safe ones. Indirect harm should count, but only if we have evidence to support plausible estimates of its magnitude. - Robert Frank, Why Libertarians Should Support Many Forms of Government Intervention

Grade: 4 cents
Reason: If he wants to measure how strongly people care about peace and quiet, then why doesn't he simply give people the opportunity to use their money to grade the relevance of peace and quiet?  A rule is simply a product, and a product is simply an idea.  All ideas can be ordered by the IH.

The beautiful idea of the Invisible Hand enraptured economists as well as many political thinkers for more than two centuries. But it is not an idea with the power of, say, the Copernican discovery. It is more a loose metaphor for the way markets may work than an ironclad law. The Invisible Hand is believed by economists to demonstrate that markets where goods and services are freely exchanged will result in the greatest benefit to buyers and sellers alike, and as noted direct investment where it is most useful, enhancing the rate at which the economy can grow. All of this takes place without any outside government intervention. - Jeff Madrick, How the Invisible Hand Was Corrupted by Laissez-Faire Economics 

Grade: 3 cents
Reason: The IH discovery has far more power than the Copernican discovery.

Uber’s real time matching algorithm actually satisfies two overlapping demand curves. If there are not enough passengers, the price must go down to stimulate passenger demand. That’s the essence of Uber’s frequent price cuts. But if there are not enough drivers to satisfy that demand, the price has to go up to encourage more drivers to come on the road.  That’s the essence of surge pricing. - Tim O'Reilly, We Can’t Wait for an Invisible Hand. It’s Time to Rewrite the Rules of the Economy 

Grade: 3 cents
Reason: We see how participants influence the outcome... but just how true are the signals?

I completely agree, of course, that it is often far better to implement private solutions to collective action problems than to rely on prohibitions enforced by rule of law. It would never be acceptable, for example, for government to forbid a citizen from painting her house day-glo orange, even though many of her neighbors might experience profound discomfort from having such a house in their midst. Yet no one challenges people’s right to form a private homeowner’s association whose rules specify, in gratuitously meddlesome detail, what colors members’ houses may be painted and how often their lawns must be cut. Again, people who don’t like the rules don’t have to join. - Robert Frank, Why Libertarians Should Support Many Forms of Government Intervention  

Grade: 3 cents
Reason: I don't challenge the right of the homeowner's association to make rules.  I challenge the ability of the homeowner's association to know the true relevance of its rules... without each and every homeowner having the opportunity to use their own money to grade the relevance of the rules.

Something similar happened with economic reform and its guiding idea that private goods – cars, cookies, holidays, houses – were the heart of our material living standards and that they were best produced by competitive markets. Under the sway of these ideas we swept away all manner of silly regulation – controlling everything from airline scheduling to shopping hours. But where market failures continued – for instance in transport, communications and energy, we look more like slaves to fashion – creating markets or the appearance of markets where there were none. But we’ve come to rue much of our handiwork. - Nicholas Gruen, Building the Public Goods of the Twenty-First Century

Grade: 2 cents
Reason: Of course I love the idea of creating markets where there are none... but this passage doesn't offer any insight into what markets are good for.

We can wait for the invisible hand (i.e. the push and pull of the many players in the game) to work things out, or we can try out different strategies for getting to optimal outcomes more quickly.  We can rewrite the rules. - Tim O'Reilly, We Can’t Wait for an Invisible Hand. It’s Time to Rewrite the Rules of the Economy 

Grade: 2 cents
Reason: He did mention that the participants influence the outcome.  But rather than facilitate this process, he wants to bypass it.  We're never going to have the most relevant rules when people don't have the opportunity to use their money to grade the relevance of the rules.

The founding idea of modern economics is Adam Smith’s invisible hand, and this great idea, badly over-simplified, was the foundation of many bad ideas of the last generation. The invisible hand tells us how an economy free of government regulations may work, not how it does work. Competitors will push prices down to maximize consumer buying, pure and simple. Government need not regulate these competitors. Increasingly, the profession took a dogmatic view. Financial deregulation, a low minimum wage, reduce government invest — these were all results of a purist interpretation of the invisible hand. - Jeff Madrick, How Economists’ Distorted Version of Adam Smith’s Invisible Hand Ruined the Economy 

Grade: 2 cents
Reason: There's mention of prices but no recognition of how spending is used to grade the relevance of products.

For unlike non-human animals, humans have the cognitive and communication skills to organize alternatives that dominate gratuitously wasteful signals. - Robert Frank, Why Libertarians Should Support Many Forms of Government Intervention  

Grade: 2 cents
Reason: Cheap-talk is a wasteful signal when it substitutes, rather than supplements, sacrifice as a signal.

These descriptors—invisible hand and natural selection—are so powerful, and so deeply annealed into our thought and culture, that it is difficult not to think of them as forces of nature, such as gravity and electromagnetism, or as mechanical systems, such as gears and pulleys. But they are not forces or mechanisms, because there is nothing acting on the agents in the system in such a causal manner. Instead, Smith’s invisible hand and Darwin’s natural selection are descriptions of processes that naturally occur in the economies of nature and society. The causal mechanisms behind the invisible hand and natural selection lie elsewhere in the system—within the agents themselves—which is why Smith invested so much work on understanding the natural sympathies of people, and Darwin advanced so much effort toward comprehending the natural tendencies of organisms. -  Michael Shermer, Would Darwin be a Socialist or a Libertarian? 

Grade: 2 cents
Reason: He was about to forcefully hit the nail on the head, but then hit his thumb instead.  Ouch for him and humanity.

Based on Adam Smith’s metaphor of the invisible hand, the Friedmans argued that market systems produce greater economic development than “command economies.” As a result, Americans came to believe that the individual pursuit of profit is not just good for an individual: it benefits all of society. - Anthony Biglan, Why Big Business Spread the Invisible Hand Ideology 

Grade: 1 cent
Reason: Did mention the pursuit of profit.

What formal economic theory says and what popular discourse says on a subject such as the invisible hand—basically, they have separate lives. - David Sloan Wilson, Sorry Adam Smith, the Father of Economics is Charles Darwin. Here’s Why 

Grade: 1 cent
Reason: Discourse on the IH isn't guided by the IH.

Which arms races are helpful and which are wasteful is an empirical question. My plea in The Darwin Economy is that we try to answer such questions on the basis of plausible evidence, not by invoking slogans about the efficacy of the invisible hand. - Robert Frank, Why Libertarians Should Support Many Forms of Government Intervention 

Grade: 1 cent
Reason: If he truly and genuinely wants plausible evidence about the IH, then he should truly and genuinely want Evonomics to be a market.  If he doesn't want Evonomics to be a market, then I'll doubt the sincerity of his interest in evidence.

As an economist my bias is to see human actions in terms of self-interest, competition and conflict, where through the invisible hand the interaction of self-interested individuals can lead to productive outcomes. But like the fish who is blind to the vast ocean of water they live in, I realised I was blind to the ocean of cooperation that was the back-drop to my focus on self-interest and competition. - Cameron K. Murray, How 10,000 Years of War Made Humans the Greatest Cooperators on Earth 

Grade: 1 cent
Reason: Mentioned interaction but didn't mention its type or purpose.

The reigning economics is concerned with settings and incentives that activate the “me” side of human nature. The next economics will study the activation of this “we” side as well. “What we are seeing now,” writes Yochai Benkler, in his book The Wealth of Networks, “is the emergence of more effective collective action practices that are decentralized but do not rely on either the price system or a managerial structure for coordination.” In other words, social co-production. - Jonathan Rowe, It’s Time to Base Economics on Human Nature, Not Homo Economicus 

Grade: 1 cent
Reason: Mentioned the price system, but doesn't explain how, in its absence, coordination can accurately reflect society's true, or correct, priorities.

The leading model in economic theory is that of Homo economicus, a person who makes decisions based on their rational self-interest. Led by an invisible hand, that of the market, the pursuit of self-interest automatically produces the best outcomes for everyone. - Mark van Vugt, Michael Price, The Ideology of Self-interest Caused the Financial Crash. We Need a New Economic Paradigm 

Grade: 0 cents
Reason: Doesn't mention anything about communication.

The results have been disastrous, in part because Lampert was ideologically committed to the metaphor of the invisible hand and the associated idea that people are purely selfish. - Jonathan Haidt, The CEO of Sears Fails His Company by Believing in Ayn Rand and the Invisible Hand 

Grade: 0 cents
Reason: Absolutely nothing about communication.

But individual organisms are not the highest level of organization. In a few species – such as bees, ants, and humans – evolution created innovations that allow groups of thousands or millions of individuals to work together toward common goals and build gigantic corporate entities, such as beehives, ant nests, and… corporations such as Sears, which thrive and cover the earth because they reap the benefits of the division of labor. 

This is the point that Lampert seems not to have grasped: cooperation and trust generate extraordinary value, yet they are fragile and easily undermined by competition at the next-lower level. It’s as though there’s an invisible band, which ties all the members together and motivates them to work for the common good. But if you tell everyone to be selfish and then you reward selfishness, the band dissolves and you lose the benefits of cooperation and division of labor. - Jonathan Haidt, The CEO of Sears Fails His Company by Believing in Ayn Rand and the Invisible Hand

Grade: 0 cents
Reason: Absolutely nothing about communication.

