Fences

Fences are a handy dandy analogy for some of the concepts explored here weekly. I mentioned Chesterton’s Fence back on 9/15/15 (just because you don’t see a reason for a fence that has been erected doesn’t mean you should immediately tear it down – it’s an admonition against rash social policy reform efforts).  Reasoned acceptance of the status quo is far superior intellectually then angry screams for radical reform.  We saw this while peering into Edmund Burke’s wardrobe of a moral imagination from 12/5/17 to 1/30/18.  In order to preserve and protect our family’s wealth, we need to erect cognitive (and moral) fences around our encampment of well-being.  There are enemy forces outside seeking to attack our lifestyle and freedom.

 

One of our most menacing enemies is mass ignorance and false certitude. Politicians and pundits with wrong ideas are absolutely convinced nonetheless that they are right and actively seek to impose their bad ideas upon us all.  There is a community of bloggers who call themselves “LessWrong” focusing on human rationality.  That’s a humble name for a group whose members are really smart.  Scott Alexander (Slate Star Codec) wrote a cool article in 2012 using the term Schelling Fence.

https://www.lesswrong.com/posts/Kbm6QnJv9dgWsPHQP/schelling-fences-on-slippery-slopes

 

A Schelling Point is a term from Game Theory (named after economist Thomas Schelling). It is a solution to a problem or conflict that seems natural, special or particularly relevant.  A Schelling Fence then would be a walled off moral and cognitive position that defends against slippery slope arguments or other attacks against my clients owning “too much” wealth.  Our War Chest fence extends across similarly situated people and across personal values as they evolve over time.  I have made a vigorous, credible pre-commitment to defend our economic, intellectual and moral positions against poisonous public policy pundits who think they know better.

 

They are enemies at the gate. Post-modern Marxist ideas are looming thought foes.  Next week, we’ll examine the rationality sabre in our War Chest that easily obliterates enemy Leftist thought combatants lurking outside our Estate Planning Schelling Fence.

 

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Life is a Story

Our final glimpse into George Gilder’s book Life After Google (2018) gives us a third reason for why his insights are so salient.  The first (transaction costs and Coase theorem) reminds us of the efficiency of free markets; the second highlights the importance of time in measuring wealth (time is the standard upon which money measures value, not money itself; otherwise economic reality descends into Gödelian futility). This week, the third reason builds history and memory onto the reality of time and true wealth.

 

We learned that a Markov chain is a disconnected statistical tool underlying Google’s search engine. It’s a memoryless flight from the true knowledge that creates real wealth.  The new block chain technology preserves and extends real information, while Markov chains destroy it with the assumption of randomness.  We should not live in a world with technology that removes the specific intentions, plans, histories and identities from the global network of information.  The information on Google is FREE!  It’s a gigantic copying machine that is failing to “establish and preserve origins, facts, truths, timestamps, ground states, and identities. Fake news and phishing expeditions are hardly differentiated from real events and edifying communications.”

 

Time is the source and ultimate frame of reference for knowledge, wealth and power. Time is the most real feature of the world.  Gilder makes this point by quoting a Lee Smolin book on pg. 260 (The Singular Universe and the Reality of Time (2014).  That reminded me of an epiphany I had a many years  ago while reading Chapter 4 of Lee Smolin’s earlier book Three Roads to Quantum Gravity (2001) – “The Universe is Made of Processes, Not Things”.  Smolin taught me that what matters is not the actual substance of reality (the atoms and molecules in your body and around you); rather, what really matters is our story.  He was writing about causality in quantum physics but those ideas on time, history and reality apply to the stories of everyone and everything.

 

Our War Chest story continues next week.

The Standard of All Measurement is Time

The second compelling concept supporting the conclusions in Life After Google (2018) is the primacy and scarcity of time. Time is the standard for all human measurement.  Gilder points out that the International System of Units establishes seven metrics:

• The second                  time
• The meter                    length
• The kilogram              weight
• The degree                  temperature
• The ampere                  electric current
• The mole                     molecular mass
• The candela                 luminosity

 

All of these measures are based on constants in physics, frequencies and wavelengths all rooted one way or another in the passage of time. These units of measure are fixed.  They cannot float because their constancy is relied upon and interconnects us to the hustle and bustle of worldwide commerce.  And this keeps us prosperous and flourishing. Gilder explains “As the only irreversible element in the universe, with directionality imparted by thermodynamic entropy, time is the ultimate frame of reference for all measured values.”  This includes money.

