He Knows You Know He Knows... Right?

[Forsher]

How does anyone know anything useful or practical about someone else?

They tell you.

The question, really, is how?

And the question that follows that is "how much should they know"?

Let's start at the top... in a standard microeconomic analysis, all markets (except maybe market gardening) fail. That is, they have some kind of market failure condition. I would suspect the main problem is negative externalities.

The next step people make is usually one of two things. You either say that it doesn't matter that markets fail because everything else fails harder, or you say "yes, markets actually fail, but we can use perfect competition... the only non-failed market type... as a normative reference point". Well, I say "either", these aren't really mutually exclusive positions. In fact, if you're an academic economist you probably believe the former because you think there's merit to the latter.

At this point, you're probably wondering what the logics of markets are. To my mind there are three main ones.

Firstly, market forces create a survival of the fittest situation... only economically viable firms and industries survive (and given how economics defines viability, see market failure, this is tends to become a moral argument; a firm/industry that ought to survive, will). Secondly, this previous reality stimulates firms to align with the wants and needs of consumers, since it's not enough to produce, you must also sell (obviously, this also tends towards moralisation). And, thirdly, prices are the mechanism which allows consumers and firms to identify what the market (which is society) wants.

This might all seem completely insane to you. And, sure, maybe it is insane. But the reality is that there is no country on Earth that has a major political party that believes in the neoclassical synthesis (orthodox economics). Plenty of them say they do but none do. The result is that economies are constantly being subject to rules and debates that, by the premises of the synthesis, probably cause "it doesn't matter that markets fail because everything else fails harder" to not be true. If you're going to use perfect competition to define "best case" scenarios, you should try and achieve outcomes that best resemble what it would achieve. That doesn't necessarily mean trying to atomise everything but, instead, saying "okay, PC says we should have equal market power because no-one has any, which is not desirable for other reasons, e.g. costs, so how else can we have equal market power?" And that's how you get things like Pharmac as a solution to Big Pharma.

In a very, very crude sense... subsidies bad, taxes good, price controls bad, monopolies neutral.

(There are situations where subsidies, for example, are a good idea, it's just that, in practice, usually subsidies exist in markets with negative externalities.)

And that's probably everything you'll ever need to know about microeconomics. Well, maybe with some explanations for what the terms are. And a supply and demand graph.

So... what's this got to do with how this OP started? Simple...

Would the world be better if there were more specific signals?

a signal being some way of communicating information to some other party... it's why we talk about price signals, for example

You might be familiar with this general argument in the context of our dear friend Xero's "tax choice" threads. The argument could've run something like (1) voting is an imprecise signal of what people want, which creates (2) politicians and policies that don't align with society's wants and needs, leading to (3) dissatisfaction and bad outcomes.

You might also be familiar with the idea of cable bundles. For those that don't know, a bundle is a collection of products that a consumer acquires as a collective. The cable bundle is this for pay television channels in the US. They were notorious because usually people only wanted a handful of channels but were forced to buy the entire bundle. This idea of bundling is a big part of the imprecision inherent in the above argument for tax choice. You see, political parties and politicians are a bundle of policies and (other) politicians, so voting for one is interpreted as being support for the entire bundle because you can't disaggregate/unbundle. You might then prove this analysis by taking a situation where you find US ballot initiatives (unbundled policies) that pass even though no party supports the initiative.

(Alternatively, you argue that political parties are zombies. That, in fact, voting isn't the only available signal, elections are merely the survival of the fittest mechanic. From this POV you instead looks to electoral laws insulate politicians and parties from the voting mechanisms, e.g. the US Electoral College, FPP, gerrymandering, rotten boroughs, the 5% threshold, [insert electoral law failure of your choosing here].)

A totally different way of looking at it is the idea of salience.

In orthodox economics, something is salient if it's a factor that an economic actor (e.g. you, Apple, the Democratic Party, the local dairy, whatever) takes into account when deciding what to do. I'm mostly familiar with the idea in the context of, yes, taxes. Basically, if you want to raise revenues using a tax, you want to make the tax non-salient... e.g. setting it at a level too low for people to care about (e.g. 2c on a $1 bar of chocolate)... but if you want to change behaviour, e.g. if you don't want someone to buy chocolate, you set it so that it's salient (e.g. a 200% tax on chocolate, making that bar $3).

