“It is difficult to make predictions, especially about the future,” says a proverb often attributed to Yogi Berra. Imagine the world of freedom, or lack of it. Who could foresee the technologies that make our lives so rewarding and convenient? The same technologies have us all under the government’s giant microscope. Thankfully, the brave have turned the microscope around.
In the months since Edward Snowden revealed the nature and extent of the spying that the National Security Agency (NSA) has been perpetrating upon Americans and foreigners, some of the NSA's most troublesome behavior has not been a part of the public debate.
The problem for NSA apologist is that when guys like Snowden disclose that the government conducts comprehensive surveillance in ways that would have made 1984’s O’Brien drool, it puts the entire progressive agenda in jeopardy.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
In times of war and national emergency, it’s sometimes necessary to sacrifice civil liberties to secure vital gains in public safety. In those cases, we may have to accept a loss of privacy or freedom rather than invite mass slaughter of Americans.The National Security Agency’s domestic phone records collection is not one of those.Never have […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
Image: ShutterstockBitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
We’ve pointed out in the past that President Obama’s views on the surveillance state shifted completely from when he was Senator to when he was President. As Senator, he supported a bunch of reforms that are very much like the ones his panel have suggested — and which he’s about to ignore. The NY Times […]
Bitcoins are largely considered digital currency (or “crypto currency”) so you’d expect it to be treated like currency on a retail web site. But the Internal Revenue Service might not think so.
The great inventors/businessmen of the First Industrial Revolution, such as James Watt and Matthew Boulton of steam-engine fame, were not just smart but privileged. Most were either born into the ruling class or lucky enough to be apprenticed to one of the elite. For most of history since then, entrepreneurship has meant either setting up […]
Both research and production look poised for a revolution as 3-D printing applies its high-tech charms to the business of creating chemical compounds and turns the production of medicine into a DIY project.
“Tea. Earl Grey. Hot.”When Capt. Jean-Luc Picard wants a steaming beverage in his ready room aboard the starship Enterprise, he just utters those words. The ship’s “replicator” then assembles the necessary atoms — including those for the cup — and produces it, ready for the drinking. Picard thinks nothing of it — it’s hardly more […]
The market has selected different things as money throughout history. Some of these items have served as money in isolated places for specific periods of time — for instance, cigarettes in prisoner-of-war camps. Cigarettes continue to be a currency in prisons if allowed, but if not, according to Wikipedia, “postage stamps have become a more […]
[Ed. Note: This article originally published on Jan. 24, 2013]Stocks up. Gold down. Bitcoin… waaay up.The S&P 500 busted through the 1,500 mark this morning. Stocks haven’t been this expensive since 2007… right before they got a whole lot cheaper… for a whole lot longer. Gold, meanwhile, dipped a tad. This, despite central bankers of […]
Before the housing market collapsed and the government pumped billions into the economy to save it, there was a programmer named Satoshi Nakamoto. And without much fanfare, he created an idea that’s in the process of changing the world. His idea was Bitcoin.Some background information is in order before I go any further.Think back to […]
Americans are still trying to get a handle on the full extent of the government’s domestic spying activities, including the recent revelation that the National Security Agency (NSA) has been collecting and storing the email address books of ordinary Americans using online messaging services. Many users of such services are looking to tech executives for […]
The online Internet exchanges created by the Affordable Care Act are up and running.OK, they’re up. Uhh, OK, some of them are sort of up.It has been almost a week since last Tuesday’s initial launch, and there have been more than a few problems.Website crashes, excessive response times and other problems have plagued the exchanges. […]
A growing consensus of IT experts, outside and inside the government, have figured out a principal reason why the website for Obamacare’s federally sponsored insurance exchange is crashing. Healthcare.gov forces you to create an account and enter detailed personal information before you can start shopping.This, in turn, creates a massive traffic bottleneck, as the government […]
As much as I love technology, part of me hates being so dependent on a live wall plug wherever I go. You find yourself trapped in some setting without accessible wall plugs and your phone is dying. You charge from you laptop, but that is dying too. You take recourse to your tablet, but that […]