 

Money is a measuring stick of value. Gilder’s point is that currencies are not commodities, part of what they measure.  He writes:

Measuring sticks cannot be part of what they calibrate. They must have their roots in a grid of measurement beyond the reach of commerce.  Self-referential loops – whether physicists measuring atoms with atoms, or philosophers gauging minds with minds, or economists measuring commodities with commodities – doom their users to Gödelian futility.

 The Google era is coming to an end because Google tries to cheat the constraints of economic scarcity and security by making its goods and services free. Google’s Free World is a way of brazenly defying the centrality of time in economics and reaching beyond the wallets of its customers directly to seize their time.

 

So, we have the Coase Theorem securing private property rights, a deeper understanding of the importance of time to wealth; next week, we get to the third reason Gilder is so right. Our Estate Planning War Chest rests upon a ground state of information stemming from memory and a carefully guarded human history.

The Great Unbundling

It’s well worth the mental effort to understand why George Gilder is correct because he is correct about something vitally important – the security of your family’s wealth and well-being. Chapters 11-22 of Life After Google (2018) discuss the technical development of the block chain revolution.  We can stipulate that it’s a world changing, unfolding event without digging down into the history and people surrounding the emerging new block chain economy.

 

The essence of Gilder’s big picture insight is his final Chapter 23 and epilogue. His predictions and understanding of what is happening are compelling because of three concepts:  1) The validity of the Coase Theorem; 2) The primacy and scarcity of time (the value and measurement of it); and 3) The importance of history and memory (a corollary of the previous notion).  Let’s take them one at a time in the coming weeks.

 

First, the ideas of Ronald Coase (1910-2013) were groundbreaking for economics and law. The Coase Theorem holds that in a market economy, strong, secure private property rights are crucial.  It is the market that should ultimately determine to what use property is put.   It generally does so correctly and efficiently.  Coase’s work focused on transaction costs.  The optimal allocation of resources comes from bargains made between firms and individuals, not from some complex scheme of taxation and redistribution.  A moral and efficiently running economy cannot be dependent on the “wisdom” of politicians and judges.

 

Markets bring together people who want to exchange things. Coase figured out why firms exist.  People build economic islands (businesses) with their own internal rules, which are protected from the market.  Organizations (firms) emerge when the costs of the transactions become less than making them on the open market.  Companies exist primarily to lower the cost of doing business.

 

Coase’s Law means that assets get bundled over time, like a bundle of sticks. Companies expand and add more “sticks” until the cost of transactions inside the firm exceeds the cost in the open market.  But, and this is why Gilder is so prescient, Coase’s Law works in reverse.  Companies whose internal cost exceeds the cost of outsourcing should shrink and spin out operations into the networked open market, i.e. unbundle.  We are entering “The Great Unbundling” stage in economic history.  This, as we shall see, is a very good thing for hard working families and firms.

 

Next week, we move on to the second reason why new technology is changing the nature of money, business and the world. One of the most crucial concepts in our Estate Planning War Chest is time; time, properly understood; not the false understanding of time permeating Google’s worldview.

 

Mugged By Reality

Chapter 10 of Life After Google (2018) by George Gilder is titled “1517”, referring to The 1517 Fund, a fellowship for young geniuses founded by Peter Thiel (the PayPal billionaire).  The Fund financially induces really smart students to skip or drop out of college to work on their own unique projects.  1517 is the year of October 31, 1517, when Martin Luther posted his 95 Thesis on a church door in Germany.  That caused the schism in the Catholic Church, profoundly changing Europe and Western civilization.

 

Among the abuses by the Church that Luther was protesting was the selling of indulgences (certificates believed to reduce the temporal punishment in purgatory for sins). The Church would issue a document memorializing the immoral transaction of buying repentance with cash.  The parallel in education, according to Thiel, is that universities today are selling a piece of paper at great costs and telling young people that buying it is the only way they can save their souls.  Universities call it a diploma and they’re making a fortune doing it.

 

Concentrated centralization of authority always leads to abuse. Always – whether it’s government, religion, media or education.  University humanities departments (but not science, engineering, etc.) have abused their authority so badly for so long that they have become vulnerable victims to the brutality of reality.  They will be mugged by reality, as Irving Kristol (1920-2009) quipped.  They can invent utopic worldviews and make believe fields of knowledge (grievance studies) and try to re-write history; but sooner or later, their tunnel of contrived philosophy and quest for a new morality based on intersectionality will run into a reality beat down.

 

Leftists believe that they are morally superior and seek to forcibly impose their views on everyone else. They are enemy cognitive combatants to those of us who enjoy and appreciate our fortunate (“privileged”) position in a wildly successful system of bourgeois capitalism.  Perhaps the greatest defensive Estate Planning War Chest weapon we wield is simply…reality.

