7 ms·

Every once in a while a company like Tesla comes along and reconstructs a particular product gaining incalculable advantages over its competitors. Every once i

by meric 12y ago

Every once in a while a company like Tesla comes along and reconstructs a particular product gaining incalculable advantages over its competitors. Every once in a while a doctor is forced to re-break someone's arm which didn't recover properly. Every once in a while severe economic recessions comes along and wipes out all the badly managed companies kept in life support by banks/government. Every once in a while a programmer writes a piece of software that has almost the same functionality as an existing one but, is, some how, just better. And every once in a while there are revolutions that completely destroys the existing system of governance, when it can no longer fix itself properly. And that's when resources get deallocated. Civilization will fall, and it will rise again from its ashes. Looks like the world uses stop-the-world garbage collection on particular threads keeping the rest of the world running.

tantalor 12y ago
Reminds me of "crash-only thinking" http://www.ribbonfarm.com/2014/10/29/crash-only-thinking/ http://www.ribbonfarm.com/2014/10/29/crash-only-thinking/ Most things work fine until they catastrophically fail and are rapidly replaced, hopefully with something better.
amirmc 12y ago
> Every once in a while severe economic recessions comes along and wipes out all the badly managed companies kept in life support by banks/government. Except we didn't allow this for the banks (iiuc), so not everything gets GCd.
- meric 12y ago
  tantalor posted a good link - artificially preventing a complete crash would only cause the next crash to be bigger. Central banks can prevent bank crashes - but only at the cost of partially compromising its own integrity (See central bank balance sheets and the amount of toxic assets they hold). Eventually a crash would become so big the central banking system itself would fail. One possible failure mode is hyperinflation.
  - XorNot 12y ago
    No, no it isn't. People really need to stop using the word "hyperinflation". It does not "just happen". It is a very specific problem, that happens when specific, deliberate but poorly thought through actions are taken: namely, the free printing of money by a government in order to pay down it's own debts, well in excess of any viable economic activity. The only place in the western world this ever happened was pre-WW2 Germany, and it will never happen again unless someone specifically sets out to destroy their own economy. It is not a thing which "just happens", ever.
    - logfromblammo 12y ago
      It will never happen again at "wheelbarrows of cash for one loaf of bread" levels, because the Brazilian Plano Real (to fix hyperinflation of 1980-1994) largely provided the blueprint for pulling out of it. Once the old debts are hyperinflated away, the hyperinflating currency is publicly indexed to an imaginary unit of trade, with artificially stabilized value. Then once full penetration has been achieved, and people start making their business decisions based upon the imaginary unit, the old currency is dropped entirely, and the imaginary unit becomes the new circulating currency. The net effect is to simply wipe out all debts and start over. If you're going to do that, you might as well just get it over with, and skip the hyperinflation step entirely. Otherwise, you could end up with a Zimbabwean situation, where the currency is destroyed, and the ruling regime actively impedes any naturally occurring repairs to the system, as a means of seizing more economic resources and consolidating its power. You cannot have hyperinflation without a deliberate and malicious decision to manipulate the money supply and seize economic resources from the savers and builders. Since monetary inflation works best when no one knows it is happening, it would probably be disguised by first redefining the publicly available statistics on the money supply, and then might take the form of buying up certain forms of debt that essentially allow private banks to expand the money supply by issuing their own notes, rather than running the printing press that everyone already knows about and watches closely. Also, if you refer to the program by a pseudonym like "quantitative easing", people will be slower to catch on. Hyperinflation only happens when the peripheral economic actors are able to recalculate prices as fast as the central bank can manipulate them. It can be mitigated by employing massive amounts of deception, propaganda, and crass stage magic. As long as the retail store managers don't realize that they should be raising prices by 15% per year, they won't. And if people don't see higher prices for goods, they won't demand 15% pay raises. And if workers don't demand more pay, companies won't raise their prices or fire marginal employees to compensate. If all the people dependent on the US-dollar-based economy realized what the Federal Reserve has been doing, there would be hyperinflation. It doesn't "just happen" because the smartest guys in the room are so much smarter than the median that they are effectively fooling all the people, all the time. The root cause of hyperinflation is already there, but the feedback loop that causes prices to rise rapidly and noticeably has been deliberately obstructed.
