This is such a lovely idea that I logged into HN for the first time in over 10 years just to leave this comment. Thank you for sharing this with us.
2,940 karma · joined October 27, 2009
My blog: http://www.hash-money.com
Email me: nate dot hashem at gmail dot com
Social norms and conventions have significantly shifted since then. It is now entirely acceptable for executives to pay themselves several hundred times the average worker compensation[1]. There is no longer any real cost, reputational or otherwise, for optimizing for your personal gain So you might as well get yours, and fuck everyone else. Sure, some people with "Sanders 2016" bumper stickers will whine on Reddit about you, and maybe they'll even get together and yell at some buildings until they collapse due to a combination of in-fighting and tear-gas. But for the most part, you'll just shrug, order another round of layoffs, and think about how much your RSUs will appreciate in the inevitable stock price bump.
And if you're truly concerned about reputational risk, and can't reconcile that some people in society will still think you're a "bad person" for this, and the thought of being a bad person causes too much discomfort for your liking, then you can literally compare them to Hitler and find a sympathetic audience.[2]
I have to imagine -- and yes, I literally have to imagine, because I don't have any quantitative evidence and don't pretend otherwise -- that this is essentially a sociopath mindset (perhaps best explained by the Gervais Principle[3]) that then trickles down at every level of most professional organizations. When you're optimizing for your personal gain, you don't have a lot of time to consider things like "empathy" or "fairness." This is unfortunate to those disposed to such personality traits like the OPs father, because they essentially get eaten alive in the modern American workplace. At many professional organizations, the approach is binary. If it's not "fuck you, got mine" then it's "fuck! you got mine."
HN is known for having a significant population of those who that there is nothing wrong with this, and if the most productive members of society happen to be sociopaths, then they should be rewarded as such as their productivity is what drives the human race forward. But what's unfortunate to me is that this means some of our society's most brilliant and productive people will essentially get marginalized in their professional (and indirectly, their personal) lives, not because they lack some level of competence, self-reliance, productivity, etc, but because they're incapable of embracing a sociopathic mindset to professional advancement.
I have no problem with those who want to make their fortunes in any way possible, so they can retire to Galt's Gultch with their fortunes. I suppose I only question why they're so hell-bent on having only assholes for neighbors.
[0] http://www.nytimes.com/2002/08/23/opinion/the-outrage-constr...
[1] http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/25/t...
[2] http://www.politico.com/story/2014/03/the-rich-strike-back-1...
The dominant industry here will always be Hollywood, where the price of failure can be literally devastating. If your startup fails in the Bay Area, it's not too hard to become a line engineer at another company. If your hedge fund fails in NYC, it's not too hard to get another job at another fund, PE firm, or commercial bank. In some cases, these "failures" are looked at as badges of honor, and likely gave you a lot of hands-on experience you can directly apply to your next job.
But if you fail in Hollywood, you're looking at however many years lost of your life, when you were making no appreciable money as a bartender or barista, with likely no applicable skills to any other industry. I found it amusing the OP described LA rent as affordable -- which by NYC or SF prices, it definitely is! -- yet LA also has the worst income/rent ratio of any city in the US, by far[0]. This is not due to rent being too high, but due to income being too low, because everyone here is broke while they're trying to write screenplays and go on auditions.
It's really hard to live here without having friends involved in the entertainment industry, so in other words, it's really hard not to see this up close. And even if your friends work on the production or post-production side, it's not much better. At least you have a steady salary, but you're probably also working for a huge megacorp studio that literally embodies every single Office Space cliche. Or you're working for a production or post-production vendor that has to jump through ridiculous hoops and work ridiculous hours to get business from said studios. And while that steady salary is nice, it's still not nearly enough if you want to ever actually do own property some day.
So, I wonder how much of that also tempers the goals and dreams for LA startup entrepreneurs. I know it's something I think about often.
[0] http://www.zillow.com/research/rent-affordability-2013q4-668...
