8 ms·

The thing about efficient markets is that lucrative activities which don't produce much value—borderline scams—can block activity which would be highly wealth c

The thing about efficient markets is that lucrative activities which don't produce much value—borderline scams—can block activity which would be highly wealth creating. For example, there could be a huge untapped retail market for financial derivatives such as interest rate and fx hedges. However, it's very hard to access this market because historically anyone who has started selling such products has pivoted towards targeting degenerate gamblers in order to fleece them. Normal people who want to hedge conclude that it's better to live with the risk than to be the sucker. Here we can see that there are lots of people who are prepared to make significant personal sacrifices to work in the software industry. The industry itself is crying out for more people and new people. But it literally doesn't make economic sense, either for universities or for new players such as bootcamps, to train people properly. It's vastly more lucrative to confuse them and then rip them off. It's hard to see a simple market mechanism which can resolve this, as opposed to rebuilding something similar to the gatekeeping and signalling functions around universities, commonly regarded as broken nowadays.

Grustaf 6y ago
Just because it’s more lucrative to rip people off doesn’t mean it doesn’t make financial sense to run a good code bootcamp. That’s like saying it doesn’t make sense to work because it’s more lucrative to steal or live off welfare. But sure, it’s a common problem in a market economy. Presumably issues of information asymmetry should be alleviated in the days of the internet.
- watwut 6y ago
  > Just because it’s more lucrative to rip people off doesn’t mean it doesn’t make financial sense to run a good code bootcamp. The good code bootcamp wont be able to compete in the sort term. The scam version will first attract more customers in short term and destroy overall trust in the long term.
  - Grustaf 6y ago
    This is a good point, although I am not sure that it makes it impossible to survive as a good school, it just makes it harder.
- jacobion 6y ago
  But it doesn't make economic sense to work rather than steal, unless there are enforced rules and sanctions against stealing. Most people who choose to work do so either because of the sanctions, or because of various reasons which are not about maximizing returns in a narrow economic sense.
  - Grustaf 6y ago
    The post didn't say that it made sense _relative_ to something else, it just said running a school in the proper way didn't make economic sense, and that is not true (except in the sense pointed out in another comment, that honest schools may be outcompeted). My point is just that a project's economic viability doesn't depend on the relative merits of other projects.
    - jacobion 6y ago
      > a project's economic viability doesn't depend on the relative merits of other projects. I'm not sure this is true - certainly the opposite of this statement is the central thesis of most investment activity.
      - Grustaf 6y ago
        If you are evaluating the viability of a specific project you don't vare if there are other projects that are even more profitable, you only care if the current one has a positive return on investment. Of course when choosing between several projects, such as starting a school or launching a scam, then yes you would look at relative profitability (_and_ absolute of course). Few people will hopefully find themselves choosing between those two options.
- jacobion 6y ago
  How does the internet 'alleviate issues of information asymmetry'?? I thought it was well understood that this has not generally happened, except in open markets for very transparent and easily comparable products. Holiday accommodation for example, much less complex than coding bootcamps, is far from a solved problem.
  - Grustaf 6y ago
    > How does the internet 'alleviate issues of information asymmetry'?? Through threads like this. Many people thinking of entering Lambda school will google it, find bad reviews and critical discussion threads and reconsider. "Alleviate" does not mean "eradicate", surely it's easier to evaluate schools and holiday homes nowadays, compared to 1980?
    - jacobion 6y ago
      It might be easier to compare them, I'm not persuaded it is any easier to evaluate them.
- robjan 6y ago
  The problem is when you sell the truth and your competitors sell "all of our graduates earn 500k within two months of graduating", which one is going to get the customers? Part of the problem is the students themselves who see six figures and think "I want a piece of that" without necessarily being interested. The code bootcamps take full advantage of this.
- Siira 6y ago
  https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://slatestarcodex.com/2014/07/30/meditations-on-moloch/
rswail 6y ago
Learning to program is more like an old fashioned trade than a profession. I don't mean that in a derogatory way. I mean that what should be happening is apprenticeships. If "industry is crying out for more people", then it should be investing in that in the same way it does in every other part of the supply chain. They should be hiring and training programmers, not externalizing their costs.
- nikanj 6y ago
  Junior programmers suffer from the tragedy of the commons. Why waste $$ training juniors, when for a fraction of that $$ you can poach a ready-trained senior from the company next door? Every company wants someone else to take apprentices and carry the burden of on-the-job training
  - brandmeyer 6y ago
    Also tragedy of the commons: Why invest in training when you can expect employees to get poached by the company next door in only 1-2 years?
    - bennysonething 6y ago
      Most of the poaching happens (well to me anyway) because the jobs became unbearable. And because it was the only way to get decent salary increases.
      - nikanj 6y ago
        It's easier to afford bigger salaries for seniors if you don't have to carry the budget burden of unproductive juniors
  - jrochkind1 6y ago
    I did work briefly work for a small consultancy that decided to take on juniors, even though it was anticipated that for probably a year they woudln't be billing enough to cover their salary; because there weren't a lot of qualified applicants anyway where we were located, and as a sort of intentional public service to help people get into the field (especially underrepresented people etc). Of course, the most skilled juniors quickly left for higher paying jobs elsewhere around when they started to actually make back their salaries in billing. There were no hard feelings, the company knew that could happen and could afford it, and of course, why wouldn't they? (I mean, I guess it was hoped that sometimes they would prefer working for the consultancy for a while). But it was a kind of experiment, and indeed the experiment showed it was not really a sustainable model, I think they stopped doing that.
Benmcdonald__ 6y ago
Same as health care. Without regulations the industry would be full of snake oil. And yet the regulation kill innovation in the industry. Money all devolutes to scam. Look at digital money. Not even HN community can spot the "crypto" scams
- shanusmagnus 6y ago
  The HN community gets around this by defaulting to thinking that everything in the space is a scam. Just saying "scam" 100% of the time will make you mostly right.
3np 6y ago
> For example, there could be a huge untapped retail market for financial derivatives such as interest rate and fx hedges. However, it's very hard to access this market because historically anyone who has started selling such products has pivoted towards targeting degenerate gamblers in order to fleece them. Tangential, but this is pretty much emerging in the cryptocurrency/digital assets/decentralized finance (defi) space. To your point, out-right or borderline scams are a-dime-a-dozen there right now and there are plenty of incentives to cut corners in order to get growth, but there are a lot of ethical and promising projects as well.
- jacobion 6y ago
  Most people will not use the ethical projects that you mention, at least until perception of crypto changes, because they will associate crypto/defi either with full-on exit/Ponzi scams, or with experiences investing in Bitcoin and others right before the peak.
  - 3np 6y ago
    I think you're right, it's going to stay fringe for a while - which I think is for the better, as I think it will be another couple of years before the ecosystem is quite ready for a huge influx of new active non-tech/non-enthusiast users. The rational part of me does not want BTC > $30k (or <~10k) within the coming months.
specialist 6y ago
> scams can block activity which would be highly wealth creating What's this phenomenon called? "Spoiling the market"? "Shitting the bed"? Basically, when inauthentic activity so increases transaction costs that the authentic market is harmed. My aunt once had a pretty good cottage business selling bespoke wall paper stuff on eBay. Over time, inauthentic entries crowded out her real product. SEO, fakes, knockoffs, misnaming stuff. Her customers could no longer find her products thru eBay, even when using exact match search terms. Sound familiar? Using terms like "fraud" and "scam" seems grossly inadequate. I'm provisionally using "authentic" vs "inauthentic", which suck, for lack of better terms. A parting thought: Somehow Amazon managed to become worse than eBay, for both vendors and customers. Amazon boosts their own brands. And has a separate payola lane for "sponsored" entries.
- zepto 6y ago
  Poisoning the well
ghufran_syed 6y ago
How exactly are students being ripped off? They pay nothing up front, and only pay lambda school afterwards if they are financially successful in a tech job.

