Imagine all of humanity in a skyscraper: the poorest live in the basement, middle classes in the middle, and richest in the penthouse.

The tower is a work in progress; as we add more floors, people move up in wealth; however, this construction creates toxic sludge which slowly fills the lowest levels, killing off the poorest.

Lots of people argue about how fast the sludge is rising, we have only the roughest estimates of that rate or the number of sludge-killed poor.

On an individual level, we strive ever higher lest we drown in sludge.

Collectively, all levels do not want the sludge to reach them; what happens when one level decides to drill a hole in the basement that will likely drain sludge and unfortunately damage the foundation?

If you're sick of the sad, hopeless stories coming out of Africa, here's one that made my year. New statistics show that the rate of child death across sub-Saharan Africa is not just in decline -- but that decline has massively accelerated, just in the last few years. From the middle to the end of the last decade, declines in child mortality across the continent plummeted much faster than they ever had before.

-- Center for Global Development

We have ten years to build institutions and economies that will allow this coming youth wave to find profitable work. Otherwise, sub-saharan Africa will run the risk of another human-density-linked genocide like Rwanda.

At a party over the weekend, I was carrying on about our robotic future, after which a friend sent me The Lights in the Tunnel.

The last Amazon review indicates that Ford sees significant roles for governments. There's certainly room for conflict: on one side gov'ts love investment, so we have stuff like deductions for robots while we also penalize companies for having workers via FICA et al. personnel taxes. However gov'ts will also protect workers, e.g. how the US goes from putting up a Statue of Liberty in 1886 to the Emergency Quota Act in 1921.

It's not super obvious to me which way gov'ts will go. However, the interactions between gov'ts seem interesting.

Cartels seem unstable -- OPEC, Kyoto, etc. provide immediate benefits to those who defect from the cartel and maintain the illusion that they are still in the cartel. A recent innovation has been the use of bank networks to enforce compliance (we blacklist your banks unless they submit to our regulatory regime), which finally defeated Switzerland. Control of those flows of capital will raise the stakes for defectors.

However, what happens when a gov't can avoid Trade? Autarky has been a pipe-dream for the longest time, however several large countries have access to enough materials to probably go almost purely autarkic.

That would be a very different world than what we have today. ;)

From the reviews, Ford seems to have a broken assumption: they view an economy like a family dinner table; there's only so much food, so when you take for yourself, you take from your brother; so having more brothers or robots is bad. That ignores how the food got there in the first place; wouldn't more people working help make more food?

To assume that the amount of work to be done is finite is to disregard a whole lot of history (all of it? ;)

Furthermore, to assume that people won't adapt seems equally naive.

However since negative adaptations may occur, I worry about gov'ts forming working cartels to control the flow of people and capital. The war that Switzerland lost spilled no blood and little ink.

Currently, I think more ink was warranted; how do we avoid/preclude ending up with a future where we wish both quantities were different?

Neal Stephenson wrote a short piece on the apparent dearth of innovation, which he believes exists and is caused by the current general lack of risk-taking and investment.

As evidence, he cites our lack of progress on the Guinness Book of World Records front: we don't have people colonizing the Moon or Mars, let alone cheap space flight, our computers don't yet think for themselves, and he's still waiting for his jet-pack.

This is the same kind of argument we hear from guys who have a "super important" project on github that everyone just ignores. So, where do we see innovation?

1. Robots
   Currently most robots are big, stupid, and kept out of sight; quite similar to the computers of 40 years ago, Despite this, we have ever more robots, doing ever more complex tasks. Just like computers, we'll see robots miniaturize and eventually integrate with the human population:
   
2. Space
   Getting into space is getting cheaper, and it's not just Elon Musk who's been pushing the boundaries and driving costs lower:
   
3. Transactions
   We build universities and cities to bring people together in order to reduce the transaction costs of communicating / working together. While the Internet has helped reduce the costs of communication, so has the increasing urbanization of the planet:
   

To a physicist, technology equals a recipe for re-arranging items: we're not creating matter or energy, we just recombine stuff in a different way than before. As the costs of moving people, parts, and money change, so do the economically viable technologies.

If Stephenson sees unexploited economically viable opportunities, he should take advantage of them by investing some of the millions he's made from his books. Calling us all foolish cowards only works *after* he's made some leap into the future and advanced the state of the world.

Over the weekend we saw a traffic auntie writing a parking ticket for a wayward BMW, so we took a couple minutes to pepper her with some questions:

1. Do you get a bonus for writing more tickets?
   No. No bonus. We have to write 30 tickets and then we're done.
2. What happens if you don't write 30 tickets?
   My pay gets docked 25 SGD. Or if I make a mistake writing a ticket, my pay gets docked again for 25 SGD.