Building on this image of the machine-like economy, neoliberal thinkers treat the ideal of the competitive market as the summum bonum (or supreme good). Taking inspiration from a few selective passages from Adam Smith, they argue that the “invisible hand” of the free market causes individual selfishness to serve the social good. Since social welfare programs or government regulations would hamper this mechanism, it is said that they must be avoided. - Julie A. Nelson, What Is Radical Economics? (Hint: It’s Not Neoliberal or Marxist) 

Grade: 0 cents
Reason: Absolutely nothing about communication.

As everyone ought to know, the Invisible Hand was Adam Smith’s metaphor for the idea that an economy can run itself without anyone having the interest of the economy in mind. He invoked the metaphor only three times in his voluminous writing, so it does not stand for the full corpus of his thought, but it achieved King-like status with the advent of neoclassical economics, Homo economicus, and all that. - David S. Wilson, The Invisible Hand is Dead! 

Grade: 0 cents
Reason: Absolutely nothing about communication.

Robert Frank’s The Darwin Economy distinguishes two “invisible hand” types. Sometimes individual incentives combine to generate good group outcomes. Sometimes they undermine group goals. Bad invisible hands create spontaneous disorder, which local incentives can’t cure (see Markets Dumb As Trees?). - Jag Bhalla, Here Is Why Economics Is Built on a Monumental Mistake 

Grade: 0 cents
Reason: Absolutely nothing about communication.

You know the famous association in the public mind between Adam Smith and the invisible hand theorem; the notion that if you just turn selfish people loose in the marketplace and have them seek their own narrow interests, you’ll get good results for society as a whole. - Robert Frank, Sorry Adam Smith, the Father of Economics is Charles Darwin. Here’s Why 

Grade: 0 cents
Reason: Absolutely nothing about communication.

I think that Smith and his modern disciples all recognize well enough that many people cheat and lie and steal when they think they can get away with it, and that’s not good for the system at a whole. - Robert Frank, Sorry Adam Smith, the Father of Economics is Charles Darwin. Here’s Why 

Grade: 0 cents
Reason: If false signals are bad for the system, then it must follow that true signals are good for the system.  But only the people themselves can know how accurate/honest their signals are.  So the best system will provide the maximum incentive to be honest.

Economists are concerned with the interaction of such individuals, especially the invisible hand conjecture that the intelligent pursuit of self-interest benefits the common good. Ironically, and in contrast to mainstream evolutionary theory in 1996, the new developments provide theoretical justification for the concept of the invisible hand, although different than the received economic version. The two criteria of the invisible hand concept are: 1) A society functions well as a unit; and 2) members of the society do not have its welfare in mind. Multi-cellular organisms and social insect colonies offer spectacular examples of the invisible hand concept in nature. They function well as units and their members—cells in the case of multi-cellular organisms and single insects in the case of social insect colonies—don’t even have minds in the human sense of the word. Instead, they behave in ways that have been winnowed by higher-level selection to be good for their group. Put another way, higher-level selection is the invisible hand and if it doesn’t operate, there’s no theoretical warrant for expecting groups to function well as units. The economist John Gowdy and I develop this theme in an academic article titled “Human Ultrasociality and the Invisible Hand: Foundational Developments in Evolutionary Science alter a Foundational Concept in Economics”. - David S. Wilson, What Paul Krugman Needs to Know About Evolutionary Economics 

Grade: 0 cents

Reason: Absolutely nothing about communication.  

Although in fields such as statistical physics, ecology and social psychology it is now widely accepted that systems of interacting individuals will not have the sort of behaviour that corresponds to that of one average or typical particle or individual, this has not had much effect on economics. Whilst those disciplines moved on to study the emergence of non-linear dynamics as a result of the complex interaction between individuals, economists relentlessly insisted on basing their analysis on that of rational optimising individuals behaving as if they were acting in isolation. Indeed, this is the basic paradigm on which modern economic theory and our standard economic models are based. It dates from Adam Smith’s (1776) notion of the Invisible Hand which suggested that  when individuals are left, insofar as possible. to their own devices, the economy will self organise into a state which has satisfactory welfare properties. - Alan Kirman, Orthodox Economics Is Empirically Invalid and Theoretically Flawed. Bring on Complexity Economics. 

Grade: 0 cents

Reason: Absolutely nothing about communication.  

I have focused on the Hayek Monster in this essay, but other monsters also need to be dispatched, including the Invisible Hand monster, the Equilibrium Monster, the Command and Control Monster, and the Trickle-Down Monster, which lumber around in the popular imagination even though they are six feet under in the graveyard of academic thought. - David S. Wilson, The Road to Ideology. How Friedrich Hayek Became a Monster

Grade: 0 cents
Reason: Wilson doesn't acknowledge the essential role of substantial (skin-in-the-game) communication in markets, therefore... the only "monsters" that he dispatches are made of straw.  It really doesn't benefit anyone when Wilson tilts at windmills.

In traditional economic theory, as in politics, we Americans are taught to believe that selfishness is next to godliness. We are taught that the market is at its most efficient when individuals act rationally to maximize their own self-interest without regard to the effects on anyone else. We are taught that democracy is at its most functional when individuals and factions pursue their own self-interest aggressively. In both instances, we are taught that an invisible hand converts this relentless clash and competition of self-seekers into a greater good. - Eric Liu, Nick Hanauer, Traditional Economics Failed. Here’s a New Blueprint. 

Grade: 0 cents
Reason: Passages about the IH that fail to mention the essential role of communication aren't even worth a dime a dozen.  

What grades would you give these passages?  Does it matter?  Does it matter how relevant these ideas are to your reality?  Does it matter how relevant these ideas are to society's reality?

How true/accurate are the grades that I gave these ideas?  Only I can know how accurate they are.  In absolute terms, perhaps the amounts aren't 100% accurate.  Clearly I have some incentive to pretend to value these ideas less than I truly do.  However, this incentive is, or would be, diminished to the extent that my grades help determine how many people are exposed to these ideas.  In relative terms though, what incentive could I possibly have to put these ideas in an order that doesn't accurately reflect their relevance to my reality?

Consider this idea from an article that I shared earlier...

In fact, it was a 19th-century paper on plants that remained healthy despite being infected with leaf rust that helped inform Ayre’s thinking on tolerance. “It had never been looked at in animals, never described in animals,” she said, speaking with her characteristic rapid-fire enthusiasm. “That’s why you should always read papers outside your bubble.” - Usha Lee McFarling, A Radical Approach against Superbugs: Learn to Live with Them 

Janelle Ayres clearly perceives the benefit of cross-pollination.  But, like all of us, she has a limited amount of time.  And, papers are not equally relevant.  From the "After Piketty" discussion...

Heather Boushey: Let me go to a question for Salvatore. I liked all of the chapters equally. But I also very much liked your chapter.
Paul Krugman: Some are more equal than others.

In the real world... ideas really aren't equal.  Some ideas are more relevant to reality than others.  The social relevance of an idea should determine the amount of attention that it receives.  But the only way to know the social relevance of an idea is to give people the opportunity to grade its relevance with their money.  By prioritizing how we divide our limited dollars among unlimited ideas, we can help each other prioritize how we divide our limited time among them.

How I divided my limited dollars among Evonomics' IH ideas reflects everything that I know about economics.  As a result, all my knowledge of economics can potentially help Ayres, who presumably has far less knowledge about economics than I do, to decide how to divide her limited time among the ideas.  Of course this should be a two way street!  Ayres knows far more about biology than I do.  Therefore, her substantial grades of biological ideas should influence how I divide my time among them.  If everybody participates in this specific and substantial prioritization process, we'd cover the most ground, find and share the most profitable flower patches, and facilitate the most profitable cross-pollination.

Perhaps I should finally acknowledge the fact that all the bees have roughly the same amount of calories to spend.  Humans, on the other hand, do not all have the same amount of dollars to spend.  We can and do transfer our dollars to each other.  Bees can't transfer their calories to each other.

Even though our wealth is unequal, each person who subscribes to Netflix pays the same monthly fee.  Let's say that Netflix became a market by giving subscribers the opportunity to use their fees to grade the relevance of specific content.  In this market all the subscribers would be able to exert the same amount of influence on producers.

It would be a different story if Evonomics became a market.  The more dollars a donor has, the more influence they could exert on producers.  Here's another snippet from the "After Piketty" discussion...

Wealth also is a means of control over people's lives. I'm thinking about the role of the employer-employee relationship. The role of extremely rich and wealthy individuals. - Salvatore Morell

It's easy to imagine Morell arguing that, if Evonomics became a market, wealthy donors would have too much influence over the producers of the articles.  After all, Bernstein was also concerned with inequality.  But when I asked him why inequality isn't a deal breaker for markets in general, he decided to exit from our discussion.  I'm guessing that he chose to do so because he wasn't able to defend his argument.  It's entirely possible though that he decided to exit for unrelated reasons.  But generally speaking, the chance of winning a fight largely determines the decision to enter/exit the ring.

