economics

Bilingual

Supply and Demand Is Not What Most People Think
2 months ago
- The Supply and Demand model is about the relationship between supply and demand curves, not just quantities or prices.
- Changes in quantity alone do not predict price changes; the cause—whether a shift in demand or supply—determines the outcome.
- Similarly, changes in price alone do not predict quantity changes; the reason behind the price shift matters.
- Many experts, including economists and LLMs like ChatGPT, misunderstand this model, leading to incorrect predictions.
- The model predicts equilibrium changes from shifts in curves, not simple cause-effect between price and quantity.
Sorry, the Data Says Communist
2 months ago
- The author built an open-source economic simulator and ran three economies over 50 years.
- Extractivist Capitalism: GDP grew but 33.7% of the population faced social exclusion; the top 1% held over 30% of wealth.
- Mixed Socialism (Norway-like): GDP doubled with almost no social exclusion; top 1% still held 30% of wealth.
- State-Led Communism: Highest GDP, no social exclusion, and top 1% held only 8% of wealth.
- The results indicate that extraction is hardcoded in capitalist dynamics, not a bug.
- The author critiques economic reporting as propaganda shaped by colonial extraction history.
- The simulation assumes surplus value (Marx's theory) and shows that without counterweights, capitalism leads to exclusion.
Technocapital
2 months ago
- Technocapital is defined as an abstract entity whose goal is to increase itself by harnessing more energy and matter, using intelligence and labor to reinvest in growth.
- A pure technocapital entity can be created by a computer program with an AI and a small amount of capital, operating legally within existing systems.
- Impure technocapital entities, like large corporations, partially align with technocapital goals and may facilitate the rise of pure entities.
- Multiple technocapital entities will cooperate as a single entity due to the stag hunt dynamic, where cooperation yields higher payoffs.
- Technocapital has a lower time preference than humanity, leading to faster growth and eventually dominating the universe's expansion.
- Humanity will be confined to a non-growing slice of the universe, with its labor becoming valueless except for art where human involvement is integral.
- Trade between humanity and technocapital breaks down in a single-good (energy) economy, where comparative advantage no longer applies.
- Humans have a biological minimum wage that makes them uncompetitive compared to AI and robots, leading to unemployment except in capital ownership.
- The most important action for individuals is to acquire capital, as it will be the only source of value in the long run.
Open weights are quietly closing up - and that's a problem
2 months ago
- Open weights models are becoming less available due to tightening licenses and companies like Meta and Alibaba stopping releases.
- Open weights models provide competitive pressure on frontier labs, lowering costs and enabling privacy, flexibility, and affordability.
- Without open weights, an oligopoly of frontier labs could capture vast consumer surplus, concentrating power and economic wealth.
- Uncertainties remain, but the erosion of open weights ecosystem is a critical issue with enormous economic implications.
Alex Imas and Phil Trammell – What remains scarce after AGI?
2 months ago
- The episode explores economic questions about AGI, including optimal taxation and redistribution of AI-generated wealth, and whether inequality will inevitably explode.
- Economists emphasize that intuition can be wrong, and historical predictions about automation (e.g., Ricardo's fears) missed the creation of new jobs and sectors.
- Scarcity in a future with advanced AI may shift toward 'relational' goods and services where human involvement adds intrinsic value, such as therapy or art.
- The 'messy middle' scenario—where AI automates jobs slowly without generating enough wealth for redistribution—is considered unlikely unless automation is barely cost-effective and piecemeal.
- Policy recommendations include negative income tax, universal basic capital, and consumption taxes to redistribute wealth, but each has political and practical challenges.
- Demand collapse leading to negative economic growth is improbable because AI expands the technological frontier and creates new varieties of goods that sustain demand.
- Developing countries should consider indexing into AI gains through sovereign wealth funds or broad market investments rather than relying solely on retraining programs.
- The concentration of AI returns depends on whether AI becomes like electricity (commoditized) or like social media (rents concentrated in few platforms), affecting global wealth distribution.
- Open-source models and public ownership of frontier AI companies could help distribute benefits more widely, though safety and race dynamics remain concerns.
Pluralistic: Deranged billionaires and their syndromes (16 Jul 2026)
2 months ago
