patrick.net

Cato Institute is my hero.

they can also stop taking payouts from major software interests to import cheap foreign labor.

I believe in a global market. Cheap foreign labor is not necessarily a bad thing. I really can use a cheap maid.

Randy H says:
I am a believer in the Solow theory, which holds that long-run growth is defined solely by productivity increases.

This emphasizes another social casualy of easy credit. Let me explain:

Technology advances have increased productivity dramatically. For example, one man with a tractor can do the work of many men with a mule drawn plow. Similar productivity increases in other pursuits mean that it takes fewer and fewer people to generate the same amount of wealth. Therefore, if consumption stayed constant per worker, but output per worker doubled, we would only need half the workers to supply the demand. Rather than have 50% unemployment, I believe we would have handled the high productivuty issue by shortening the work week. If people were content to drive "modest" cars and live in "modest" houses. I believe we would have a 20 hour work week by now. Or even a trend back to where only one spouse works.

I believe the productivity driven evolution to the shorter work week was killed by debt. Easy credit drove up the prices of even "modest" cars and homes, plus allowed people to overconsume to the point of 7 year car loans and NINJA/ARM/40yr home loans. People in debt can't cut back on work hours, they need the extra money to service the debts.

If not for debt pushing up prices and encouraging overconsumption, productivity increases would have us on well on our way to the 20-30 hour work week. We would then have the corresponding benefits of more time for family, friends, and volunteer work. Instead, I see news articles about people working 3 jobs to afford the lifestyle they hocked their way into.

I believe the productivity driven evolution to the shorter work week was killed by debt.

Yes, I agree that debt is a factor, but I think it's pretty certain that even without debt, workers will never be allowed to work substantially less. The finish line will be moved further away as soon as too many people get near it. The rich require a good supply of the poor to do their work.

Even 100 years ago, people were also noticing that increases in productivity did not translate into less work for workers. From Henry George's "Progress and Poverty": the owners of land and capital will increase their demands on workers (rent and interest) to take most of the productivity for themselves no matter how much the workers produce.

Henry's solution was a single tax on land-rent, but leaving all income from capital (buildings rather than the land) untaxed. Supposedly that fixes things because land values fall, giving room for everyone to accumulate capital.

Even 100 years ago, people were also noticing that increases in productivity did not translate into less work for workers

But notice the work week shortened from 60 hrs/wk to 40hrs/wk. I believe the trend would have continued even more.

Didn't land prices fall in the US and Great Britain from 1850 on as productivity increased? Also, the amount of "rent" and "interest" paid today is not based on an employer in the company store model you seem to be alluding to, but by what one chooses to consume.

I'm surprised the RE industry isn't putting out more propaganda about how now is a "good time to buy." I remember all the RE ads during the run-up but the RE industry is rather quiet now and I think they would be jumping all over people trying to create some urgency to buy "before prices go back up." It wouldn't be hard to spin it so the sheeple would think, oh, I better buy now before this turns....

Maybe public sentiment is just too far in the other direction to make it work. But I'm still surprised I'm not seeing a stronger effort.

Someday, when we mine asteroids for metals, that will increase growth. And then, finally, no one will be able to argue for the inane “gold standard” anymore because gold will be infinitely available, and terribly inflationary.

At that point we could switch to the Iridium standard. Oh, wait, that's fairly common in asteroids too. How about Unobtanium?

I think I agree with Randy, if you think innovation and organization is what drives increases in standards of living.
I'm not going to disagree with you guys, although I will add that mankind's forward progress seems to have also been aided by the abilitiy to exploit increasingly concentrated supplies of energy. We are going to face some challenges as we hit the downslope of the EROEI (energy returned on energy invested) curve. Extrasomatic innovations don't power themselves (at least not yet :-) ).

Headset said: If not for debt pushing up prices and encouraging overconsumption, productivity increases would have us on well on our way to the 20-30 hour work week.

In theory this would work. But the problem in the current system is that the bulk of productivity increase is siphoned off by a small number of people - leaving only a small portion to trickle down to the rank-and-file.

Debt (fueled by overconsumption) and the resulting pressure of debt-service motivates worker-bees to compete more fiercely for work, rather than demand more leisure - this in turn reinforces the framework in which productivity increases get siphoned off by those who are in a position to do so. One of them positive-feedback cycles.

I remember my textbooks in junior high back in the mid-60s had discussions about how we were only going to be working 1-2 days per week when we got older, and how the real growth industries would be "leisure time" oriented. The biggest social problems were supposed to be caused by boredom. Somehow this certainly didn't happen.

I got out of debt and retired early. So I guess I'm working a zero hour week now.

if you think innovation and organization is what drives increases in standards of living

Innovation and organization drive expectations.

