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naraburns  nihil supernum  1yr ago (text post)   29310 thread views

Culture War Roundup for the week of December 12, 2022

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I think the realistic option is some flavor of (3). We already see this in the real world.

Consider an oil well in Iraq or Sudan, protected by the US military or PMCs, primarily constructed from parts designed and built in Texas or Germany and exporting oil to global markets. The local people have essentially no economic value to the people operating this well. Mostly they don't interact, unless someone on the oil well wants to try Sudanese food.

This is economically pretty equivalent to the scenario where 1% of people generate 99% of production that you've described.

Wouldn't the huge collapse in aggregate demand caused by the withdrawal of billions of people from the market sink a lot of those rich people?

No. I think you don't understand the role of aggregate demand. Here's the classical Keynesian story:

  1. Exogenous shock brings real productivity below real wages.

  2. Workers refuse to take a pay cut due to nominal wage stickiness. Net result is workers who could be productive stop working and total output drops.

  3. Raise AD to produce inflation, thereby tricking these workers into taking a (real) pay cut.

You've already assumed these workers cannot be productive which invalidates step 2 of Keynesian economics. There is no output drop. Their real productivity is zero, therefore there is no possible amount of inflation which can reduce their real wages low enough to put them back to work.

(There are other flavors of Keynesian economics which use other forms of nominal rigidity, but I can't see how any of them are applicable. E.g. here's a very plausible one: bank lends you money to buy some CRE but insists on you maintaining a certain LTV. If you lease it out at a lower rent, LTV necessarily goes up. If it goes unoccupied, you can plausibly delay the assessment that would result in triggering your LTV covenant and having to pony up cash to the bank. Hence many commercial landlords will let buildings go unoccupied.)

I think one of the major differences between Sudan and the USA in this scenario is that very few Americans are subsistence farmers who can take care of themselves, assuming they’re left alone enough. They have to be provided for by someone either in exchange for money or due to moral obligation.

Why can't the non-wealthy Americans just maintain an economy similar to the current one, while the tiny number of wealthy people live on their estates with armies of flying robot butlers and engage in no trade?

Two reasons:

  1. Usage of finite resources. Farmland, minerals, etc. Sheer space - being able to look out of the window and see nothing you don't own appeals to people. I'm reminded of Isaac Asimov's Solaria, a planet where people have lived on vast estates for so long that physically perceiving or interacting with another person repulses them.

  2. I think people like controlling other people. They want to make sure everyone thinks and does Good things, and refrains from Bad things, regardless of whether this actually affects their own interests.

At this point we're talking about a breakaway civilization and the wealthy don't need most of those resources.

Jeff Bezos current plan for getting resources is the following:

  1. Deliver goods and services to hundreds of millions of people.

  2. Those people provide him some of their productive output.

  3. The amount in (2) exceeds (1) by a marginal amount, which Bezos keeps.

The flip side of (3) is that of the resources Bezos controls today, the vast majority are devoted to creating value for the world rather than himself.

However, in this hypothetical the productive output of (2) is negligible. Bezos doesn't need to trade with the world anymore, he can just make whatever he wants with his own robots factorio style. He has no need for the vast resources he previously controlled in order to serve the world - just whatever he and his buddies need.

Sure, but my point is that ‘need’ and ‘want’ are two very different beasts and ‘want’ is capable of expanding pretty much indefinitely.

Or to put it another way, in your scenario it’s Bezos and his buddies who decide what they need, not the breakaway group, and I bet they’re going to disagree.

I don't think we're disagreeing strongly. In my comment, Bezos is the breakaway civilization.

But I think real world examples of groups with massively disparate technology levels are illustrative. For the most part, Exxon does not steal subsistence farmland unless there's oil literally underneath it. Modern industrialized humans generally don't seek out resources useful to monkeys just for the heck of stealing them.

In fact, the general trend as tech levels increase is for humans to use land more intensely - modern cities as a real example, arcologies surrounded by forest as the futuristic example. The primary countervailing factor in the west (but not the east!) has been antisocial behavior on the part of mainstream political actors - specifically NIMBYism and a refusal to provide effective policing that induces people to spread out and avoid destructive people. Neither of those would be much of a problem for overlord bezos.

But I think real world examples of groups with massively disparate technology levels are illustrative. For the most part, Exxon does not steal subsistence farmland unless there's oil literally underneath it. Modern industrialized humans generally don't seek out resources useful to monkeys just for the heck of stealing them.

That’s fair, I hadn’t thought about it like that. Big aristocratic estates have historically been a thing - maybe our conception of what’s valuable changed, or the social acceptability of chasing it to the last drop. I’ll have to think about it.

Growing potatoes really isn't that difficult, however, they won't be allowed to do so.

Tractors and synthetic fertilizers makes it pretty easy now, but without those growing potatoes is pretty difficult. You don't average 8 kids per woman and zero population growth at the same time if agriculture is easy. Just take away the oil and Malthus can finally stop spinning in his grave.

We'd still have brown coal. You can run cars on coke, no problem if you want.

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