Suncho

=)

> If you print money on a fixed schedule, the natural market response is to devalue the currency according to the same fixed schedule.

This is wrong. Price levels of a currency are determined by the volume of spending relative to the volume of trade. Furthermore, it's not the volume of any trade that matters. It's the volume of trade of goods whose prices you care about.

Money does not spread itself evenly over the course of the economy. To take an extreme example, if we just throw the printed money down a hole, it doesn't affect prices. Or if we spend all that money to buy stocks, it might drive up the price of stocks, but we probably don't care about the price of stocks when calculating the general price level for our currency.

Additionally, people borrow in order to spend. The amount of spending in the economy increases when people borrow more. In this sense, an increase in credit and debt in the economy has a very similar effect to an increase in the amount of money.

As I alluded to previously, there are places in the economy where money flows in faster than it flows out. Money tends to accumulate in these places. The spending that people would have used that money for must be continually replaced or you end up with deflation.

But let's imagine a world in which people are able to buy more of the stuff whose prices we care about. This is the basic income scenario. Assuming that we have the capacity to produce more of that stuff, we will produce more. Note that doubling the number of people who can afford to buy stuff is very different from doubling the amount of money that everyone has. In the former scenario, more people are willing to buy at existing prices. In the latter, people are willing to spend more on the stuff they already buy. The second scenario is always inflationary.

Anyway, I could go on and on about this. And I have. The bottom line is that it's complicated. And you always need monetary policy keeping your currency stable regardless of whether you have a basic income. The effects of a basic income could be either inflationary or deflationary. It probably depends on the amount of the basic income. In either case, monetary policy has got you covered.

I agree with you though that Circles doesn't seem to have any kind of sane monetary policy.

One of the cool things about basic income is that because it distributes the incomes evenly, it flattens out the demand curve or increases the price elasticity of demand. This means that (even absent competition) if producers raise prices, they'll lose customers. Conversely, if they lower prices they'll get more customers.

A basic income creates an incentive for producers to keep their prices low. This incentive is higher than it would be without the basic income.

Another way to think about it is that basic income, doesn't give people more money to spend on goods they're already buying. Instead, it gives money to more people to spend on goods they wouldn't have bought before. It's the difference between giving money primarily to people who already have it and giving money to people who don't.

Basic income allows the economy to start activating previously unused productive capacity that was already available.

Of course this doesn't work for goods whose production is being constrained by resource limits. For example, under basic income, you might see the price of meat rise, which would cause people to buy less meat and substitute other types of food. We have the capacity to feed the world, but we don't necessarily have the capacity to feed everyone meat 24/7.

These days, the amount of money the government is able to spend has very little to do with the size of their tax revenues. You can certainly tax landowners, but you should only do so if you want to punish people for owning land. The money you collect is meaningless.

As has been mentioned by me and others in other comments, basic income will push down real estate prices all on its own.

Maximizing social prosperity and stabilizing the economy would probably #1 and #2 for me.

Sort of. But land is not a uniform commodity. Different parcels of land are subject different levels of demand. For a place like New York City, the demand for real estate is fairly inelastic. But a basic income would decrease the incentive for people to live near where the jobs are. This would likely cause real estate prices to crash in more expensive places like San Francisco and New York. Many of those prices are inflated due to speculation anyway.

Everyone should be. =)

> In reality the Phillips curve was too simple.

Yes. The Phillips curve relationship between inflation and unemployment only holds under certain conditions. Policymakers thought they could stimulate the economy by causing inflation, but this kind of thing isn't going to work if the underlying problem with your economy is that you have less access to resources (in this case, oil).

So the policymakers made a mistake in the 1970's. And, as you say, the expectations of inflation led to institutional inflation, which is basically just inflation that reinforces itself out of habit.

Small amounts of inflation can be okay because they help the economy more evenly absorb adverse conditions. For example, instead of firing a bunch of your workers, inflation allows you instead to choose not to give people raises. But there's a limit to how much benefit you can get out of inflation.

> UBI could lead to stagflation because the income allotments and any increases would be according to some formula known ahead of time. This means that producers could anticipate demand and simply raise prices to soak up any income increases.