How about Unobtanium?

The price was infinite last time I check. Even if its price drop by half, it will still be infinite. See, you can't loose buying Unobtanium. :)

DOW 13,000 anyone?

I remember my textbooks in junior high back in the mid-60s had discussions about how we were only going to be working 1-2 days per week when we got older, and how the real growth industries would be “leisure time” oriented.

Where's my flying car, moon condo and anti-grav suit?

SP says

Debt (fueled by overconsumption) and the resulting pressure of debt-service motivates worker-bees to compete more fiercely for work, rather than demand more leisure - this in turn reinforces the framework in which productivity increases get siphoned off by those who are in a position to do so. One of them positive-feedback cycles.

Kill the easy access to debt and you break that positive feedback cycle. I also believe you have it backward - debt is not fuled by overconsumption, it is overconsumption that is fueled by debt.

Wow, Carol Llyod's Surreal Estate column hits one out of the park this week. She looks at the sales price of similar models in a KB Homes development in Antioch. Coincidentally, many homes were bought by specUvestors. It is not pretty.
What's the bottom line? Since their high of $720,000 less than a year and a half ago, these particular models of Antioch homes have fallen a whopping 55 percent. I will note, though, that you need AC to survive in Antioch.

Antioch is one of those towns I drove by last fall where new SFHs are 3-story standard packed on a postage-sized lot (2000 sft). It was like being in an earlier version of SIMCity, when you just twisted certain parameters so residential construction craze started. But the game rendering was so bad that the exterior looked flimsy and misaligned and all the houses looked pathetically the same, that was Antioch.

It is such a depressing place that I think we should just delist it from Bay Area entirely.

Yes, I remember Antioch being extremely hot even in the fall, perhaps due to the complete lack of vegetation that could be providing shades.

http://www.exuberance.com/photos/panos/Sprawl-Antioch-CA.html

This is the high-end communities in Antioch taken in 2004. What I saw in 2007 was far more disgusting, rows and rows of 3-story (or 4?) "SFHs" at different stages of finish packed airtight extending all the way to as far as your eyes could see.

That's actually a very flattering pic of Antioch. It's much worse in real life and not because of the heat. Most of West LA is just as hot but not as hideous.

HARM Says:
April 18th, 2008 at 9:58 am

"Where’s my flying car, moon condo and anti-grav suit?"

Still a little early for those but they are coming in our lifetimes. They don't even sound far fetched anymore.

The EROEI point is a perfect way to describe long-run technological productivity. It ties into why we don't have 7-hour work weeks. Because for every revolutionary introduction of technology there is a long downward curve of decreasing returns on increasingly efficient use of that technology. Moore's law is another example. It takes more and more "effort" to squeeze that last marginal unit of utility out of the technology.

But, there's also a wild search for the next revolution occurring at the same time, powered by the utility generated by the accumulated previous revolutions. Genetics for example could not have exploded into practical application without the existence of powerful computers. But no one creating the computer processing revolution in the 50s-60s could have imagined that application of what they were trying to create.

Right now there is a wild search for energy technology. There are as many ideas, theories and lunacy as there are entrepreneurs, scientists and crackpots who listen to late nite AM radio. But out of that will, hopefully, come a real discovery that propels us to the next rung on the ladder.

For every new leap we create even that much more work which needs to be done, because each leap is progressively harder, requires more energy, and is more fragile.

Headset said:
debt is not fuled by overconsumption, it is overconsumption that is fueled by debt.

You are right. It was poorly worded. I meant the debt is fueled by a desire to ape the conspicuous consumption of the rich.

Patrick,
Looks like this thread is very timely. Here's a bad new/good news story from the SF Chronicle.
But there is a silver lining to the tumbling values: More people can afford a home in the Bay Area.

"We got married in 2005, and it was time to buy a house," Gabrielle Bussey said. "At that point the median price was around $500,000 and definitely above what we could afford. A few months later it went to $600,000 and then (soon) I read that it was $700,000. I thought, this is grotesque, I resent it, I wouldn't pay that much money even if I could afford it."

SQT Says:
I’m surprised the RE industry isn’t putting out more propaganda about how now is a “good time to buy.”

I still hear this line from RE shills Realtwhores - but even they seem slightly nervous about saying something that is so easily refutable.

For every new leap we create even that much more work which needs to be done, because each leap is progressively harder, requires more energy, and is more fragile.

While we're probably (not?) disagreeing, I tend to frame the discussion differently. I would argue that up until now we have been riding the EROEI curve (exploiting increasingly concentrated energy supplies) supplemented by technological innovation to live more productive lives. The energy part of that equation is about to go south. We will have to go from using historically accumulated energy flows (ie - fossil fuels) to a sustainable option of harnessing existing energy flows (solar, wind, geothermal, biological...). The next leap had better require less energy, not more; we simply don't have it (give or take a hundred years). Efficiency is/will be the name of the game.