Check out this screenshot from a recent Evonomics article...

Donating = Changing Economics.  And Changing the World. 

Evonomics is free, it’s a labor of love, and it's an expense. We spend hundreds of hours and lots of dollars each month creating, curating, and promoting content that drives the next evolution of economics. If you're like us — if you think there’s a key leverage point here for making the world a better place — please consider donating. We’ll use your donation to deliver even more game-changing content, and to spread the word about that content to influential thinkers far and wide.

The title of the article is, "Hayek Meets Information Theory. And Fails."  It was written by Jason Smith (JS).  The timing of his article was perfect.  My criticism of Evonomics' articles is that their criticism of the IH neglects the crucial importance of substantial communication.  And voila!  Here's a new article all about the topic.  Well... it doesn't specifically mention the IH.  Then again, I haven't specifically mentioned Friedrich Hayek.  In order to fully appreciate Hayek you first have to fully appreciate Adam Smith.

Unfortunately, it is quite clear that JS does not fully appreciate Adam Smith.  Perhaps this is the most relevant thing that JS wrote...

These failures are exactly the failure of information to flow from the real data to the generator through the detector – the failure of information from the demand to reach the supply via the price mechanism.

Spending money is by no means a perfect mechanism for transmitting information about demand.  But, how does it compare to the alternatives?

Everybody who read JS's article knows how relevant it is to their reality.  Should they share this information?  Not if you believe that experts are always superior to crowds.  If this is what JS truly believes, then why would he care about how effective the price mechanism is at transmitting information?  If readers' information is useless, then it's pointless to worry about the effectiveness of extracting/transmitting it.  Given that JS does worry about the efficacy of the price mechanism, it must follow that he believes that experts are not always superior to crowds, so the information that readers have about the relevance of his article should be shared.  Then the question is... how, exactly, do readers share this information?  By commenting?  We can look at the comments and certainly see that most of them were not positive.  But what about all the people who didn't leave comments?  Perhaps they didn't have the time, energy or eloquence to do so.  Should they, and all the other readers, have the opportunity to superficially grade (ie thumbs up/down) the relevance of the article?  If so, why should we believe that superficial grades are more reliable and credible than substantial grades?  Why should we believe that direct democracy is better than the IH at dividing society's limited resources?

JS's article argues against substantial signals but then, immediately after the article, there's a strong, albeit indirect, argument in favor of substantial signals...

"Donating = Changing Economics.  And Changing the World."

In order to change the world, we have to change the division of society's limited resources.  This can and should be accomplished by changing how each and every one of us divides our own limited dollars among unlimited organizations/ideas.  In other words, the IH can, and should, change the world.

JS's article lacks an incredible amount of self-awareness.  Then again, the same is true of most of Evonomics' articles.  They disparage people's ability to figure out what things are worth but, after each one, Evonomics itself promotes the idea that people are capable of recognizing that Evonomics is worth their money.

One thing that JS and I both agree on is that this Crooked Timber blog entry... In Soviet Union, Optimization Problem Solves You... by Cosma Shalizi is one of their very best ones.

We need then some systematic way for the citizens to provide feedback on the plan, as it is realized. There are many, many things to be said against the market system, but it is a mechanism for providing feedback from users to producers, and for propagating that feedback through the whole economy, without anyone having to explicitly track that information. This is a point which both Hayek, and Lange (before the war) got very much right. The feedback needn’t be just or even mainly through prices; quantities (especially inventories) can sometimes work just as well. But what sells and what doesn’t is the essential feedback. - Cosma Shalizi, In Soviet Union, Optimization Problem Solves You

This isn't good... it's great!  Verbal feedback and sacrificial feedback are not mutually exclusive.  Markets certainly don't prevent or prohibit verbal feedback, but far more weight is given to monetary feedback.  The problem is.... even though I value Shalizi's product... why spend my money on it?  Why buy the cow when I can get the milk for free?  As I endeavored to explain earlier, I can be incentivized to spend money, or more money, on a relevant article if doing so helps more people to read it.  In this case I'm paying to help promote the article.  Even though I'm not paying for the article itself, the amount of money that I'm willing to spend to promote it reflects my perception of its relevance.

Perhaps I should mention that I currently have the option to post Shalizi's product on Twitter and pay to promote it.  Then more people would read it.  But this is a far cry from Crooked Timber's articles being sorted by crowdfunding.  On Classtopia's page of products sorted by crowdfunding, we can see and compare their relative relevance.

Right now most people who value Shalizi's article/product/idea don't spend their money on it.  Maybe somebody wants to argue that this is an example of market failure.  Well ok... but only if we recognize that it's not a failure of markets in general!  It's a failure of this specific species of market.  It's a failure of the species of market where the crowd has little motive and/or opportunity to easily and publicly fund the promotion of Shalizi's article.

Also from Shalizi's article...

It is conceivable that there is some alternative feedback mechanism which is as rich, adaptive, and easy to use as the market but is not the market, not even in a disguised form. Nobody has proposed such a thing. - Cosma Shalizi, In Soviet Union, Optimization Problem Solves You

There's always room for improvement.  Markets are not an exception to this rule.  But we can't expect many people to improve markets when so few people understand what they are good for!

What else?

This is not just because the market revolution has not been pushed far enough. (“One effort more, shareholders, if you would be libertarians!”) The conditions under which equilibrium prices really are all a decision-maker needs to know, and really are sufficient for coordination, are so extreme as to be absurd.(Stiglitz is good on some of the failure modes.) Even if they hold, the market only lets people “serve notice of their needs and of their relative strength” up to a limit set by how much money they have. This is why careful economists talk about balancing supply and “effective” demand, demand backed by money. - Cosma Shalizi, In Soviet Union, Optimization Problem Solves You

Of course demand has to be backed by money.  It's the only way that we can effectively prioritize the division of society's limited resources.  If superficial signals are allowed to subvert substantial signals, then less important priorities will subvert more important priorities.  Less relevant ideas will compete attention away from more relevant ideas.

This is just as much an implicit choice of values as handing the planners an objective function and letting them fire up their optimization algorithm. Those values are not pretty. They are that the whims of the rich matter more than the needs of the poor; that it is more important to keep bond traders in strippers and cocaine than feed hungry children. At the extreme, the market literally starves people to death, because feeding them is a less”efficient” use of food than helping rich people eat more.

If we care about food being abundant, then the "whims" of productive farmers should matter more than the "whims" of unproductive farmers.  Productive farmers should be more influential than unproductive farmers.  Everyone would suffer if society's limited resources were equally divided among unequally productive farmers.  Pretending that everybody's thumb is equally green doesn't make it so.  Pretending that everybody is equally competent, intelligent, talented, creative or eloquent doesn't make it so.

Regarding people starving to death... feeding the needy is a public good.  I certainly have no problem acknowledging that certain species of markets are less effective for public goods.  But what if we created a market in the public sector by allowing taxpayers to substantially grade the relevance of public goods?  This would obviously be a different market species.  Each and every taxpayer could decide for themselves, with their own tax dollars, how relevant it is that the needy be fed.  Then we'd be able to see and compare the social relevance of...

A. feeding the needy
B. bombing the terrorists

No matter how tax dollars were divided between these two public goods, the division would be acceptable to the average ("normal") taxpayer.  The more standard deviations a taxpayer is from the norm, the more they'd complain about the division.  If pacifists aren't the norm, then they would complain about the division.  They would complain that too many tax dollars were allocated to bombing, rather than benefiting, people.  But at least none of their own tax dollars would be used to bomb people.  Instead, their own tax dollars would be used to feed, clothe, shelter, educate, heal and elevate people.

With a market in the public sector, you could certainly be concerned that too many people are starving to death or being bombed.  But your concern really wouldn't be with the market... it would be with humanity.  The market would simply be a mirror that showed you an accurate reflection of humanity.  Being able to correctly see and know the true extent and degree to which humanity is diseased is absolutely essential if you genuinely want to help heal humanity.  You can't correctly triage humanity if you're ignorant of the seriousness of its diverse diseases.   Humanity's physicians should have the deepest possible regard for the truth.

Part of the inherent challenge is fully appreciating that cheap-talk does not accurately uncover humanity.   Consider this example from Evonomics...

Is it possible to make progress towards this inclusive state in the United States at the moment? I would’ve said yes 15 years ago, 10 years ago, 5 years ago, but today I do feel more pessimistic than ever about the United States and about the world. Of course, I’m not surprised that there is a huge amount of discontent among some segments of the voting public, and some of this is entangled with fear from and hatred against immigrants and minorities. But the extent of this hatred has been a shock to me. - Daron Acemoglu,  Stop Crying About the Size of Government. Start Caring About Who Controls It.

We shouldn't judge a book by its cover but we should judge a society by its opinions?  Why do Acemoglu and Krugman put so much faith in cheap-talk?  Why do such highly regarded economic experts perceive so little difference between superficial signals and substantial signals?

Shalizi goes on to say....

