Month: August 2023
An aggregate Bayesian approach to more (artificial) intelligence?
It is not disputed that current AI is bringing more intelligence into the world, with more to follow yet. Of course not everyone believes that augmentation is a good thing, or will be a good thing if we remain on our current path.
To continue in aggregative terms, if you think “more intelligence” will be bad for humanity, which of the following views might you also hold?:
1. More stupidity will be good for humanity.
2. More cheap energy will be bad for humanity.
3. More land will be bad for humanity.
4. More people (“N”) will be bad for humanity.
5. More capital (“K”) will be bad for humanity.
6. More innovation (the Solow residual, the non-AI part) will be bad for humanity.
Interestingly, while there are many critics of generative AI, few defend the apparent converse about more stupidity, namely #1, that we should prefer it.
I am much more worried about #2 — more cheap energy — than I am about more generative AI.
I don’t know anyone worried about “too much land.” Maybe the dolphins?
There have been many people in the past worried about #4 — too many people — but world population will be shrinking soon enough, so that is a moot point.
I do not hear that “more capital” will be bad for humanity. As for innovation, the biggest innovation worriers seem to be the AI worriers, which brings us back to the original topic.
My general view is that if you are worried that more intelligence in the world will bring terrible outcomes, you should be at least as worried about too much cheap energy. What exactly then is it you should want more of?
More land? Maybe we should pave over more ocean, as the Netherlands has done, but check AI and cheap energy, which in turn ends up meaning limiting most subsequent innovation, doesn’t it?
If I don’t worry more about that scenario, it is only because I think it isn’t very likely.
If you worry about bringing too much intelligence into the world, I think you have to be a pretty big pessimist no matter what happens with AI. How many other feasible augmentations can have positive social marginal products if intelligence does not?
Addendum: I have taken an aggregative approach. You might think we need “more intelligence” and also “more AI,” but perhaps in different hands or at different times. In contrast, I think we are remarkably fortunate to be facing the particular combination of parties and opportunities that stand before us today.
Political Sentiment and Innovation
Are these the “animal spirits” they like to talk about? And is this also evidence of the growing politicization of the U.S. economy?:
We document political sentiment effects on US inventors. Democratic inventors are more likely to patent (relative to Republicans) after the 2008 election of Obama but less likely after the 2016 election of Trump. These effects are 2-3 times as strong among politically active partisans and are present even within firms over time. Patenting by immigrant inventors (relative to non-immigrants) also falls following Trump’s election. Finally, we show partisan concentration by technology class and firm. This concentration aggregates up to more patenting in Democrat-dominated technologies (e.g., Biotechnology) compared to Republican-dominated technologies (e.g., Weapons) following the 2008 election of Obama.
That is from a new NBER working paper by Joseph Engleberg, Runjing Lu, William Mullins, and Richard R. Townsend.
Thursday assorted links
1. Scott Alexander defends the notion of automaticity.
2. Well, the Rolling Stones needed a bass player and a drummer… They have to cut “I Wanna’ Be Your Man,” right?
3. “Specifically, we show that men who post often on social media are seen as feminine, a phenomenon we refer to as the “frequent-posting femininity stereotype.”” Link here.
4. Caltech allows new, non-high school class admissions requirements.
5. Zvi on Gemini, and many other AI matters.
New Emergent Ventures Vertical Supports Talent Identification Projects
Here is the press release and more detail, I thank Schmidt Futures and Eddie Mandhry for their support, and there is a parallel initiative led by David Deming and Heidi Williams, focusing on the research side of talent identification (for that do not apply to Mercatus/EV). Applications on the practitioner side for finding and developing talent are welcome at the usual Emergent Ventures site.
Italy fact of the day
Before becoming Italian prime minister, Giorgia Meloni was one of the most strident voices on migration in the European Union. As an opposition politician, she warned darkly of efforts to substitute native Italians with ethnic minorities and promised to put in place a naval blockade to stop migrants crossing the Mediterranean.