Driving a car is a classic negative externality situation. As the saying goes "you're not stuck in traffic, you are traffic". Congestion is one of many, many negative externalities associated with the private automobile.

Now, there are lots of costs associated with driving a car. You've got to learn to drive, you have to acquire a car, you have to pay for petrol/diesel/electricity, you need a licence, you need a warrant, you need a rego, you need (in some places) insurance, you (in some places) need to pay for parking and so on. However, how many of those costs are experienced when you sit down at the wheel ready to drive?

None. Unless it's some kind of hire car with a deposit or flat fee (presumably with some ongoing time or mileage cost).

In other words, the costs of driving are non-salient, which leads to more people driving than they otherwise would be. And that means there's more traffic than there should be and more pollution and more accidents and so on.

And that's the long version of the opening to this OP.

---

So... is specific information necessary to achieve a better world?

I don't have a nice hot take like the "tax choice, now" argument buried in that spoiler. Instead, I have a "it depends" answer.

I agree with the rationale for tax choice.., at least, the version I presented. It's just (though this is a big point) that I think the conclusion is, as I said, electoral zombies cause those issues, not the vagueness of voting signals. But, there are some situations where I think the flawed signalling present in the English speaking world is a big part of the problems we generally like to talk about. Like the driving example.

I suppose it's also a question of how evil you feel people are. It's one thing to say "if people had better information, the world would be better" but that rather implies that the issue is a lack of information. And when it comes to, particularly in the US, zombie political parties, I don't think lack of information is the problem. Instead, I think there's no punishment for being bad. And that's kind of true in the car example, too... except what I'm saying is "the punishment already exists, it's just not salient so people keep driving anyway".

Anyway, what say ye, NSG?

[The Kingdom of the Three Isles]

How does anyone know anything useful or practical about someone else?

They tell you.

The question, really, is how?

And the question that follows that is "how much should they know"?

Let's start at the top... in a standard microeconomic analysis, all markets (except maybe market gardening) fail. That is, they have some kind of market failure condition. I would suspect the main problem is negative externalities.

The next step people make is usually one of two things. You either say that it doesn't matter that markets fail because everything else fails harder, or you say "yes, markets actually fail, but we can use perfect competition... the only non-failed market type... as a normative reference point". Well, I say "either", these aren't really mutually exclusive positions. In fact, if you're an academic economist you probably believe the former because you think there's merit to the latter.

At this point, you're probably wondering what the logics of markets are. To my mind there are three main ones.

Firstly, market forces create a survival of the fittest situation... only economically viable firms and industries survive (and given how economics defines viability, see market failure, this is tends to become a moral argument; a firm/industry that ought to survive, will). Secondly, this previous reality stimulates firms to align with the wants and needs of consumers, since it's not enough to produce, you must also sell (obviously, this also tends towards moralisation). And, thirdly, prices are the mechanism which allows consumers and firms to identify what the market (which is society) wants.

This might all seem completely insane to you. And, sure, maybe it is insane. But the reality is that there is no country on Earth that has a major political party that believes in the neoclassical synthesis (orthodox economics). Plenty of them say they do but none do. The result is that economies are constantly being subject to rules and debates that, by the premises of the synthesis, probably cause "it doesn't matter that markets fail because everything else fails harder" to not be true. If you're going to use perfect competition to define "best case" scenarios, you should try and achieve outcomes that best resemble what it would achieve. That doesn't necessarily mean trying to atomise everything but, instead, saying "okay, PC says we should have equal market power because no-one has any, which is not desirable for other reasons, e.g. costs, so how else can we have equal market power?" And that's how you get things like Pharmac as a solution to Big Pharma.

In a very, very crude sense... subsidies bad, taxes good, price controls bad, monopolies neutral.

(There are situations where subsidies, for example, are a good idea, it's just that, in practice, usually subsidies exist in markets with negative externalities.)

And that's probably everything you'll ever need to know about microeconomics. Well, maybe with some explanations for what the terms are. And a supply and demand graph.

So... what's this got to do with how this OP started? Simple...