Hmm. I'm not sure this is right. UBI or not, you need to keep inflation in check. But there's a lot more to inflation than just the amount of money in circulation.

In order to keep prices stable, the amount of spending in the economy must stay aligned with the amount of actual stuff being traded. Generally speaking, monetary policy keeps prices stable. If there otherwise would be deflation, monetary policy incentivizes borrowing (lowers interest rates) to increase the amount of spending in the economy. If there would otherwise be inflation, monetary policy disincentivizes borrowing (raises interest rates).

UBI, on its own, won't cause inflation, let alone stagflation. In fact, it can lessen the need for monetary policy to encourage borrowing in the private economy. Through the monetary policy response it induces, basic income can take some of the fuel away from the speculative bubbles that tend to destabilize the economy every so often.

However, Circles hasn't described how they plan to implement monetary policy. Without solving the problem of price stability, they won't have much of a currency, let alone a basic income. A flat increase in the amount of the basic income isn't going to cut it. Monetary policy must be able to respond to various economic conditions.

It's probably a mistake not to keep your monetary policy separate from your basic income.

> The joint-stock company was one of the most important inventions in human history. It allowed us to align a lot of people in pursuit of a common goal and accomplish things no individual could. Obviously, the US is not a company, but I think a similar model can work for the US as well as it does for companies.

If the joint-stock company actually depended on their shareholders in order to be successful, then you'd have the same problem with the tragedy of the commons. But it doesn't. The shareholders and the workers at the company are different but overlapping sets of people.

What the joint-stock company really did was it allowed you to bet on the success of the company. And it allowed you speculate by betting on the price of the stock, which wasn't always the same thing. Unless you have a really high stake in the company, if you think the stock price is going to drop, the incentive isn't to improve the company. It's to sell the stock.

Your plan feels like it's trying to achieve something different.

> A proposal like this obviously requires a lot of new funding [1] to do at large scale

Depends what you mean by "new funding." There's no reason (except politcal) why we can't fund people's incomes by running higher government deficits.

> [1] It’s time to update our tax system for the way wealth works in the modern world--for example, taxing capital and labor at the same rates.

I'm not sure how useful it is to think of taxation as a way to fund spending. The amount of money the government should spend for optimal benefit to the economy has very little to do with the amount of money they take in through taxes. If you can deficit spend without causing inflation, then you should do it. Taxation just makes things more complicated.

Taxation is useful if you actively need to remove money from the economy to combat inflationary pressure or to conserve resources. But as far as inflationary pressure goes, the Fed still has a ton of room to raise interest rates and shrink the private financial sector, which is where most of our money flow comes from these days anyway.

The private debt that we rely on is also very unstable. It consists of a brittle web of interconnected debt obligations that grows more fragile with time as it builds up. So a deficit-funded basic income can help stabilize the economy and prevent 2008 from happening again. You're replacing unstable money backed by private debt with stable money backed by government debt. The decision to deficit spend is not a choice between debt or no debt. It's a choice between public debt or private debt.

And if you're distributing the new money to everyone evenly, instead of people with money getting more money to spend on stuff they already buy, people without money are getting more money tospend on new stuff. This creates an incentive for producers to produce more rather than to raise prices. Because of this effect, a deficit-funded basic income might not cause very much inflationary pressure in the first place.

> And we should consider eventually replacing some of our current aid programs, which distort incentives and are needlessly complicated and inefficient, with something like this.

Sure. But I think you can introduce the basic income first. Then, we might eventually realize that some of these other programs have become entirely pointless.

> Of course this won’t solve all our problems--we still need serious reform in areas such as housing, education, and healthcare. Without policies that address the cost of living crisis, any sort of redistribution will be far less effective than it otherwise could be.

I'm not so sure about that. A basic income would allow people to live in cheaper places because they don't need to be as close to jobs. That, in itself, can take pressure off housing prices. But it's because housing prices in currently-expensive areas won't really matter as much anymore. It will become far more okay not to live there.

The biggest problem with education is that it's too tied to the labor market. If people don't have to worry about educating themselves in a very specific and restricted way just in order to survive, then that takes the pressure off tuition prices. If people are free to eductate themselves by exploring on their own, following their natural curiosity, and making use of free online resources (which are only getting better and better), then that takes demand away from colleges.

