Comment by RangerScience | Hacker News Reader

Comment by RangerScience | Hacker News Reader

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We do have a model that has successfully demonstrating certain principles which may be capable of addressing this problem: Burning Man. Bear with me for a second.

I'd say (and then pointing out my lack of formal or amateurish study of economics) that the issue you're pointing at is that capitalism doesn't function well in a post-scarcity environment, which we're entering. This is because our means of determining value is primarily based on supply/demand dynamics - aka, scarcity. As scarcity goes away, our ability to determine value goes away, and with it, our ability to distribute energy throughout our civilization.

Burning Man (which is definitely NOT a viable economic model and I am NOT aruging that) demonstrates the viability of a new principle: YOUR value is based on what you give away.

Which gets really interesting when you look at economics as a sort of directed thermodynamic problem: What defines where energy (aka money) goes? Right now, it's defined by supply/demand dynamics and wants and needs - what if it were primarily defined by altruism?

You can come at this from a different angle, going back to that grade school career question: If you had a million dollars, what would you do? Or to rephrase, if all your needs were taken care of, what would you do?

Blah, blah, blah, I'm throwing out a bunch of ideas to see how they react. What're your thoughts, given what I've described?

> the issue you're pointing at is that capitalism doesn't function well in a post-scarcity environment, which we're entering.

A literally post-scarcity environment is not a problem because it makes the price of everything zero. Food is free, shelter is free, medical care is free, you don't need a job. Do whatever you want all day, it's not a problem.

The problem is that what we're entering is not a post-scarcity environment, it's an environment where things many people don't already have, like energy or land, become more scarce and thus more valuable than the things they do have, like the ability to perform unskilled labor.

In theory capitalism works fine in that situation. If people can't afford rent or home ownership then the price of housing should come down, because the supply of housing and the number of people who need it haven't really changed, so if people have less money then landlords and home sellers can no longer charge as much.

The problem is that we interfere with that process -- the housing crash was a market correction. Instead of letting that correction happen all at once, we bailed out the banks. So now the banks that didn't file for bankruptcy and liquidate their assets are sitting on thousands and thousands of foreclosed homes and intentionally keeping them off the market in order to backstop housing prices and prevent even more foreclosures. But the result is a significant artificial inflation of housing costs that comes directly out of the pockets of people in poverty.

Then the solution is pretty simple, doesn't it? make it illegal to foreclosure a house for more than 6 months, an "use it or lose it" policy.

Or even simpler, don't bail out businesses that make stupid decisions.

That's actually going to be ridiculously complicated. I doubt we will see such a reversal of the status quo happen in our lifetime.

I've heard the idea that banks are keeping foreclosed houses off the market a few times. Do you know of a reference that describes the scale of that?

> I've heard the idea that banks are keeping foreclosed houses off the market a few times. Do you know of a reference that describes the scale of that?

This estimates the number at 85-90% of foreclosures:

http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much...

You can literally see it with your own eyes. Walk down a street in a working class neighborhood. You'll see plenty of homes with a piece of paper on the front door saying the house has been foreclosed and "winterized" but no realtor's sign or other indication that the house is on the market.

Not selling foreclosures is completely rational behavior for the banks. The houses are usually on their books at the price the original owner paid for it, so selling it at the current market value causes them to take an accounting loss and makes the bank's CEO look bad. Meanwhile the homes are still assets they can collateralize and trade as securities without actually allowing anyone to live in them, which is all the bank was ever interested in anyway, and not allowing anyone to live in it keeps overall housing prices higher, which is more important to mortgage banks than anyone else in the world. Meanwhile the value of the home isn't actually going down, which is what would happen if they sold them at scale.

> what if it were primarily defined by altruism?

It's a fun question, but I think the answer is less entertaining: we would all be less happy. The fact is that most people are better at guessing what they themselves really want than other people are. It's a question of information. I know more about my desires than my friends do, for the most part.

Altruism is nice, but inefficient.

Spending quality time with friends & family, on the other hand, truly is priceless. I don't want them to be nice to me - I just want to be with them. So finding an economic (and cultural) system - be it a few tweaks on the current one or a radical rethink - that gives me more opportunities for a healthy social/family life ought to be the goal, in my opinion.

A bigger problem, IMHO, is how do you define Altruism? Is bill gates more altruist because he gave up a million dollar? Or someone else who speds large amount of time outside job with NGOs working for poor people?

Gift economies prevailed for longer than capitalism has, and my gut says they will again. Not because of scarcity / abundance but because now we have social software. I'm working on a speculative project to scale the gift economy.

http://www.wired.com/2014/07/document-coin/

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