I don’t think this sort of pathology is intrinsic to market exchange; it comes from market exchange plus gross inequality. If we want markets to signal supply and demand (not just tautological “effective demand”), then we want to ensure not just that everyone has access to the market, but also that they have (roughly) comparable amounts of money to spend. There is, in other words, a strong case to be made for egalitarian distributions of resources being a complement to market allocation. Politically, however, good luck getting those to go together. - Cosma Shalizi, In Soviet Union, Optimization Problem Solves You 

It either does, or doesn't, make sense for society's limited resources to be equally divided.  From my perspective, it would be nonsensical and detrimental for society's limited attention to be equally divided among Crooked Timber's unlimited articles.  Its articles are not equally relevant.  Some articles are more relevant than others.  For this reason I definitely wouldn't choose to equally divide my limited dollars among the unlimited articles.  Nobody in their right mind would choose to equally divide their limited dollars among the unlimited articles.  Doing so would be as stupid as the bees choosing to equally divide themselves among the unequally profitable flower patches.

What's actually and truly important is for society's limited resources to be correctly divided.  Right now society's limited resources are not correctly divided.  This is simply because there are countless places/spaces where people aren't given the opportunity to substantially and specifically participate in the prioritization process.

Ants explore their environment, discover different food sources, substantially grade their relevance, and share their grades with each other.  Human behavior is remarkably similar for things like food and cosmetics.  Yet, even though we are far more advanced than ants, we still haven't figured out whether this behavior should be encouraged or discouraged.  Do we want to make it easier or harder for billions of us humans to substantially inform each other of the relevance of the things that we discover?

The Bible says, "go to the ant thou sluggard".  Personally, as an avid gardener, I often wish that slugs were a lot less industrious.  It's upsetting when I discover that, even though an orchid is 6 feet off the ground growing on a tree, its new roots have been chomped on by slugs.  During the night, if I grab a flashlight and go outside, chances are pretty good that I'll confirm that the culprit has indeed returned to the scene of the crime.  I wondered if the slug's ability to do so was somehow related to its mucus trail.  If there is any information in its trail, then it's most likely freely available to any other slugs that happen to discover it.  I looked it up and found this paper by Mark S. Davies and Peter Beckwith which says that "aquatic snails follow others, usually conspecifics, to more profitable patches of food: see Hawkins & Hartnoll 1983, Deneubourg et al. 1988".  I'm guessing that this is just as true for terrestrial slugs.

At least as far as food is concerned, it's easy to imagine that any individual slug would want to cheat by somehow preventing other slugs from accessing its own trail while still having access to all their trails.  But if all the slugs were able to cheat, and chose to do so, clearly this would greatly diminish their collective intelligence.

In the case of Evonomics, I really don't want to hide the substantial grades that I've given their content.  I want everybody in the world to know how relevant their content is to my reality.  And I also definitely want to know how relevant their content is to other people's reality.

I've given quite a bit of the content on Evonomics very low grades.  Many products criticize the IH but they don't even mention anything about communication.  I'm very unhappy with these products.  Just like some people are very unhappy with Tuvel's product.  But unlike those people, I'm definitely not arguing that the inferior/irrelevant products should be retracted.  Instead, here I am using my limited time, energy, information, creativity and brainpower to try and produce a far more relevant product.  To the extent that I've at least mentioned that communication is an integral part of the IH, from my perspective, this product of mine is certainly far more relevant than most of Evonomics' products.

We should all endeavor to give each other more relevant options, and we should all be able to use our money to grade the relevance of any and all options.  This is what markets and the IH are good for.  

Right now Evonomics is in a market, but it is not a market.  I don't know if, or exactly how, the donations are divided among the different writers/producers... but the division of donations is definitely not determined by the donors themselves.  It's their dollars but they aren't encouraged to use them to grade the relevance of Evonomics' products.  I wouldn't be surprised if some, or even most, of the donors aren't interested in using their money to help guide each producer to their natural place.  But in the absence of donors' substantial and specific feedback, it's a fundamental fact that the producers have the wrong amount of influence.  Some have too much influence while others have too little influence.

If we zoom out and consider all the places/spaces that are missing markets.... Evonomics, Crooked Timber, Quartz, New Yorker, the NY Times, Netflix, Roosevelt Institute, Cato Institute, the public sector... we can get some sense of how incredibly incorrect everybody's influence is.  This massive incorrectness of influence means that the division of society's limited resources is also massively incorrect.  In order to maximize the correctness/intelligence of the division of resources, the incorrectness of influence must be minimized.

For sure nobody wants less influence.  But if everybody's influence is corrected... then no matter how much influence anybody loses... their loss will be imperceptible when compared to their gain from living in an infinitely more intelligent world.

Last month Patrik Schumacher shared this interesting article...

Accelerationism: how a fringe philosophy predicted the future we live in https://t.co/BzDrer5hmp

— Patrik Schumacher (@patrik_schu) May 11, 2017

A couple weeks later this article.... A Quick-And-Dirty Introduction to Accelerationism... by Nick Land was posted to Jacobite.

A few years ago Land and I had a discussion about anarcho-capitalism versus pragmatarianism.  It wasn't the most productive discussion.  For some reason he bravely ran away in the middle of it.  Maybe he realized that he couldn't win the fight.  Maybe I stepped on his toes.  Dancing with a partner is harder than dancing like nobody is watching.

Last October I replied to this story by Koen Smets... Useful ‘Nobel’ Economics? You bet!  He replied but for some reason I did not.  It was a short tango.  A month later I replied to another story of his... Trading values.  I didn't realize that it was the same person that I had replied to the previous month.  But he replied, and then I replied.  We ended up dancing for around three months.  It was a long tango.  I think this was the last reply.  He recently messaged me on Twitter that he was planning to reply.

Ok, back to accelerationism.  Humanity's rate of progress depends on how intelligently it divides its limited resources.  This connection/correspondence functions as a fail-safe device.  This device isn't perfect, as all the wars have proved, but it certainly has limited our wars to our own planet.

The essence of the IH is everybody using their own money to help assemble the most accurate picture of reality.  Each and every one of us is an integral part of the process.  None of us are superfluous.  We all have essential pieces of the reality puzzle.   Yet, right now Evonomics thinks that it can correctly see and respond to reality despite the fact that virtually none of us are a substantial part of the process of assembling reality.  Evonomics thinks that our substantial participation is superfluous.  Can you imagine an advanced AI with that same tragically flawed thinking?  Can you imagine if we were visited by aliens with that same tragically flawed thinking?  Can you imagine if we were ruled by humans with that same tragically flawed thinking?

People don't understand the essence of the IH... so our resources aren't divided very intelligently... which means that we've made relatively little progress with AI and space colonization.  It's a blessing that our level of technology corresponds with our understanding of economics.  It doesn't perfectly correspond... but our level of technology is certainly tethered to our understanding of economics.

Admittedly, it's entirely possible that my own understanding of economics is flawed.  Well... I'm sure that it is flawed.  The question is.... how much more, or less, flawed is it than Krugman's understanding of economics?  He's never argued that the NY Times should be a market.  I certainly have.  So at least one of us is really far from understanding what markets are good for.

From my perspective.... Adam Smith, history, astronomy, bees, ants and even slugs...  all provide plenty of justification for deliberately and safely testing the IH.  If doing so doesn't closely match the preferences of Shalizi, Krugman, Bernstein, Piketty, Steinbaum, Wilson or any other economists (more or less)... then be extremely skeptical of their interest in the truth.

Is it true or false that your influence doesn't equal your relevance to reality?

Every derangement of the natural distribution of stock is necessarily hurtful to the society in which it takes place; whether it be by repelling from a particular trade the stock which would otherwise go to it, or by attracting towards a particular trade that which would not otherwise come to it. - Adam Smith, Wealth of Nations

Every such encroachment, every violation of that natural distribution, which the most perfect liberty would establish, must, according to this system, necessarily degrade more or less, from one year to another, the value and sum total of the annual produce, and must necessarily occasion a gradual declension in the real wealth and revenue of the society; a declension of which the progress must be quicker or slower, according to the degree of this encroachment, according as that natural distribution which the most perfect liberty would establish is more or less violated. Those subsequent formularies represent the different degrees of declension which, according to this system, correspond to the different degrees in which this natural distribution is violated. - Adam Smith, Wealth of Nations

So, have I adequately hedged my bets?  Nope.  Let's again turn to Netflix.  There's a new documentary called "Teenager vs. Superpower".  It's a really amazing story about Joshua Wong, a high-school student who started a movement against China's increasing control of Hong Kong.  He spent countless hours creating fliers, passing them out, writing speeches, making them, rallying 1000s of people and leading them in protest.  His leadership skills and his dedication to liberty are super impressive.  Personally, I don't have his skills.  I have never led a protest.  I haven't even participated in a single protest.  All the time that I could have spent protesting, is time that I spent studying.  Conversely, all the time that Wong did spend protesting, is time that he could have spent studying.  I imagine grabbing a long networking cable and plugging one end into my head and the other end into his head.

