In this issue:
Free Trade Is Distracting
Speaking of Miscalculated Returns
Using Energy Wisely
Work Shapes Us
(Sadly, there were many more ideas that I wanted to ‘more fully’ explore….that took second priority to my girlfriend #ValentinesDayPrep).
Free Trade Is Distracting
Conventional economic theory could not be more clear -- you want capital, labor, and goods to flow to their most productive uses. This shouldn't be too controversial. If you're running a company, you want all of your employees to be doing what they are best at, you want all of your machines to be used as much of the time as possible, and you want every employee equipped with the best tools to be as productive as possible.
Similarly, if you're running a country (of employees), you want everyone to be free to move to wherever they're going to be most productive / contribute most to society. If the skilled chef is going to be more productive in NYC because there are Michelin-Star restaurants there that can stretch him to his potential, you don't want to prohibit him from moving just because he's from Colorado. This is Econ 101.
Almost everyone recognizes why we should have labor mobility between U.S. states. For some reason (racism?), no one extends the analogy to the world (!!!).
Let's run it back one more time...
If the skilled chef is going to be more productive in NYC because there are Michelin-Star restaurants there that can stretch him to his potential, you don't want to prohibit him from moving just because he's from ITALY.
Obvious, right? Wrong. Imagine if no one agreed with this and regularly prohibited moving from country to country. That's the world we live in. If the next U.S. president insisted on no moving from state to state, the U.S. economy would collapse. There is no president of the world. But imagine a utopia where there is.
If you're running a company... If you're running a country.... If you're running a world (it's the same analogy!), you want to allow (even encourage!) people moving. If a world president insisted on no moving from country to country, we'd think he's a terrible world president.
Tragically, no one thinks beyond their domestic economy. No one asks "what would a WORLD president do here?" The closest thing we have is Americans expressing concern for poor people in other countries on Twitter. Their rhetoric is not specific or persuasive! No one is advocating for "global labor mobility" (it just doesn't get the retweets) (see: politics as virtue signaling).
What people advocate for is "open borders," which tragically backfires by (1) providing fuel for Republican rhetoric (see: FOX News viewership increasing with tweets mentioning "open borders") and (2) raising the probability of Republicans getting elected (see: GOP fundraising spiking). For anecdotal evidence, talk to any Trump-supporter from the South and they'l tell you the "Democrats want open borders, can you believe that?"
What we want is GLOBAL LABOR MOBILITY. That's way more specific and harder to argue with. It's also useful because it's a spectrum (instead of "open borders or bust", we can ask "how many barriers to global mobility are there? And how can we eliminate the most fickle 5% of barriers?" (by 2050? -- tragically, this isn't climate change -- there is very little incentive for any corporation or politician to invest in the PR strategy. But imagine if there was!! (My best bet would have been Amazon, but they're clearly not trying to lower labor costs to the point where the PR strategy would have any significant return.) (Maybe we need to wait till corporations are multi-national enough (???), but even then they have no incentive to have their Mexican factory workers moving to rich countries with high labor costs from regulations/protections/minimum wage, etc)
Here's the ridiculous part. The most pro-market politicians and corporations spend all of their PR dollars selling "free trade" and "free capital flows." These goals, admittedly, transformed the world (if not the U.S.) positively over the last 50 years (see: most of the gains cutting global poverty in half). But now, in 2021, the world is relatively open (to trade and capital). Most of the low-hanging fruit (barrier elimination) has already been picked. The estimated gains from removing ALL barriers to merchandise trade are between 0.3% to 1.8% of world GDP. The estimated gains from removing ALL barriers to capital flows are between 0.1% to 1.7% of world GDP. Both are sizable gains worth advocating for. But the level of advocacy should be proportionate to the expected gains (or should we weight for the probability of realizing those gains (???).
The estimated gains from removing all barriers to LABOR mobility are between 67% and 147.3% of world GDP (!!!!!!!!!!). They SWAMP the gains from trade/capital. These could be underestimates -- my professor is working on a paper that argues if just ONE rich country opened up its borders, world GDP would quadruple (+300%).
If you advocate for free trade even a little bit ("because of the gains"), you should advocate for global labor mobility at least 67x as much (???). I almost think someone should declare free trade accomplished, so we can get on with catching bigger fish (???).
If anyone has any sense of how to popularize this concept, hit me up. My best hypotheses so far, in order of feasibility: (1) viral Vox-esque YouTube video or ad, (2) inspiring the leadership of the "effective altruism" subreddit, (3) late night conversation with a billionaire VC after a party in Silicon Valley, (4) be-friending a future presidential candidate, (5) becoming a billionaire that has access to all the influential people pulling levers.
Speaking of Miscalculated Returns
My friend made an argument that Microsoft Excel is killing productivity in knowledge-work settings (compared to the counterfactual) and everyone is too stubborn to change. He said a task that took him a WEEK to do in Excel took him 2 HOURS in Python. All my CS-friends seem to agree that Excel is a huge drain on productivity (compared to Python). For more details on the "ditch Excel" side of the debate, read this guy. For a more balanced take, check out The Diff. My plan is to take CS111 next fall (to learn it formerly) and seek out more technical, Python-managers at BCG (if anyone has any only Python course recommendations too good to pass up, hit me up).