As far as healthcare goes... hmm. Yeah. Healtchare is a problem. I have a lot to say about healtchare, but I won't say it here because this post is already way too long.

> but I think we could start very small--a few hundred dollars per citizen per year--and ramp it up to a long-term target of 10-20% of GDP per year when the GDP per capita doubles.

I like the idea of gradually ramping up a basic income. You'd just keep ramping it up until the additional increases stop providing additional benefit to society. And, of course, as technology improves, the optimal amount of the basic income would increase.

However, we really need to let go of tying it to GDP. Even if we had a more sane metric of economic output than GDP, the basic income necessarily changes the level of economic output. As people get more money, we will produce more stuff for them to buy.

> I have no delusions about the challenges of such a program. There would be difficult consequences for things like immigration policy that will need a lot of discussion.

Immigration is really interesting, at least with respect to a basic income. Because if we opened up immigration and provided all the immigrants with basic income, that would provide a huge boost in demand. Plus we'd have more human minds living right here in America. And the human mind is, of course, the most valuable resource. Basic income plus open immigration is a very powerful combination.

> We’d also need to figure out rules about transferability and borrowing against this equity.

Yeah... This equity thing doesn't really make that much sense. Straight up cash would be a lot simpler.

> And we’d need to set it up in a way that does not exacerbate short-term thinking or favor unsustainable growth.

Yup. This brings us back to resource conservation again. We can achieve resource conservation by taxing the use of those resources we want to conserve.

> However, as the economy grows, we could imagine a world in which every American would have their basic needs guaranteed. Absolute poverty would be eliminated, and we would no longer motivate people through the fear of not being able to eat.

Yes.

> In addition to being the obviously right thing to do, eliminating poverty will increase productivity.

Yes. It would increase productivity primarily by giving people more money to spend, which would induce more production. It might also reduce the total amount of labor we employ. More production and less labor means more labor productivity. But I don't think that labor productivity should be a goal in itself. Higher productivity is merely a consequence of achieving production while also using less labor.

> American Equity would create a society that I believe would work much better than what we have today. It would free Americans to work on what they really care about, improve social cohesion,

Replace "American Equity" with deficit-funded basic income and I'm sold.

> and incentivize everyone to think about ways to grow the whole pie.

Nope. Not this part (for reasons stated above).

So there's your feedback. I hope this was helpful.

Cheers!

I hope you're ready for a wall of text. Had to break this into multiple posts...

I have several comments about what you're proposing, to the extent that I understand it.

> I think that every adult US citizen should get an annual share of the US GDP.

Right of the bat, you're starting with GDP, which is an inherently flawed measure of economic output. Namely, it gets imports and exports backwards. If you want to distribute incomes to people, it would be useful for the amount of the incomes to somehow line up roughly with the amount of stuff they'd able to buy with those incomes. The higher the potential imports, the more people can potentially buy.

As a thought experiment, we can imagine that foreign countries are analogous to firms that don't use any labor to produce what they produce. The output of the firms, of course, adds to total GDP. And the output of the countries subtracts from total GDP. This is despite the fact that the two are the same thing.

I've written a blog post about this: http://www.suncho.com/blog/20170616_gdp_is_wrong.html

> I believe that owning something like a share in America would align all of us in making the country as successful as possible

No. It wouldn't. The problem here is that you run into the tragedy of the commons. Everyone receives the benefit whether they happen to be contributing or not. This creates an incentive not to contribute because you're going to receive the benefit anyway. This is why communism doesn't work.

The good news is that we by and large don't need most people to contribute. So an incentive not to contribute might not be such a bad thing.

> the better the country does, the better everyone does

Yes. But the good news is that you really don't need to incentivize people to be involved in making the country successful. The innovations of the few can benefit the many.

> give more people a fair shot at achieving the life they want.

The idea that people should have to "achieve" the life they want is a little silly. We have to resources to give everyone an amazing life without them having to work for it. We're operating way below our productive capacity.

There's a Buckminster Fuller quote that I really like:

"We must do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest."

