The monetary mentality strikes again!

They say I'm caricaturing the view of monetary economists to imply that they just want to get people to spend, spend, spend, whether or not that spending is actually accomplishing anything of value, that this nominal GDP has become an end in itself, completely decoupled from whether it actually accomplishes any good by what we really look for in "the economy".

But then along comes famous economist Alan S. Blinder to prove my caricature right ... again:

So the third easing option is to cut the interest rate on reserves in order to induce bankers to disgorge some of them. ... How about minus 25 basis points? ...

Charging 25 basis points for storage should get banks sending money elsewhere. The question is where. ...

... suppose some fraction of the $1 trillion in excess reserves was to find its way into lending. Even if it's only 10%, that would boost bank lending by 3%-4%. Better than nothing.

There, again, you see the mentality: get the money spent. Out there. Somewhere. Anywhere. Doesn't matter if it's destructive, shortsighted loans. Doesn't matter if it just jumpstarts projects that have to unwind and liquidate in a year. Just spend money and we'll all be fine!!!

UPDATE: After posting this, monetary stimulus ringleader Scott Sumner actually endorsed the passage. Yep, get that money lent lent lent! We'll worry if the loans actually went to genuine economic productivity ... um, later.

The Onion sets Time Magazine straight

Oh ... this is epic. Just epic. The Onion says what's been on my mind for years: Time is written like it's for children, dumbing everything down and writing in such simplistic terms that aren't conducive to critical thinking.

Likewise, despite all the criticism the blogosphere gets for being superficial, I've long held that one day of browsing blogs gives me more intellectual stimulation than I've gotten from a lifetime of reading print media like Time. And I used to joke that the average poster on a discussion site communicates better than Time's writers.

Average commenter: "Two plus three equals five."

Time article: "So imagine that you've got a pair of whiz-bang new gadgets, and your friend has stepped up with three of her own. Well, using an advanced mathematical procedure called adding, you can instantly figger how many you've got in total, say Profession David Livinsky of MIT. The result in this case? Cinco."

But enough of that -- just watch the video. They've nailed everything there is to mock about Time.

Election humor

In case you didn't know, Alvin Green won the Democratic primary in South Carolina, despite being unknown and not running much of a compaign. (My earlier comments on the strange reaction this has gotten.)

Well, thanks to this post from Bob Murphy, I found some clever videos someone made about Greene's campaign. The dialogue is done with a speech synthesizer, but that somehow just makes it come off as being even funnier!

Like in this one:

I just voted for the first guy on the ballot. [Greene's name was first on the primary ballot, which many attributed his victory to. --SB] I used to vote for the second guy on the ballot, but that didn't work out. Now, I only vote for the first guy on the ballot.

Or this one:

No, Greene, we can't spare you for Iraq. We need you to guard this table. If you were not here to guard the table, then who would?

(Quotes from memory.)

I'm surprised they didn't get more views. These had me laughing harder than I have in a while! Synthesizers sure know their deadpan...

Intellectual Property's Ungrateful Hitchhikers

I'm going to discuss an ethical and decision-theoretic intuition that underpins my support for intellectual property rights, and which seems to be absent, or unintuitive, among anti-IP libertarians. (See the discussion linked in yesterday's post for lots of good examples.)

But first let's consider a puzzle in decision theory. This one is known as Parfit's Hitchhiker and, as best I can tell, comes from Derek Parfit's book Reasons and Persons, though the term "hitchhiker" didn't come up in a search of the book.

It goes like this (well, my version does anyway): Assume you're lost in the desert, with nothing of value on you. You're approached by a superpowerful, superintelligent being we'll call Omega. It is willing to take you back to civilization and stabilize you -- but only if you will withdraw $5 from your bank account and give it to Omega once that's over with. (Yes, such a being might have reason to do this.) It has no enforcement mechanism for if you don't pay.

But here's the catch: Omega can scan you in detail and find out if you're really intending to give it the $5 when you're safe, rather than -- I don't know -- reasoning that, "Hey, I'm already safe, I've already got what I need and all, and you know, this Omega thing is powerful enough anyway, I think I'll just keep the $5." And if it finds that you wouldn't give it the money upon reaching safety (i.e. you don't have a decision theory that outputs "pay $5 to Omega" given that you are safe), then it just won't take you back and you can die in the desert.

At this point, a lot of you might be recoiling in horror: "What? Keep a measly five dollars when this thing saved my life? Are you ****in' nuts?" Yeah -- you're the people with the intuition I was referring to at the beginning -- the one that I have, and the anti-IP libertarians don't seem to. More about that in a minute.

Those of you who didn't recoil in horror may be thinking something like, "Whoa whoa whoa, I don't like dying. See, I would just make a contract -- or heck, even a simple promise -- that I will give Omega the $5. Since I feel honor-bound to abide by my promises, of course I would pay, and wouldn't have such diseased thoughts" as I referred to above. But I didn't make it that easy: note that Omega doesn't ask you anything and can't even receive your messages. Its decision is based entirely on what you would do, given that you know the details of the situation.

Here's the neat thing to notice: you will never find yourself in a position to be deciding whether to take that final step and give the Omega-like being $5 unless you adhere to a decision theory (or "ethic", "morals", etc.) that leads you to do things like "give Omega $5 for rescuing you at least in those cases where it rescued you conditional on expecting you to give it that $5" even when you already know what the Omega-like being has decided, and that decision is irreversible.

(I know, I know, I'm doubling up on the italics. Bear with me here.)

Conversely, all of the beings who come out alive have a decision theory (or ethic, etc.) which regards it as an optimal action (or an "action they should do", etc.) to pay the $5. Omega's already selected for them!