With an incentive structure like that, "30 and done" seems pretty rational.

At work, a friend wondered what was the meaning of "learning like a mother".

I refrained from throwing him into the Internet Abyssal via "learning like a boss". Instead, I asked him what word he thought might be missing from the end of the sentence. And then I launched into this mini-story.

Dinner is to be served hot, not lukewarm.

I think this is an example of ellipsis where dropping "expected" or "going" transforms the "is" from its soft helping verb form into a harder declarative.

When you can't make sense of some construction in English, try assuming that something was dropped.

Daemon by Daniel Suarez

Action-thrill center of the brain pleasing story of a social game that envelops a planet. Like Frankenstein, it triggers fears of the new and how-do-we-deal-with-that questions arise:

Identity Assassination and Subterfuge
Say you ask a friend about maintaining their online persona, they'll probably talk about whatever social networking site they happen to use most at that moment. They're not thinking about all the electronic records tied to them via customer databases.

What happens when that electronic history gets trashed? From a computer perspective, we'd want to roll back to known good backups, or fail over to secondary systems. We currently have no way of rolling back electronic history for anyone. The alternative of creating a second legal identity appears costly or illicit.

The Cost of Capital
After that weird and disquieting question, you ask your friend about gov't eco-policies and which of the two alternatives is greener:

1. Lower taxes on gasoline or higher?
2. Lower fuel-efficiency cars or higher?

Your friend will probably say higher taxes and higher fuel-efficiency. Note that these two policies run contrary to each other; raising fuel efficiency reduces the incremental cost of driving and is similar to lowering the cost of fuel.

Your friend might point out that the efficiency gains might split so that we end up with less overall fuel consumption. However, our technological history can be viewed as always trying to do more with less, and we've only ever consumed more energy. Lowering the cost of something has generally only made it more accessible to more people, so production and usage ramp up.

What happens when the cost of capital falls? Marx pointed out that the relative value of labor should increase. He overlooked, and Suarez reminds us, this means that the cost of weaponry / war also falls and increasingly the targets will be the workers.

In Act of Valor and Spec Ops, we see military units augmented with large amounts of physical and human capital. It's not difficult to imagine field ops completely replaced by cheap bots. The only way to stop the pain is to destroy the weapons factories or their supply chain. Or to avoid detection in the first place.

In a different vein, the film also probes (lightly) the use of language to both bind and differentiate humans. There are no subtitles, but significant lines are spoken in Germanic and Slavic languages (Dutch?, German, Russian, Croat?, and a smattering of other languages) . Either you speak these languages or not, driving home the existence of language bridge or large gap between people and peoples (which parallels the film's core of people paying to torture people from different countries)

Of course, it is possible to skip past this cerebral poo, and just watch a fun horror film. Which is probably why this film is doing so well at the box office. ;)

Weather hasn't ever been in our control, so we've always just created micro-climates by enclosing an area. Whether we built a fire-warmed lean-to or a skyscraper with an HVAC system, we've just built systems that helped provide an environment better than the local default.

Similarly, we've never been able to cartelize production of global warming gases. Russia seems like it will benefit inordinately from global warming as its ices melt, the Northwest passage opens up, and it continues to sell off it oil and gas resources. Since Russia's a nuclear power, it seems like the proverbial 800-pound gorbear, which means we'll end up with whatever a globally warmed climate looks like.

The vast expanses of Earth will probably see different weather with more pollution. People will have even more incentive to move into cities where the costs of environmental dialysis will be lower due to economies of scale in process and shared infrastructure.

Just like laptops now, the biggest problem of our ultra-urban future will probably be waste heat. Packing millions of high-energy-use humans together in a separate environment will generate large quantities of heat which will probably be dumped into the outside world, just as our current air conditioning does. Though, we'll likely make some use of that heat.

Given the current state of the world, this will probably (and hopefully) work out without too much disruption.

TTF just added support for equities in India. Given the preliminary analytic results, India appears to present several reasonable opportunities. The equities markets there have been ignored recently, paving the way for possible acquisitions as development continues apace in India.

India seems to be developing towards a more dynamic urban future, and to get there it will need several forms of capital, all in large quantities. However, the global economic slowdown appears to have impacted India's equity markets negatively.

However, compared to European equities markets, India's are brimming with confidence. TTF's European bank holdings have especially been hit (again) at a time when insurance has been too expensive. It's currently better to take a temporary capital hit, than to try to gain on any insurance trades.