~gallant (Posts about economics)https://gallant.dev/categories/economics.atom2024-01-15T22:54:21ZAaron GallantNikolaKnowing Where To Taphttps://gallant.dev/posts/knowing-where-to-tap/2024-01-15T10:54:07-08:002024-01-15T10:54:07-08:00Aaron Gallant<figure><img src="https://gallant.dev/images/person-holding-power-tool-at-work-bench.jpg"></figure> <div><p>You've likely heard some variant of the <a href="https://quoteinvestigator.com/2017/03/06/tap/">morality story</a> where someone justifies their (commercial) worth as mostly a matter of knowledge, and not just labor.</p>
<p>A typical version is as follows - a handyperson is hired to fix a failing heater. They spend a few minutes investigating and listening to it from a variety of locations, and then tap a particular spot with a hammer and fix it.</p>
<p>They bill the owner of the heater $300 - the owner objects, saying that it was a simple tap of the hammer. So the worker remakes the invoice:</p>
<ul>
<li>Tapping a hammer: $1</li>
<li>Knowing where to tap: $299</li>
</ul>
<p>As with most concise-yet-resonant stories, it belies a more complex issue.</p>
<p><a href="https://gallant.dev/posts/knowing-where-to-tap/">Read more…</a> (3 min remaining to read)</p></div><p>You've likely heard some variant of the <a href="https://quoteinvestigator.com/2017/03/06/tap/">morality story</a> where someone justifies their (commercial) worth as mostly a matter of knowledge, and not just labor.</p>
<p>A typical version is as follows - a handyperson is hired to fix a failing heater. They spend a few minutes investigating and listening to it from a variety of locations, and then tap a particular spot with a hammer and fix it.</p>
<p>They bill the owner of the heater $300 - the owner objects, saying that it was a simple tap of the hammer. So the worker remakes the invoice:</p>
<ul>
<li>Tapping a hammer: $1</li>
<li>Knowing where to tap: $299</li>
</ul>
<p>As with most concise-yet-resonant stories, it belies a more complex issue.</p>
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<p><img alt="Person holding a power tool at a work bench, doing a task that clearly requires fine motor control" src="https://gallant.dev/images/person-holding-power-tool-at-work-bench.jpg"></p>
<p>In most versions of this story, the task is simple enough that - despite knowledge being the integral factor - one doesn't need special training or deep consideration to see the justice of it. That is why it is a morality story, after all!</p>
<p>But real labor (including that done by handypeople) occurs in vastly more complex settings. This does not mean the moral is incorrect - simply that it obfuscates higher dimensions, and that further analysis is needed.</p>
<p>Consider situations where <a href="https://gallant.dev/posts/profit-as-a-series-of-asymmetries/">information is asymmetrical</a>. An auto mechanic tells you that, despite coming in for a simple oil change (for say $30), your engine block has a cylinder liner that looks “off” (they pull out a part to show it to you - you can tell it looks oily and round). They say a more elaborate repair is needed, at a cost of $1200.</p>
<p>They may well be correct - in fact, they may not only be pricing the repair fairly, but doing a service to you and others on the road by alerting you to a genuine safety issue. Or, it is possible that the issue is real but not urgent - that vehicles of your make and age often show a superficial degradation in that spot, but it doesn’t impact performance or safety at this time. Or maybe they just made the whole thing up!</p>
<p>Unless you’re both (1) a subject-matter expert in the area (in this case, auto mechanics), and (2) taking the time to look at it yourself - you just don’t know. And if you are both of those things, you’re probably not taking your car in for a simple oil change!</p>
<p>What’s the moral of this more complicated story? That asymmetries (and particularly those of information) subtly warp our intuitions, and make otherwise simple judgments remarkably complex.</p>
<p>Consider “indispensable” employees - the term can apply to both those who are truly invaluable in their work (and may or may not be fairly rewarded for that). But it can also refer to those who engineer situations (by hoarding information and creating complexity) where only they know how to complete a critical function. The latter tend to be more successful at extracting value from their employment - to the point that they often direct the primary decisions of their business.</p>
<p>And what about other ways businesses “protect” their production? Punishing larceny has a simple logic, when the situation is equally simple - steal a physical good from your peer and you are depriving them of rightful ownership. But who are you depriving of what if you download an audio file of <a href="https://www.youtube.com/watch?v=zn5bhJ5YX6U">Leonard Bernstein conducting Candide</a>? Sure, <a href="https://en.wikipedia.org/wiki/You_Wouldn't_Steal_a_Car">you wouldn't download a car</a> - but not all things are cars.</p>
<p>The overall dilemma is that pricing things (which can include goods, labor, and punishments) is hard, and there are few situations with a clear impartial arbiter. Capitalism suggests that the free market is the answer - but many of the examples we're considering are themselves products of that.</p>
<p>So, how do we resolve all this lurking complexity? There's no single answer - the educational and professional institutions that provide accreditation can give valuable signal in some situations, but they can also perpetuate stereotypes and inequality. There's simply no replacement for critical consideration of individual situations.</p>
<p>If I had to suggest one moral, it is that taking a general moral from a simple story and broadly applying it to life is poor reasoning, and generally inadvisable. The semi-paradox of me suggesting this is left as an exercise to the reader.</p>The Good Kind of Scarcityhttps://gallant.dev/posts/the-good-kind-of-scarcity/2022-02-12T15:38:38-08:002022-02-12T15:38:38-08:00Aaron Gallant<figure><img src="https://gallant.dev/images/purple_flower_bud_in_close_up.jpg"></figure> <div><p>There has been <a href="https://moxie.org/2022/01/07/web3-first-impressions.html">much</a>
<a href="https://www.oreilly.com/radar/why-its-too-early-to-get-excited-about-web3/">ado</a>
about web3, "crypto", and decentralization lately. I care about, study, and work
with the web, decentralization, and even a touch of cryptography - but I think
that recent trends hinge less on technological specifics and more on economics,
human behavior, and scarcity (or lack thereof).</p>
<p>Technology obviates scarcity, and computational technology especially so. Price
is driven by supply and demand, with effectively infinite supply making price
negligible. This makes the marginal cost of digital goods generally near zero,
with the barrier to create and share content lower than ever.</p>
<p>The result is a world that gives consumers unprecedented media options, and at
the same time makes it
<a href="https://www.theonion.com/spotify-celebrates-100th-dollar-given-to-artists-1844943985">challenging to compensate artists</a>.