During her time in office, she has taken a markedly different tack — presiding over a sharp spike in irregular arrivals and introducing legislation that could see as many as 1.5 million new migrants arrive through legal channels.
Do note this:
Meloni is presiding over a country that is economically stagnant and in demographic decline. Over the last decade, Italy has shrunk by some 1.5 million people (more than the population of Milan). In 39 of its 107 provinces, there are more retirees than workers. ..
Meloni’s legal migration decree estimates Italy needs 833,000 new migrants over the next three years to fill in the gap in its labor force. It opens the door to 452,000 workers over the same period to fill seasonal jobs in sectors like agriculture and tourism as well as long-term positions like plumbers, electricians, care workers and mechanics…
Given Italy’s rules on family reunification, which allow residents to bring in relatives, “it’s easy to predict that over something like 10 years, these figures will triple,” bringing in about 1.5 million migrants, said Maurizio Ambrosini, a professor of sociology and an expert on migration at Milan’s university.
The median voter surfaces yet again? Here is the full account, via Andrew McLoughlin.
Wednesday assorted links
My Conversation with Vishy Anand
In Chennai I recorded with chess great Vishy Anand, here is the transcript, audio, and video, note the chess analysis works best on YouTube, for those of you who follow such things (you don’t have to for most of the dialogue). Here is the episode summary:
Tyler and Vishy sat down in Chennai to discuss his breakthrough 1991 tournament win in Reggio Emilia, his technique for defeating Kasparov in rapid play, how he approached playing the volatile but brilliant Vassily Ivanchuk at his peak, a detailed breakdown of his brilliant 2013 game against Levon Aronian, dealing with distraction during a match, how he got out of a multi-year slump, Monty Python vs. Fawlty Towers, the most underrated Queen song, how far to take chess opening preparation, which style of chess will dominate in the next ten years, how AlphaZero changes what we know about the game, the key to staying a top ten player at age 53, why he thinks he’s a worse loser than Kasparov, qualities he looks for in talented young Indian chess players, picks for the best places to eat in Chennai, and more.
Here is one excerpt:
COWEN: Do you hate losing as much as Kasparov does?
ANAND: To me, it seems he isn’t even close to me, but I admit I can’t see him from the inside, and he probably can’t see me from the inside. When I lose, I can’t imagine anyone in the world who loses as badly as I do inside.
COWEN: You think you’re the worst at losing?
ANAND: At least that I know of. A couple of years ago, whenever people would say, “But how are you such a good loser?” I’d say, “I’m not a good loser. I’m a good actor.” I know how to stay composed in public. I can even pretend for five minutes, but I can only do it for five minutes because I know that once the press conference is over, once I can finish talking to you, I can go back to my room and hit my head against the wall because that’s what I’m longing to do now.
In fact, it’s gotten even worse because as you get on, you think, “I should have known that. I should have known that. I should have known not to do that. What is the point of doing this a thousand times and not learning anything?” You get angry with yourself much more. I hate losing much more, even than before.
COWEN: There’s an interview with Magnus on YouTube, and they ask him to rate your sanity on a scale of 1 to 10 — I don’t know if you’ve seen this — and he gives you a 10. Is he wrong?
ANAND: No, he’s completely right. He’s completely right. Sanity is being able to show the world that you are sane even when you’re insane. Therefore I’m 11.
COWEN: [laughs] Overall, how happy a lot do you think top chess players are? Say, top 20 players?
ANAND: I think they’re very happy.
Most of all, I was struck by how good a psychologist Vishy is. Highly recommended, and you also can see whether or not I can keep up with Vishy in his chess analysis. Note I picked a game of his from ten years ago (against Aronian), and didn’t tell him in advance which game it would be.
The Relentless Rise of Stablecoins
1. In 2022, stablecoins settled over $11tn onchain, dwarfing the volumes processed by PayPal ($1.4tn), almost surpassing the payment volume of Visa ($11.6tn), and reaching 14% of the volume settled by ACH and over 1% the volume settled by Fedwire. It is remarkable that in just a few years, a new global money movement rail can be compared with some of the world’s largest and most important payment systems.