Figuring out how to embrace joblessness as a positive force for humanity is probably the most important social challenge we currently face.

I also wrote a blog post about this: http://www.suncho.com/blog/20150326_morality.html

> And we all work together to create the system that generates so much prosperity.

As I've said, we really don't need everyone to be working together. Furthermore, even if you really want people to be working together, your plan to doesn't incentivize us to do that.

> I believe that a new social contract like what I’m suggesting here--where we agree to a floor and no ceiling--would lead to a huge increase in US prosperity and keep us in the global lead.

When we distribute money to people (e.g. through a basic income), there's always going to be an amount that's optimal for social prosperity. I agree with you that it would be a mistake to put a cap on the amount of the basic income that's below what's socially optimal. I cringe every time someone says that the basic income should be exactly equal to the amount that pays for everyone's basic needs.

But it would also be a mistake to put a floor on the basic income that's above what's socially optimal. That being said, I think we have enough available resources that the optimal amount of basic income would be well above what most of the "basic needs" people are calling for.

> Countries that concentrate wealth in a small number of families do worse over the long term--if we don’t take a radical step toward a fair, inclusive system, we will not be the leading country in the world for much longer. This would harm all Americans more than most realize.

I mostly agree. If we flatten out the aggregate demand curve by providing an evenly distributed income to everyone, then that increases quantities demanded of many of the things we produce and allows us to scale up production. This gives more people more access to more wealth.

> Today, the fundamental input to wealth generation isn’t farmland, but money and ideas--you really do need money to make money.

Hmm. Sort of. Even today there are resources we use that are factors of production that aren't farmland, but that are analogous to farmland. And we still have farmland, of course. Technological improvement allows us to use such resources more and more efficiently with time. Our overall productive capacity increases with time. We also have financial resources and we can certainly make money out of money.

But then another important factor is demand. We're not going to generate (i.e. produce) wealth if nobody's going to buy it. Our technology can improve all it wants, and our productive capacity can go through the roof. If people don't have the incomes to pay for all this stuff, it won't matter.

As far as ideas go, I'm not sure how important they are. Ideas are a dime a dozen. There are no new ideas on the face of the planet (except of course for my ideas, which are unique and special). Execution on ideas can be great. Innovation can be great. But as long as we're constrained by demand, none of that is going to help. Demand is our bottleneck. By focusing attention elsewhere, we're prematurely optimizing a part of the code that isn't going improve performance.

> American Equity would also cushion the transition from the jobs of today to the jobs of tomorrow.

Huh? Are you saying that if everyone had an income it would give them the freedom to work on things that are actually going to matter?

> Automation holds the promise of creating more abundance than we ever dreamed possible, but it’s going to significantly change how we think about work.

It depends on us significantly changing how we think about work.

> If everyone benefits more directly from economic growth, then it will be easier to move faster toward this better world.

Yes.

> The default case for automation is to concentrate wealth (and therefore power) in a tiny number of hands.

Yes. If we rely on wages for people's incomes and production is constrained by consumer spending levels, then the result of automation is necessarily a reduction the amount of wealth we produce. And the people who do have access the the wealth are the ones who somehow still have sufficient incomes to purchase it.

> America has repeatedly found ways to challenge this sort of concentration, and we need to do so again.

Yes. But it's been pretty ugly so far. A lot of it involves contorting the labor market in an attempt to get somewhere close providing people with sufficient incomes through wages. I hope we can do better in the future.

There's only a problem if we're expecting people to get that money from... wait for it... jobs. So let's lower interest rates and make it easier for everyone to borrow money. That will boost spending and create jobs! What could possibly go wrong?

>You really think so?

I didn't write the blog post, but I think it's pretty clear that he's saying is that this is what many crypto fans believe. I don't think he's claiming to believe it himself.

> Cryptocurrency is not fundamentally an IOU any more than a bar of Gold is an IOU.

Correct. Bitcoin is digital gold. But a bar of gold is an IOU. Because gold gets most of its value from its ability to be traded for other stuff, it's basically a form of credit. You can think of gold as a general purpose IOU from the economy to the person holding the gold. If the economy collapses, the gold isn't worth much. Bitcoin is the same.