The blockchain enables a form of (artificial) scarcity, with
<a href="https://ethereum.org/en/nft/">NFTs</a> digitally embodying assets, which some
argue can address the above challenges. To form opinions on manufactured
scarcity like NFTs, I think it is useful to more generally consider what is good
about scarcity and what is not so good, economically and beyond.</p>
<p><a href="https://gallant.dev/posts/the-good-kind-of-scarcity/">Read more…</a> (2 min remaining to read)</p></div><p>There has been <a href="https://moxie.org/2022/01/07/web3-first-impressions.html">much</a>
<a href="https://www.oreilly.com/radar/why-its-too-early-to-get-excited-about-web3/">ado</a>
about web3, "crypto", and decentralization lately. I care about, study, and work
with the web, decentralization, and even a touch of cryptography - but I think
that recent trends hinge less on technological specifics and more on economics,
human behavior, and scarcity (or lack thereof).</p>
<p>Technology obviates scarcity, and computational technology especially so. Price
is driven by supply and demand, with effectively infinite supply making price
negligible. This makes the marginal cost of digital goods generally near zero,
with the barrier to create and share content lower than ever.</p>
<p>The result is a world that gives consumers unprecedented media options, and at
the same time makes it
<a href="https://www.theonion.com/spotify-celebrates-100th-dollar-given-to-artists-1844943985">challenging to compensate artists</a>.
The blockchain enables a form of (artificial) scarcity, with
<a href="https://ethereum.org/en/nft/">NFTs</a> digitally embodying assets, which some
argue can address the above challenges. To form opinions on manufactured
scarcity like NFTs, I think it is useful to more generally consider what is good
about scarcity and what is not so good, economically and beyond.</p>
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<p>Scarcity is good when it encourages ingenuity and rewards creativity, for
instance increased
<a href="https://www.energystar.gov/about/about_energy_efficiency">energy efficiency</a>.
It is bad when it causes and reinforces inequity through stockpiling and
<a href="https://www.nytimes.com/2020/03/27/us/coronavirus-price-gouging-hand-sanitizer-masks-wipes.html">similar dynamics</a>,
as occurred with both
<a href="https://en.wikipedia.org/wiki/Deployment_of_COVID-19_vaccines">vaccines</a> and
<a href="https://en.wikipedia.org/wiki/Food_security_during_the_COVID-19_pandemic">food</a>
during the COVID-19 pandemic.</p>
<p>Scarcity is good when it strengthens balance by limiting indulgence, such as a
<a href="https://www.nytimes.com/games/wordle/">puzzle released once per day</a> or a
weekly TV show. It is bad when it prevents entire possibilities from raw lack of
resources - a world without any puzzle games or TV shows. All things in
moderation, including moderation.</p>
<p>Scarcity can enhance our appreciation of something by increasing contrast - a
point of beauty jumps out from the background. But it can also limit beauty
itself, resulting in the dominance of the bland sameness of the usual.</p>
<p><img alt="Purple flower bud in close-up" src="https://gallant.dev/images/purple_flower_bud_in_close_up.jpg"></p>
<p>Good things - things that inspire us and bring us joy - are often scarce. Are
they good because they're scarce, or scarce because they're good? Likely a
little bit of both.</p>
<p>Would it be good to have a
<a href="https://kardashev.fandom.com/wiki/Post-scarcity">"post-scarcity" society</a>?
Maybe - or <a href="https://en.wikipedia.org/wiki/Player_Piano_(novel)">maybe not</a>.
Likely a little bit of both.</p>
<p>So, should we manufacture scarcity? Can we artificially bottle the good, using
scarcity to inspire and reward things we truly value, while omitting the bad,
the inequity and waste and limited potential?</p>
<p>Doing so would require the creation of a more sophisticated and considerate
system than humans have a track record for creating. It would require avoiding
<a href="https://en.wikipedia.org/wiki/Tulip_mania">economic and psychological pitfalls</a>
and finding how to sustainably reward those involved. Everyone would need to be
informed - to learn and really understand a new system - in order for them to
engage with it in an appropriate and fair manner.</p>
<p>Inventing beneficial scarcity is already hard for individual humans - the main
examples I can think of are fasting and meditation. So there is such a thing as
good scarcity, and we can clearly manufacture scarcity (companies have been
doing it long before the blockchain). But I'm skeptical of the intersection of
the two - or at least, we have a ways to go before we get there.</p>Codebases are Amortized Intelligencehttps://gallant.dev/posts/codebases-are-amortized-intelligence/2021-10-03T20:27:58-07:002021-10-03T20:27:58-07:00Aaron Gallant<figure><img src="https://gallant.dev/images/hand_over_blue_and_white_lines.jpg"></figure> <div><p>Anyone who has written more than a handful of lines of code gains the intuition
that measuring productivity in terms of code quantity is not a promising
approach. But the perception that a codebase is an asset - whether proprietary
or otherwise - is present even in engineering cultures.</p>
<p>How do we explain that having code is worth something, but measuring work in
terms of writing it isn't? One answer is that lines of code <em>are</em> valuable, but
in such a nonlinear and <a href="https://iep.utm.edu/mean-c-s/">context-sensitive</a> way
that counting and assigning some sort of score is futile.</p>
<p>I find that perspective compelling - but incomplete. To understand why code is
valuable we have to first ask what a codebase really <em>is</em>.</p>
<p><a href="https://gallant.dev/posts/codebases-are-amortized-intelligence/">Read more…</a> (3 min remaining to read)</p></div><p>Anyone who has written more than a handful of lines of code gains the intuition
that measuring productivity in terms of code quantity is not a promising
approach. But the perception that a codebase is an asset - whether proprietary
or otherwise - is present even in engineering cultures.</p>
<p>How do we explain that having code is worth something, but measuring work in
terms of writing it isn't? One answer is that lines of code <em>are</em> valuable, but
in such a nonlinear and <a href="https://iep.utm.edu/mean-c-s/">context-sensitive</a> way
that counting and assigning some sort of score is futile.</p>
<p>I find that perspective compelling - but incomplete. To understand why code is
valuable we have to first ask what a codebase really <em>is</em>.</p>