U.S. and British intelligence agencies have successfully cracked much of the online encryption relied upon by hundreds of millions of people to protect the privacy of their personal data, online transactions and emails, according to top-secret documents revealed by former contractor Edward Snowden.The files show that the National Security Agency and its UK counterpart GCHQ […]
Today, like most days, I fired up my computer.I read freely available information on the latest developments in technology that would, in the not too distant past, have required a drive to a library to flip through journals too numerous for me to afford. I read the latest national and global news without having to […]
On a Sunday afternoon swim, a 6-year-old boy was bugging me in a sweet sort of way. He rode up and down the handrail on the stairs in the shallow end of the pool where I was trying to sit in peace. He was laughing and talking, but I couldn’t understand a word through the […]
I’ve just completed a heavy schedule of talks at the Agora Financial Investment Symposium in Vancouver. All my talks centered on information economics, Web startups, and the productivity of the Internet and its meaning. As usual, I learned as much from the attendees as (I hope) they learned from my talks. The research I did […]
That headline probably seems strange coming from me. I’ve been a champion of social media, and my book A Beautiful Anarchy has a chapter on each of the most popular social media outlets: Facebook, Twitter, LinkedIn, Skype, Google+, and so on.
These tools have connected people as never before, and given people the power to manage their own lives and careers in ways that were not possible in the past. These sites have made us less dependent on institutions like government and workplace bosses and liberated millions to be in a better position to build their own private civilizations.
Yet this article has one message: Shut them down. Not entirely down. Everything I’ve written still applies. But there are uses and there are abuses. The trick is to tell the difference and act on it.
The point came to me this weekend when I was speaking at Duquesne University in Pittsburgh. Antony Davies of the economics department worked with the Institute for Humane Studies to set up this lecture. It was gratifying that on a freezing cold Friday night, in the science building in the middle of campus, 150 or so people came to hear about the relationship between ethics and the market economy. I spoke for fully 90 minutes and there was more to say.
Mostly, I was happy to have the chance to visit with so many young students and professionals about trends in the market today. Many of them wanted detailed reading lists and specific references to the books about which I spoke, most of which we’ve made available in the Laissez Faire Club.
Again and again, they complained of a problem. They don’t have time to read. They don’t know what to read to give them the best information given their limited time. There is no shortage of material, but what should they be reading that is going to give them the fastest track to wisdom that will truly improve their lives.
This is a gigantic problem in our time. In the Middle Ages, books were only for the tiny few. They took years and whole teams of scribes to make. When they were finished, they were the most valuable possession a person could have. Actually, very few individuals owned them at all. They were the possessions of large institutions that could create and guard them, institutions like governments and monasteries. They were more valuable than buildings and even people.
The world craved more books. When Gutenberg created the first copy machine for books, the company couldn’t keep up with the demand. It was total frenzy on the streets, and the dawn of a new age of learning.
Today it’s all different. We are flooded with information, most of it available at zero unit price. But the time and attention it requires of us carries a high opportunity cost. After talking with so many people about this problem — a nice problem to have — I’m struck by the real possibility that despite the access and the information flood, people are actually reading less than they ever have. A main problem is the flood and the confusion about what to read.
This is a major reason we established the Laissez Faire Club in the first place. Our job is to carefully curate resources and provide every possible tool to help you make the decision about whether investing your time in a particular book is worth it for you. We’ve put together a growing package of only the best gems from the best body of work that stand the chance of making the biggest possible difference in your life.
As time has gone on, I’ve come to realize that this is the most valuable service we offer. The comment I receive more than any other: “The Club has inspired me to do what I should have been doing for years.”
As I spoke to these students and professionals, I would inquire further on how they tend to spend their time. The same answer kept coming back at me. They spend their time on Facebook, Pinterest, and Twitter. They try to direct their attention to longer-run pursuits, but these venues keep pulling them back in.