Grustaf 6y ago

Just because it’s more lucrative to rip people off doesn’t mean it doesn’t make financial sense to run a good code bootcamp. That’s like saying it doesn’t make sense to work because it’s more lucrative to steal or live off welfare. But sure, it’s a common problem in a market economy. Presumably issues of information asymmetry should be alleviated in the days of the internet.

watwut 6y ago
> Just because it’s more lucrative to rip people off doesn’t mean it doesn’t make financial sense to run a good code bootcamp. The good code bootcamp wont be able to compete in the sort term. The scam version will first attract more customers in short term and destroy overall trust in the long term.
- Grustaf 6y ago
  This is a good point, although I am not sure that it makes it impossible to survive as a good school, it just makes it harder.
jacobion 6y ago
But it doesn't make economic sense to work rather than steal, unless there are enforced rules and sanctions against stealing. Most people who choose to work do so either because of the sanctions, or because of various reasons which are not about maximizing returns in a narrow economic sense.
- Grustaf 6y ago
  The post didn't say that it made sense _relative_ to something else, it just said running a school in the proper way didn't make economic sense, and that is not true (except in the sense pointed out in another comment, that honest schools may be outcompeted). My point is just that a project's economic viability doesn't depend on the relative merits of other projects.
  - jacobion 6y ago
    > a project's economic viability doesn't depend on the relative merits of other projects. I'm not sure this is true - certainly the opposite of this statement is the central thesis of most investment activity.
    - Grustaf 6y ago
      If you are evaluating the viability of a specific project you don't vare if there are other projects that are even more profitable, you only care if the current one has a positive return on investment. Of course when choosing between several projects, such as starting a school or launching a scam, then yes you would look at relative profitability (_and_ absolute of course). Few people will hopefully find themselves choosing between those two options.
jacobion 6y ago
How does the internet 'alleviate issues of information asymmetry'?? I thought it was well understood that this has not generally happened, except in open markets for very transparent and easily comparable products. Holiday accommodation for example, much less complex than coding bootcamps, is far from a solved problem.
- Grustaf 6y ago
  > How does the internet 'alleviate issues of information asymmetry'?? Through threads like this. Many people thinking of entering Lambda school will google it, find bad reviews and critical discussion threads and reconsider. "Alleviate" does not mean "eradicate", surely it's easier to evaluate schools and holiday homes nowadays, compared to 1980?
  - jacobion 6y ago
    It might be easier to compare them, I'm not persuaded it is any easier to evaluate them.
robjan 6y ago
The problem is when you sell the truth and your competitors sell "all of our graduates earn 500k within two months of graduating", which one is going to get the customers? Part of the problem is the students themselves who see six figures and think "I want a piece of that" without necessarily being interested. The code bootcamps take full advantage of this.
Siira 6y ago
https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://slatestarcodex.com/2014/07/30/meditations-on-moloch/