Would the world be better if there were more specific signals?

a signal being some way of communicating information to some other party... it's why we talk about price signals, for example

You might be familiar with this general argument in the context of our dear friend Xero's "tax choice" threads. The argument could've run something like (1) voting is an imprecise signal of what people want, which creates (2) politicians and policies that don't align with society's wants and needs, leading to (3) dissatisfaction and bad outcomes.

You might also be familiar with the idea of cable bundles. For those that don't know, a bundle is a collection of products that a consumer acquires as a collective. The cable bundle is this for pay television channels in the US. They were notorious because usually people only wanted a handful of channels but were forced to buy the entire bundle. This idea of bundling is a big part of the imprecision inherent in the above argument for tax choice. You see, political parties and politicians are a bundle of policies and (other) politicians, so voting for one is interpreted as being support for the entire bundle because you can't disaggregate/unbundle. You might then prove this analysis by taking a situation where you find US ballot initiatives (unbundled policies) that pass even though no party supports the initiative.

(Alternatively, you argue that political parties are zombies. That, in fact, voting isn't the only available signal, elections are merely the survival of the fittest mechanic. From this POV you instead looks to electoral laws insulate politicians and parties from the voting mechanisms, e.g. the US Electoral College, FPP, gerrymandering, rotten boroughs, the 5% threshold, [insert electoral law failure of your choosing here].)

A totally different way of looking at it is the idea of salience.

In orthodox economics, something is salient if it's a factor that an economic actor (e.g. you, Apple, the Democratic Party, the local dairy, whatever) takes into account when deciding what to do. I'm mostly familiar with the idea in the context of, yes, taxes. Basically, if you want to raise revenues using a tax, you want to make the tax non-salient... e.g. setting it at a level too low for people to care about (e.g. 2c on a $1 bar of chocolate)... but if you want to change behaviour, e.g. if you don't want someone to buy chocolate, you set it so that it's salient (e.g. a 200% tax on chocolate, making that bar $3).

Driving a car is a classic negative externality situation. As the saying goes "you're not stuck in traffic, you are traffic". Congestion is one of many, many negative externalities associated with the private automobile.

Now, there are lots of costs associated with driving a car. You've got to learn to drive, you have to acquire a car, you have to pay for petrol/diesel/electricity, you need a licence, you need a warrant, you need a rego, you need (in some places) insurance, you (in some places) need to pay for parking and so on. However, how many of those costs are experienced when you sit down at the wheel ready to drive?

None. Unless it's some kind of hire car with a deposit or flat fee (presumably with some ongoing time or mileage cost).

In other words, the costs of driving are non-salient, which leads to more people driving than they otherwise would be. And that means there's more traffic than there should be and more pollution and more accidents and so on.

And that's the long version of the opening to this OP.

---

So... is specific information necessary to achieve a better world?

I don't have a nice hot take like the "tax choice, now" argument buried in that spoiler. Instead, I have a "it depends" answer.

I agree with the rationale for tax choice.., at least, the version I presented. It's just (though this is a big point) that I think the conclusion is, as I said, electoral zombies cause those issues, not the vagueness of voting signals. But, there are some situations where I think the flawed signalling present in the English speaking world is a big part of the problems we generally like to talk about. Like the driving example.

I suppose it's also a question of how evil you feel people are. It's one thing to say "if people had better information, the world would be better" but that rather implies that the issue is a lack of information. And when it comes to, particularly in the US, zombie political parties, I don't think lack of information is the problem. Instead, I think there's no punishment for being bad. And that's kind of true in the car example, too... except what I'm saying is "the punishment already exists, it's just not salient so people keep driving anyway".

Anyway, what say ye, NSG?

5 words: Big Brother is watching you

[Wormfodder Delivery]

This post kinda smells like 3 Letter Agent Energy and somewhat has a glowing effect. Weird.

[Resilient Acceleration]

Is this thread the time for dataism to shine?

[Resilient Acceleration]

Also about the poll, if I can hijack Facebook, surely I can hijack Youtube, which I personally view to be far more juicy and important in terms of hijacking elections.

[Forsher]

Is this thread the time for dataism to shine?

I still find dataism extremely confusing but, this is part of what you were talking about, right?