Unfortunately, neither bitcoin nor gold can be currency. Currency must have a reliable stable value. As far as I know, the only way to ensure stable value of a currency is through centralized monetary policy.

If everybody started saving 10% of their salary, the decrease in consumer spending would put deflationary pressure on the economy. That could, in turn, lead to a few different possible scenarios depending on the economic policy decisions of the government and the central bank:

1. If the economic authorities refused to respond and decided to "let nature take its course" on the economy, the reduction in consumer spending would lead to businesses shuttering and people losing their jobs. Maybe instead of 1/3 of people not saving any of their salary, 1/3 of people just wouldn't have salaries in the first place.

2. The central bank can lower interest rates thereby making it easier for people to borrow. This easy borrowing would provide an incentive for people to spend. This could counteract the effects of whatever was incentivizing them to save in the first place. Or maybe we'll end up in a situation where people think they're saving, borrowing, and spending all at the same time and what's really happening is that they're "investing" in some kind of asset bubble that they don't know is a bubble.

3. The fiscal authority borrows and spends money into the economy to make up for the drop in consumer spending (and, if distributed well, that money circulates and boosts consumers pending too). This fiscal expansion route is kind of the opposite of the monetary expansion route in scenario #2. Here, the government is going into debt in a stable and controlled manner. With the central bank lowering interest rates (#2 above), you're encouraging the expansion of private debt, which is unstable and can collapse.

I don't make economic policy, but if I did, I'd tend to lean toward option #3. Of course, it entails the central bank and the country's government working together to make it happen. The ECB would have to encourage (or at least allow) the EU member nations to go further into debt. In the case of America, the Fed doesn't have that kind of control over the government. If Congress decided to take on massive government debt and spend new money into the economy, the Fed would have no choice but to take the necessary actions to keep prices stable (raise interest rates, etc).

Well, that turned into a little rant about things I care about. I guess my overall point is that if Everyone started saving 10% of their salary, it would be a huge shock to the economy, and probably not a good one. And what happens next would depend on a lot of things that I think about a lot.

Anyway, solving this "problem" is not just about a shift in attitude toward saving. At least not in the general sense. I do agree with you that it's not an unsolvable problem for an average comfortably-living individual.

Because there's a limited amount of it, it's deflationary in nature. If a currency becomes deflationary, then it's not going to be a currency for very long. People will hoard it instead of using it in their everyday transactions.

Cryptocurrency gets most of its value from speculation. In the case of Bitcoin, at least, that speculation is spurred by some people's belief that it has importance as a potential future currency. It doesn't matter that they're wrong. Their beliefs are still enough to boost the price of the speculative asset. Then you have this cycle where its price will crash every so often. If Bitcoin's price ever stabilizes, it will be because most people have given up on it as a currency.

Once the hype dies down, the question is whether it can do what gold did and become a valuable asset with a relatively steady price. Will there be fringe Bitcoin bugs like there are gold bugs who create enough demand for it to keep the price from going to zero? I guess we'll see.

At its core, Bitcoin is gold. And if you want an answer to why we'll never be using Bitcoin as our currency, ask yourself why gold is never again going to be our currency. It's the same answer. Without a central authority, you can't keep the price stable.

Now we could certainly construct a credit structure on top of Bitcoin. So instead of trading Bitcoin directly, we trade IOUs for Bitcoin. That's what we did with the gold standard. If they're "just as good" as Bitcoin, then it effectively increases the circulation of Bitcoin-denominated assets and can help keep prices stable.

You'd of course need some kind of trusted authority to tweak various macroeconomic variables to ensure that the value of Bitcoin (or Bitcoin IOUs) remains stable. But it's possible at least for a while. You just have to give up one of the core principles of cryptocurrency.

Eventually you're going to have so much money circulating and so little actual Bitcoin to back it up that the system is going to become too brittle and you'll have to leave the Bitcoin standard.

Hey look. You just bootstrapped another fiat currency.