2. Over 25mm blockchain addresses hold over $1 in stablecoins. Of these, ~80%, or close to 20mm addresses, hold between $1 and $100. For a sense of scale, a US bank with 25mm accounts would rank as the 5th largest bank in the US by number of accounts. The massive number of small-dollar stablecoin holdings indicates the potential for stablecoins to provide global financial services to customers underserved by traditional financial institutions.
3. Approximately 5mm blockchain addresses send stablecoins each week. This number provides a very rough proxy for global users regularly interacting with stablecoins. These ~5mm weekly active addresses send ~38mm stablecoin transactions each week, representing an average of over 7 weekly transactions per active address.
4. Stablecoin usage has decoupled from crypto exchange volumes, indicating that significant stablecoin transaction volumes may be driven by non-trading/speculative activity. Since December 2021, centralized exchange volumes are down 64%, and decentralized exchange volumes are down 60%. During this period, stablecoin volumes are down only 11%, and weekly active stablecoin addresses and weekly stablecoin transactions are up over 25%.
5. Of the ~5mm weekly active stablecoin addresses, ~75% transact less than $1k per week, indicating that small/retail users likely represent the majority of stablecoin users.
6. The outstanding supply of stablecoins has grown from less than $3bn five years ago to over $125bn today (after peaking at over $160bn) and has shown resilience to the market downturn with the market cap of stablecoins currently down ~24% from its peak, compared with a ~57% decline for the overall crypto market cap.
7. Less than 1/3rd of stablecoins are held on exchanges. Most are held in externally owned accounts (not exchanges or smart contracts).
8. The majority of stablecoin activity uses Tether (USDT). Tether represents 69% of stablecoin supply, and YTD has accounted for 80% of weekly active addresses, 75% of transactions, and 55% of volumes.
9. Most stablecoin activity occurs on the Tron and BSC blockchains. Year-to-date, the Tron and BSC blockchains collectively account for 77% of weekly active addresses, 75% of transactions, and 41% of volumes.
10. The Ethereum blockchain is used for higher value transactions (on average). Despite accounting for just 6% of active wallets and 3% of transactions, the Ethereum blockchain is home to 55% of stablecoin supply and settles close to 50% of weekly stablecoin $ volume.
These are all from a Bevan Howard report, The Relentless Rise of Stablecoins (requires email).
*The Conservative Futurist*
The author is James Pethokoukis, and the subtitle is How to Create the Sci-Fi World We Were Promised.
All excellent stuff…due out October 3rd…
What I’ve been reading
R.C. Zaehner, Concordant Discord: The Interdependence of Faiths Being the Gifford Lectures on Natural Religion Delivered at St. Andrews in 1967-1969. Half of this volume is amazing, the other half meandering. The best parts are on Hinduism and Buddhism, and how they can best be understood in relation to Western religions. Zaehner has an amazing Wikipeda page, and I have ordered other books by him, the ultimate act of literary flattery.
James Stafford, The Case of Ireland: Commerce, Empire and the European Order, 1750-1848. An excellent and well-researched books, most interesting on the Irish Union of 1800-1801 and how and why so many classical liberals favored it. What did they get wrong? Or did they? Consistently instructive on earlier Irish thought on trade as well.
Victoria Houseman, American Classicist: The Life and Loves of Edith Hamilton. A good and fun book. I hadn’t known that she was very likely bisexual, or that she was good friends with Felix Morley and Robert Taft. Interesting throughout, and drives home the point about just how early Hamilton did her most important work on mythology. It remains widely read today.
Harvey Sachs, Schoenberg: Why He Matters. A very good introduction to a composer who truly matters. Also a good (short) portrait of Vienna at that time. Maybe it won’t “sell you” on Schoenberg, but it will make his advocates (I am one of them) seem far less crazy. It also admits that a lot of his work wasn’t that good, and helps you separate the better from the worse.
Henry Farrell and Abraham Newman, Underground Empire: How America Weaponized the World Economy. This book in preprint form was well ahead of its time, and now it is coming out in a super-timely fashion.