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<p><img alt="Hand over blue and white lines" src="https://gallant.dev/images/hand_over_blue_and_white_lines.jpg"></p>
<p>If you've ever bought something with a loan, you've likely had to make periodic
payments to, over time, liquidate the debt. This is called amortization -
<a href="https://en.wikipedia.org/wiki/Amortization#Etymology">etymologically derived</a>
from "to kill" and "death."</p>
<p>The reason for this grim phraseology is that these periodic payments really are
eliminating something - an outstanding debt. The debt is "alive" in that it
probably generates interest of some form, so to effectively pay it down requires
enough not only to address its growth but also chip away at its principal.</p>
<p>What does this have to do with codebases? The concept of technical debt is seen
as an accumulation of defects, from shortcuts and other compromises - something
that may accompany a codebase, but a side effect and not an integral mechanism.</p>
<p>In any project with scope that requires a timeline (even implicit), technical
debt and the codebase are inevitably and intimately related. Much like a
debt-financed purchase, creating a codebase that has a time dimension means
creating a present commitment predicated on future payments. And much like a
financial investment, the value of a codebase can shift up or down as or after
we pay into it, and these shifts can sometimes be anticipated and other times
occur due to chance.</p>
<p>The nature of payments when working with code is
<a href="https://agilemanifesto.org/">trickier to measure</a> - but at a high level, code
is a product of structured thoughts, or intelligence. And so when we work on a
codebase we are paying intelligence into an inherently debt-driven structure, a
promise of present and future value conditional on ongoing intelligence-debt
service. Like a loan, a technical project is a commitment, serviced over time.</p>
<p>Seeing technical debt as the cost of shortcuts is a simplification - all planned
work involves a process of iterative consideration and refinement, even and
sometimes especially when it is well-engineered. Debt is a promise and system,
one that can easily cause harm when mismanaged, but also the primary way to get
big things done. Financial loans aren't intended to simply shift money around
for the sake of it - they are meant to enable projects and work.</p>
<p>Obvious technical debt (like
<a href="https://en.wikipedia.org/wiki/Monkey_patch">monkey patching a dependency</a>)
still matters, and is the "high-interest credit card" of this perspective -
something to be used situationally and only when you know you can pay it off
promptly. But recognizing that all "long work" involves debt and payments
allows us to see the value we accrue as we chip away at it (and perhaps
facilitate better planning as we go). The codebase is still an asset, but
encumbered by its nature to be more of a process than a result.</p>
<p>The value of code isn't just nonlinear and
context-sensitive - it's
<a href="https://en.wikipedia.org/wiki/Time-variant_system">time-variant</a>. The resulting
artifact - the codebase - is the accumulation of amortized intelligence. And of
course, the <em>real</em> value comes from the actual utility to the end user.</p>Profit from Efforthttps://gallant.dev/posts/profit-from-effort/2021-09-26T15:18:24-07:002021-09-26T15:18:24-07:00Aaron Gallant<figure><img src="https://gallant.dev/images/egg_balanced_on_forks.jpg"></figure> <div><p><em>A continuation of
<a href="https://gallant.dev/posts/profit-as-a-series-of-asymmetries/">Profit as a Series of Asymmetries</a>.</em></p>
<p>When one party is monetarily compensated by another due to their hard work,
that is capitalism "working as intended."</p>
<p>Work reduces not just to capitalism, but to physics - it is the
<a href="https://en.wikipedia.org/wiki/Work_(physics)">energy transferred by applying force to effect displacement</a>.
In other words, it's pushing stuff around, and when considered figuratively
it is an apt description for many capitalistic enterprises.</p>
<p><a href="https://gallant.dev/posts/profit-from-effort/">Read more…</a> (2 min remaining to read)</p></div><p><em>A continuation of
<a href="https://gallant.dev/posts/profit-as-a-series-of-asymmetries/">Profit as a Series of Asymmetries</a>.</em></p>
<p>When one party is monetarily compensated by another due to their hard work,
that is capitalism "working as intended."</p>
<p>Work reduces not just to capitalism, but to physics - it is the
<a href="https://en.wikipedia.org/wiki/Work_(physics)">energy transferred by applying force to effect displacement</a>.
In other words, it's pushing stuff around, and when considered figuratively
it is an apt description for many capitalistic enterprises.</p>
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<p><img alt="Egg balanced on forks" src="https://gallant.dev/images/egg_balanced_on_forks.jpg"></p>
<p>An important part of this "pushing" model is that there is often a counterforce.
Consider gravity - as residents of Earth, we constantly experience a "downward"
pull that, absent our effort, pins us to the surface of our planet. Staying
upright requires constant work on our part to resist this external force - and
acrobatics or flight require even more effort and ingenuity.</p>
<p>Not all profitable work is physical - but intellectual effort can be seen as
pushing against a counterforce. To perform intellectually for others subsumes
your will, requiring compromises that cause oneself not simply to push
conciously but subconciously. Achieving and maintaining employability shapes our
identity. Instead of "you are what you eat", professionally "you are what you
do" - which is why "what do you do?" is both a commonplace and toxic inquiry.</p>
<p>"Profit from effort" is a bit like an iceberg - we see the surface (and it
<a href="https://en.wikipedia.org/wiki/Cost-of-production_theory_of_value">plays nicely with our models</a>),
but it is what lurks underneath that threatens to upset things. Counterforces
complicate models - we can wave them away as externalities, random noise, or
say "it's only a model", but when they impact the question at hand it's best not
to neglect them.</p>
<p>In this case that means acknowledging that, though "profit from effort"
satisfies a fairly ideal model of capitalism, it raises numerous questions about
the type of effort, the context or contract (capitalistic couterforces) that
motivated the exchange, and the personal and long-term costs of the laborer.
