Archive for October 2008
[EDITED 05/08/2009: see here] If you’ve been following my posts on the financial crisis (here, here, and here) and Singularity Summit (there, there, and there), you might wonder, “Uh, but how do we get there from here?”. It’s pretty obvious to me that the the road to economic advancement is paved with innovation. So we have to innovate our way from here to there.
I’m pretty sure I’ve figured out a way to supercharge what I call the “Innovation Economy”. My thinking was catalyzed by reading Nassim Taleb‘s The Black Swan. The basic idea is simple: if we want more groundbreaking firms like Google to come out of the Innovation Economy, we have to shove more startup feedstock into it.
Now that I’ve had a week to digest what I saw at the summit, I have some thoughts on the most likely path we’ll take to the singularity. From an absolute perspective, this path isn’t very likely because there are a lot of different ways to get there (or not get there). But given what I’ve seen so far, I assign this path the highest concentration of the admittedly diffuse conditional probability mass.
As most of you know, one of the commonly proposed paths to The Singularity is the development of artificial general intelligence (AGI). As you can read in my rundown of the Singularity Summit, speakers showcased a lot of progress in hardware substrate and software infrastructure, but no significant conceptual advances in implementing executive function in software.
Absence of evidence isn’t necessarily evidence of absence, but I believe that if anyone were making headway on this problem, the chances that someone at the summit would have alluded to it are high. Therefore, I predict that the first being with substantially higher g than current humans is much more likely to be an augmented human than an AGI [Edit: more thoughts on electronically enhancing humans here].
I attended the Singularity Summit today. Overall, it was worth the time spent. I did not attend the workshop on Friday because it didn’t look substantive when I reviewed the program. Today, I spoke to several people who were there and they confirmed my prediction. I took 7 pages of notes at the summit and hope to have some insightful synthesis of the material in a few days [Edit: first thought here, more here]. In the meantime, here is a short review of the talks.
As most of you already know, I am an anthropogenic global warming skeptic, aka “denier”. Well, a new paper by the Federal Reserve Bank of Minneapolis has turned me into a credit crunch skeptic too.
The maintstream narrative on why we need a bailout is that credit is “frozen”. We can’t just let the financial sector sort itself out because it provides the credit “grease” that lubricates the rest of the economy. The graphs in this paper make it pretty clear that the wheels of Main Street have plenty of grease. So it looks to me like the bailout is corporate welfare plain and simple. It also means that Paulson and Bernanke talking about how bad things are to justify the bailout may have actually exacerbated any real recession by magnifying the psychological salience of the crisis.
As we saw in Act I and Act II, the current financial crisis was enabled by government interference in the housing and mortgage markets, then initiated by Wall Street’s willful blindness to systematic risk in the MBS market. Now we are observing the government’s flailing response.
First they bail out Bear Stearns. Then they let Lehman go bankrupt. But AIG gets a lifeline. On to a $700B bailout intended to purchase toxic MBSs. And most recently forcing several probably healthy banks to absorb $250B in government investment. Along the way, there were a bunch of changes to FDIC regulations and a see-sawing stock market.
You might be asking yourself, what the heck is going on here? The reason for all the flailing is that the government is attempting to implement a command and control solution to an extremely distributed problem.
When the bailout passed, I first thought this post was moot. But then I reconsidered. There’s still plenty of time to affect the implementation and several lessons to be learned. Also, when I’m pissed off, it’s nice to know that I have a good reason.
In Act I, we saw how government meddling overheated the housing and mortgage markets. Now we’ll see how Wall Street took advantage of this opportunity and also apportion some blame to ourselves.