How should we think about the productivity loss / inefficiency? Do we compare the current equilibrium to a Python-only world? Why not compare to a more advanced software that will come out in 2030? It seems pretty arbitrary. My professor would say that's ridiculous -- there's hidden costs in learning Python + advantages to Excel that "rationalize" the current equilibrium. But we can still recognize differences in efficiencies from steady state 1 to steady state 2 (???).
This gets at the problem with defining efficiency -- whether something's "efficient" depends on the time frame you're looking at (because so many things have a high upfront fixed cost and low marginal cost -- E.g. everyone in your organization learning Python is "inefficient" if the time frame is the first week (the cost exceed the benefits) but "efficient" if the time frame is the first year (the benefits outweigh the costs).
Growing up in the Cedar Rapids Catholic School System, I prayed every day. For ~30min, I'd kneel before a more powerful presence and ask him for help. I noticed recently how this is different from the 1hr of meditation I currently do every day. When I explain meditation, I tell people "I BOLD sit with my anxieties and let them dissipate." "I" am the actor / key focus. Whereas in prayer, the focus/actor is God. This shift of spotlight lets one explore their's anxieties/problems without focusing on oneself exclusively (imagine the harsh glare of an interrogation spotlight shifting away).
The process of regularly asking SOMEONE ELSE for help breeds humility in a way that meditation does not. In prayer, even the most prideful Church-goers must (a) acknowledge their limitations/weaknesses, (b) recognize that they are not the most powerful agent in the world, and (c) recognize that some things are out of their control. Some Christians even describe a "freeing" feeling when they "give their problems up to God."
Two weeks ago, I wrote about how recognizing how things ARE under one's control can be key to limiting anxiety (E.g. if you have a frustration at work, remembering that you made the decision to take the job, knowing the possible costs and benefits). Yet there's something compelling about the point (b), recognizing that some things ARE'NT in your control. I suppose God is just the name we give to all the forces/factors outside of our control (???). This would explain why people with less control of their lives are more often religious -- maybe it's easier to accept that some things ARE'NT in your control if those things are controlled by a warm, friendly presence looking out for you (??) (vs the cold, random laws of the universe).
This would also help explain the world's massive resistance to science when it first came out. Everyone agreed that some things (most things, back then) were out of anyone's control. If I believe it's fine because those things are controlled by a warm, friendly presence looking out for me (God), and someone comes around and says "actually, those things are controlled by the laws of gravity/physics/science," it makes sense to get defensive! That's a much scarier concept (these laws don't respond to prayer?! Fuck, what are we supposed to do? We can't improve our material circumstances!).
Arguably, the most recent ambition/capitalism concept is just everyone wrestling for more and more control of their lives. (This has always been happening on some level, but when less and and less people believe in the warm, friendly force behind the uncontrollable, the race for control becomes much more urgent!).
Without strong Buddhist/Eastern thought (see: every thing/feeling is temporary, so don't get attached), the U.S. has a massive culture of getting attached/anxious/depressed. We're increasingly anxious about the things we have, and increasingly depressed about losing those things (and the whole "consumerism replacing modesty" thing means companies profit the more we feel both of those things -- see Paradox of Choice) (see: advertising as "you need this or that to finally feel secure or not depressed about the last thing you lost").
Factor in declining religion / increasing "I am in control" vibes, and the stakes for anxiety/depression get even higher. We might put more effort into our efforts to feel secure / escape dissatisfaction (E.g. see: working our way out of our problems), but we're often over-leveraged (betting with more than we own), which creates even more anxiety (???).
There's some connection to "getting your own house in order before you try to help someone else with their house (or buy a new house!)" here but I can't articulate it clearly. The messaging is funded by the people selling us new houses, and there's huge (perceived) social costs to avoiding the messaging (see: how hard it is to quit social media), so profit-driven consumerism/anxiety/depression will probably continue to rise while Buddhism/religion declines. Not the best scenario for society at large, but individuals can beat the average (see: Digital Minimalism before VR drops).
Using Energy Wisely
My good friend Nick thinks of his energy like a reservoir being filled up by the important people in his life. So when he, inevitably, runs into an emotionally or mentally draining experience, he has the energy to expend on it. Another reason to prioritize quality time with close friends above most things. Being increasingly conscious of what fills up and what drains my reservoir will hopefully help me figure out the whole "circadian rhythm / sleep / "how to allocate energy over the course of a day or week" thing. Also: note to self -- surround yourself with people who spend their time intentionally. There's a spectrum if you look for it.
When one of my most intelligent friends forgot his jacket recently, it occurred to me that being forgetful is actually super important (???) because it opens up mindshare for more legit stuff/theories. Over time, you probably should drop >90% of what you observe/notice/hear to have a clear and updated framework for understanding the world. The capacity to forget is probably underrated. Maybe this is part of why Buddhism (accepting that things -- theories? -- are temporary) correlates with wisdom (???). (Yes, this is a self-serving argument against being detail-oriented).