Progressive thinkers can try and burrow their beliefs into mainstream acceptance but at the end of the tunnel they will be mugged by reality.

Happy 4th Birthday to the War Chest

Today marks 4 years of weekly observations on wealth, philosophy, the political economy and morality. Our position is secure and clearly protected from bad Leftist ideas and identity politics, which grow increasingly insane every day.  The triumvirate of anti-knowledge (politicians, media and academia) is in full panic mode because their worldview and desire to impose it on others is being swept away by rational, stoic acceptance of capitalism and bourgeoisie values (which the Left abhors).

 

The hypocrisy, stupidity and militant wrong-headedness of supposedly elite thinkers is astounding. Examples abound:

Politicians – The confirmation of Supreme Court Justice Kavanaugh – what a fiasco!

Media – The Left bias of the mainstream Press grows increasingly palpable.

Academics – More hoax “Grievance Studies” came to light where phony academic papers get published even though they are ridiculous – how intellectually embarrassing for that profession.

 

Thankfully, we need not engage directly in all that nonsense. We can simply count our blessings and maintain awareness, morality and financial security.  I continue to scan for distant threats to our position from idiot politicians, biased mainstream media and an out of touch academia.  The root of their menacing ideas seems to be a postmodernist view that values and truth are relative.  But when all truth is relative, the world becomes a never ending battlefield of Hobbesian morality (the war of all against all).  Here’s an article on that:

https://www.nationalreview.com/2018/10/postmodernism-relativism-breeds-bullies-conflict/

I love the Fukuyama quote referring to the aim of enemy elites as always pursuing the ancient pleasure of exercising power over others. They are “espousing a kind of Nietzschean relativism that said there is no truth… yet most of them were committed to a basically Marxist agenda”.  He sees the contradiction as “total bullshit”.

 

The Slate Star Codex blog points out that neither side will listen to the other side or concede in any manner, unless forced to do so after a bitter battle loss. He also finds it interesting that ordinary people are afraid you’ll steal their ideas, while observant people who think a lot “have so many ideas that they know they will never be able to do all of them, and practically beg you to steal them so that they get done.” Here’s a list of Projects that blogger Luke Muehlhauser wishes he had time for:

http://lukemuehlhauser.com/projects-i-wish-i-had-time-for/

 

Great ideas! As we enter the 5^th year of The Estate Planning War Chest blog, I vow to continue defending the position of my tribe of friends, family and clients from enemy ideas for many years to come.

Gödel Smiled

If you are ever worried that computer intelligence will eventually surpass humans and take over the world, read Chapter 9 of Gilder’s Life After Google (2018).  As I wrote here on 6/28/16, I’m not worried about it.  However, anyone who understands exponential growth and Moore’s Law will at least pause to consider that intelligent machines could eventually build ever smarter machines ad infinitum.  Google’s Ray Kurzweil believes that “technological singularity” is inevitable.  Endnote 6 of Chapter 9 describes Ray’s exponential chessboard allegory.

The emperor of China was so grateful to the guy that invented the game of Chess that he offered him anything that he wanted. The inventor said “Just one grain of rice on the first square of the chessboard…..and a doubling on each subsequent square of the 64-square board.  The emperor, not understanding exponential progression, agreed.  To produce 2⁶⁴ of rice grains, the emperor would have to award the inventor 18 million trillion grains – several times more than all the rice ever grown on Earth.

The exponential growth of computing power, guys like Kurzweil and Stephen Hawking tell us, threatens the existence of humanity with an artificial intelligence explosion. But Gilder knows better.  Super-AI proponents, no matter how powerful computers become, get smacked in the face with the Gödel -Turing problem of self reference.  Gilder writes:

By referring back to their own brains, which they don’t really understand, the AI scientist plunge directly into the self-referential Gödel perplex.  By using their own minds and consciousness to deny the significance of consciousness in minds, they refute themselves.  As Turing concluded, they need an “oracle” – a source of intelligence outside of the system itself – and all he could say about the oracle is that it “could not be a machine.”  Turing saw that computers repeat the uncertainties of physics that stem from recursive self-reference.  Just as physic founders when it tries to use instruments made of electrons and photons to measure electrons and photons, artificial intelligence founders when computers use computers to explain themselves….  [Kurzweil] plunges into circularity, merely asserting that when a machine is fully intelligent it will be recognized as consciousness. Gödel smiled.

Tomorrow is a 4 year anniversary bonus edition of the Estate Planning War Chest.