In the last three recoveries, however, America’s economic engine has emitted sounds we’d never heard before. The 1990 recovery took 15 months, not the typical six, to reach the prerecession peaks of economic performance. After the 2001 recession, it took 39 months to get out of the valley. And now our machine has been grinding for 60 months, trying to hit its prerecession levels – and it’s not clear whether, when or how we’re going to get there. The economic machine is out of balance and losing its horsepower. But why?
The answer is that efficiency innovations are liberating capital, and in the United States this capital is being reinvested into still more efficiency innovations. In contrast, America is generating many fewer empowering innovations than in the past. We need to reset the balance between empowering and efficiency innovations.
Clayton Christensen — A Capitalist’s Dilemma
While it is conceivable that PayPal could become a ‘financial API’, capitalizing all of the pieces of a production value chain, PayPal, like eBay, is an artifact of the transition to hyperconnectivity, an arbitrageur exploiting imperfections in hyperconnectivity. Once everyone is directly connected, it is possible to transfer capital between peers, without any mediating exchange service.
Given the capital flow restrictions of central banks, fiat currencies can not be employed in transactions crossing international boundaries. Instead, individuals and organizations will begin to develop their own exchange mechanisms, perhaps based on precious metals (a de facto return to the gold standard), but more likely employing virtual currencies: perhaps kilowatt-hours, abstract ‘labour units’, or other measures of value.
As capital migrates from friction-filled national and international finance markets into hypereconomic frameworks, institutions dependent upon those frictions will be threatened. Banks will not be able to collect interest. Governments will not be able to tax – customs duties and user fees look to be the only ways governments can generate revenue. Courts will not be able to seize assets. The peculiar arrangement of laws and regulations which keep our economic system stable will grow increasingly meaningless. Governments and courts will try to follow capital flows into hypereconomic zones, only to learn that their mechanisms of control and enforcement are poorly matched to such a fluid environment.
Mark Pesce — Hypereconomics
The Local-Global Flip, Or, “The Lanier Effect”. Absolutely fascinating interview. Two technologies on the cusp of going mainstream: self-driving cars and (dis)assembling robots. Also, technological efficiencies tend to have a positive benefit to the already wealthy (you save more money) but a negative benefit to the already middle-class or poor (you don’t have any money to begin with). What do we do when machines can do it better?
Digital currencies: Bits and bob. The Economist hedges its analysis of Bitcoin. The present has been weirded by the future.
The University Has No Clothes. Data point one:
Nearly half of all students demonstrate “exceedingly small or empirically nonexistent” gains in the skills measured by the Collegiate Learning Assessment, even after two years of full-time schooling, according to a study begun in 2005 by sociologists Richard Arum and Josipa Roksa.
Data point number two:
In the past 30 years, private- college tuition and fees have increased, in constant 2010 dollars, from $9,500 a year to more than $27,000. Public-college tuition has increased from $2,100 to $7,600. Fifteen years ago, the average student debt at graduation was around $12,700; in 2009, it was $24,000. Over the past quarter-century, the total cost of higher education has grown by 440 percent.
Mull those two together.
The Great Ephemeralization. Big picture: Today’s economic growth indices, like GDP, are poor at accounting for the effects of ephemeralization, or the processby which “special-purpose products are replaced by software running on general-purpose computing devices.”
10 Dying U.S. Industries. Number three ain’t that bad.