Bitcoin is gold. It can be manipulated by governments just as much as gold can. And it has just as much potential to be a real currency as gold does. For a long time there, we were lucky and we were mining new gold at roughly the rate required to keep prices stable. No such luck with the cryptocurrencies. And even if you manage to hit on the right rate of currency minting today, the future looks different.

The reality is that a lot of people already are doing the equivalent of receiving their basic income in exchange for digging and then filling in a big hole.

But maybe there's a cheaper way to meet people's "need to be needed" that's less wasteful of resources. Sports? Video game competitions? Intellectual debate? Volunteer work? There are a lot of possibilities here. I'd love to find out.

In any case, I think it would be prudent to separate the debate about how people get most of their incomes from the debate about how people find meaning in their lives. Tying the two together is only one option and I'm not sure it's the right one.

What's wrong with central bankers tightening in response to fiscal expansion? From where I'm sitting, central bank tightening seems like exactly what we need. And we can't have it without the fiscal expansion coming first. What do you mean when you say that monetary tightening will "counter and undo" the benefits of fiscal expansion?

The problem with monetary policy that's too expansionary is that it leads to the creation of lots and lots of debt in the private financial sector. And the thing about private debt is that it's WAY less stable than public government debt. As private debt builds up in the economy, the web of interconnected private debt obligations becomes ever-more brittle and susceptible to a chain reaction of defaults bringing down the whole system. See 1929 and 2008.

Fiscal expansion, on the other hand, increases the amount of public debt. This expansion induces a monetary policy tightening response that raises interest rates and reduces the amount of lending in the private economy. You're basically swapping in a more stable form of debt for a less stable form of debt. I'd rather have the stable form of debt.

To put it succinctly, fiscal expansion coupled with monetary tightening helps crowd out what Austrian economists call malinvestment in the private economy.

The "collapse of Rome" outcome is what we get when the federal deficit is too small for too long. It's not the other way around.

No.

Intuitively, it seems like piling up mountains of debt would lead to a default (or default equivalent) some day in the future. But if you're a government and your debt is denominated in a currency that you control, you'll always be able to meet your debt obligations by creating new currency.

Now you might think that this kind of "money printing" action would lead to inflation, which is the equivalent of a default that's distributed across the entire economy. This isn't true either.

This is where monetary policy comes into play. Any inflationary pressure caused by fiscal policy has to be compensated for through monetary tightening. Poof goes the distributed default.

The deficit can be way higher than it is now. And it can be permanent. We can cut taxes AND increase spending no problem.

There is, in fact, a limit to how much of this we can do. That is to say, there's no limit to how big the debt can grow, but there is an optimal size of the deficit, above which (and below which) we start to see some problems. But that optimal size has nothing to do with balancing the budget in the traditional sense.

If we don't kick the can down the road sufficiently, we're dropping the ball.

Central banks have a mandate to keep prices stable. Interest rates are low because central banks don't have a choice.

I agree with you 100% about Bitcoin.

The thing about labor is that it's not just any old resource. It's a resource whose price determines consumers' incomes. And consumers' incomes determine how much stuff they buy.

There's a common myth that technology will make everything cheaper. It won't. Some things will get cheaper and other things will get more expensive. Economic policies prevent deflation, and therefore prevent the general price level from adjusting downward. If the price of one good decreases, the price of another good necessarily increases to compensate.

Furthermore, labor can't be one of those goods whose price increases. At least not on its own. As labor becomes more efficient, the amount of money going to labor decreases for each unit of output. If we leave it up to the markets, increased labor efficency would lead to lower incomes and lower output and further lower incomes.

But we have economic policies to address that too. We don't just leave it up to the markets. Instead, we do our best to negate the efficiency (labor productivity) that technology would have otherwise enabled. This keeps people's incomes reasonably high.

Economic policies keep people employed, keep wages high, and keep labor inefficient. The Jevons Paradox doesn't really apply here... at least not in any kind of straightforward way.

Tim O'Reilly -- and many economists (armchair or otherwise) -- seem to completely miss this point.

If labor is less valuable, it doesn't have to mean fewer jobs. It doesn't even have to mean fewer hours worked. It can just mean less money going to labor (i.e. lower wages).

If our economy is operating below its productive capacity, which it is, then our levels of production are constrained by how much people can spend. And if consumers get their incomes from labor, then automation means consumers have less spending money.

If consumer incomes are constrained by wages, you'd therefore expect our level of production to decrease with increased levels of automation. And because economic policies are keeping the hours worked high, you'd expect the amount of production per man hour to decrease.

Hence...

"1. The U.S. economy is in a productivity recession."

Furthermore, if firms need to keep production levels low in order to clear markets, you'd expect that they wouldn't have much of a need to figure out ways to boost production.

Hence...

"2. Companies don’t seem to be investing in technology nearly as much as they used to."

Technology and automation allow the use of resources to be more efficient. One of those resources is labor. That means that in cases where we're actually using labor for production -- instead of, you know, just as an excuse to give people incomes -- we can get that labor really cheap.

"3. Globalization is a much bigger deal than automation for work and wages."

Globalization is automation.

But because we're Americans and we believe in the American dream, we need to force the labor market to provide incomes for hard-working Americans. Naturally, since many jobs amount to little more than token busy-work, we should then expect the labor market to become exceedingly boring and uneventful. After all, these are just fake jobs propped up by economic policy.

Hence...

"4. The U.S. economy’s creative-destruction engine is broken."

"This isn’t what the end of work was ever supposed to look like."

Yes it is. This is exactly what it's supposed to look like.

Furthermore, if you don't check the "success" flag, then your function would fail silently. The exception ensures that something reasonable happens (program termination) when the client does nothing to handle the error.

Exceptions are cleaner.

I wouldn't say that they are doing it wrong. They throw an exception because they don't want to make assumptions about how you would want to handle the error.

What would you prefer the std::stoi() function to do?

C++ programs normally throw an exception when a C program would call exit() or abort().

So I would start by having one try block that surrounds your main() function with a catch-all block that prints some sort of error message before your program terminates. This is often all you need.

If a situation arises in which you can handle an exception without terminating your program, you can throw a try block in there too.

Exceptions automatically provide for you what you would write by hand in languages like C:

  // The C way

  int error_flag = EVERYTHING_IS_OK;

  int checked_div (int numerator, int denominator, int *quotient)
  {
    if (denominator == 0)
      return 1;

    *quotient = numerator / denominator;

    return 0;
  }

  int foo (int a, int b, int c)
  {
    int q;

    int err = checked_div (a, b, &q);
    if (err) {
      error_flag = FOO_DIV0;
    }

    return q+c;
  }

  // The exception way (notice that there's no try block)
  int checked_div (int numerator, int denominator)
  {
    if (denominator == 0)
      throw runtime_error ("Divide by zero!");

    return quotient;
  }

  int foo (int a, int b, int c)
  {
    return checked_div (a, b) + c;
  }

Returning error codes prevents functions from directly returning their results. The "eithers" strategy is an attempt to make this a little smoother, but it doesn't solve the problem that it makes your code weird. Global error flags have their own host of problems. If you fail to check for errors, havoc will ensue. Furthermore, multithreaded environments turn global error flags into a tangled web of deceit.

Nevertheless, these ad hoc strategies often suffice because the unusual nature of exceptional errors can prevent error handling code from clogging up your primary code path too badly. But even for simple situations, the compiler can do better than you can. Why add unnecessary complexity to your code?

You should write try/catch blocks only when you know how to cope with exceptional errors. Needless to say, they should be pretty rare. But lets say that when a particular invocation of foo() fails, we want to use the maximum integer value as our result. Here's how it looks:

  // The C way
  int bar (int a, int b, int c)
  {
    int result = foo (a, b, c);
    if (error_flag != EVERYTHING_IS_OK) {
      assert (error_flag == FOO_DIV0);
      result = numeric_limits<int>::max();
      error_flag = EVERYTHING_IS_OK;
    }

    return result;
  }

  // The exception way
  int bar (int a, int b, int c)
  {
    try {
      return foo (a, b, c);
    } catch (runtime_error)
      return numeric_limits<int>::max();
    }
  }

  int bar (int a, int b, int c)
  {
    return foo (a, b, c);
  }

  // This is only called when a runtime_error exception is thrown.
  int bar_catch (int a, int b, int c)
  {
    // return to the same place bar() returns to
    return numeric_limits<int>::max();
  }

This exception handling strategy is often referred to as the zero-cost exception mechanism. The latest versions of Clang, GCC, and 64-bit VC++ all implement some variation of it. For compilers that don't, there's a cost to adding try/catch blocks to your code. But it's still cheaper than the cost of your own error checking. Even if it tried, I don't know if a compiler could possibly implement exceptions in a way that's slower than a manual error handling approach.

There's a myth out there that exceptions add overhead or make the control flow of a program more difficult to reason about. Of course, this is the opposite of what they do. Even if you're working with C-like code that has no user-defined classes, switching to exceptions is a win. Exceptions enable some of the fundamental abstractions in C++. How else are you going to handle a memory allocation error in an implicitly-called copy constructor?

If you'd like to get a sense of just how perversely you need to contort the C++ language in order to deal with the absence of exceptions, look no further than Google's C++ style guide. Google doesn't use exceptions in their C++ code. This policy has ripple effects throughout their guidelines. Among other things, they forbid constructors from allocating resources.

https://google.github.io/styleguide/cppguide.html

Google's excuse for not using exceptions is that their existing exception-free code base is so large that it would take too much effort to convert it. But if they can interface C++ code with Java/Python/Go code, they should have no problem interfacing exception-free C++ with exception-full C++. I can't help but wonder if some of their engineers are confused about how exceptions work.

Anyway, if you don't work for Google, use C++ exceptions.

Wow. That turned into a rant (some of which was copy-pasted from something I wrote a while ago).

If you know how to handle an error when it arises, then you shouldn't be using exceptions. If you're wrapping a try block around every piece of code that might throw an exception, then you're doing it wrong.

The technique described in this article is not an alternative to exceptions... unless you were using exceptions wrong in the first place.

EDIT: Replaced "any code" with "every piece of code."

Some people will undoubtedly want to pay extra to drive their own car for fun. I imagine that having a driver's license will be like having a pilot's license today.

> what of motorbikes or even regular bicycles?

A bicycle is a lot cheaper than a car, so I imagine that more people will be riding their own bikes than driving their own cars.

> In the future people could lounge at the pool all day and have everything done for them by robots.

Yup. Except for the stuff they want to do themselves.

It's not just self-driving tech. It's the ride-hailing paradigm in general, which the self-driving tech makes incredibly cheap. As soon as it becomes more cost effective to use ride hailing services than to own your own car, those 2 billion cars will all leave the road basically overnight.

We're not going to have to wait for the old cars to die.

For example, in the not-to-distant future, we won't need parking spaces. You'll just hail the self-driving car (or similar) using your phone. People won't own their own cars.

So if your startup is designed to help people get parking spaces, how much potential is it really going to have? Probably not much.

Similarly, the internet is transforming education. Information is everywhere. A startup focused on helping kids get into college feels a little shortsighted to me. It might provide a useful service to some people today in the context of present challenges, but there's no way it's going to turn into a unicorn.

Anything related to helping people find jobs is also probably a non-starter. Do you imagine a future in which we need everyone to contribute to the extent that it's worth paying them what today we would consider a "fair salary" for their labor? I certainly don't.

Take the salary part out of the job and maybe you have something. What about a platform for helping people find interesting ways to spend their time?

Take the college part out of education and all kinds of possibilities open up. For that matter, take the job training part out too. I've become pretty disgusted as Udacity, Coursera, and edX have gradually shifted toward teaching people "career skills." There are still some good MOOCs out there, but you have to wade through all the "learn these skills to make more money in your career" crap.

What about a platform to foster pure intellectual curiosity? That's what I was hoping these MOOCs would be.

Sure. But it's unclear where the equilibrium is between the volume of passive investing and the volume active investing (or if there is one).

In the meantime, the increasing share of passive investment is causing the prices on all these assets to become more correlated. This increases systemic risk. When everyone diversifies completely, you lose the benefits of diversification.

It's unclear to me how well investors recognize this shift in systemic risk. Obviously there will always still be some active investors. But how can you be sure that the economy won't be destabilized from this?