Saturday assorted links


1. The problem with Silicon Valley isn't the $120 million juicer. The problem with Silicon Valley is that it chose the easy path to generating cash flow and is now addicted to it. Of course, the easy path is the advertising platform. $120 million juicers, like flying cars and spaceships to Mars, at least advance technology rather than another advertising platform. But these are the hobbies of billionaires, not the technology that can jump start the economy into another industrial revolution. Don't get me wrong, technology won't go anywhere if it can't generate cash flow. I devoted several years to a telemedicine project (in particular, capnograhy) that had enormous potential to advance health care. The problem was in generating a cash flow that would support the investment. Silicon Valley figured out an easy path to generating cash flow (well, those who went first did, as they now capture most of the cash flow), and that's great. Indeed, it's possible that by pursuing the hobbies of billionaires Silicon Valley may stumble upon something useful. Something besides juicers, flying cars, and spaceships to Mars.

Arguably, marketing is the most important aspect of modern capitalism. To what extent did the almost magic post-war American economy coincide with the golden age of advertising and mass marketing through mass communications? To what extent are our current economic doldrums and outright stagnation due to the collapse of mass marketing?

wow ... your way off course with that post

'production' of goods & services is the most important aspect of modern (and past/future) capitalism

marketing is a far secondary function, greasing communication between sellers & buyers

Marketing and Sales people are by far the best renumerated types of positions, engineering/production jobs are far less renumerated in general and therefore you are wrong. The marketing and sales functions are what is actually important.

... marketing/sales are merely employees of the "capitalists" (owners/investors) -- owners/investors of successful businesses make the big bucks

You are correct. Brilliant inventors who lack sales and marketing skills have the same role as carpenters in today's economy.

Production is only relevant if there is a market. How are markets created? How is demand created? If there is demand for something how do purchasers find the producers?

Yellow Pages has lost relevance and value because people don't look in a phone book anymore, they search online. But Yellow Pages was the basis of many a business and it still hasn't been replicated entirely by online advertising. Maybe that is one of the causes of stagnation.

And yes, production of goods and services is important, no question. You need the capability to supply demand.

'Production is only relevant if there is a market. How are markets created? How is demand created? '

Because we all get hungry might just be the answer for food production - and the market for food is probably the source for all subsequent markets.

Sure. So you need a refrigerated cabinet for food preparation. Who makes them, who sells them, who services them? What is the price, when can I get one? What options do I have that would fit my purpose? Who would ship it? I need to modify my workspace. Who is experienced in that, who can help me lay out the space effectively? Who can deal with the ventilation, the regulatory requirements, who can put in the plumbing and electrical?

On the other end, who can tell the manufacturer what to make? What do food preparation people need to do their jobs? Where are they located, what is the price range that makes economic sense? Who else is producing these thing?

The first markets in food were people showing their products to others. Marketplaces were where buyers and sellers congregated, creating a noisy and active space where arguably the foundations of civilization began. Proximity to the market was a measure of prosperity for both the buyers and sellers.

I don't go to a noisy market location to buy and sell things now. The means of communication are different. But someone has to communicate what they want to buy and what they want to sell. That is all marketing and advertising is.

I'm surprised that it is even a question.

"How are markets created?"

do you need food or clothing ... or perhaps would like eyeglasses or plumber services ?

Those kinds of things are spontaneous "demand" --- no salesman or advertising agency required to stir up consumer interest

{how well did those Edsels sell with high-powered Ford advertising?)

I don't know how to say this politely, but you don't have the faintest clue how the real world works. That plumbing service you talk about, that you need. Where does the plumber get the pipe, the fittings, the tools, his vehicle, the means of which you contact him? He gets it through someone selling to him. He knows what is available becomes someone told him. They know what he needs because they asked.

How did you know who to call? A service business like that where there are hard costs per volume doesn't hire an agency to generate massive interest because they couldn't supply the demand. Other businesses are different, where high volume is required so they hire someone to do video or audio advertising, and high quality is expensive.

This is very very basic economics. The specialization of trade. Some people sell the communication between buyers and sellers. The plumber doesn't have time to scour the world for products. He depends on sales representatives and targeted advertising to know what is available. So do you.

And like any function in an economy, when it facilitates the transactions, oddly enough more transactions occur. Markets are created by those who enable the transactions. They wouldn't exist without them.

And yes, failures happen. But isn't a free market economy about failure, allowing failure to happen? Which again oddly enough creates a thriving and growing economy as ideas are tested.