Joeboy 12y ago
> Civilization will fall, and it will rise again from its ashes. Yes to the first bit. The second bit seems like an application of the Peter Principle.
brc 12y ago
This happens at the micro level (one employee is swapped for another who is better) and at the macro level (banks/tesla) and at the country level (socialism is replaced by more efficient and humane capitalism as in ussr/GDR). The problem is when the bad employee cannot be removed, the bank is bailed out or the people are unable to get themselves a new form of government. The key to efficient reallocation is not letting too much power concentrate in one location. And I think that is the thing at risk the most right now. Governments have become too powerful and are preventing the necessary creative destruction, like an operating system refusing to run the garbage collector and preventing new programs from running.
- FireRabbit 12y ago
  The problem with the USSR wasn't its economic system, it was the fact it was a corrupt dictatorship.
  - hvs 12y ago
    Which was required by its economic system. http://en.wikipedia.org/wiki/Economic_calculation_problem http://en.wikipedia.org/wiki/Economic_calculation_problem
    - imanaccount247 12y ago
      Then why was national socialism such a huge success in Germany?
      - brc 12y ago
        It's a late reply but national socialism only ran for a short time before being replaced with a wartime economy. In effect the program ran fine because it didn't run long enough for garbage collection to be an issue.
    - ticviking 12y ago
      This is a real problem, but not as big as Libertarians like to make it out to be. Additionally there is a tendency to ignore the very large command economies within our market Surely the command economy within Wal-Mart is at least as large as the USSR was, and it appears to have just as many inefficiencies, and absurdities generated by perverse incentives and miscalculations.Because it is not the state it manages to do away with the most egregious cruelties of a planned economy, and is definitely preferable to a state planed economy, but it's also probably not the best we can do. Spend a bit of time studying Yugoslavia and the ideas of http://en.wikipedia.org/wiki/Workers%27_self-management http://en.wikipedia.org/wiki/Workers%27_self-management if you're interested in non-anarchocapitalist solutions to the calculation problem
aethertap 12y ago
I think you nailed it. This is a good example of the adaptive cycle that's used to explain behavior in complex adaptive systems of various kinds. The cycle goes through up to four phases: rapid growth, conservation, release, and reorganization. Rapid growth happens when a relatively unexploited resource is abundant (usually after a release/reorganization) and there isn't much competition. This is like a bare field - weeds move in quickly to take up unused space. Gradually, competition heats up as more things get in on the action. This is where optimization starts to become important, because the ones that do a better job with what's available start to come out on top, at the expense of the less-competitive ones. Late in the process, you're in the conservation phase, where it's hard to change the entrenched winners because they have all of the resources locked up (can be money, nutrients, or whatever). In the field analogy, the bigger weeds shade out the smaller ones, until eventually you have large trees taking up most of the available resources. This phase is the longest-lasting of the four in general. The system at this point is highly optimized and dependent on the winners of the conservation phase. At some point, these few hub elements get hit by a disturbance that shakes them up a bit, and the repercussions spread throughout the whole system. If it's a big enough disturbance, the whole system can fall apart due to the loss of the hubs. This is the release (so-called because the stuff that was locked up by the entrenched players becomes available again). In the field example, this might be a blight that knocks out the climax tree species, opening tons of space for new competitors and releasing the accumulated biomass in the trees for reuse. At this point, it's a free-for-all to see who can get a toehold first in the new rich environment, and a brief period of reorganization ensues while that's being sorted out. In the field example, this is where all of the dormant weed and tree seeds that have been waiting in the soil sprout at the same time. This quickly transitions into rapid growth again, and the whole thing repeats. It's also an instance of self-organized criticality, where a system tends to evolve toward a critical state (i.e. local disturbances can have global implications). There are ways to manage this cycle to some extent when you're aware of it - primary among them is to deliberately introduce disturbances to shake up the formation of the conservation phase and loosen the connections that have built up. Basically, you introduce more randomness into the works in order to keep things from becoming overly optimized (or highly correlated, in the language of self-organized criticality).
- 12y ago