These considerations don't come out in GDP (which capitalism is indeed good at
maximizing) - but
<a href="https://pubmed.ncbi.nlm.nih.gov/2430906/">physical quality of life</a> captures a
bit more of the personal benefits and burdens of an economic system.</p>
<p>This is neither a recapitulation of Marx nor a condemnation of capitalism - but
we are only two steps down our series of profitable asymmetries and already
finding fairly significant concerns. You, along with most of society, probably
make most of your money through what could be characterized as "effort" - what
are the lurking counterforces you labor against, and what do they say about your
overall situation?</p>
<p>Perhaps effort, if it is also framed by a fair contract, is a good and just
mechanism for profitable exchange. That's a big enough "if" that it requires
further consideration - the good news is the idea of "contract" will be relevant
to many of the coming asymmetries (notably investment and ownership).</p>
<p>So, I hope reading this was worth the cognitive effort, and stay tuned for more
profitable thoughts.</p>Fortune as Cognitive Biashttps://gallant.dev/posts/fortune-as-cognitive-bias/2021-08-03T16:56:26-07:002021-08-03T16:56:26-07:00Aaron Gallant<figure><img src="https://gallant.dev/images/two_dice_showing_1_and_6.jpg"></figure> <div><p>Think about the most money you've received as a windfall - perhaps you deserved
it, but its arrival was unexpected. You could have literally been gambling, or
simply been in a situation that favored you in unanticipated ways.</p>
<p>Similarly, think about the most money you've ever lost unexpectedly. Again, you
might have been gambling - or maybe you suffered a very real loss, and whatever
form of insurance that should have mitigated the situation was inadequate.</p>
<p>For both of these, you should focus on situations with immediacy. Getting a
raise or taking a loan both have substantive impacts on your finances, but
neither have the psychological punch of a poker hand.</p>
<p>Our fortunes, good and bad, shape us in many ways. Their direct impact is most
obvious, but they also become perceptual reference points.</p>
<p><a href="https://gallant.dev/posts/fortune-as-cognitive-bias/">Read more…</a> (2 min remaining to read)</p></div><p>Think about the most money you've received as a windfall - perhaps you deserved
it, but its arrival was unexpected. You could have literally been gambling, or
simply been in a situation that favored you in unanticipated ways.</p>
<p>Similarly, think about the most money you've ever lost unexpectedly. Again, you
might have been gambling - or maybe you suffered a very real loss, and whatever
form of insurance that should have mitigated the situation was inadequate.</p>
<p>For both of these, you should focus on situations with immediacy. Getting a
raise or taking a loan both have substantive impacts on your finances, but
neither have the psychological punch of a poker hand.</p>
<p>Our fortunes, good and bad, shape us in many ways. Their direct impact is most
obvious, but they also become perceptual reference points.</p>
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<p><img alt="Two dice, one showing 1 and the other 6" src="https://gallant.dev/images/two_dice_showing_1_and_6.jpg"></p>
<p>"Guess the price" games feature both randomness and fortune - and are also used
to illustrate our cognitive biases. The wealthy <a href="https://youtu.be/ad_higXixRA">are disconnected from the
details of groceries</a>, while the rest of us <a href="https://guesstheprice.net/">use
extravagant purchases as grist for a guessing game</a>.</p>
<p>But, as with most of reality, binary classification is a simplification.
Extreme wealth and the lack thereof are reference points in a continuum, with
each of us in our own unique situation along it.</p>
<p>So, think back to your answer to the opening questions. Maybe the biggest
windfall you've received was an unexpected $1,000 bonus, and the largest
sudden loss was learning you needed to spend $3,000 for your car to keep
going.</p>
<p>How unusual were these events? Think about the distribution of your (financial)
wins and losses.</p>
<p>How recent was it? Does it feel like another life, or did it happen last week?</p>
<p>If you can <a href="https://en.wikipedia.org/wiki/Big_O_notation">roughly estimate</a> the
positive and negative bounds for the amount of money that you experience
"arbitrarily", I suggest you have also identified a zone of cognitive bias.</p>
<p>Whenever you make a financial decision that is within these bounds, it would be
wise to take a moment and reflect on your fortune (good or bad), and use that
context to inform not just immediate gratification but long-term outcomes.
The defining quality of money is its fungibility - little bits add up to a lot,
and a lot can be eroded by persistent splinters.</p>Profit from Interest - Starting a Free Email Newsletterhttps://gallant.dev/posts/profit-from-interest/2021-05-19T07:18:26-07:002021-05-19T07:18:26-07:00Aaron Gallant<figure><img src="https://gallant.dev/images/woman_using_smartphone.jpg"></figure> <div><p>As promised, here is the first followup to
<a href="https://gallant.dev/posts/profit-as-a-series-of-asymmetries">my consideration of profit as a series of asymmetries</a>.
The first ("best") reference point in our model is when transactions are
motivated by an imbalance of interest - not the percentage charged on a loan,
but the
<a href="https://www.websters1913.com/words/Interest">"excitement of feeling, whether pleasant or painful, accompanying special attention to some object."</a></p>
<p>I find it interesting that Webster's definition allows for both pleasant and
painful possibilities. But regardless of source, interest entails an agent
having an intrinsic preference or desire that may impact their behavior.</p>
<p>And so, if a monetary exchange occurs simply because the seller is personally
interested in providing the good/service, and the buyer is both satisfied with
the terms and is purchasing for their own interest as well, that is perhaps
capitalism working at its best.</p>
<p>Or is it? How cleanly does this model actually correspond with reality? To
critically evaluate the above claims, I am going to engage in a (meta-ish) case
study - I am going to start a free email newsletter.</p>
<p><a href="https://gallant.dev/posts/profit-from-interest/">Read more…</a> (5 min remaining to read)</p></div><p>As promised, here is the first followup to
<a href="https://gallant.dev/posts/profit-as-a-series-of-asymmetries">my consideration of profit as a series of asymmetries</a>.