Interestingly, this thread was inspired by another. Specifically, it was intended to be a more cogent (did I succeed? who knows?) rewrite of what I think this OP was about.

[Forsher]

Also about the poll, if I can hijack Facebook, surely I can hijack Youtube, which I personally view to be far more juicy and important in terms of hijacking elections.

Ooh, dammit. I normally use ten options for these polls but I didn't want to use Twitter and couldn't think of one more on top of that anyway.

And I was just trying to get the Algorithm to learn what my mother is interested in watching the other day, as well. It's honestly uncannily good at finding things I might be interested in (if, however briefly).

But, yes, I would be inclined to agree. I think Facebook has serious retention problems among huge swathes of its userbase.

[Resilient Acceleration]

Is this thread the time for dataism to shine?

I still find dataism extremely confusing but, this is part of what you were talking about, right?

Interestingly, this thread was inspired by another. Specifically, it was intended to be a more cogent (did I succeed? who knows?) rewrite of what I think this OP was about.

Although those who first talk about it don't use this term, I prefer to divide the whole thing into two terms: "informationism" and "dataism". According to informationsim's school of thought, everything in the universe can be viewed as information - stars, chemical processes, DNA, trees, human thought, agriculture, wars, religion, the internet, the economy. Economic systems for example can be thought of as a process of information collection and processing, with capitalist economies regulating things through prices guided by supply and command, while command economies directly do the job of collecting information, controlling value generation processes, and allocating resources themselves.

What differs dataism (an ideology) from informationism (a description of reality), is that according to dataism, "a system able to process more complex information more efficiently is always a better system."

What differs living things from dead things? Life contains and processes far more information. What differs man from animal? Man are capable of generating and processing far more information. Why do societies developed and prevail? They are able to deal with far more information - agriculture, taxes, troop raising and movements. Why did capitalism triumphed over command economies? Capitalism is far more efficient at processing information than committees filled with boomers. Why did democracies prevai over centralized authoritarianism? Because the more people are able to process data, the less likely that someone's screw up will plunge everything into chaos. (And personally, I do think that democracy's most important perk is "the ability to demand transparency, debate, and criticize government policies". In fact, I believe that this can be linked to why the West prevailed as a civilization: in autocracies of legalist imperial China or the Islamic world, absolute rulers tend to monopolize all powers and utilize them for meaningless pursuits of big palaces, religious conservativism, or glory wars. In the West, meanwhile, power is far more decentralized, meaning that more relevant economic and technological factors becomes far more important in the region's decision-making processes.)

Obviously, neither informationism nor datiaism are laws created by God, and I disagree with many dataist proposals (I mean these are dystopia building blocks). But I think it's much more useful if we think of dataism as a trend: things that are able to more efficiently process information will roflstomp things that don't. In this case China of all places is perhaps be the most interesting dataist sandbox, due to the (very apparent) claims that an AI-run economy with zero privacy > price systems. Although I have strong doubts, considering that the CCP is a fundamentally a political entity, not an economic, cultural, or technological one (all of which I think will be able to utilize dataism far better, and with far more interesting results, than the usual Pooh and his fledging 1984).

[Forsher]

I still find dataism extremely confusing but, this is part of what you were talking about, right?

Interestingly, this thread was inspired by another. Specifically, it was intended to be a more cogent (did I succeed? who knows?) rewrite of what I think this OP was about.

Although those who first talk about it don't use this term, I prefer to divide the whole thing into two terms: "informationism" and "dataism". According to informationsim's school of thought, everything in the universe can be viewed as information - stars, chemical processes, DNA, trees, human thought, agriculture, wars, religion, the internet, the economy. Economic systems for example can be thought of as a process of information collection and processing, with capitalist economies regulating things through prices guided by supply and command, while command economies directly do the job of collecting information, controlling value generation processes, and allocating resources themselves.

What differs dataism (an ideology) from informationism (a description of reality), is that according to dataism, "a system able to process more complex information more efficiently is always a better system."