by meric 12y ago

tantalor 12y ago

Reminds me of "crash-only thinking" http://www.ribbonfarm.com/2014/10/29/crash-only-thinking/ http://www.ribbonfarm.com/2014/10/29/crash-only-thinking/ Most things work fine until they catastrophically fail and are rapidly replaced, hopefully with something better.

amirmc 12y ago

> Every once in a while severe economic recessions comes along and wipes out all the badly managed companies kept in life support by banks/government. Except we didn't allow this for the banks (iiuc), so not everything gets GCd.

meric 12y ago
tantalor posted a good link - artificially preventing a complete crash would only cause the next crash to be bigger. Central banks can prevent bank crashes - but only at the cost of partially compromising its own integrity (See central bank balance sheets and the amount of toxic assets they hold). Eventually a crash would become so big the central banking system itself would fail. One possible failure mode is hyperinflation.
- XorNot 12y ago
  No, no it isn't. People really need to stop using the word "hyperinflation". It does not "just happen". It is a very specific problem, that happens when specific, deliberate but poorly thought through actions are taken: namely, the free printing of money by a government in order to pay down it's own debts, well in excess of any viable economic activity. The only place in the western world this ever happened was pre-WW2 Germany, and it will never happen again unless someone specifically sets out to destroy their own economy. It is not a thing which "just happens", ever.
  - logfromblammo 12y ago
    It will never happen again at "wheelbarrows of cash for one loaf of bread" levels, because the Brazilian Plano Real (to fix hyperinflation of 1980-1994) largely provided the blueprint for pulling out of it. Once the old debts are hyperinflated away, the hyperinflating currency is publicly indexed to an imaginary unit of trade, with artificially stabilized value. Then once full penetration has been achieved, and people start making their business decisions based upon the imaginary unit, the old currency is dropped entirely, and the imaginary unit becomes the new circulating currency. The net effect is to simply wipe out all debts and start over. If you're going to do that, you might as well just get it over with, and skip the hyperinflation step entirely. Otherwise, you could end up with a Zimbabwean situation, where the currency is destroyed, and the ruling regime actively impedes any naturally occurring repairs to the system, as a means of seizing more economic resources and consolidating its power. You cannot have hyperinflation without a deliberate and malicious decision to manipulate the money supply and seize economic resources from the savers and builders. Since monetary inflation works best when no one knows it is happening, it would probably be disguised by first redefining the publicly available statistics on the money supply, and then might take the form of buying up certain forms of debt that essentially allow private banks to expand the money supply by issuing their own notes, rather than running the printing press that everyone already knows about and watches closely. Also, if you refer to the program by a pseudonym like "quantitative easing", people will be slower to catch on. Hyperinflation only happens when the peripheral economic actors are able to recalculate prices as fast as the central bank can manipulate them. It can be mitigated by employing massive amounts of deception, propaganda, and crass stage magic. As long as the retail store managers don't realize that they should be raising prices by 15% per year, they won't. And if people don't see higher prices for goods, they won't demand 15% pay raises. And if workers don't demand more pay, companies won't raise their prices or fire marginal employees to compensate. If all the people dependent on the US-dollar-based economy realized what the Federal Reserve has been doing, there would be hyperinflation. It doesn't "just happen" because the smartest guys in the room are so much smarter than the median that they are effectively fooling all the people, all the time. The root cause of hyperinflation is already there, but the feedback loop that causes prices to rise rapidly and noticeably has been deliberately obstructed.