Lorraine Byrne Bodley, Schubert: A Musical Wayfarer. Super-thorough, everything about Schubert and most of all his music.
I have not read the new novel by Bradley Tusk, namely Obvious in Hindsight, about the attempted introduction of flying cars and the regulatory obstacles that arose (among other dramatic events).
Lunana, A Yak in the Classroom is the only and also the best Bhutanese movie I have seen, ever. Recommended, gives you a real look at the country, both rural and urban [sic].
AI update
We’re in that “a lot of people have stopped caring” phase of the transition, don’t let the status quo and recency biases fool you:
Google’s new flagship AI model, “Gemini,” is set to be a direct competitor to GPT-4 and boasts computing power 5 times that of GPT-4. Trained on Google’s TPUv5 chips, it’s capable of simultaneous operations with a massive 16,384 chips. The dataset used for training this model is around 65 trillion tokens, and it’s multi-modal, accepting text, video, audio, and pictures. Moreover, it can produce both text and images. The training also included content from YouTube and used advanced training techniques similar to “AlphaGo-type” methods. Google plans to release the Gemini model to the public in December 2023.
And that may or may not prove the most important event of that half year…
How to travel in India
An MR reader asks me:
….what have you found to be nonobvious activities with high return on time invested in India?
Perhaps it is all obvious, but here is my list:
1. Make sure you visit a bunch of smaller temples, not just the famous, very well known sites.
2. Never turn down a trip, or side trip, to any particular part of India. Never say “Nah, it is not interesting there.” Because it is.
3. Along those lines, try to see many different parts of the country. Think of India as more culturally diverse than say Europe.
4. Most of the typical “sights” are overrated, the best sight is India itself. I enjoyed the (Indian) visitors to the Taj Mahal more than the Taj itself.
5. The very best food is often in mid-tier restaurants, smallish, often with lines, find out when you should arrive. There isn’t a good enough reason to risk street food, given the quality available elsewhere, though in many other countries I do recommend street food.
6. Try to visit residences from all income classes.
7. Noise pollution still matters.
8. You cannot expect people to be on time, or to be able to avoid social pressures to join situations, spend more time somewhere, see another family member, and so on.
9. Unless you have been to India very recently, the infrastructure is much better than what you might be expecting from a previous trip.
10. India has the world’s best hotels, and many of them are less expensive than you might think, especially in off-season.
11. When choosing when to visit, do look into issues of heat, monsoon, and air pollution, before making concrete plans.
What else?
Tuesday assorted links
The geography of Indian grandmasters
The chart speaks for itself. pic.twitter.com/35erte95c6
— 𑀅𑀫𑀦 (@The_Equationist) August 28, 2023
Via Scott Sumner.
Market Response to Racial Uprisings
Defund the police was never really in the cards:
Do investors anticipate that demands for racial equity will impact companies? We explore this question in the context of the Black Lives Matter (BLM) movement—the largest racially motivated protest movement in U.S. history—and its effect on the U.S. policing industry using a novel dataset on publicly traded firms contracting with the police. It is unclear whether the BLM uprisings were likely to increase or decrease market valuations of firms contracting heavily with police because of the increased interest in reforming the police, fears over rising crime, and pushes to “defund the police”. We find, in contrast to the predictions of economics experts we surveyed, that in the three weeks following incidents triggering BLM uprisings, policing firms experienced a stock price increase of seven percentage points relative to the stock prices of nonpolicing firms in similar industries. In particular, firms producing surveillance technology and police accountability tools experienced higher returns following BLM activism–related events. Furthermore, policing firms’ fundamentals, such as sales, improved after the murder of George Floyd, suggesting that policing firms’ future performances bore out investors’ positive expectations following incidents triggering BLM uprisings. Our research shows how—despite BLM’s calls to reduce investment in policing and explore alternative public safety approaches—the financial market has translated high-profile violence against Black civilians and calls for systemic change into shareholder gains and additional revenues for police suppliers.
That is from a new NBER working paper by Bocar A. Ba, Roman Rivera, and Alexander Whitefield.