The first ("best") reference point in our model is when transactions are
motivated by an imbalance of interest - not the percentage charged on a loan,
but the
<a href="https://www.websters1913.com/words/Interest">"excitement of feeling, whether pleasant or painful, accompanying special attention to some object."</a></p>
<p>I find it interesting that Webster's definition allows for both pleasant and
painful possibilities. But regardless of source, interest entails an agent
having an intrinsic preference or desire that may impact their behavior.</p>
<p>And so, if a monetary exchange occurs simply because the seller is personally
interested in providing the good/service, and the buyer is both satisfied with
the terms and is purchasing for their own interest as well, that is perhaps
capitalism working at its best.</p>
<p>Or is it? How cleanly does this model actually correspond with reality? To
critically evaluate the above claims, I am going to engage in a (meta-ish) case
study - I am going to start a free email newsletter.</p>
<!-- TEASER_END -->
<h3>Your ideas are intriguing to me and I wish to subscribe to your newsletter</h3>
<p><img alt="Woman using smartphone" src="https://gallant.dev/images/woman_using_smartphone.jpg"></p>
<p>Social media has made marketers of us all, but
<a href="https://www.everything2.com/title/Your+ideas+are+intriguing+to+me+and+I+wish+to+subscribe+to+your+newsletter">newsletters have been lampooned</a>
long before the first tweet. The idea that words you create deserve to be
serialized and shared, and via delivery thrust into the lives of others,
enables a particular flavor of hubris and self-aggrandizement.</p>
<p>Newsletters are not discussions - readers may occasionally "write in", but the
newsletter proprietor has editorial oversight and selects what they acknowledge
in their future work. Similarly, newsletters are generally not critically
reviewed or crafted works - they are a step above tweets, but are still meant
as a transient document and not a durable artifact of record.</p>
<p>At their worst, newsletters are a brand contrivance - a clever semi-classy way
to get some of your ideas into the heads of others. They're framed just enough
to exude authorial legitimacy, but kept simple enough for casual consumption.</p>
<h3>News<del>letter</del></h3>
<p>Drop some letters, and much of the above can be applied to swathes of the news
ecosystem (which is having its own
<a href="https://www.cjr.org/local_news/is-the-quest-for-profits-and-clicks-killing-local-news.php">reckoning with capitalism</a>).
Words are
broadcast from a pedestal, responses are filtered by the broadcasters
themselves, and content balances being legitimate and easy, or even
"<a href="https://www.buzzfeed.com/">fun</a>."</p>
<p>Of course, this doesn't really describe journalism - and nor does it describe
all newsletters. Both <em>can</em> have craft, and be a part of a larger discussion
that involves critical review, consideration, and iteration. These things
sound as worthy of capitalistic support as anything, and since newsletters
democratize the process by opening it up to anyone with a computer, they can
be particularly noble.</p>
<p>But what qualities actually make news(letters) good? A good place to start is
mitigating their weaknesses - peer review, sources, contrasting perspectives,
and expression of confidence (or lack thereof) as appropriate. Good writing
shares thoughts, in all their
<a href="https://gutenberg.org/files/2814/2814-h/2814-h.htm">unkempt and uncertain glory</a>
(after all, they reflect our experiences - and data).</p>
<h3>Learning by any other name</h3>
<p>That's starting to sound like the academic process, and I would suggest that is
no accident. The idealized form of "profit from interest" is arguably education
- learning and sharing knowledge, and truly creating mutually beneficial growth
as opposed to the zero sum trading that is much of our economy.</p>
<p>There is a long philosophical tradition
<a href="https://plato.stanford.edu/entries/wisdom/">describing and extolling wisdom</a>,
and plenty of
<a href="https://en.wikipedia.org/wiki/Wisdom#Religious_perspectives">complementary religious perspectives</a>.
Whether or not it is the "highest virtue", most folks who've thought about it
would agree that it's up there.</p>
<p>Of course, quibbles remain - enumerating "profit" monetarily as opposed to
holistically neglects both internalities (e.g. sense of self-worth) and
externalities (e.g. pollution, literal or metaphorical). Learning is hard, and
teaching doubly so - and even defining successful outcomes is subjective, much
less achieving them.</p>
<h3>So, does "profit from interest" hold up?</h3>
<p>In this first step on our capitalistic journey I've explored both pros and
cons and considered historical and psychological perspectives. This may leave
you with the impression that I am straddling a fence, avoiding hard problems
and simply waffling about with words.</p>
<p>However, I am not avoiding hard problems but instead hard statements - to
conclude something with generality is exceedingly challenging, as the
available signal does not rise above the noise except in particularly
<a href="https://en.wikipedia.org/wiki/Pure_mathematics">pure</a> problems. Society is
many things, but it is not pure.</p>
<p>And so I cannot say whether profit from interest is good or bad in all cases.