What differs living things from dead things? Life contains and processes far more information. What differs man from animal? Man are capable of generating and processing far more information. Why do societies developed and prevail? They are able to deal with far more information - agriculture, taxes, troop raising and movements. Why did capitalism triumphed over command economies? Capitalism is far more efficient at processing information than committees filled with boomers. Why did democracies prevai over centralized authoritarianism? Because the more people are able to process data, the less likely that someone's screw up will plunge everything into chaos. (And personally, I do think that democracy's most important perk is "the ability to demand transparency, debate, and criticize government policies". In fact, I believe that this can be linked to why the West prevailed as a civilization: in autocracies of legalist imperial China or the Islamic world, absolute rulers tend to monopolize all powers and utilize them for meaningless pursuits of big palaces, religious conservativism, or glory wars. In the West, meanwhile, power is far more decentralized, meaning that more relevant economic and technological factors becomes far more important in the region's decision-making processes.)

Obviously, neither informationism nor datiaism are laws created by God, and I disagree with many dataist proposals (I mean these are dystopia building blocks). But I think it's much more useful if we think of dataism as a trend: things that are able to more efficiently process information will roflstomp things that don't. In this case China of all places is perhaps be the most interesting dataist sandbox, due to the (very apparent) claims that an AI-run economy with zero privacy > price systems. Although I have strong doubts, considering that the CCP is a fundamentally a political entity, not an economic, cultural, or technological one (all of which I think will be able to utilize dataism far better, and with far more interesting results, than the usual Pooh and his fledging 1984).

Okay, I'm pretty sure I follow, but how do you personally moralise this stuff?

Is it necessary to have more specific information (to be more dataist) to preserve the "Western liberal democracy status quo", say? Would doing so be a good thing?

[Bombadil]

Back when I was extremely poor I remember an evening where I was faced with a choice:

1. Take a bus or walk some 5 miles home
2. Buy some food or don't eat that night
3. Buy a pack of cigarettes, walk home and don't eat

I bought the cigarettes. That is, with all the information available to me I essentially made a very poor choice. However I can happily walk home, I was relatively used to skipping meals so I opted for, what was technically, the worst choice in the grand scheme of things but in the short term staved of withdrawal. I'd have been more miserable.

That is data, all available data, is certainly useful to a point - if for example I didn't realise a massive storm was approaching then that lack of knowledge changes the outcome of my decision as to how happy I'd be.

That is, with all the available data, we still have to make decisions.

It reminds me of that criminally underrated film - Margin Call - where after a long speech about the lifetime hours saved by building one single bridge the response was 'Hey, some people want to take the long way home'.

[Resilient Acceleration]

Although those who first talk about it don't use this term, I prefer to divide the whole thing into two terms: "informationism" and "dataism". According to informationsim's school of thought, everything in the universe can be viewed as information - stars, chemical processes, DNA, trees, human thought, agriculture, wars, religion, the internet, the economy. Economic systems for example can be thought of as a process of information collection and processing, with capitalist economies regulating things through prices guided by supply and command, while command economies directly do the job of collecting information, controlling value generation processes, and allocating resources themselves.

What differs dataism (an ideology) from informationism (a description of reality), is that according to dataism, "a system able to process more complex information more efficiently is always a better system."

What differs living things from dead things? Life contains and processes far more information. What differs man from animal? Man are capable of generating and processing far more information. Why do societies developed and prevail? They are able to deal with far more information - agriculture, taxes, troop raising and movements. Why did capitalism triumphed over command economies? Capitalism is far more efficient at processing information than committees filled with boomers. Why did democracies prevai over centralized authoritarianism? Because the more people are able to process data, the less likely that someone's screw up will plunge everything into chaos. (And personally, I do think that democracy's most important perk is "the ability to demand transparency, debate, and criticize government policies". In fact, I believe that this can be linked to why the West prevailed as a civilization: in autocracies of legalist imperial China or the Islamic world, absolute rulers tend to monopolize all powers and utilize them for meaningless pursuits of big palaces, religious conservativism, or glory wars. In the West, meanwhile, power is far more decentralized, meaning that more relevant economic and technological factors becomes far more important in the region's decision-making processes.)

Obviously, neither informationism nor datiaism are laws created by God, and I disagree with many dataist proposals (I mean these are dystopia building blocks). But I think it's much more useful if we think of dataism as a trend: things that are able to more efficiently process information will roflstomp things that don't. In this case China of all places is perhaps be the most interesting dataist sandbox, due to the (very apparent) claims that an AI-run economy with zero privacy > price systems. Although I have strong doubts, considering that the CCP is a fundamentally a political entity, not an economic, cultural, or technological one (all of which I think will be able to utilize dataism far better, and with far more interesting results, than the usual Pooh and his fledging 1984).