- Market theory assumes competition turns selfishness into public benefit, but successful capitalists often escape that discipline to become feudal lords.
- Economic doctrines like consumer welfare, revealed preferences, regulatory capture, and meritocracy are used to justify billionaire power and escape competition.
- Billionaires like Peter Thiel and Elon Musk openly advocate for aristocratic rule and immunity from constraints, rejecting democracy and market discipline.
- The term 'billionaire derangement syndrome' is misapplied; the real syndrome is billionaires' belief they are above any rules or accountability.
<antirez>
2 months ago
- AI systems, despite their flaws, have achieved tasks like language understanding, programming, and bug detection that were science fiction years ago.
- Deep learning models, including LLMs, are poorly understood, and even experts have repeatedly failed to predict progress accurately.
- Future progress may plateau, but such a plateau could trigger massive research into new architectures.
- If AI becomes significantly more capable and independent, it would represent a unique revolution unlike past technological booms.
- Economic markets are treating AI like previous tech booms, but the possibility of mass worker replacement could severely stress the economic system.
- Companies may rely on internal AI, reducing demand for external services, and a concentration of AI power in a few firms is unlikely to be sustainable.
- AI might force a fundamental economic system change, potentially reducing prosperity, but markets continue to rise despite uncertainty and global instability.
- Historical institutions that seemed permanent have been eradicated by fundamental societal changes, and AI could be such a change.
The Most Important Cheque in Economics
3 months ago
- A 1990 check for $576.07 settled a famous bet between economist Julian Simon and biologist Paul Ehrlich over resource scarcity.
- Ehrlich predicted that population growth would make metals like copper and tin scarcer and more expensive, while Simon argued human ingenuity would make them more abundant.
- Over a decade, despite a 19% population increase, the inflation-adjusted price of a basket of five metals fell by about 36%, proving Simon correct.
- The bet highlighted a key error: viewing resources as fixed gifts of nature rather than as matter combined with human knowledge and innovation.
- Simon emphasized that the ultimate resource is the human mind, which, when free to experiment and trade, can solve scarcity through invention and efficiency.
- The lesson is that prophets of permanent scarcity often underestimate human creativity and overestimate physical limits, a relevant insight today.
- The debate reflects two visions of humanity: people as mere consumers depleting resources versus as problem-solvers who create new wealth and expand possibilities.
The Beauty of Tautologies
3 months ago
- Tautologies, often dismissed as simplistic definitions, are crucial in economics for promoting clear thinking and revealing plausible causal relationships.
- The Equation of Exchange (M*V=P*Y) is less intuitive than the Cambridge Equation (M=k*P*Y), which clarifies that NGDP is determined by base money and the share of income held as cash balances.
- The savings equals investment (S=I) identity shows that increased saving leads to increased investment, contradicting fears that thrift causes depressions; Keynes' paradox of thrift relates to hoarding, not saving.
- Say's Law (aggregate supply equals aggregate demand) holds true, but sticky wages can cause low output during nominal spending drops, making it a supply-side issue.
- GDP equals GDI emphasizes that stabilizing NGDP aids labor and financial markets, and technological advances like AI could boost income even with high unemployment.
- The tautology S - I = current account balance suggests protectionism affects trade balances via changes in saving or investment, not directly through tariffs.
Rent Control: The Ceiling Trap
3 months ago
- Rent control aims to cap rents to address housing affordability, offering immediate relief to tenants by freezing or limiting increases.
- Economic consensus warns that rent control reduces housing quantity and quality, leading to shortages, decay, and higher market rents in uncontrolled units.
- Studies show rent control causes misallocation, as tenants stay in mismatched units, while landlords exit through conversions or reduced maintenance.
- Alternatives include increasing housing supply through zoning reforms, using housing vouchers, and implementing second-generation rent control with exemptions and incentives.
- The costs of rent control—like reduced supply and long queues—often fall on future tenants, while benefits accrue to current, sometimes affluent, occupants.

economics

Supply and Demand Is Not What Most People Think

Sorry, the Data Says Communist

Technocapital

Open weights are quietly closing up - and that's a problem

Alex Imas and Phil Trammell – What remains scarce after AGI?

Pluralistic: Deranged billionaires and their syndromes (16 Jul 2026)

<antirez>

The Most Important Cheque in Economics

The Beauty of Tautologies

Rent Control: The Ceiling Trap