"Where’s my flying car, moon condo and anti-grav suit?

or...

"Where's my tax cuts and rising property values and cheap gas and upwardly-progressive, consumerist lifestlye?!!"

What a letdown; someone must pay dammit!

Realtwhores don't just hope for higher prices, they're actually praying for them...

http://www.nwfdailynews.com/article/6725

The accelerating pace of technological progress and change is frightening to some, who think we are inevitably heading towards achievement of self evolving artificial intelligence.

The singularity is coming. Everything then changes. It's a very interesting concept.

The more things change, the more they remain the same. Technology cannot improve the hierarchical relationship among people. Those who are hopeful for a better future through advanced technology will surely be disappointed.

Star Trek was a TV show.

No, but Cthulhu is.

Cthulhu?

You mean tako?

Guess who won the BA Sales Volume Decline Derby last month? According to DQ, Marin barely edged out Alameda with a 48.8% decline in volume. At this rate we may yet see 50% declines next month. Randy, don't give up on the hot tub just yet. I've laminated my Web 2.0 RoR social networking pitch and it just wouldn't have the same impact if I gave it in a pool with all the kids splashing around.

The singularity is coming...

...called the credit implosion

EBGuy

You have my number. Damn. We just passed up on a Novato new constr. w/ pool.

Entering another year lease (with cancelation option, of course; I can dream).

AC is essential in Novato. :)

For anyone not aware of singularity concept.

Earth's electronic systems have been self-organizing, in a symbiotic relationship with human society, at rates approaching the speed of light since Faraday's time. Grossly, this generalized rate of evolutionary development is at least seven million times faster than the speed of thought in biological systems (the speed of an action potential and synaptic diffusion in a human brain).

From http://www.accelerationwatch.com

NVR,

Ugh, just looking at that website hurts my eyes.

And for once I'll have to disagree with you. The futurists that think that self-evolving artificial intelligence is on the horizon are way off base. Just look at microsoft. They can't evolve Windows into something halfway usable in 20 years, even with the help of lots of human intervention.

NVR,

I also have some trouble with people claiming a special meaning for the word "singularity", completely ignoring all the existing usages of the word.

I realize they mean "technology singularity", but they should say so. Otherwise it sounds just like some kooky cult. Which may not be to far off the mark :)

Since I'm late to the party, let me see what I can say about what
started out as the "debt" subthread.

It started with comments about debt explosion, consumption explosion,
followed by observations about productivity increases, Headset on
debt/inflation, Patrick talking about how workers will never be allowed
to work substantially less, Solow theory from Randy H, Peter P on human
nature , somebody said that the fruit of the productivity increases are
largely accumulated by the ruling classes, and so on, EBGuy observed how technology really is about using more energy. Those were some of the main points, I think.

Here's my take:

Productivity is not only a function of technology and organization, but
also very strongly a function of the "state" of world society in the
sense of control system theory:

The state of the society consist of many elements such as infrastructure
of all kinds, population, properties of the population such as
knowledge, education, state of satisfaction, free time, hunger,
organization, what have you.

There is any number of state variables that affect the evolution of
the system. Along with the state variables there are fundamental
parameters such as physical constants, the distance of earth from the
sun (affects incoming energy levels), and so on.

Both physical/pshycological state and physical parameters play into
"productivity", which is the output that feeds back and changes (part
of) the state again.

The human aspect of the feedback consists of all the individual
objective functions that people are trying to optimize (or think they
are).

Where this will all end is anyones guess.

Keep in mind that patrick.net is also part of the system. The objective
function of patrick.net is to drive down the cost of housing and to
reward those who refused to participate in the "productivity" of getting
something for nothing.

I would argue that enabling platforms/technologies/groups/organizations often do not have an objective function, per se. Or, if they do, that objective function is self-altering over time, non-linear, and lacks clearly objective maxima (minima). Not that there aren't objective functions; clearly there are. But I believe that notion breaks down beyond a relatively simple and small unit. Once you start looking at something like this blog there is no single function. It just is, until such time as it ceases to be.

I also agree that "technological singularity" is further away in terms of time than those guys linked above suggest. Just like Bill Joy's "grey goo". Sure, it's a concern. But not for a while. Not for a long while.

I'm partial to the Kardashev scale of ranking, which describes my views towards advancement and productivity. The constraining factor for all civilizations is energy in its availability and usage. Of course state of civilization and all those other things are relevant, but there is no single, objective "best" state which enables advancement. Energy is the only objectifiable constraint.

We surely need an objective function to train a neural net. ;)