Okay, I'm pretty sure I follow, but how do you personally moralise this stuff?

Is it necessary to have more specific information (to be more dataist) to preserve the "Western liberal democracy status quo", say? Would doing so be a good thing?

I still view dataism as more of an "observation of trends", rather than a "coherent ideology that tells you to do something specific". Like how almost all encounter between an agricultural society and a hunter-gatherer frontier society almost always results in the decimation of the latter, or how people who are able to read are orders of magnitude more prosperous on average than people who can't. These observations don't necessarily determine whether something is "good" or "bad", they just "happen".

And what makes the Western liberal democracy a "good thing", anyway? If savage nomads, horrific plagues, or drought can kill off half of your neighbors on regular frequency while you or your king can literally do nothing except pray to God, then liberal democracies seem ridiculous if compared to alternatives of militaristic empires or theocratic medieval kingdoms. Vice versa, if the loss of privacy and the significant increase of authority for artificial intelligence results in a far better decision-making process, economic policies, and an increase in immediate happiness than what our current political and cultural institutions are able to do, they will win. If, for example, the EU decided to banhammer various technological advancements to preserve their social-democratic status quo, they will rapidly be economically outcompeted by the United States or China simply due to differences in raw power, just like what imperial Qing found out when technologically advanced Europeans shows up at their coasts.

To be honest, while I'm quite sure about the "what will happen" part, I don't have the answer for the "what needs to be done" part. The rise of AI combined with the information revolution of instant data access everywhere is truly as significant as the agricultural revolution. Actually, talking about the agricultural revolution, one needs to realize that the living conditions for the peasants are insanely horrific with the Mesopotamian kingdoms being essentially all slave-states. If you ask a hunter-gatherer society whether moving civilization in that direction is "good", the answer will be very nuanced. The same question applies to today.

But if I have to put my two cents, I'd put my money away from traditional means of problem-solving like elections, and into new methods or institutions that emerged or are designed directly to deal with the problems that will arise. (Although this might is because I already have a very low opinion of my country's political actors anyways, and are thus far more supportive to those out of the loop who try to break the status quo by inventing completely new things).

[Xerographica]

The answer to the whole highway problem lies in “pricing” the highway correctly. The existence of congestion on our streets and highways is solely due to the fact that we do not charge high enough “prices” for their use. This is one of the main functions of price in our free enterprise economy… [p]rice relieves potential congestion around our meat counters, our motels, and our models. Why do we shun its usage in the case of highway services? — James Buchanan, Painless Pavements: Highways by High Finance

We all want things for free, but virtually everybody misses the point that the abundance of the things we want is a function of our costly signals directing society's limited resources accordingly. Orchids, for example, used to be very scarce but are currently abundant because, and only because, wealthy people back in the day were willing to shell out tons of money for them. This huge amount of money strongly signaled and motivated crazy/brave people to risk their necks going half way across the world into jungles to collect orchids. It eventually strongly signaled and motivated some geniuses to figure out how to reproduce orchids using a flasking method. As a result, orchids went from scarce to abundant. Do only rich people benefit from this abundance? Nope. Countless people benefit and we know this to be true because they willingly spend their money on orchids. It's an incredibly involved and participatory process.

What is the alternative? We go back in time and everybody votes for orchids? Or we vote for representatives who want to supply more orchids?

Society has this expectation that it's possible to skip the market process and voila... optimal transportation. Nothing could be further from the truth. We only get anything even remotely close to optimal when each and every person has no choice but to personally sacrifice what they consider to be the less beneficial alternatives. Anything else is voodoo nonsense. There's absolutely no scientific support for it.

Here in this forum we all want an abundance of entertaining and interesting threads. But the only way we can get remotely close to this is if each and every one of us has the opportunity to specify/signal with our own money what we personally consider to be entertaining and interesting. It would be a different story if we were all the same. But we aren't. We are all weirdly and wonderfully different. This is society's most useful thing, but we squander it.