rswail 6y ago

Learning to program is more like an old fashioned trade than a profession. I don't mean that in a derogatory way. I mean that what should be happening is apprenticeships. If "industry is crying out for more people", then it should be investing in that in the same way it does in every other part of the supply chain. They should be hiring and training programmers, not externalizing their costs.

nikanj 6y ago
Junior programmers suffer from the tragedy of the commons. Why waste $$ training juniors, when for a fraction of that $$ you can poach a ready-trained senior from the company next door? Every company wants someone else to take apprentices and carry the burden of on-the-job training
- brandmeyer 6y ago
  Also tragedy of the commons: Why invest in training when you can expect employees to get poached by the company next door in only 1-2 years?
  - bennysonething 6y ago
    Most of the poaching happens (well to me anyway) because the jobs became unbearable. And because it was the only way to get decent salary increases.
    - nikanj 6y ago
      It's easier to afford bigger salaries for seniors if you don't have to carry the budget burden of unproductive juniors
- jrochkind1 6y ago
  I did work briefly work for a small consultancy that decided to take on juniors, even though it was anticipated that for probably a year they woudln't be billing enough to cover their salary; because there weren't a lot of qualified applicants anyway where we were located, and as a sort of intentional public service to help people get into the field (especially underrepresented people etc). Of course, the most skilled juniors quickly left for higher paying jobs elsewhere around when they started to actually make back their salaries in billing. There were no hard feelings, the company knew that could happen and could afford it, and of course, why wouldn't they? (I mean, I guess it was hoped that sometimes they would prefer working for the consultancy for a while). But it was a kind of experiment, and indeed the experiment showed it was not really a sustainable model, I think they stopped doing that.

Benmcdonald__ 6y ago

Same as health care. Without regulations the industry would be full of snake oil. And yet the regulation kill innovation in the industry. Money all devolutes to scam. Look at digital money. Not even HN community can spot the "crypto" scams

shanusmagnus 6y ago
The HN community gets around this by defaulting to thinking that everything in the space is a scam. Just saying "scam" 100% of the time will make you mostly right.

3np 6y ago

> For example, there could be a huge untapped retail market for financial derivatives such as interest rate and fx hedges. However, it's very hard to access this market because historically anyone who has started selling such products has pivoted towards targeting degenerate gamblers in order to fleece them. Tangential, but this is pretty much emerging in the cryptocurrency/digital assets/decentralized finance (defi) space. To your point, out-right or borderline scams are a-dime-a-dozen there right now and there are plenty of incentives to cut corners in order to get growth, but there are a lot of ethical and promising projects as well.

jacobion 6y ago
Most people will not use the ethical projects that you mention, at least until perception of crypto changes, because they will associate crypto/defi either with full-on exit/Ponzi scams, or with experiences investing in Bitcoin and others right before the peak.
- 3np 6y ago
  I think you're right, it's going to stay fringe for a while - which I think is for the better, as I think it will be another couple of years before the ecosystem is quite ready for a huge influx of new active non-tech/non-enthusiast users. The rational part of me does not want BTC > $30k (or <~10k) within the coming months.

specialist 6y ago

> scams can block activity which would be highly wealth creating What's this phenomenon called? "Spoiling the market"? "Shitting the bed"? Basically, when inauthentic activity so increases transaction costs that the authentic market is harmed. My aunt once had a pretty good cottage business selling bespoke wall paper stuff on eBay. Over time, inauthentic entries crowded out her real product. SEO, fakes, knockoffs, misnaming stuff. Her customers could no longer find her products thru eBay, even when using exact match search terms. Sound familiar? Using terms like "fraud" and "scam" seems grossly inadequate. I'm provisionally using "authentic" vs "inauthentic", which suck, for lack of better terms. A parting thought: Somehow Amazon managed to become worse than eBay, for both vendors and customers. Amazon boosts their own brands. And has a separate payola lane for "sponsored" entries.

zepto 6y ago
Poisoning the well

ghufran_syed 6y ago

How exactly are students being ripped off? They pay nothing up front, and only pay lambda school afterwards if they are financially successful in a tech job.