Joeboy 12y ago

> Civilization will fall, and it will rise again from its ashes. Yes to the first bit. The second bit seems like an application of the Peter Principle.

brc 12y ago

This happens at the micro level (one employee is swapped for another who is better) and at the macro level (banks/tesla) and at the country level (socialism is replaced by more efficient and humane capitalism as in ussr/GDR). The problem is when the bad employee cannot be removed, the bank is bailed out or the people are unable to get themselves a new form of government. The key to efficient reallocation is not letting too much power concentrate in one location. And I think that is the thing at risk the most right now. Governments have become too powerful and are preventing the necessary creative destruction, like an operating system refusing to run the garbage collector and preventing new programs from running.

FireRabbit 12y ago
The problem with the USSR wasn't its economic system, it was the fact it was a corrupt dictatorship.
- hvs 12y ago
  Which was required by its economic system. http://en.wikipedia.org/wiki/Economic_calculation_problem http://en.wikipedia.org/wiki/Economic_calculation_problem
  - imanaccount247 12y ago
    Then why was national socialism such a huge success in Germany?
    - brc 12y ago
      It's a late reply but national socialism only ran for a short time before being replaced with a wartime economy. In effect the program ran fine because it didn't run long enough for garbage collection to be an issue.
  - ticviking 12y ago
    This is a real problem, but not as big as Libertarians like to make it out to be. Additionally there is a tendency to ignore the very large command economies within our market Surely the command economy within Wal-Mart is at least as large as the USSR was, and it appears to have just as many inefficiencies, and absurdities generated by perverse incentives and miscalculations.Because it is not the state it manages to do away with the most egregious cruelties of a planned economy, and is definitely preferable to a state planed economy, but it's also probably not the best we can do. Spend a bit of time studying Yugoslavia and the ideas of http://en.wikipedia.org/wiki/Workers%27_self-management http://en.wikipedia.org/wiki/Workers%27_self-management if you're interested in non-anarchocapitalist solutions to the calculation problem

aethertap 12y ago

I think you nailed it. This is a good example of the adaptive cycle that's used to explain behavior in complex adaptive systems of various kinds. The cycle goes through up to four phases: rapid growth, conservation, release, and reorganization. Rapid growth happens when a relatively unexploited resource is abundant (usually after a release/reorganization) and there isn't much competition. This is like a bare field - weeds move in quickly to take up unused space. Gradually, competition heats up as more things get in on the action. This is where optimization starts to become important, because the ones that do a better job with what's available start to come out on top, at the expense of the less-competitive ones. Late in the process, you're in the conservation phase, where it's hard to change the entrenched winners because they have all of the resources locked up (can be money, nutrients, or whatever). In the field analogy, the bigger weeds shade out the smaller ones, until eventually you have large trees taking up most of the available resources. This phase is the longest-lasting of the four in general. The system at this point is highly optimized and dependent on the winners of the conservation phase. At some point, these few hub elements get hit by a disturbance that shakes them up a bit, and the repercussions spread throughout the whole system. If it's a big enough disturbance, the whole system can fall apart due to the loss of the hubs. This is the release (so-called because the stuff that was locked up by the entrenched players becomes available again). In the field example, this might be a blight that knocks out the climax tree species, opening tons of space for new competitors and releasing the accumulated biomass in the trees for reuse. At this point, it's a free-for-all to see who can get a toehold first in the new rich environment, and a brief period of reorganization ensues while that's being sorted out. In the field example, this is where all of the dormant weed and tree seeds that have been waiting in the soil sprout at the same time. This quickly transitions into rapid growth again, and the whole thing repeats. It's also an instance of self-organized criticality, where a system tends to evolve toward a critical state (i.e. local disturbances can have global implications). There are ways to manage this cycle to some extent when you're aware of it - primary among them is to deliberately introduce disturbances to shake up the formation of the conservation phase and loosen the connections that have built up. Basically, you introduce more randomness into the works in order to keep things from becoming overly optimized (or highly correlated, in the language of self-organized criticality).

12y ago