But I hold nonetheless that massaging novel and occasionally beautiful patterns
into our brain folds is valuable, and the main way we can really distinguish
ourselves. That we do so in a capitalistic system makes capitalism just a means
to an end, but at least in itself doesn't reflect poorly on it.</p>
<p>And so, though as any academic would I withold final judgment (pending more
data), I invite you to join me on this journey of mental growth and subscribe
to my newsletter:</p>
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<p>N.B., it's really just another way to "follow" - I won't be monetizing it with
exclusive content (unless it takes off unexpectedly 😀). So if you prefer your
feeds in <a href="https://gallant.dev/rss.xml">RSS</a> or <a href="https://gallant.dev/feed.atom">Atom</a> (or
<a href="https://twitter.com/GallantIdeas">@GallantIdeas on Twitter</a>) that's cool too.</p>
<p>And that caveat also adds a twist to my conclusion - doing things for interest
is all well and good, and making a buck from it here or there doesn't hurt. But
actually pinning your survival ("day job") on it is a different matter, and
usually requires both compromises and luck. To do it on your own terms requires
fame (an accumulation of past compromises and luck).</p>
<p>So I (and most of us) really only reap personal and
reputational benefits from these sorts of pursuits. If something "goes
viral" (is promoted by the right vertices in the social graph) it is possible
to pivot towards real profitability, but outside of that it is too much of a
grind and not dependable enough if you want stability in your life.</p>
<p>Ultimately interest-focused creative pursuits may get you "beer money", and
help you network and land a "day job", but it usually won't replace one. Merely
pursuing creative outlets like this is in fact a mark of luxury, as it means
you don't have to scramble all the time for the basics. Perhaps this would be
different in a world with a broader social safety net
("universal basic income") - or
<a href="https://en.wikipedia.org/wiki/Player_Piano_(novel)">perhaps not</a>.</p>
<p>Thank you for reading, and stay tuned for more considerations of capitalism
(and other things). The next reference point in our continuum is asymmetries of
effort ("I'll pay you $20 to help move my couch") - direct exchanges of value
and generally transparent/obvious work.</p>
<p>And of course, I welcome your thoughts and feedback, and will use my own
munificent editorial oversight to incorporate it into my future writing.</p>Profit as a Series of Asymmetrieshttps://gallant.dev/posts/profit-as-a-series-of-asymmetries/2021-04-19T17:29:17-07:002021-04-19T17:29:17-07:00Aaron Gallant<figure><img src="https://gallant.dev/images/coins_on_table.jpg"></figure> <div><p>Profit is inherently asymmetric - a resolution of an imbalance through
the exchange of <a href="http://rawilsonfans.org/raw-circuits/">"survival
tickets."</a> The source of this
asymmetry varies - heritage, effort, investment, resources, aptitude,
interest, and more. Whatever it is, it is enough that one party lacks
it, and is willing (or required) to pay another party that has it to
deal with the details instead.</p>
<p>When considered from this angle, a useful ethical slant appears. Profit
that emerges from asymmetry of what I'd loosely term "true utility"
(effort, real value, practice) is perhaps good, or at least as good as
capitalism gets. But profit that depends on asymmetric information
(opaque costs, bureaucratic rules, proprietary knowledge) is problematic
- specifically it leads to situations where the incentives of the
profiter and their client diverge dramatically.</p>
<p><a href="https://gallant.dev/posts/profit-as-a-series-of-asymmetries/">Read more…</a> (5 min remaining to read)</p></div><p>Profit is inherently asymmetric - a resolution of an imbalance through
the exchange of <a href="http://rawilsonfans.org/raw-circuits/">"survival
tickets."</a> The source of this
asymmetry varies - heritage, effort, investment, resources, aptitude,
interest, and more. Whatever it is, it is enough that one party lacks
it, and is willing (or required) to pay another party that has it to
deal with the details instead.</p>
<p>When considered from this angle, a useful ethical slant appears. Profit
that emerges from asymmetry of what I'd loosely term "true utility"
(effort, real value, practice) is perhaps good, or at least as good as
capitalism gets. But profit that depends on asymmetric information
(opaque costs, bureaucratic rules, proprietary knowledge) is problematic
- specifically it leads to situations where the incentives of the
profiter and their client diverge dramatically.</p>
<!-- TEASER_END -->
<h3>Modeling Capitalism as a Series of Asymmetries</h3>
<p>Capitalism is
<a href="https://sites.manchester.ac.uk/global-social-challenges/2017/05/08/are-capitalism-and-inequality-linked/">often identified</a>
as an engine of inequality, but the specific mechanism matters.</p>
<p>For our model, consider these reference points, from <strong>"Good"</strong> to <em>"Bad"</em>:
Interest > Effort > Practice > Aptitude > Investment > Ownership > Opportunity > Information.</p>
<p>Capitalistic imbalances can take many forms, and these imbalances lead
to different motivations. If the only reason for one party to choose to
do some task for another is their intrinsic interest in it (i.e. they
"want" to), that's about as good as it gets. From there, it can be
about effort, practice (essentially amortized effort), aptitude
(<a href="https://archive.org/details/talentisoverrate00colv_0">if there is such a thing</a>),
investment (past allocation of resources),
ownership (overall difference of resources), opportunity (the
intersection of ownership with time and place), and lastly information.</p>
<p>Many "capitalism is bad" allegories can be considered in terms
of information asymmetry. Fine print and unfair contracts, insider trading,
DRM and intellectual property, and inequity due to different educational
opportunities are all clearly instances of one party using information over
another, and not openly sharing it.</p>
<p>When a capitalist exchange hinges on direct effort ("I'll pay you $20
to help move my couch"), the value proposition is clear. This doesn't
make it inherently fair - but it does mean that the involved parties
have roughly equal understanding and capacity to determine the fairness (and
if it's unfair, to not do it or renegotiate).</p>
<p>Excepting wage slavery (which precludes renegotiation due to direct
survival pressure), "money for effort" is more or less capitalism
working as best it can (which again I'm not proclaiming as the peak of
ethics, but at least "not as bad" as other capitalist transactions).</p>
<h3>Aside #1 - It's only a model!</h3>
<p><img alt="Coins on table" src="https://gallant.dev/images/coins_on_table.jpg"></p>
<p>There is plenty of discussion to be had around what (if
anything) qualifies as "true utility", and how real
situations fit into this idealized spectrum. We can go even deeper -
perhaps there is no aptitude or intrinsic skill
("nature"), but only opportunity and learning ("nurture"), where
asymmetries of the latter are a bit harder to accept as an equitable
foundation for society.</p>
<p>We have all evolved from the greatest competitors
natural selection has to offer - our nature is to compete, and the variation
in outcomes isn't a consequence of the pieces but the board. Reducing that
board to a simple list of qualities fails to trace the history, but hopefully
it can provide a form of clarity. The important consequence of using a
simplifying model is that its conclusions must always be taken as non-absolute.</p>
<p>In other words, all this doesn't mean that every "information economy" effort
is inherently unethical. If the reason one party is willing to pay another
to deal with an information problem isn't about information
access but simply the (mental) effort or investment required, then it is
still similar to traditional effort-based exchanges.</p>
<h3>Aside #2 - Everything has its own "stack"</h3>
<p>People in tech frequently invoke the "stack" - this owes its etymology to
<a href="https://en.wikipedia.org/wiki/Reverse_Polish_notation">Reverse Polish notation</a>,
and more generally refers to a technique of layering and ordering abstractions
to engineer an efficient and functioning system.</p>
<p>But it is important to realize that every specialization has a stack. I'm
pretty good at debugging code, but it's far less obvious to me how my car
works or where my food comes from. Domain expertise is orthogonal to our model,
but the grand variety of domains is part of why information asymmetry is
important.</p>
<p>Information is, quite literally, how we attempt to <a href="https://en.wikipedia.org/wiki/Information_theory">describe and quantify
our understanding</a>. Like the
Force, it is all around us, not just in things with microchips but
<a href="https://en.wikipedia.org/wiki/Laplace%27s_demon">in every atom in the universe</a>.