- “Oh, someone just commented on something I said”
- “Someone just retweeted my tweet!”
- “Someone is liking my meme that I just liked”
- “Someone just commented on a post that I commented on.”
This is a bottomless pit. Add it all up and what you have is endless hours of wheeling, spinning, and largely pointless blather. All these interruptions and comments and quick reads take a serious toll on the overall quality of your life. This habit takes something that is truly wonderful and turns in into a massive time suck that, over the long run, contributes very little to your life compared with the things you are being prevented from doing.
Am I saying that what I used to say was valuable is actually not valuable? Not in any way. And let me explain this by reference to an amazing book that I happened to be reading over the last four days. The book is The Common Sense of Political Economy by Philip Wicksteed. It is a mighty economic treatise, and the Laissez Faire Club releases the first-ever e-book edition this Friday. It is the longest, most elaborate, and most interesting book on the theory of marginal utility ever written.
The core point of marginal utility is that there is a strong and decisive difference between the total value of a good or service and the marginal value of a good or service. To look at marginal value means to look at the value of the individual unit that you are in a position to consume. This is the relevant value for understanding economics.
Something can be hugely valuable for life (water, clothing, food) yet have a very small marginal value at the point of decision making. Also, the marginal value of anything falls the more it is consumed. When you are dying of thirst, the first drink is priceless. When you are bloating from drinking gallons, someone might have to pay you to drink more. This is because we all make decisions not on the total, but based on the marginal, unit.
Reading The Common Sense of Political Economy brings the point home. It explains why I am willing to pay $3 for a cup of coffee when I could be paying 10 cents by brewing my own. It explains why plumbers make more than baby sitters even though the job of the baby sitter is seemingly more important. It explains why rap stars make more than professors even though professors are dealing in big ideas whereas rap stars are only entertaining us. It explains why banks close on holidays and restaurants stay open.
Wicksteed’s book opens up a new way of looking at the world, which is why it has been chosen to be part of the Laissez Faire Club’s e-book library.
Here is how social media is affected by marginal utility. Getting on there and getting your name out is gigantically valuable. Assembling a network of contacts is crucial. Having this network be portable, attached to your person, can make the difference between success and failure.
The problem is that the marginal value of each additional contact and interaction falls over time. After the 1,000th status update or comment or interruption, the value becomes zero or negative. Of course, what we call “value” is ultimately subjective, but the enterprises behind these tools are very anxious to find ways to affect your subjective sense of the value of their service. They want to convince you that the marginal value of each interaction is higher than you might otherwise think. If you go along with it, you could turn around and see your whole life sucked into a pointless endeavor.
The point of learning about the theory of marginal utility is to become more aware of the opportunity costs you are paying for all of your choices. To be sucked into the social-media vortex could ruin your ability to be productive in other ways. In particular, it takes valuable time away from serious thinking and serious reading.
In general, you will notice that young people are far more involved in social media than professionals of an older age. The usual explanation is that younger people are more hip to the digital scene and know how to navigate it better than old people. Actually, there’s a better explanation that comes from the theory of marginal utility. The opportunity costs for young people’s time on social media is far lower than those of older people who are actually being compensated for their time. As the young get older, if they are smart, they will spend much less time on these platforms.
So my advice to those who want to get smart, become wise, become erudite: Sign up for social media, cultivate the network, and then discipline yourself and limit your level of engagement. Think seriously about how it is affecting your life. You might find that shutting it down and allowing only limited contact is the best choice you have ever made.
A friend of mine who is an economist who truly understands marginal utility has his wife change his Facebook password every few weeks, just to help him become more disciplined and remind him of the high cost of spending his day doing seemingly interesting things that are actually completely worthless on the margin. He is thinking in terms of the marginal unit of his time and mental energy. He knows that the platforms have huge total utility but very small utility on the incremental unit. He knows this because he is an economist.
A book like Wicksteed’s helps everyone think the same way. In this way, economic theory can help you use your time better, stop being buffeted about by the latest digital frenzy, and live a smarter life.