The day after watching the documentary, I read this huge article about the 20 year old case against Microsoft bundling its operating system and its browser.  While reading the article, it continually struck me that nobody even thought to mention the fact that the government itself is by far the biggest bundler.  The taxes that Gates paid didn't just fund things as unrelated as national defense and environmental protection, they also funded his own prosecution.  How insane is that bundle?  If the government hadn't been bundled, then the DoJ's attack on Gates would not have been the epitome of hypocrisy.  Gates, given a choice, obviously would not have allocated any of his tax dollars to the DoJ's war on Microsoft.  But what about all the other taxpayers?  How many tax dollars would they have been willing to spend in order to facilitate a fair fight between Internet Explorer and Netscape?  Does it matter?  Gates didn't mention the beam in the government's eye because, all the time that he spent studying computing is time that he didn't spend studying economics.  Conversely, all the time that I didn't spend studying computing is time that I spent studying economics.  I imagine grabbing a long networking cable and plugging one end into my 2017 head and the other end into his 1997 head.

Literally networking people is the premise of "Sense8".  In this Neflix show, the eight main characters live all over the world but they are able to psychically access and utilize each other's different skills and knowledge.  So no need for really long cables.  The show was created by Lana Wachowski, Lilly Wachowski and J. Michael Straczynski.  I love the premise but, the creators didn't spend enough time studying economics.  I imagine grabbing three long networking cables and plugging our heads together.

The problem with people being inadequately networked is the premise of the story of the blind men touching different parts of an elephant.  This story is really old.  I like to try and imagine a modern version with blind robots.  They are arguing with each other until one of them has a bright idea... "Hey!  We're robots!  Why don't we just wirelessly network our brains?"  They do so and instantly exchange all their puzzle pieces.  Having each other's puzzle pieces allows them to all reach the same conclusion.

Around 20 years ago the Wachowskis wrote the Matrix.  It contained quite a few robots that disagreed... Agent Smith, the Oracle, the Architect.  For some reason they didn't wirelessly exchange all their puzzle pieces.  Or they did, but doing so didn't eliminate their disagreement?  Now, 20 years later, the Wachowskis have written a show about eight humans who can psychically exchange their puzzle pieces.  All their puzzle pieces?   Has their incredible ability decreased or eliminated their disagreement?

Let's consider a relevant real-life disagreement...

The New York Times reviewer, John Chamberlain, was savage: “This beautifully written essay in the revaluation of a hundred and fifty years of history adds up to a subtle appeal for a new feudalism, a new slavery, a new status of economy that will tie men to their places of abode and their jobs.” If that sounds just like Polanyi’s nemesis, Hayek, it was for good reason. Chamberlain had just written the foreword to Hayek’s The Road to Serfdom, also published in 1944. While Hayek’s book was adapted in Reader’s Digest and became a best-seller, Polanyi’s languished. - Robert Kuttner, Karl Polanyi Explains It All 

It was possible, and desirable, for Hayek and Polanyi to "primitively" share their information with each other.  It wasn't possible for them to literally plug their brains together.  But what if it had been possible?  If they had perfectly synchronized all their puzzle pieces, would they still have been able to maintain different conclusions?   Intelligent robots can reach different conclusions.  But is it possible for them to maintain different conclusions?  How intelligent do robots have to be in order for them to understand the benefit of putting their heads together?  How intelligent do robots have to be in order for them to understand the problem with having all their eggs in the same basket?

1. More heads are better than less heads
2. More diversification is better than less diversification

Life is synonymous with colonization.  Any species that has too many of its members in the same geographic (or genetic) basket runs the risk of extinction...

Elon Musk doesn’t just want to land on Mars, the way Apollo astronauts landed on the moon.  He wants to build a new civilization there before some calamity, possibly self-inflicted, wipes us out on Earth. - Joel Achenbach, Race To The Red Planet

The conquest of space is Nature's mandate.  Nature abhors a vacuum... and outer space is a pretty big vacuum.   Out of all the species, humans are the closest to colonizing outer space.  Therefore, by this measure, the only real measure, we are the most successful species on this planet.  Is it a coincidence that we're also the best at non-verbal communication?

If there are two groups of primates, whichever group is better at collecting/transmitting/sharing/exchanging information will have an advantage.  It's beneficial to have easier access to each other's information.  It's beneficial when we all make more, and better, informed decisions.  It's beneficial when we maximize the number of people barking up the right trees.  It's beneficial when we minimize the number of people who are tilting at windmills (ie Wilson).

Recently some really old human (more or less) bones were discovered.  The bones are around 300,000 years old.  They were discovered in Morocco which is interesting because East Africa is the original basket that all our "eggs" were in.  If it helps, here's a map...

Humans had already migrated across the African landscape, and were evolving at a continental scale - Philipp Gunz, Scientists Have Found the Oldest Known Human Fossils 

Migration depends on answering important questions.  Where to go?  When to go?  What to take?

Human bodies aren't optimized for speed (ie cheetahs), or propulsion (ie dolphins), or flying (ie birds), or climbing (ie squirrels), or strength (ie gorillas).  Our bodies are optimized for allocation.  The transition in habitat from the jungle, to the woodland and then to the savanna made it increasingly advantageous to be able to simultaneously transport multiple different resources over greater distances.  Out of all the species in the world, our species is by far the best at carrying different combinations of resources (ie water, food, tools, weapons and offspring) from one location to another.  We're the best at allocating resources.  Is it a coincidence that we're also the smartest species?

Being able to physically carry many different things at the same time selected for individuals who were the best at being able to mentally carry, and compare, many different things at the same time.  Storing and processing a greater amount and variety of information facilitated better carrying decisions.  Better carrying decisions facilitated better survival.

Gordon Hewes recognized, to a decent degree, the allocative benefit of being a bipedal primate... Food Transport And The Origin Of Hominid Bipedalism.  The same is true, albeit to a lesser degree, of Charles Darwin.  However, neither of them recognized the connection between carrying and intelligence...

The slight corporeal strength of man, his little speed, his want of natural weapons, etc., are more than counterbalanced, firstly by his intellectual powers, through which he has, while still remaining in a barbarous state, formed for himself weapons, tools, etc., and secondly by his social qualities, which lead him to give aid to his fellow-men, and to receive it in return. No country in the world abounds in a greater degree with dangerous beasts than Southern Africa; no country presents more fearful physical hardships than the arctic regions; yet one of the puniest races, namely, the Bushmen, maintain themselves in Southern Africa, as do the dwarfed Esquimaux in the arctic regions. The early progenitors of man were, no doubt, inferior in intellect, and probably in social disposition, to the lowest existing savages; but it is quite conceivable that they might have existed, or even flourished, if, while they gradually lost their brute-like powers, such as climbing trees, etc., they at the same time advanced in intellect. But granting that the progenitors of man were far more helpless and defenceless than any existing savages, if they had inhabited some warm continent, or large island, such as Australia or New Guinea, or Borneo (the latter island being now tenanted by the orang), they would not have been exposed to any special danger. In an area as large as one of these islands, the competition between tribe and tribe would have been sufficient, under favorable conditions, to have raised man, through the survival of the fittest, combined with the inherited effects of habit, to his present high position in the organic scale. - Charles Darwin, The Descent Of Man

Joseph Henrich and Kevin Laland have spent years researching and studying intelligence, anthropology, communication, evolution and other things.  They carry a lot of different information in their heads.  But their combination of information hasn't led them to the conclusion that our superior computational ability is the result of our superior allocative ability.  Perhaps they don't carry enough economics.  Then again, I don't know of any economists who've argued that our powerful brains are the result of our exceptionally allocative bodies putting exceptional pressure on the selection of intelligence.  Carrying around abundant economics isn't adequate to solve the puzzle of human intelligence.

The fact that Darwin, Hewes, Henrich, Laland and economists did not discover the cause of our exceptional intelligence proves the necessity of cross-pollination.

One sign of creativity is being able to make connections between seemingly disparate concepts. Richer communication between areas of the brain may help make those intuitive leaps possible.  - Claudia Kalb, What Makes a Genius?

This is certainly true for the collective brain.  A group can mentally and physically carry far more than any member can.  But the group's greater carrying capacity is only beneficial to the extent that individuals share what they carry.  More sharing means more access to a wider variety of things.  Things have to be accessible before they can be utilized.  We obviously can't utilize things that we can't access.

There's a logical limit to how much a group can mentally and physically carry.  The larger a group is, the more that it can carry.  But no matter how large a group is, there is still a carrying limit.  This means that groups always have to prioritize.

The human makeup includes biological programs dealing with anxiety and flight that are older than the human species, and these comprise or engender at least the rudiments of the ritual pattern, correlating threat, alarm, pursuit, flight, and the trick of abandoning what can be spared. - Walter Burkert, Creation of the Sacred: Tracks of Biology in Early Religions

Correctly deciding what can, and can't, be abandoned depends on knowing the social value of things.   Knowing something's social value depends on knowing how valuable it is to each and every member of the group.  So correctly prioritizing what to physically and mentally carry depends on communication among the members.

The groups of primates that left the jungle weren't equally good at carrying things.  They weren't equally good at communicating.  They weren't equally good at deciding what to carry.  The same is true of the groups that left East Africa.  So the migration process selected for...