The term word of mouth does mean something to you, right? How do you think most people, for most of human history, found out where and what to buy? Then there is the idea of a peddler - whether a peddler is a salesman as compared to a middleman is a discussion for itself, obviously. And in many places and times, if you wanted footwear, you went to the street where cobblers practiced their trade - and if for some reason you did not know where that was, you simply asked until someone told you how to find it.

When you have unique needs you don't have word of mouth. I had a side door that accidentally locked and I was without a key. A web service allowed me to describe the problem to a pool of locksmiths at once and find one who could pick a lock instead of one would have to drill the door, without my having to call a dozen locksmiths through the yellow pages

You're both right.

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

--Peter Drucker

I do think there is an unhealthy focus on advertising, and to some degree it should be viewed as an externalized cost like pollution. I just don't know how one would quantify that.

Anyone wondering what "Silicon Valley" has been doing all these years, should just remember what the Osborne 1 was (and if you were fortunate, what it was like to use).

4. Fail in your job duties and you may be cryogenically preserved early. Next!

2. Kevin is a true asset to NR but this article has a patronizing tone which frankly elicits a visceral rejection of the premise. If he wanted an honest discussion with women on whether we should pay more for insurance he might have approached this subject without the condescension. I can't discuss this article with my friends without half of them blowing their top. First response was "maybe a womb rental surcharge would change his mind". $100,000 to carry him to term would even things out nicely.

2. Should a Darwin Award tendency be factored into healthcare costs for the other sex? Even if the attempts are failed, these are costs we must consider.

Did Tyler disappear another link?(Not that I'm complaining, Kevin Williamson is a cuckservative.)

I disagree with Kevin's article is the tons he uses is exactly the one one should use when talking to those people.

Looks like the link for #2 should be this:

"Four enemies plunged into the first choke point and overwhelmed me. Biu yelled out when I died."
I am told it never gets easier.

Multiline games are popular, but many seem to have communities that are toxic, or have random players that don't play the game as intended. Some might say they enjoy screwing up other people's games.

On Steam (the major PC gaming service) there are constant threads on multiplayer games for people looking for others to play with. This is especially true for games that are a little bit older with smaller communities, or for games that are designed to be played cooperatively.

## 3 game theory and North Korea

fairly good discussion of the current North Korea topic

{surprising how last week's frantic headline news coverage of Trump/NorthKorea War/WWIII was totally replaced by this week's frantic Trump/Comey-firing news --- seems like the MSM really likes to hammer Trump and the choice of hammers is unimportant to the urge for hammering}

North Korea is not a U.S. problem. South Korea & Japan can and should handle it, perhaps with China cooperation. U.S. should pull out every last soldier in South Korea; we've wasted over a trillion dollars there and much blood.

Any war with North Korea would be a huge disaster for all parties. Negotiation is the only rational option, North Korean overal leadership is barbaric, but not irrational -- they want something for themselves personally and that's the key to successful negotiation. Kim Jong-un can not and does not rule by himself -- he's got an elite group of people supporting him -- they would feed him to the dogs if offered a better deal for themselves (and maybe for their homeland).

I think that the problem with North Korea goes beyond Korea. The South Koreans are not all that anxious about the NorKs as evidenced by their recent elections. However, US interests have to be cognizant of the fact that if an economy the size of NorK can build a couple of nukes and 1000 kilometer range missiles it means that a hundred other nations can. Game theory can't analyze a 100 player situation, and a realistic approach would be that human stupidity just about guarantees disasterous outcomes with a large number of nuclear powers. We consequently need to stop the NorK arms program. It is not immediately clear to me what the best strategy to achieve our goals is. We appear to have chosen to browbeat by threats.

I guess if the real concern about North Korea is dissuading other nations from pursuing nuclear weapons programs, then we should just go ahead and invade them now as opposed to later, to prove to everyone that pursuing nuclear weapons as a means to deter invasion and regime change is not a viable strategy. S. Korea, China, and Japan will all hate it, and China will certainly do everything in its power (perhaps short of sending in troops or engaging in sorties) to increase US casualties. However, the point is US interests, not S. Korean, Chinese, or Japanese interests. If it is the case that stopping N. Korea's nuclear weapons and missile program is in of such paramount concern.

#7 Sociology may be a joke but the essential claim here, that Tricky Whitey uses licensure to lure large numbers of naive minorities into certain "professions" thereby swamping those fields with supply and driving down wages, would be fun to interrogate but the author failed to supply any evidence for it.