No model will capture all that, so instead we try to understand the general
dynamics (almost a metamodel), and acknowledge that any specific application
will also depend on the specifics.</p>
<h3>Back to Business</h3>
<p>This is roughly where I should arrive at a grand conclusion, and give it a hook
of contemporary or practical relevance. Ideally I even relate it to a personal
venture, one that may benefit from the extra attention a post may bring to it.</p>
<p>But this topic is larger than any one conclusion or venture, and does not
readily admit crisp "takeaways." Despite its faults, a truly robust and general
condemndation of capitalism is nontrivial - considered historically, the free
market has coincided with a general increase in quality of life. Of course,
technology is also a factor - but some might argue that its very advancement is
aided by market pressure and competition. Yet only a dogmatist would insist
that capitalism is fully without flaw, with
<a href="https://www.oxfam.org/en/press-releases/worlds-billionaires-have-more-wealth-46-billion-people">increasing inequality</a>
and
<a href="https://www.bloomberg.com/news/articles/2021-04-09/when-will-world-be-fully-vaccinated-pace-is-2-400-faster-in-wealthy-countries">stark differences in personal welfare</a>.</p>
<p>And so, the venture I am undertaking (and ironically advertising) is this
consideration itself. My goal is not to condemn capitalism (or anything else),
but to understand it and where it is in the river of history. Capitalism is
essentially the latest and greatest instance of competition and conflict,
and both came from something and will give way to something else.</p>
<p>Can we harness the innovation that competition can bring, while
attenuating its costs and the harm it inflicts on individuals? Our system is
already an improvement in those regards, relative to the direct violence of our
ancestors. But, like I hope many of you, I am not willing to accept "better
than before" as good enough - if those in the past did, we'd never have gotten
where we are.</p>
<p>In other words - consider this the start of an informal "series", with more
posts coming in future. My goal is to write a more detailed consideration of
each of the reference points I suggested along the continuum of asymmetries,
from interest through information. I'll examine each critically, and consider
both their origins and potential futures as society progresses.</p>
<p>Thanks for reading - I hope you found elements of interest, and that you will
return for future inquiry.</p>A Selfishness I Wish To Sharehttps://gallant.dev/posts/a-selfishness-i-wish-to-share/2020-12-31T22:08:39-07:002020-12-31T22:08:39-07:00Aaron Gallant<div><p>Why do I make? I write, and publish online. My creations are accessible
freely and globally, with a potential reach unprecedented for most of
human history. You are reading my words right now.</p>
<p>But, you excepted, my \"impact\" is not that great. Everyone has a
megaphone the same as mine, and my creations are stubbornly eccentric
(this does not make them original or worthwhile, but is true
nonetheless). I eschew marketing - you (being here) probably know that,
but it is worth emphasis.</p>
<p>The need for artists to be marketers is fairly new - for most of
history, art did not need mass appeal to succeed, and indeed most of
what has lasted is art that pleased the elite. Popular works spread
organically and were relegated to the world of \"folk\", and generally
not recorded as fastidiously. We are left only with \"high art\"
impressions of it, a subset of its original creativity.</p>
<p>Past art depended on the sponsorship of elites - modern creators have
more options for monetization. But as with most things, these reference
points imply a continuum of possibilities, not discrete outcomes. To
answer why I make, I will consider the range of reasons why people have
made.</p>
<p><a href="https://gallant.dev/posts/a-selfishness-i-wish-to-share/">Read more…</a> (6 min remaining to read)</p></div><p>Why do I make? I write, and publish online. My creations are accessible
freely and globally, with a potential reach unprecedented for most of
human history. You are reading my words right now.</p>
<p>But, you excepted, my \"impact\" is not that great. Everyone has a
megaphone the same as mine, and my creations are stubbornly eccentric
(this does not make them original or worthwhile, but is true
nonetheless). I eschew marketing - you (being here) probably know that,
but it is worth emphasis.</p>
<p>The need for artists to be marketers is fairly new - for most of
history, art did not need mass appeal to succeed, and indeed most of
what has lasted is art that pleased the elite. Popular works spread
organically and were relegated to the world of \"folk\", and generally
not recorded as fastidiously. We are left only with \"high art\"
impressions of it, a subset of its original creativity.</p>
<p>Past art depended on the sponsorship of elites - modern creators have
more options for monetization. But as with most things, these reference
points imply a continuum of possibilities, not discrete outcomes. To
answer why I make, I will consider the range of reasons why people have
made.</p>
<!-- TEASER_END -->
<h2>Art and Power</h2>
<p>Traditionally, art has been supported by those with wealth and authority
- the church was an early sponsor of much creativity, with nobility and
independent wealth slowly supplanting it over past centuries. This
aligns with a more general, gradual, decentralization of affluence - a
process that is (hopefully) nowhere near complete, but one where we can
already see fairly radical shifts over the centuries.</p>
<p>The artist needs this support, as their direct product is generally not
of practical (biological survival-aiding) utility. To be able to devote
themselves to their art, they require sponsorship from an entity with
resources to spare. The folks with that luxury are often educated, and
playing a very different sort of game - one where signals and status are
the true currency. They also carry their own beliefs, as we all do, and
in most cases prefer reinforcement to challenge.</p>
<p>Artists, supposedly, don\'t really care for the games of the wealthy.
They are expressing an inner voice, creating for an intrinsic reward,
and only seeking sponsorship out of necessity. And so their pacts with
patrons are uneasy, a balance of artistic vision and social posturing,
often with a side of politics.</p>
<blockquote>
<p>\"To make his fortune I wish he had but half his talent and twice as
much shrewdness, and then I should not worry about him.\" -- From a
letter by Friedrich Melchior von Grimm, a Paris-based sponsor of a
then-22-year-old Mozart, to his father Leopold Mozart (from <a href="https://books.google.com/books?id=_3e2lx-UsiAC&q=%22to+make+his+fortune+I+wish+he+had+but+half+his+talent+and+twice+as+much+shrewdness%2C+and+then+I+should+not+worry+about+him%22#v=snippet&q=%22to%20make%20his%20fortune%20I%20wish%20he%20had%20but%20half%20his%20talent%20and%20twice%20as%20much%20shrewdness%2C%20and%20then%20I%20should%20not%20worry%20about%20him%22&f=false">Mozart\'s
Letters, Mozart\'s
Life</a>)</p>
</blockquote>
<p>For most of history, artists needed to play this game. The
centralization of wealth meant that creativity had to conform, or at
least not be so obviously challenging as to alienate its sponsor. The
creations that survive, the great works of the past, are those that both
pleased the wealthy and inspired the audience (who were perhaps not as
rich as the primary patron, but likely well-to-do and educated).</p>
<p>As wealth decentralized, the number of possible patrons increased, until
eventually it became feasible to support art entrepreneurially. After
Mozart struggled with satisfying the nobility, Beethoven took advantage
of the <a href="https://internet.beethoven.de/en/exhibition/beethovens-capital/id9.html">burgeoning music publishing
industry</a>
to establish a largely independent middle-class lifestyle. Though when
publishing he did not need to please any particular patron, there was
still a market to consider - middle class households could afford pianos
and possibly string quartets, not private orchestras.</p>
<p>Many artists after Beethoven continued the transition from patrons to
the market, with technology enabling more products (recorded audio in
its various forms, as well as branded merchandise). Has technology and
capitalism liberated artists from their past sovereigns?</p>
<h2>Art and Markets</h2>
<p>Simply having a product is not enough - most well-known contemporary
creators sell. Depending on their scale, they refollow, periodically
re-engage, or otherwise reward those who consume them. This mutualistic
incentivization of mental consumption is not unlike the relationship
between artists and patrons of old, but with a significantly different
discovery and scaling process.</p>
<p>At large scale, the balance of power is almost reversed - \"rock star\"
level success gives an artist power, and often notoriety. They wouldn\'t
have it without the support of their fans, but they have so <strong>many</strong>
fans that considered individually they are insignificant. The artist
becomes a brand, an institution - often one that <a href="https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act">outlives their own
biological
existence</a>.</p>
<p>Does this power give famous artists independence and true creative
freedom? The only general answer is \"it depends\", but it is clearly
not a guarantee. Some level of wealth and material comfort is necessary
to simply have the time to create, to not be constantly fighting for
subsistence. Celebrity is clearly well above that threshold, but comes
with its own liabilities - being a brand in our modern capitalism is
immensely complicated, and requires lawyers, social media marketers,
personal security, and a variety of other assistants and gurus.</p>
<p>Depending on others doesn\'t make somebody \"not a real artist\" - but
it does mean that their product is more complicated, and is being shaped
by forces with varying goals. Are Marvel superhero movies \"art\"? They
are certainly entertaining, but they are also very \"safe\" - with big
production cost comes conservative business practices such as
<a href="https://www.cnet.com/features/marvel-is-censoring-films-for-china-and-you-probably-didnt-even-notice/">censorship</a>
and <a href="https://youtu.be/7vfqkvwW2fs">formulaic music</a>. Stan Lee got to do
cameos, but there was clearly no
<a href="https://en.wikipedia.org/wiki/Auteur">auteur</a> - these are movies by
committee.</p>
<p>In short, stars inevitably lose control of their creation. This is also
true historically, if for no other reason than mortality - <a href="https://www.imdb.com/title/tt0138097/">Shakespeare
in Love</a> was clearly not written
by its namesake, and is instead an \"inspired-by\" creation set in a
universe that has continued to live after its creator passed. In modern
society, this typically happens even while the creator is still with us
- scale, capitalism, and technology conspire to depose the author from
their own work. They are usually still in a good place subsistence-wise,
but instead of artistic independence they become dependent on how
society interprets and persists the universe they birthed.</p>
<p>Of course, most creators don\'t have these problems. They scramble for
every potential follower - technology has given them reach, but <a href="https://en.wikipedia.org/wiki/Red_Queen_hypothesis">it has
done the same for everyone else
too</a>. And so they
face a choice - fully invest in their art, and likely require the
charity of others, or treat it as a hobby and obey the dictum \"don\'t
quit your day job.\"</p>
<h2>Art and Balance</h2>
<p>Hobbyists necessarily lack time for the same level of mastery as those
with focus, and stars are ultimately authorially dissolved by their own
success. What remains is the oft-cited situation of the independent
\"starving\" artist - an idealist and nonconformist, at war with the
world, wielding weapons of ideas and aesthetics. Are these the <a href="https://en.wikipedia.org/wiki/No_true_Scotsman">only
true artists</a>?</p>
<p>Again, the only general answer is \"it depends\" - hobbyists and stars
face challenges in creating art, but so do their starving brethren.
Besides the challenge of basic subsistence, being an idealist does not
alone make one independent. Everyone is beholden to their own impulses
and insecurities - a bohemian creator is still part of a subculture, and
can still end up conforming and failing at original creation. Their
self-image, and how they imagine they are perceived by others, shapes
their choices - this doesn\'t mean they aren\'t making art, but it does
mean that being independent is quixotic.</p>
<p>All attempts at creation are hard - that is what makes them worthwhile.
The nature of the challenge varies - hobbyists need to be clever and
efficient in their use of time to deliver quality, stars need to think
about how to place the system they are making in the larger world, and
independent artists need to maintain an open mind to both the mainstream
and the mediocre. Going to war with the world yields nothing - it\'s
bigger than you, and is going to be here after you too.</p>
<p>For any path, the key is mindfulness and balance. Going back to the
opening question, I make because I wish to find my own balance. The
above categorizations are a simplification, a mental model - though I
(and likely most of you) fit most neatly into the \"hobbyist\" bucket.
I\'m not expecting to achieve material success through art, but neither
am I quitting my day job.</p>
<p>I create because I wish to give form to my thoughts. I share because I
am selfish - I have made things of my self, and want those things to
have some life in others. My aspirational balance is one of sufficiency
- to have enough, and to share the rest.</p>