1. Allocation (ability to transport resources)
2. Communication (ability to transmit information)
3. Memory (ability to story information)
4. Intelligence (ability to process information)

The invention of bags made it possible for groups to carry even more resources.  This made it even more challenging to optimally solve the carrying problem... which put even more selection pressure on communication, memory and intelligence.  The same is true of the discovery that other animals and boats could be used to carry things.  In the modern era it's possible to carry even more things.  However, the selection pressure has plummeted because in most cases our survival doesn't depend on our carrying decisions.  This could potentially change once we begin to seriously colonize outer space...

When and whether we go to Mars doesn’t just depend on technology and money.  It depends on what we consider an acceptable level of risk.  Advocates of an early landing say that NASA is too risk adverse, that true explorers accept the possibility of failure or death, that the people who first tried to reach the poles or cross the oceans knew they might not make it - and often didn’t.  NASA could send people to Mars a lot sooner if it didn’t worry so much about whether they’d arrive alive and eventually make it home. - Joel Achenbach, Race To The Red Planet  

Let's imagine that taxpayers were given the opportunity to divide their limited tax dollars among the unlimited public goods.  Would taxpayers all want the government to carry the same variety and quantity of goods?  Nope.  Some people would really want the government to carry space colonization... other people not so much.  But would the people who did give their taxes to NASA want it to carry the same variety and quantity of space colonization?  Nope.  Supporters of space colonization obviously would not be equally risk adverse.

Nature minimizes risk by maximizing different strategies.  The government's current system does the opposite.

So far as this is the case, it is evident that government, by excluding or even by superseding individual agency, either substitutes a less qualified instrumentality for one better qualified, or at any rate substitutes its own mode of accomplishing the work, for all the variety of modes which would be tried by a number of equally qualified persons aiming at the same end; a competition by many degrees more propitious to the progress of improvement than any uniformity of system. - J.S. Mill, Principles of Political Economy with some of their Applications to Social Philosophy

If we created a market in the public sector, the supply of space colonization would be as diverse as the demand for space colonization.  More difference means more progress.  So we'd colonize space sooner rather than later.  Nature would breathe a huge sigh of relief.  One of her many strategies had successfully managed to spread life to other planets.

Let's imagine that tomorrow some aliens land their spaceship on our planet.  One thing that we could know for a fact about these aliens is that they would be exceptionally good at allocating resources!  This fact really narrows down their potential form.  Or at least their past form.  In this video Neil deGrasse Tyson tells Richard Dawkins that it's disappointing how frequently Hollywood anthropomorphizes aliens.  Tyson goes on to say that his favorite movie alien is the blob.  The blob arrived on our planet inside a meteorite.  It's one thing for the blob to evolve on some planet and be randomly ejected into space by some cosmic impact, it's another thing entirely for it to allocate all the resources that it needs in order to intentionally allocate itself to a different planet.

Philip Morrison, a theoretical physicist emeritus at MIT, says: "I don't think these beings will be smaller than a meter or larger than three meters; smaller than 50 pounds or larger than 500 pounds. If it's smaller than 50 pounds it won't have a big, complex neural system. And if it's larger than 500 pounds it will collapse under gravitation." In other words, intelligence and physiognomy are inextricably linked. Morrison goes so far as to guess that aliens wouldn't be water creatures because they couldn't see the sky -- and thus wouldn't become astronomers. - Joel Achenbach, Space Strangers

Physiognomy?  Due to inadequate/inefficient cross-pollination, what most scientists and economists don't appreciate is that intelligence, morphology and allocation are inextricably linked.

Consciousness has only arisen in one species, us, of a minor order of mammals: the primates with fewer than 200 species in toto. You have a million named species, including about 500,000 beetles. So if intelligence was such a good thing , so obviously a Darwinian benefit, and easy to achieve, I assume other lineages would have—but they haven't. And yet they're doing very well. I think the best evidence of the accidental nature of intelligence, is the very sparse distribution of this phenomenon after three and a half billion years of life, and four and a half billion years of the earth's history. - Stephen Jay Gould, Life Beyond Earth

What are the odds that intelligent, technically advanced aliens would look anything like the ones in films, with an emaciated torso and limbs, spindly fingers and a bulbous, bald head with large, almond-shaped eyes? What are the odds that they would even be humanoid? In a YouTube video, produced by Josh Timonen of the Richard Dawkins Foundation for Reason and Science, I argue that the chances are close to zero (www.youtube.com/watch?v=JKAXrmkx12g). - Michael Shermer, Will E.T. Look Like Us?

Does the name "Michael Shermer" ring a bell?  It's a random memory test.

My teacher friend who helped establish Classtopia is from Jamaica.  She introduced me to "yellow yams".  I told her that it can't be their real name.  She challenged me to Google them so I did.  It turned out that she was right.  We ended up watching several Youtube videos about yams... including one from Africa.  I asked my friend if any slaves had taken any yams with them when they left Africa.  She paused and replied, "Seriously???  Yeah, hold on, give me a few minutes to grab some yams."

What if the captured Africans had been permitted to each pack one bag?  What would they have packed?  Does is matter?  Does it matter what they would have chosen to carry?  Does it matter what they would have been unwilling to abandon?  Does it matter what they would have persuaded each other to carry?  Does it matter how many of them would have decided to carry yams?

My teacher friend decides, to some degree, what her students mentally carry.  Most of the information is determined by the school system.  The students are tested and graded according to their ability to carry the standard information.  But my friend's classroom is a mixed economy.  The other part of the economy is a market... Classtopia.  These two economic systems are very different.  Which system is better?

The first step in evaluating an economic system is recognizing that there's a limit to how much anyone, including students, can carry.  This limit makes prioritization essential.  Correctly prioritizing things depends on knowing their social value.  No two systems can be equally effective at revealing the social value of things.  Less effective systems will result in students carrying less valuable things.  In order to ensure that students carry the most valuable things, it's imperative to recognize the difference between...

A = the things you want students to carry
B = the things you are willing to pay students to carry

It's one thing to want students to carry correct spelling.  It's another thing to be willing to pay students to carry correct spelling.  It's one thing to want students to carry a list of all the presidents.  It's another thing to be willing to pay students to carry a list of all the presidents.  It's one thing to want students to carry a map of the world.  It's another thing to be willing to pay students to carry a map of the world.  It's one thing to want students to carry the quadratic equation.  It's another thing to be willing to pay students to carry the quadratic equation.

We all want students to carry the most valuable things.  We all want Evonomics to carry the most valuable things.  We all want Netflix to carry the most valuable things.  We all want the government to carry the most valuable things.  We all want each other to carry the most valuable things.  But everyone can only carry the most valuable things when we're all given the opportunity to divide our limited dollars among our unlimited desires.

Good question:  Do I want Netflix to carry Sense8?
Better question: How many of my subscription dollars would I be willing to spend on Sense8?

Good question: Do I want Netflix to carry Teenager vs Superpower (TvS)?
Better question: How many of my subscription dollars would I be willing to spend on TvS?

The only way that Netflix can truly carry the most valuable content is if each and every subscriber has the opportunity to decide how to divide their limited subscription dollars among the unlimited content.  Not only will this market help Netflix carry the most valuable content, it will also help each and every subscriber mentally carry the most valuable content.  If you truly wanted more people to mentally carry TvS, then you'd spend more of your subscription dollars on it.  If you truly wanted more people to mentally carry Sense8, then you'd spend more of your subscription dollars on it.

Right now we all carry Harry Potter in our heads because so many people spent their money on J.K. Rowling's books and movies.  Many of us also carry Thomas Piketty in our heads because so many people spent their money on his book.  Then again, we all carry Donald Trump in our heads because so many people voted for him.  Voting and spending aren't equally effectively at ensuring that we carry the most valuable things.

So here's a surprise.  Between now and the first time that I mentioned Sense8... it was canceled!  Evidently there weren't enough viewers...

“Relative to what you spent, are people watching it? That is pretty traditional,” Sarandos said in a conversation with Jerry Seinfeld, whose “Comedians in Cars Getting Coffee” is moving to Netflix for its next season. “When I say that, a big expensive show for a huge audience is great. A big, expensive show for a tiny audience is hard even in our model to make that work very long.” - Daniel Holloway, Netflix’s Ted Sarandos Talks ‘Sense8,’ ‘The Get Down’ Cancellations

Sense8's audience was too small?  Isn't this the same thing as its budget being too big?

I did a bit of digging and found this...

Well, you can tell when we cancel a show.  So, I'm always pushing the content team, we have to take more risk, you have to try more crazy things, because we should have a higher cancel rate overall.  Because then, what you get is you get some winners that are just unbelievable winners like "13 Reasons Why" over the last three months has been a big hit for us.  And you know, it surprised us too.  I mean, it was a great show, but we didn't realize just how it would catch on.  - Reed Hastings, CNBC Transcript

This is an excellent strategy... except for how the winners are chosen.  Yes, time is certainly a scarce resource.  But how people divide their limited time among the unlimited content does not reflect how they would divide their limited dollars among the unlimited content.  Just because people watch something doesn't at all reveal how valuable/important/relevant it is to them.  Just because I read all of Evonomics' articles that referenced the IH really doesn't mean that I value them equally.  Clearly I don't value them equally.

My teacher friend is going to be super sad that Sense8 was canceled.  I'm going to tell her that she should have watched it more times.  Because it's not like I can tell her that she should have allocated more of her subscription dollars to it.

Coincidentally, not too long ago she mentioned that Trader Joes (TJs) frequently discontinues products.  I guess the CEO went to the same business school as Hastings.  I wondered what would happen if shoppers at TJs could see a product's distance to the discontinuation threshold.  What do you do if the frozen chile and cheese tamales are getting dangerously close to the threshold?  Obviously it depends on how close they are to your preferences.  If they are far from your preferences then you aren't going to care if they are near the threshold.  The closer they are to your preferences, the closer they are to the threshold, the more concerned that you're going to be.  But if you are concerned... then what?  Are you going to buy the tamales more frequently than usual?  Are you going to try and persuade others to buy them?  Or maybe you just won't forget to buy them?

On TJs' homepage you can see some of their products.  The products at the top of the page are some of their newest products.  You can visit this page to see all their newest products.  What if there was a page where you could see their most valuable products?  How would the value of the products be determined?  Here are some options...

1. Voting
2. Buying
3. Donating

The first two are self-explanatory.  The third would involve donors to TJs dividing their donated dollars among the different products.  This is the bee option.  Donating (spending) wouldn't be used to buy the products, it would be used to draw more attention to them.  The more money that was donated to TJ's chile and cheese tamales, the higher up they'd be on the page of most valuable products, and the more attention they'd receive.  More people would mentally carry them.  More people would remember to purchase them.  

Producers would have an obvious incentive to donate money.   The incentive would be less tangible for consumers.  But it would be entirely possible for the "hive" to change the order of the products.

If TJs did create a page for its most valuable products, and allowed donors to determine the value of the products, then everybody would have an additional opportunity to substantially participate in the prioritization process.

Let's juxtapose the government and grocery stores.

The Government

On 3 November 1793 she was guillotined, by an increasingly tyrannical government claiming a monopoly on the interpretation and implementation of the general will and wellbeing of the people in whose name it claimed to speak. - Jacob Mchangama, Democracy Has No Place For Safe Spaces 

Grocery Stores


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As our desires and beliefs change, slowly the grocery-store aisles change. They fill up with gluten-free foods when we want gluten-free foods; they fill up with exotic fruits that are now available to us. And they fill up with convenience food, which is so often nutritionally bankrupt. It’s up to us to know the difference between what’s good and what’s bad, and I think that's fine. - Michael Ruhlman, Grocery Stores: An American Miracle

So, I think that through consumer demand, we’re asking for better food and to be better informed about what’s in our food. The grocery store is where we buy most of our food, more than $600 billion of it. So when you have more than $600 billion—or $1 trillion overall in all food retail, which would include convenience stores and Target and all the places that sell food, not just supermarkets—that’s a lot of buying power. If you shift a substantial portion of that money toward organic produce, you’re going to see more organic produce. - Michael Ruhlman, Grocery Stores: An American Miracle

Well, just as I said before, it’s consumers’ choices that the grocery stores respond to. They run on such tight margins—1.25 percent to 1.5 percent, usually—that they have to be very careful, and they have to respond to the consumer. That’s partly why you see so many different products on grocery-store shelves. If somebody wants something, and they can’t find it, next time that customer is going to go to a store that has it. - Michael Ruhlman, Grocery Stores: An American Miracle

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TJs is a market.  The government is not a market.  Netflix is not a market.  The Atlantic is not a market.

If The Atlantic was a market, then I'd use my dollars to draw more attention to their interview with Ruhlman.  Not only would The Atlantic know that their article was important to me, they would know how important it was to me.

Good question: Is this article important to you?
Better question: How important is this article to you?

Substantially quantifying importance is essential because The Atlantic can't carry everything.  It can't cover every story.  It can't review every book.  It can't carefully consider the cancellation of every show or product.  Therefore, it has to prioritize.  It has to decide how to divide its limited talent among unlimited topics.  Right now, because The Atlantic is not a market, its priorities do not reflect my priorities.  Its priorities do not reflect the priorities of any of its readers.  Its priorities reflect its interpretation of its readers' priorities.

If The Atlantic can correctly interpret its readers' priorities, despite the fact that it's not a market, then this would be the biggest uncovered story of all time.

Here's a relevant blog entry of mine... My Well-Being Depends On Artichokes!

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Reply to reply: No Such Thing As A Free Lunch

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Thus the government may fund things that a business would never fund because it increases the well being of a population, even though it may represent an opportunity cost or seem like it has little utility to the opposition. - Northern Light

You expect congress to make public goods choices with due consideration for my well-being. My well-being? In the private sector I have to spend so much time and energy going around informing producers what works for my well-being. I shop and shop and shop. For example, I go to the store and buy some artichokes. In doing so I tell Frank the farmer, "Hey! You correctly guessed that my well-being depends on artichokes! Thanks! Good lookin' out! Here's some money! Keep up the good work!"

Yet here you are telling me that congress can somehow know what works for my well-being despite the fact that I've never once in my life shopped in the public sector. It boggles my mind. It blows my mind. It bears repeating with emphasis... congress can know what works for my well-being despite the fact that I've never once in my life shopped in the public sector. If you think that this is really true... then please... don't hide your insight under a bushel. Start a thread here, there and everywhere and say "Hey folks! Shopping is entirely redundant! It's entirely unnecessary for us to spend so much of our limited time and energy using our cash to communicate what works for our well-being."

Then again, it pays to double check. E-mail your representative and ask them what works for your well-being. If they say general things like food and defense are you going to be super impressed? Are you super impressed when a fortune teller makes "divinations" that are so vague and general that they pretty much apply to everyone?

The market is based on the premise that producers really aren't mind-readers. So in order for the well-being of the population to truly increase, there has to be constant monetary communication between consumers and producers. You gotta use your hard-earned money to specify exactly what works for your well-being. You gotta use your money to advocate for yourself. Because nobody knows you better than you do.

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If The Atlantic truly believes that it doesn't need to be a market in order to know its readers' priorities... then why hasn't it broken the story that markets are a massive waste of everybody's time and energy?  Why is it sitting on the biggest story of all time?

Last week I wrote an entry about a book (Cents and Sensibility) and e-mailed the link to the authors.  They both replied, but not equally.  My reply to Gary Saul Morson included this...

Sense8 is a pretty wonderful show on Netflix.  Let's say that I argue that society undervalues this show.  However, Netflix is not a market.  Imagine that it became a market.  Each and every subscriber could decide for themselves how they divided their limited fees among Netflix's unlimited content.  How many fee dollars would be allocated to Sense8?  I have absolutely no idea.  Neither does anybody else.  

Netflix canceled Sense8 without knowing its social value.  Netflix discontinued the show without knowing its value to society.  When I manage to fully appreciate this fact, it makes our society feel extremely primitive.  Like living among early humans who fail to recognize that cooking is equally useful for meat and vegetables.  Speaking of which...

Like Wrangham, the authors also see a feedback loop in the history of feeding. Along with increasing the efficiency of our food intake and eliminating limits on growth, eating cooked food would have increased the time humans could spend around the fire, time spent together. Socializing, along with other "cognitively demanding" activities--like developing speech, social structure and civilization--would have required more brain power. And humans could afford to develop these more powerful brains, thanks to their improved, cooked diet. This positive feedback drove the rapid increase in neurons that took place in human evolution, the authors say. - Rebecca Boyle, Eating Cooked Food Made Us Human

Cooking is a consequence, rather than the cause, of our big brains.  I'm sure that cooking helped, but it certainly didn't get the ball rolling.

All the different groups of early humans in Africa weren't equally effective at carrying things.  They weren't effectively effective at communicating the value of things.  They weren't equally effective at prioritizing.  They weren't equally effective at utilizing their collective brainpower.  They weren't equally effective at deciding what to carry.  More effective groups competed resources away from less effective groups.  This selection pressure on intelligence has plummeted in modern times.  Far fewer humans are taken out of the gene pool as a result of making dumber carrying decisions.  Conversely, making smarter carrying decisions doesn't significantly increase your presence in the gene pool.  We've reached peak intelligence.  For now at least.

But what about our organizations?  Netflix and Hulu are different groups of humans.  If Netflix makes too many stupid carrying decisions, then the humans in its group won't be removed from the gene pool.  Instead, Netflix itself will be removed from the gene pool of organizations.  What if Netflix doesn't make stupid carrying decisions, but Hulu starts to make much smarter carrying decisions?  Then Netflix might be removed from the organization gene pool.

Netflix and Hulu are currently like two groups of early humans that aren't very different.  But this would change if Hulu became a market by giving its subscribers the opportunity to divide their dollars among its content.  Compared to Netflix, Hulu would do a much better job at utilizing its collective brain.  As a result, Hulu would make much smarter carrying decisions.  Netflix might be removed from the organization gene pool.

The same process that selected human intelligence would select organization intelligence.  How fascinating would it be to witness the rapid evolution of organizations?

It might be perceived as a problem that individual intelligence has plateaued.  It might be perceived as desirable for space colonization to skyrocket individual intelligence.  However, space colonization is a function of collective intelligence.  Efficiently utilizing the intelligence that we already have is far more beneficial than any increase in individual intelligence.

Humans are organisms, groups of humans are superorganisms.  No two groups of superorganisms are equally super.  The whole is always greater than the sum of its parts, but the value of the whole depends on the quality and quantity of communication among its parts.  Limiting, rather than facilitating, communication will decrease the intelligence/relevance of the whole.

The Wachowskis and I are different parts of the same whole... Netflix.  So far the extent of my communication with them involves giving Sense8 a "Thumbs Up".  This interaction is a far cry from the interaction between the 8 main characters in Sense8.  For sure I'd want to hang out with the Wachowskis and exchange all our puzzle pieces.  But if we did so, and they did the same thing with all their fans, then they'd never have time to actually produce anything.  The trick is appreciating that all the information that people want to share with the Wachowskis isn't equally valuable.  Then it's a matter of having an effective system for determining the social value of the information.

Now that their show has been canceled... what's next for the two sisters?  I'm sure that they already have plenty of potential projects that they'd like to work on.  If they are open to suggestions, my top priority project for them would be to create a real-life red pill.  People who took this pill would clearly see the problem with Netflix canceling Sense8 without actually knowing its value to society.  It's not enough for Neflix to know how much it values Sense8, it has to know how much we value it. The pill/project would open people's eyes to the fact that making the best carrying decisions depends on actually knowing the social value of things.

The importance of knowing the social value of things is the most important lesson.  This lesson can be taught in countless ways.  Voila!  Here's one way to teach it.  But is this the best way to teach it?  Probably not.  So what's the best way for everybody to learn that carrying the most socially valuable things depends on actually knowing the social value of things?

I'd love to see a show/movie about an alternative reality where Joshua Wong turns his political party, Demosistō, into a market.  Members of this market would spend their money to bring the most valuable ideas to the world's attention.  Demosistō would effectively demonstrate and prove the benefit of knowing the social value of things.  Given that the government does not provide people with the opportunity to determine and know the social value of things, Wong would win his fight against the government.

I'd also love to see a show/movie about an alternative reality where Bill Gates used the case against him to draw everybody's attention to the government's monumental double standard.  In this far better reality he would take the government's attack on Microsoft and use it against the government.  In an attempt to unbundle Microsoft, the government itself ends up being unbundled.  It would be the biggest and best Aikido move in the history of the world.  How would Gates acquire the necessary puzzle pieces?  He'd meet the Nobel economist James Buchanan.

Let's fantasize that the Wachowskis create a website where everybody in the world could pitch projects to the two sisters.  Most importantly, participants would have the opportunity to divide their limited dollars among the unlimited projects.  This substantial prioritization process would allow everybody to clearly see and know the social value of each and every project.  Whichever project the Wachowskis decided to carry, their decision would be informed by all the participants' puzzle pieces.

A couple years ago I shared a collection of economic passages that are the most relevant to Sense8.  After watching the second season I was curious if anybody else made the same connections.  My Google search went like so...

Sense8 Hayek
Sense8 Netflix Hayek
Sense8 Netflix "Hayek"
Sense8 Netflix "Hayek" -Salma
Sense8 Netflix "Hayek" -Salma -Selma
Sense8 hivemind

Thanks to this post on Reddit, I learned that the Wachowskis were influenced, to some degree, by this book by Kevin Kelly.... Out of Control.  It was required reading for the main actors in the Matrix.

Everybody can read the entire book on Kelly's website for free.  That's exactly what I did.  I really enjoyed it and highly recommend it.  Lots of it is relevant to this entry.  Even though Kelly's book closely matches my preferences, I didn't even spend a penny on it.  The relationship between true signals and the socially optimal division of resources is the most important puzzle piece that is missing from Kelly's book.

Sure I want you to read Kelly's book... but do I want you to read his book before you read Piketty's book?  Do I want you to read Kelly's book before you read Smith's Wealth of Nations?  Do I want society's limited attention to be equally divided between these three books?

In his section on bees, Kelly understands that bees dance harder when something more closely matches their preferences.  But then he goes on to say...

It's an election hall of idiots, for idiots, and by idiots, and it works marvelously. This is the true nature of democracy and of all distributed governance. At the close of the curtain, by the choice of the citizens, the swarm takes the queen and thunders off in the direction indicated by mob vote.

The true nature of democracy is to disregard how strongly an individual prefers something.  How strongly does each and every one of Netflix's 100 million subscribers prefer Sense8?  Netflix doesn't know.  Netflix doesn't care.  Netflix only cares about how many subscribers watch Sense8.  Netflix doesn't care about the demand for Sense8.  Netflix isn't a market.

Democracies are entirely about breadth.  Markets are about breadth and depth.  Depth is essential because of scarcity.  We can't carry everything.  For sure we can carry more and more things, but there's always going to be a limit to how much we can carry at any given time.  Therefore, we have to prioritize.  Correctly doing so depends on knowing the social value of things.  Social value is a matter of breadth and depth.

These puzzle pieces about scarcity/prioritization/spending/communication are entirely economic.  Kelly is missing these pieces.  Their absence prevented him from providing a far more coherent account of things.  He should have engaged in more cross-pollination with the best economists.

"This is just intuitive," Kauffman cautions me, "but you can feel your way from Fontana's 'string-begets-string-begets-string' to 'invention-begets-invention-begets-invention' to cultural evolution and then to the wealth of nations." Kauffman makes no bones about the scale of his ambition: "I am looking for the self-consistent big picture that ties everything together, from the origin of life, as a self-organized system, to the emergence of spontaneous order in genomic regulatory systems, to the emergence of systems that are able to adapt, to nonequilibrium price formation which optimizes trade among organisms, to this unknown analog of the second law of thermodynamics. It is all one picture. I really feel it is. But the image I'm pushing on is this: Can we prove that a finite set of functions generates this infinite set of possibilities?" - Kevin Kelly, Out of Control  

Stuart Kauffman feels the need for a coherent picture, and he referred to the Wealth of Nations, and he somewhat understands the relevance of prices, but it wasn't enough for either him or Kelly to appreciate the difference between a democracy and a market.

"Five years ago," recalls Kauffman, "Brian Goodwin [an evolutionary biologist] and I were sitting in some World War I bunker in northern Italy during a rainstorm talking about autocatalytic sets. I had this profound sense then that there's a deep similarity between natural selection -- what Darwin told us -- and the wealth of nations -- what Adam Smith told us. Both have an invisible hand. But I didn't know how to proceed any further until I saw Walter Fontana's work with autocatalytic sets, which is gorgeous."

I mentioned to Kauffman the controversial idea that in any society with the proper strength of communication and information connection, democracy becomes inevitable. Where ideas are free to flow and generate new ideas, the political organization will eventually head toward democracy as an unavoidable self-organizing strong attractor. Kauffman agreed with the parallel: "When I was a sophomore in '58 or '59 I wrote a paper in philosophy that I labored over with much passion. I was trying to figure out why democracy worked. It's obvious that democracy doesn't work because it's the rule of the majority. Now, 33 years later, I see that democracy is a device that allows conflicting minorities to reach relative fluid compromises. It keeps subgroups from getting stuck on some locally good but globally inferior solution." -  Kevin Kelly, Out of Control 

Kauffman and Kelly are definitely a few puzzle pieces short of a coherent economic picture.  They aren't the only ones.

Far too many people are missing essential pieces of the economic puzzle.  This is why Evonomics, Netflix, the government, and countless other organizations are not markets.

It's a basic fact that Evonomics can't carry everything.  Therefore, it has to prioritize.  But in order for it to carry the most valuable things, it needs to give its supporters the opportunity to substantially participate in the prioritization process.  The people who carry Evonomics should be able to use their dollars to help directly and substantially influence what it carries.  Then, and only then, will Evonomics be able to fully utilize its collective brainpower and maximize the intelligence of its carrying decisions.

If Evonomics was a market, then visiting non-economists such as Kevin Kelly, the Wachowskis, Gary Saul Morson, Janelle Ayres and Neil DeGrasse Tyson would clearly see and know the social value of the articles.  Being able to easily find and freely access the most valuable articles would facilitate the most valuable cross-pollination.

We aren't always going to agree with society's valuation of things.  But if Evonomics was a market then at least we'd see and know the difference between our valuations and society's valuations of economic ideas.  This knowledge would help us prioritize which puzzle pieces we share.

In this day of modern witch-burning when freedom of thought has been exiled from many lands which were once its home, it is the part of Harvard and America to stand for the freedom of the human mind and to carry the torch of truth. - Franklin Delano Roosevelt

Evonomics should carry the torch of economic truth.  It should carry the most truthful economic articles.  But it can only do so when each and every donor has the opportunity to easily use their dollars to grade the truthfulness/importance/intelligence/relevance of its articles.