1. Silicon Valley handily beats Sturgeon's law, but jealousy leads to motivated thinking and poor analysis. Never mind the 12 inventions that improved my life this morning, the Juicero is the nail with which to drive my emotion. Shakes fist.

7. I know that restrictive covenants (private enterprise) don't have quite the appeal as Regulations! (government) as an explanation for all that's wrong in the world, but I will suggest that readers (and Cowen) consider the (very unAmerican) cancer that has spread throughout the economy, from the executive suite to the factory floor. Here's a anecdotal article on the subject. Don't get me wrong, I write employment agreements with restrictive covenants almost weekly, to the dismay of the recruit who has little choice but to accept it. The adverse economic effects of restraints of trade caused by Regulations! is a common theme at this blog, but restrictive covenants are a restraint of trade that is self-imposed by business. Do as I say not as I do.

In california, non-compete agreements are illegal. It is one of the reasons that sillicon valley out-competed other tech centers in the US according to this book:

I was pretty disappointed in the game theory article, its hard to see any advantage of the game theory approach versus simply scenario planning where you brainstorming ideas as to what NK might do and think of responses and then prepare a mitigation. Game theory works very well as an academic tool, but I bet no-one would ever use it to make a real decision that mattered.

On best strategy for dealing with NK, the current one of simply waiting it out is probably the best. Even if they did develop a viable nuclear weapon and delivery system, what could they use it for? If they attacked US or SK they would know if would be end of the game for them.

The problem with traditional game theory is that it requires the assumptions that I know that you know that I know... that you are rational and vice versa. Donald Trump and Kim Jong Un both want people to think they are not rational and maybe one convinces the other of that fact.

What if they both actually are not rational?

Dave Roberts, on Trump and "Theory of Mind" is a bit over-long, but it is probably the key thing to understand.

Game theory doesn't require complete knowledge, or even other rational players. You could just choose to minimize the worst outcome. Of course without rational players it's hard to negotiate.

The captured USS Pueblo, docked in North Korea and used as a tourist attraction since 1968, is physical evidence that a US military response to NorK aggression isn't guaranteed.

Capturing a ship is not the same as attacking someones homeland with a nuke.

Here is my beef with "Silicon Valley" (as it is constructed in all these discussions): to use Cowenian (?) terms, "SV seems unable to raise its own status without lowering the status of other groups." I don't mind when "SV" blows money on a juicer. I admire SV when it invents a new handy gadget or app. I don't even mind SV when it pompously praises itself for coming up with some gizmo. What "really grinds my gears" (to quote a great philosopher), is when SV tries to raise its status by lowering the status of others. E.g. Teslarati like to praise the Model 3 by making fun of the Chevrolet Bolt. Ideally, they would see both cars as advancing the automotive electrification that they favor, praise both for being good tries at advancing the cause, and then evaluate the two on objective bases (e.g. range). But instead from Tesla fanboys I hear more often comments like "Bolt? That's from General Motors, it's a dying dinosaur!" Of course, I suppose one could argue that there is a fixed quantity of status, and so to raise mine I have to lower yours, but I don't buy that.

(A parallel argument I make is in politics in America, where when side A favors X and side B doesn't, B doesn't attack X on its merits, but on the basis of it being liked by A, so inherently it must be flawed.)

(God, I am so naive about human nature I scare myself. Do I really think any criticism of SV will cause SV to think any differently?)

Why don't you write that up with quill and ink, and mail it to someone who cares.

And make juice with your hands like a stupid savage!

General Motors needs high volume. Tesla needs enough sales to exist. The products and strategies they will use to reach their goals will be as different as the products they make. Tesla needs a high margin, so needs to go for the luxury market.

Silicon Valley has picked the low hanging fruit. Once you put all the newspapers out of business by taking their advertising dollars, then what?

I think the challenge Silicon Valley faces is actually being an engine of growth for the economy they depend on for their growth. They are a service industry, and the industry they service needs to grow. Their products paradoxically are being used by business and government to efficiently implement policies and procedures that are anti-growth. Centrally controlled monopolies are now possible with technology, but they are not a vibrant vigorous source of economic growth.

You guys are gleaning the bits of Silicon Valley you want to hate, and forgetting the rest. Who are Cisco, Intel and NVidia?

And Apple and Uber and AirBnB and....

And AMD, HP, Google and Netflix

#...Why is each body individually wrapt, so to speak? Wouldn't it be cheaper to pile the bodies on top of each other?

