Gavin ([info]selfishgene) wrote,
@ 2008-04-29 14:01:00
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Great Boom
Nevertheless, this Great Boom is also very different from all previous bubbles. This time around, globalization either will succeed and humanity will achieve a degree of freedom and prosperity that can scarcely be imagined, or globalization will fail and capitalism or even humanity itself may come to an end. The real alternative to good globalization is world war.
A somewhat pessimistic view but not absurdly so. The current recession may be fatal to global economic integration and fatal to many humans too. Nothing that will happen in this recession is truly disastrous, if governments react rationally. However, the track record of government rationality is extremely weak. We know FedGov made many bad decisions after 1929, including provoking the Axis into war with America.

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[info]jordan179
2008-04-29 06:59 pm UTC (link)
We know FedGov made many bad decisions after 1929, including provoking the Axis into war with America.

How exactly could we have avoided this outcome? And how, assuming we did, would we have avoided fighting (and probably losing) the World War III likely to have followed, against the triumphant Axis powers, and without any allies in the Old World?

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[info]selfishgene
2008-04-29 09:05 pm UTC (link)
I think it is far more likely the Axis powers would have fought amongst themselves. Faced with invading America across a vast ocean or fighting over Siberia / China, the Asian option is closer and easier. The Axis powers were never very closely linked. For example, Japan attacked Russia in 1939 and was defeated, without Germany lifting a finger to help. When Germany attacked Russia in 1941, Japan didn't lift a finger either.
America could have defended itself very cheaply by slightly increasing the size of the navy. This would have been a very minor expense compared with the cost of WW2. Not to mention the saving of hundreds of thousands of American lives.

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[info]abyrneseyeview
2008-04-29 07:16 pm UTC (link)
The problem with Thiel's thesis is that the lower your boom-allocation, the more money you can invest in the boom in the long run. For a simple example, consider a market with two kinds of companies. One, at $10/share, will be worth $11/share in a year. The other, at $10 share, has a 90% chance of being worthless in a year, and a 10% chance of being worth $110/share. They have the same expected value, but nine times out of ten, the guy who bought the latter is broke -- whereas the guy who bought the first one for a few years in a row may have enough money to invest a little in the second each year, such that, for example, his portfolio is up 5% in an average year, and up 55% one year in ten.

The problem with Singularity investment, then, is that the people who have the most resources for investing in the Singularity are almost always the ones who don't believe in it. Since so much relies on timing, the people inclined to think it can never happen are best able to make it happen, and vice-versa. This also works in politics, where hewing to the status quo is the only way to be powerful enough to effect a revolution.

Thiel, by the way, has made most of his investments in the global macro space, where he bets on oil prices, international stock markets, etc. Most of his net worth is probably in Facebook, but I believe his cost basis for that is just $500,000. Meanwhile, Warren Buffett could be the biggest signularity-investor in the world overnight without substantially affecting the rest of his portfolio, even though his money is mostly in the dowdier businesses. Likewise, Gates, Mittal, Slim, etc., make money on high-cashflow stuff biased against radical change. And yet if they develop even the slightest suspicion of an imminent Singularity, they will be able to benefit from it far more than Robin Hanson or Eliezer Yudkowsky or even the rather well-off Ray Kurzweil.

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[info]selfishgene
2008-04-29 09:07 pm UTC (link)
I always thought the idea of Singularity was that it would make all existing wealth obsolete?

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[info]abyrneseyeview
2008-04-29 09:12 pm UTC (link)
That's one vision of the Singularity, but I'm not sure how accurate it is. After all, the usual cycle is that rich people end up paying money to smart, ambitious people, who eventually earn enough money to get dumb and lazy and have to do stuff by paying smart, ambitious people, who...

But if you can rewrite your preferences and buy extra smarts, it looks like wealth will keep on compounding. Some people will certainly opt out, but the ones who don't will be at a huge advantage. I suspect that when the Singularity arrives, median wealth will increase, but inequality will increase a lot faster.

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