Now at this point, those of you who don't have the recoiling intuition I referred to, or are still worried I'll derive implications from it you don't like, may insist that this is a contrived scenario, with no application to real world -- you can't make your decisions based on what capricious, weird, superpowerful agents will do, so why change your decision theory on that reasoning?

And there is something to that belief: You don't want to become a "person who always jumps off the nearest cliff" just because there's some rare instance where it's a good idea.

But that's not what's going on here, is it? Omega makes its decision based upon what you would do, irrespective of what decision process led you to do it. So for purposes of this scenario, it simply doesn't matter whether you decide to pay that $5 because you:

- feel honor-bound to do so;
- feel so grateful to Omega that you think it deserves what it wanted from you;
- believe you would be punished with eternal hellfire if you didn't, and dislike hellfire;
- like to transfer money to Omega-like beings, just for the heck of it;
- or for any other reason.

So, then, is it normal for the world to decide how it treats you based on (a somewhat reliable assessment of) "what you would do"? Yes, it is, once you realize that we already have a term for "what you would do": it's called your "character" or "disposition" (or "decision theory" or "generating function").

Do people typically treat you differently based on estimations of your character? If you know where they don't, please let me know, so I can go there and let loose my sarcasm with impunity.

So, to wrap it up, what does Parfit's Hitchhiker have to do with intellectual property? Well:

- Omega represents the people who are deciding whether to produce difficult, satisfying intellectual works, conditional on whether we will respect certain exclusivity rights that have historically been promised them.

- The decision to rescue us is the decision to produce those intellectual works.

- The decision to pay the $5 represents the decision to continue to respect that exclusivity once it is produced "even though" they're "not scarce anymore", and we could choose otherwise.

The lesson: if you don't believe that the Omegas in your life "deserve", in an important sense, to be paid, you won't find yourself "rescued". We are where we are today because of our beliefs about what "hitchhikers" should do, and we miss out on rescues whenever we decide to become ungrateful hitchhikers. (Edit: that should probably be phrased as "... whenever we decide that it's right for hitchhikers to be ungrateful.")

(Note: this post was heavily influenced by Good and Real, Chapter 7, and by this article on Newcomb's problem.)

Intellectual works aren't scarce -- just like money

If you listen to Stephan Kinsella or his acolytes, you're probably well familiar with the argument that "Intellectual property rights should not exist" because "intellectual works aren't scarce", though this is often confusingly shortened to "IP isn't scarce". Here's Kinsella's latest compilation of the anti-IP arguments, that being one of them. (Which led to a very lengthy discussion.)

Well, I've been reading Jaron Lanier's recent book, You Are Not a Gadget, which gives a good reply (p. 102):

It is a common assertion that if you copy a digital music file, you haven't destroyed the original, so nothing was stolen. The same thing could be said if you hacked into a bank and just added money to your online account. ... The problem in each case is not that you stole from a specific person but that you undermined the artificial scarcities that allow the economy to function. In the same way, creative expression on the internet will benefit from a social contract that imposes a modest degree of artificial scarcity on information. [bold added]

I've made a similar point before: Money is information -- specifically, the relative amount that the world (believes that it) owes you. When money is stolen from you, then you can certainly force yourself to think of it in terms of

-a physical item being removed from your possession, or of
-a server having "unauthorized use".

But what's really important is the editing of that information: where before, the world thought it had a remaining balance against you of $X, now it thinks that the thieves are owed that $X. This problem persists even after you are given compensatory paper or the bank gets standard compensation for trespassing, and it's what people care about.

MMORPGs (World of Warcraft, Everquest, etc.) have already assimilated this lesson. In such online games, your money really is nothing but a database entry. It doesn't correspond, even in principle, to a physical object, just the knowledge of a relationship.

Lanier's alternate suggestion, following Ted Nelson, is that we could instead simply have an automated system that charges for each time a given intellectual work is accessed. People could "pirate" these (already freely-accessible) works by only using versions stored outside of where there access would be recorded, just as they do today when pirating works. But so long as the public regards this as wrong, and wrong for the same reason as counterfeiting, they would run into the same problem as counterfeiters. And the relatively low cost with which the works could be accessed under such a system would remove most of the sympathy for them.

I note that one particular snag of this is that people will not want to have to think of the costs each time they want to look at a book again. However, if everyone paid a fixed amount each year, and their choice of what to access only determined which fraction of that payment went to each creator, then choosing to view anything would cost nothing on the margin, further eroding any incentive to pirate.

Setting spending straight: Now, we're getting somewhere

Setting spending straight: Now, we're getting somewhere

As you might have noticed, I'm quite confounded by the arguments for stimulus, especially monetary stimulus.

In discussing the issue on Less Wrong, I've argued that once you expand out what the economics jargon, it's not even clear that stimulus arguments even claim to be accomplishing something good. And that such schemes are justified with reasoning that would just as wellprove it beneficial to do clearly absurd things, showing a misuse of the term "the economy".

This suggested to me a serious case of lost purpose, where one's policy justifications have become completely disconnected from the original reasoning.

Well, now I've found someone willing to engage these issues: John Salvatier of Good Morning, Economics. He's not Scott Sumner, but he does advocate the same things, and knows his way around the topic.

If you're interested, take a look at our ongoing exchange on the basis for stimulus (and this shorter thread).

About the redesign

To all of you hecklers about to write me that, "Um, I think someone hacked your site, bro, LOL": No, I accepted the services of someone I know from Less Wrong. The eminent Ian Pollock, freelance graphic designer and electrical engineering major, did the redesign. I like this much better that what I had before.

The Möbius strip exemplifies the site's goal: where before, an issue was hopelessly twisted on itself, I cut through the assumptions and let it start making sense again!

If you find yourself in need of a site redesign, well, now you know where to go.