My Marxist philosophy class inspired an interesting way to think about contracts. When a worker signs a contract, he agrees to specific terms of employment. This can be thought of as the EXPLICIT power/dominance/authority that the worker consented to (perhaps long ago). Because all contracts are inherently incomplete (both sides benefit from some fluidity/ambiguity), there's also an EXTRACT-CONTRACT POWER/authority that the employer has in the gray areas not specified by a contract (E.g. a barista being asked to clean bird-poop off a counter). This extract-contract power is a function of EXTERNAL, NOT INTERNAL FACTORS -- specifically, (a) the probability of the worker challenging the contract in court while keeping their job security (usually, extremely low) and (b) the desirability of the alternative jobs the worker would flee to in the case of termination. In the age of corporations, lawyers ensure (a) is minimized and regulations ensure (b) is minimized, leaving (c) the worker's bargaining power in gray areas, minimized.
(a), (b), and (c) vary drastically around different parts of the country (and the world, if we were to widen the analysis). A rough metric for (b), for example, is the # of job options available to low-skill workers in a given area. (I would look to see a heat map of the U.S. here). The (# of jobs) function is probably a function of investment in a given area, which is a function of, among other things, the level of regulation, the cost of living (lower cost of living --> lower wages necessary), and SR/MR labor supply (E.g. Dubuque, IA the labor supply will go down in the MR as the middle-aged people get old and the younger-people leave for bigger cities like Des Moines or Chicago).
In small/medium-sized towns, the "low investment" effect will probably dominate the "low cost of living" effect in the MR/LR. The best bet for (# of jobs) is probably Amazon/Walmart.com warehouses (because it seems like most other low-skill jobs are either being automated or outsourced to lower-wage countries). Maybe I'm discounting the service industry here (??). I'm also not sure where waves of immigration are hitting (which can slow down the deterioration of local economies, but increase labor supply). It's my understanding that immigration waves are extremely network-driven (if I'm moving from El Salvador, my options are limited by where friends/family live). But as inter-CITIES moving increases (E.g. more people moving from NYC to Chicago/Detroit), the number of options will (hopefully) increase. It's possible the net effect will still be decreasing labor supply because more immigrants might induce "white flight" (??).
In cities, the "high investment" effect will probably dominate the "high regulation" <-> "high cost of living" effects. The investment, however, must be directed towards sufficiently labor-intensive industries. I'm really not sure what the breakdown is (new jobs per investment $), but from my vantage point, it seems like more and more investment is going towards (job-cutting) private equity or (job-replacing) software. Let me know.
There is cause for concern, specifically for the well-being/safety of workers with the least (# of jobs) available. Fortunately, Twitter is causing (some?) companies to invest in the safety/well-being of (at least their U.S.) workers from a PR standpoint. Also: new management philosophies are encouraging companies to minimize accidents + invest in the sustainability of their workers from a retention / productivity standpoint -- especially in a tight labor market (???).
Work Shapes Us
The same Marxist professor mentioned how mid-level managers don't actually have that much freedom. You either become a jerk with impossible expectations or lose your job.
Everyone gets punishment (social sanction) from someone (Elephant). Increasingly, my professor would argue, the punishment comes from a top-down, profit-driven supervisor threatening your financial or job security. Previously, in the glorified past (where famines regularly killed half your kids #tradeoff), people got feedback from the bottom-up. Managers were sanctioned from their workers for being jerks. Kindness was cultivated, more often (??).
The instances of jerkiness/harm derive from either the systematic tendencies in the way work is organized (the rules --> more constant distribution of harm) or the LACK of rules constraining bad actors (more spike-y distribution of harm). Whether you blame the rules or the lack of rules probably depends on what you think about human nature (and correlates with your degree or religiosity / political affiliation).
The "Rules Create Jerky Bosses" thesis has my vote, but that's probably because I believe people are inherently good (#CatholicUpbringing + small, sheltered sample size). If I witnessed more experiences of harm (to myself or loved ones), I would almost certainly be more like to take the other side of the debate. The big picture tradeoff, in this view, is corrupted moral (how do we treat people?) values for less deadly famines. I come from an extremely privileged position in the world / do not really understand what it's like to go hungry (like some of my friends), so I probably shouldn't pretend to be objective on the merits of that tradeoff.
If someone points a gun at your head and tells you to work, you technically have an alternative, but it's not an acceptable or reasonable one. We would say this person is "forced" to work.
For someone to be "forced" to work, to generalize, they need not have NO alternative, but rather no ACCEPTABLE and REASONABLE alternative.
The problem with this framework is that "acceptable" and "reasonable" are very arbitrary concepts -- they depend more on the room of people judging the alternative than the actual nature of the alternative. What's an "acceptable" job for a group of Brown University students is drastically different than what's acceptable for a randomly selected 100 people from around the world.
A banker committing suicide after the 2008 financial crisis might seem “unreasonable” by the 90% of the U.S. in inferior positions (measured. by income). Similar, an Amazon worker quitting their job might seem “unreasonable” to the 90% of the world in inferior positions (11k/year = top 10% of the world -Doing Good Better).
More on this next week. Going to try to intentionally explore the counterarguments to my theories.