Ultimately I just remember struggling so much with... "identity," if that's the right word for it. Penn basically ended up disproving everything I thought I knew about myself when I was 18. I thought I was a "high achieving" individual, then I was suddenly very average. I thought I was someone that made friends easily, then I found myself on a campus with 11,000 undergrads yet basically felt like I had no friends. I thought my ethnicity was irrelevant because I we now lived in a post-racial America (hah!), but it seemed like so many organizations there defined themselves by socioeconomic or racial lines. I thought I was good at programming, yet I felt so completely lost in my comp sci classes.
It was pretty harrowing feeling like everything I thought I knew about myself was false, and I couldn't figure out what was true, and I was still expected to achieve at a very high level while I was figuring it out. The OP's anecdote about going to Wawa really hit home, because I remember almost literally the same thing happening to me, and that's all it would take to feel like nothing made sense anymore. Am I really the kind of person who doesn't have a single fucking friend out of 11,000 undergrads that would take a 10 minute break to grab a sandwich?
The OP seemed to blame Penn as an institution, and I do think these selective universities could do more to recognize that some of their students will basically feel like they've been abruptly thrown into a crucible, and it's not always painless to adjust. The OP advocates things like publishing suicide rates, but I think that's just another way of advocating, "please tell everyone they don't need to pretend everything is great, because I've felt fucking miserable sometimes and I don't think I'm the only one."
There was a guy in my freshman dorm that basically did "crack" and abruptly withdrew for the semester, and I just remember everyone just kind of smirking about it. "Yeah, Sean went nuts or something. Was spazzing out over a midterm and then next thing I know, all his stuff's packed and he's gone. Guess he couldn't hack it."
I didn't smirk. I just remember feeling sad and wishing Sean had said something to me. Feeling overwhelmed apparently meant "going nuts." Was that fair? That didn't seem fair. I don't think Sean would have thought it was fair either. Maybe we could have gotten a sandwich at Wawa and talked about that.
Some examples off the top of my head:
- A healthy 24 year old software engineer is making $75,000. This means he doesn't qualify for any of the tax subsidies by buying insurance on the exchange. He wants to avoid the $2,500 penalty for being uninsured, but every plan on the Covered CA will cost more than that over 12 months. Perhaps his best option is to buy an individual policy for catastrophic coverage only.
- A small business isn't sure whether it's optimal to insure their employees, or just give them a cash "bonus" and tell them to buy their own policy on Covered CA (similar to what Trader Joe's announced they're going to do with their part-time employees).
- Purchasing insurance on Covered CA is limited only to certain enrollment periods (this is perhaps the biggest misunderstanding, as I've seen various media personalities ask "why wouldn't healthy people just wait until their sick, and then get insurance?" countless times). However, there are exceptions for a life-changing event. Thus, a person who is laid off (thus counting as one of those life-changing events) would like information on whether their best option is to pay for COBRA or buy a policy on Covered CA.
Basically the ACA is complex, but it does turn health insurance into a much more structured and transparent market, which lends itself well to applications like SimplyInsured. Otherwise, what could any sort of system do for my third scenario, for example? All anyone could advise to have them stay on COBRA because they'd probably get screwed by letting it lapse and then trying to get an individual policy.
If you're desperate enough, sabotaging yourself to qualify for a need-based social program eventually becomes the objectively optimal thing to do. This is the first I've heard of that sabotage extended all the way to intentionally getting AIDS and intentionally not seeking treatment, though.
Typically these stories can be dismissed for the anecdotes they are. I have a handful of right-winger friends who love sending me some article from the Wichita Star or something where some woman got promoted at her job, lost her Medicaid benefits, so she quit her job, and now gets even more benefits, or something, and RAAAR $16 TRILLION IN DEBT WE'RE ON THE ROAD TO GREECE MAKERS TAKERS SMALL BUSINESS THIS COUNTRY IS GOING TO HELL.
No, this country has decided it's beyond the state's responsibility to provide food, shelter, and medicine to everyone. Instead, various state and local programs only provide it those things to a fraction of the people who need it, usually based on some seemingly well-intentioned criteria. And then some people have the kind of lives where being a homeless prostitute without AIDS is worse than having a roof and having AIDS, so they decide to do that.
You can accept that any program like this will induce morally hazardous behavior in some people, and look for objective information vs. sensationalized anecdotes to see if that program needs reform. You can also realize any need-based program will almost always introduce said morally hazardous behavior, and the problem is that we underfund these programs so that they need this need-based criteria to begin with.
Or you can push to eliminate all these programs because you think they turn everyone into lazy welfare AIDS-seeking moochers, and the good news for you is there's already a political party in the US that pretty much supports all that.
Oh, man.
When it comes to my natural reaction to this, the words 'strong and visceral' doesn't even do justice.
It took me a really long time to understand why I had such a deep-seated loathing for phrases like that. Think of some absurd scenario where someone asks you to cause harm to yourself, so they can benefit in some way, and that's how I would respond. I basically translated these requests to something like, "can't you just shoot yourself in the foot, so I can sell your toes?" and reacted accordingly.
This post provides some good examples -- explained in a much more objective and rational manner than I've been able to -- of the cost, and why this bothered me so much. In general though, if engineers have to spend a lot of time mitigating "can't you just...?" then I think it may point to a more systemic problem in the organization. Namely, the business units are so disconnected from engineering they don't even realize the costs of what they're asking for, and the engineers are so disconnected that they reap zero benefit from whatever business goal is going to be accomplished by this.
I'm actually okay with shooting myself in the foot to sell my toes every once in awhile. I just don't want to do it if everyone else is going to make money from selling my toes except me, and they don't care about giving me time to rebuild my foot afterwards.
There is a lot of "affordable" ($400K to $600K) single family homes in the San Fernando Valley, or towards Orange County, so I had a lot of coworkers buy homes in those areas. If you work in Venice, a house in Torrance is about a 45 minute commute by car. I know this will sound absurd to a lot of people in HN, but if you told a Los Angelan your commute to work was 45 minutes each way, they would say "that's pretty good."
However, if you bought a home in Torrance and live there and a company in downtown LA wants to hire you, even though you're only driving about another 8 miles or so, your commute will probably explode close to an hour and a half, and at least one day a week there'll be some clsuterfuck of an accident on one of the freeways, and you'll have the lovely experience of leaving your house at 8:00am and somehow still being late to your 10:00am stand-up meeting. Fun times!
So I saw home ownership cause former coworkers limit their economic mobility to within one section of one city. For them, it was an option to simply wait until a desirable job opened up in the areas with a bad-but-not-intolerable commute, or they were able to mitigate commutes by negotiating flexible hours with their employers (e.g. working 7am to 3pm, or 11am to 8pm, or only coming in 2-3 days a week, etc).
I recognize Los Angeles' traffic is about as bad as it gets as far as a home ownership "anchoring" someone, but if home ownership causes a reduction in mobility for professionals in a high-earning and high-demand field, I can only imagine the kind of impact it has on the rest of America.
Great. Have fun stashing your cash under your mattress. Or maybe you'd rather just have gold bars, but I hear those aren't as valuable as they used to be these days[0].
This is nonsense. Fractional reserve banking[1] has existed for literally centuries. Based on the concept that "not all depositors need their money at the same time" and "most creditors pay back their loans," a bank can give out loans in excess of the cash they have on hand.
Naturally, this isn't full-proof. Banks can make too many loans, and too many of those loans go bad, and not actually have any money when depositors want their money back. This possibility used to end up being self-fulfilling -- if you thought your bank was at risk of not having enough money to repay your deposits, then you'd immediately withdraw your money, and if everyone did this, then they really would likely not have enough money to pay back your deposits.
You'd have fractional reserve banking even if the currency was anchored to some sort of asset like gold. I'd urge anyone to try and imagine a world where banks were required to have 100% of what they loaned out backed in full by deposits. Credit would be extremely tight. Almost any successful business -- internet startup or otherwise -- starts with some credit, and you'd basically be throwing a huge roadblock into any brilliant but capital-intensive idea. Did you invent an amazing prototype and now want to get a loan so you can build a factory and crank out and sell your new invention? Well, guess you have to wait until a bank has enough in deposits to loan out, of which they'll probably charge you usurious interest rates, since they can't tolerate any risk of eventual default because that could bring their below 100% of deposits.
In lieu of requiring banks to cover 100% of loans with deposits, in the the US we have things like FDIC insurance, and we had laws like Glass-Steagall, to minimize the chance of bank runs and bank defaults happening, and to mitigate the impact when it does. I'm sure all the resident HN Paulbots are already furiously pounding away at their keyboards ready to blast my naivete about fiat currency, government manipulation, inflation, Ben Bernanke being the spawn of Satan, Too Big to Fail, etc. To me, those are separate from the OP's point, which attacks fractional reserve banking as some sort of Great Lie that needs to be expunged.
[0] http://krugman.blogs.nytimes.com/2013/05/20/dead-ingot-bounc...
Easy DNS charges $19.95 CAD/yr for its basic package of DNS services for a domain. Amazon's Route 53 charges $0.50 per month, or $6.00 USD/yr. Given the OP claim to be "traditionally anti-big government, pro-free market, pro-capitalist whack jobs," they are offering a service 3x more expensive than a comparable service US company. Maybe EasyDNS has some extra goodies that Route 53 doesn't to justify the higher price. Either way, that is what drives Mr. Smith's invisible hand, and acting like US states enforcing their 6% or 8% or even 8.75% sales tax is some sort of game changer is absurd.
The OP seems to woefully misunderstand that this is not a new tax. This requires any internet business with over $1 million in sales -- which I'm guessing doesn't apply to a lot of startups whose founders/employees read HN, btw, mine included -- to collect any applicable state/local sales tax at the point of sale, just like pretty much every local business. And if these businesses are getting squeezed by internet retailers, I'm guessing it has nothing to do with sales tax. Recently I needed a DisplayPort/DVI adapter, and impatiently went to Best Buy, where the only one I could buy was $30. Then I saw this one on Amazon for $4.95 on Amazon -- http://www.amazon.com/gp/product/B003BHHIA4 -- promptly ordered it, and returned the Best Buy one, even though Amazon sales tax meant I actually paid $5.45. Best Buy is getting destroyed because retailers can sell similar products at a 84% discount, and that would still be true if it was only a 78% discount.
So, to the OP and all the other people I've seen on HN lamenting that this bill is akin to exhuming Adam Smith's corpse and urinating on it: can we please stop acting like this is the end of the world? Making sweeping states predicting economic outcomes without practical considerations (e.g. many internet retailers have a pricing advantage that dwarfs sales tax) and human responses (an effective 6-10% increase on purchases -- 'effective' because this is a tax they should have been paying anyway -- is not really accomplishing much. There are times to get infuriated about the government fucking up the free markets and disincentivizing capitalist innovation and production, but I don't think this is one of them.
Likewise, unless you're a completely static individual, your own preferences will change. You might not mind a completely chaotic startup environment at age 26, but you might be over it by age 31. So given all that, over a five year period, what's the likelihood that you and and your company will evolve into being as good of a fit in Year 1 as it was in Year 5? Pretty damn unlikely.
Given this paradigm, the two errors most companies make are:
1) Treating this phenomenon as "disloyalty." For a lot of companies, it's not acceptable to say, "the company went one direction, I went another, let's stop dating and just be friends." Good companies understand this happens, treat their former employees like alumni, and a lot of good things can come out of "just being friends" (e.g. that former employee recommending to others they work at the company). Bad companies act butthurt and whine that Generation X/Y are a bunch of ungrateful 'job hoppers.'
2) