Wednesday, April 8, 2015

Debugging Scott Alexander And Paul Krugman

Alt Title1:  Make Money vs Kill Humans
Alt Title2:  Faulty Analysis by Intelligent People
Alt Title3:  Debugging Two Intellectuals With One Entry

Scott Alexander - No Physical Substrate, No Problem
Paul Krugman - The Fiscal Future I: The Hyperbolic Case for Bigger Government

Alexander fears that AIs will become too powerful while Krugman hopes that the government will become more powerful.

Alexander argues that an AI will decide to get rich and then decide to kill us.  Krugman argues that we need a bigger government because people make poor decisions.

The bug in their analysis is that they don't really grasp the simple concept of garbage in, garbage out.  Every entity, whether it's a human, a robot, a company or a government... makes decisions based on information.  If the information is garbage, then the decisions will be garbage.
When a businessman makes a business error…a bad mistake, you'll look back and say, gee, what did I do wrong.  I made a bad decision.  I made a wrong decision. What do you mean by that? Do you mean that you made a mistake in arithmetic?  You mean your computer kicked out the wrong answer?  No, that's not what you mean. You mean you fed the wrong data into the computer.  That's what you mean.  You figured wrong.  You opened a hardware store in a place where nobody buys hardware. You went to law school in a country where nobody litigates (not this country).  That's where you make a mistake. You made a mistake where you assess the future wrongly.  You got a wrong picture of what you were choosing between.  That's a business mistake. 
And what's a correct decision.  A correct decision is one where you saw correctly.  You saw right.  You saw what the future held...more or less. Nobody's got a PhD in prophecy.  You can peer ahead and have a hunch for the future and act and if you act right...and if you're an entrepreneur... that means you see things right more of the time than you don't. - Israel M. Kirzner, Competition and Entrepreneurship
Krugman supports a minimum wage.  A minimum wage feeds the wrong data into society's allocation computer.  Here's an illustration from my entry... Jeff Madrick vs The Invisible Hand

Krugman: The world economy is a system -- a complex web of feedback relationships -- not a simple chain of one-way effects
Krugman: Wages, prices, trade, and investment flows are outcomes, not givens
Krugman: Wages are a market price--determined by supply and demand
Krugman: Money still talks — indeed, thanks in part to the Roberts court, it talks louder than ever
Krugman: Raise minimum wages by a substantial amount
Krugman: The price of labor--unlike that of gasoline, or Manhattan apartments--can be set based on considerations of justice, not supply and demand, without unpleasant side effects
Krugman: Your decision to stay in school or go out and work will shape your lifetime career
Krugman: Now, the fact is that people make decisions like these badly
Krugman: Bad choices in education are the norm where choice is free
Krugman: He and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day

Think about driving somewhere.  You want to change lanes... so you use your blinker to communicate your desire.  Somebody cuts you off... so you communicate your displeasure by honking at them and/or giving them the middle finger.  You see break lights on the cars in front of you.  What does this communicate to you?  It communicates that you need to stop.  Same thing when you see a stop sign or a red light.  A green light, on the other hand, communicates that you need to go.  When you see the sign for a street that you need to take... you take it.  You hear a siren behind you and see the flashing lights in the review mirror... what do you do?  If it's an ambulance then you get out of the way.  If it's a police car then you start hoping that you're not the target.

Safely arriving at your destination depends on a considerable amount of communication.  Would clearer communication make it easier or harder for you to get to your destination?
One doesn't need to be Thomas Gradgrind to be interested in the rules underlying the English language, or to believe that good communication and understanding depend on clarity.  Grammar is not just about learning sentence construction: it's about speaking clearly and plainly and cutting through obfustication. But even aside from that, and most importantly of all, good grammar will help you get laid. - Hadley Freeman, Humanity's future depends upon good grammar
When Paul Krugman advocates for minimum wages... he's advocating for more, rather than less, obfuscation.  A minimum wage really doesn't clarify the demand for labor... it obscures the demand for labor.

We can either clarify demand... or we can obscure it.  We can either make it easier to understand and respond to each other's demands/concerns... or we can make it harder.

Here's an illustration from my entry... Scott Alexander vs Adam Smith, J.S. Mill, Alex Tabarrok, Don Boudreaux, David Friedman, Murray Rothbard, Jason Brennan, Elizabeth Warren, Geoffrey Brennan, Loren Lomasky

If gays are going to foot vote... then what information do they need to make a correct decision?  They need to know what the demand is for gays here, there and everywhere.  When gays make poor foot voting decisions... then it's because their information was garbage.

Same thing when libertarians attack the wrong targets.  Here's the illustration from my entry... S Is Never Going To this rate...

In this illustration vulgar libertarians are tilting at windmills.  They are wrongly attacking taxes, public goods, welfare and fiat money.  Why are they barking up the wrong tree?  It's because their information is garbage.  If their information wasn't garbage, then they would be attacking the assumption of omniscience.

Right now we can't choose where our taxes go.  The monetary expert Scott Sumner can't use his tax dollars to communicate his concerns.  Here's the illustration from my entry... Scott Sumner vs The Fed

With our current system, no matter how bad the Fed's policies are... it would never be rational for Scott Sumner to encourage people to boycott the Fed.  This is because people can't choose where their taxes go.  Scott Sumner can't encourage us to boycott the Fed... but he can encourage us to boycott Disneyland.  We can't use our money to communicate with the DoD.... but we can use our money to communicate with McDonald's.  As if it's more important to clearly communicate with Ronald McDonald than it is to clearly communicate with Barack Obama.

With our current system... a bigger government increases demand opacity.  This means that more people will make even worse decisions.  With more garbage in, we get more garbage out.
The immense Soviet efforts to mobilize economic resources were hardly news. Stalinist planners had moved millions of workers from farms to cities, pushed millions of women into the labor force and millions of men into longer hours, pursued massive programs of education, and above all plowed an ever-growing proportion of the country's industrial output back into the construction of new factories. - Paul Krugman, The Myth of Asia's Miracle
There's nothing inherently wrong with society's limited resources being massively mobilized.  The issue is whether the allocation decisions are based on actual demand.  If the allocation decisions are based on accurate information... then the consequences will be beneficial.  If, on the other hand, the allocation decisions are not based on accurate information... then the consequences will be detrimental.  Garbage in, garbage out.

If Scott Alexander wants to paint plausible scenarios of robots making really bad decisions... then he really needs to show some basic understanding of the garbage in, garbage out concept.  If he truly understands this concept then he'll explain where the robots got their bad information from.  Alexander will clearly communicate to us exactly what information led robots to the decision to make money... and exactly how that information changed so that the robots then decided to kill humans.  But if Alexander can truly understand the garbage in, garbage out concept... and how it relates to demand... then he's going to adjust his intelligence allocation by addressing the clear and present danger of governments preventing millions and millions of people from using their tax dollars to clearly communicate their concerns/demand.

The economist Don Boudreaux recently wrote about truth vs lies...
Market-determined prices – those that are neither set nor constrained by government diktat – reflect underlying economic realities. Prices are the results of those realities. Prices – even those that are set or constrained by government diktat – also have consequences; prices affect and direct economic decision-making. So while prices that are set or constrained by government diktat affect and direct economic decision-making no less than do market-determined prices, only the latter does so in ways that are consistent with underlying economic realities. The reason is that only market-determined prices tell the truth about underlying economic realities; minimum-wage rates and other prices that are set or constrained by government diktat lie about underlying market realities. Such government-determined prices thus cause people to act on misinformation – on economic lies. And people who are misinformed and misled will not make decisions that improve underlying economic realities; quite the opposite.
Let's be truthful about the market though.  With this goal in mind... here are a couple illustrations from my entry... Accurately Communicating Value

In this illustration I'm buying the book Toleration from the author... Andrew Cohen.  Hopefully it's clear in this illustration that I'm lying.  I'm paying far less money than I value his book.  The amount that I'm paying isn't accurately communicating how much I value his book.  Garbage in, garbage out.

In this illustration I'm also lying.  I'm paying far more money than I value his book.  The amount that I'm paying isn't accurately communicating how much I value his book.  Garbage in, garbage out.

In the first illustration I'm getting a really great deal.  In the second illustration I'm really being ripped off.  And in both illustrations I'm lying.  I'm falsely reporting the underlying economic realities.  I'm miscommunicating my demand for books on the topic of tolerance.  I'm feeding bad information into the allocation computer.  I'm sending the wrong message to producers.  In the first illustration I'm sending the message that there's a surplus.  But the truth of the matter is that, in that scenario, I honestly believe that there's a shortage.  In the second illustration I'm sending the message that there's a shortage.  But the truth of the matter is that, in that scenario, I honestly believe that there's a surplus.  False messages adversely effect the future supply.

In both scenarios the amount of money that I'm paying for Cohen's book isn't accurately communicating the amount of value that I derive from his book.  The logical consequence is that society's limited resources will not be put to their most valuable uses.  Garbage in, garbage out.

Even though markets have plenty of room for improvement... the information that they supply is vastly superior to the information supplied by governments.   Vegetarians aren't going to order steaks like pacifists have to order war.

One of the most significant events in human history will be when the majority of people realize the value of knowing the actual demand for war.
There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest in war. - Mancur Olson
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. The seasons during which the ability of private people to accumulate was somewhat impaired would occur more rarely, and be of shorter continuance. Those, on the contrary, during which the ability was in the highest vigour would be of much longer duration than they can well be under the system of funding. - Adam Smith, Wealth of Nations

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