It says something about Alexander's audience that they need a long essay to explain to them that different people value different things.

And he doesn't even point out that the VC money for the things his crowd likes comes from the people who buy $400 juicers.

You must not read much Scott Alexander if you think that was a *long* essay. It was quite terse by his standards.

So what's wrong, and right, about Silicon Valley? The first thing is that many people don't understand what it really is: A bunch of people that were very successful in the first computer revolution happened to live in the same region and, unlike those in Texas, figured out that investing in the next set of companies was a great idea. Thus, what makes the Bay special is not Berkeley and Stanford, but the immense concentration of venture capital that is willing to invest in computers. Founders just have to move there because it's far harder to raise early, and even mid rounds if the VCs are more than a short drive away from your team and your product.

This disparity in ease of capital doesn't just mean that anyone doing something very dubious has to do it in the valley, but, in practice, it makes it so much easier to make a tech company of any sort in SV that it makes very little sense to even attempt doing this somewhere else. So we have a lot of high quality, quiet companies doing great things that nobody has heard about, along with a whole lot of consumer facing companies which are often either low value, or downright crazy, Juicero style.

Having all those companies together though gives the area a unified culture which isn't the best. The situation in Uber is well documented. The crazy perks, from meals better than most restaurants to company private transport systems, help separate those working at the most successful companies from the people around them. But there's a lot of subcultures there that aren't anywhere as easy to dislike, but you don't hear much about them because they don't really need the publicity: They all hunker down and try to make their product successful. So our opinion of Silicon Valley has more to do with the little bits of it that we see, instead of what the place really is.

Is cryopreservation taxable as income when provided by one's employer? If not, that may explain why it's so expensive on the individual market. When people get cryopreservation through their employers, they stop thinking about the cost. In any event, cryopreservation is a fundamental right. No one should have to die permanently just because they don't have money. Government should provide "free" cryopreservation, or at least mandate that everyone buy it and provide subsidies to those that can't afford it. Also, even if someone doesn't cryopreserve himself when he dies, he should still be brought back to life in the future. No one should be denied immortality because of a pre-existing condition.

1. Funny he titles it a "reality check" and the lists a bunch of technologies which aren't actually real or are only in the prototype, not-yet-cost effective stage like an artificial pancreas, cultured meat, and "a structured-light optical engine to manipulate single cells and speed up high-precision biological research."

If I had to guess, a lot of the ire directed at Silicon Valley comes from two sources:

1. The rest of the economy has more or less stopped innovating and Silicon Valley is expected to pick up the slack. However, since the tech industry only makes up around 2% of the economy, it really can't carry the economy by itself and people's​ (unreasonable) expectations aren't met.

2. A lot of Silicon Valley boosters made a lot of utopian promises and those promises look a little ridiculous now. Remember in the 90's when the internet would make geography obsolete? Remember during the Arab Spring when social media would stop authoritarian regimes? Remember when software was going to eat the world? Those promises never really paaned out. When you promise the world and deliver the Juciero, are you really shocked that people are making fun of you?

#4...I can just see it now..."Forget the children, make sure to save the cryogenic pods!"

The problem with Silicon Valley is that it does everything the most inefficient way possible. If they actually want to help people in Africa, the work should all be done out of Africa. Money is fungible, so this should be easy - why use the most expensive realty in the world instead of the cheapest.

Basically half the companies Alexander mentions are scams and many of his statements are false. For example even if you like solar, it is all lead out of China (Trina Solar etc.). But of course nuclear is much better and all the permit delays are completely artificial and unnecessary. Many of the problems have a root cause in politicians elected and funded by Californians. And of course deadspin was wrong to claim SV is libertarian, no libertarian would spend time in coastal California and we are the first to point out that most products and services are pointless.

Which states have higher GDP growth?

Anyone have an ungated link to the occupational licensure article?

No doubt there are a lot of good companies in SV.

I think what gets people in the attitude. In SV everyone is convinced they are the hottest shit saving the world, assumes only people in SV are worth shit, think that rent in SV is the #1 productivity issue in the whole world, and like to get very up into peoples business on issues unrelated to their business (culture, politics, etc).

One of the companies listed, the diabetic one, is simply trying to be second to market on something Medtronic already made. Medtronic is HQed in Minnesota, and from the website seems to employ lots of people, including very qualified professionals, all over the country including many second tier cities. Somehow all these boring professionals out in middle America managed to just quietly made the world a better place without all the SV baggage.

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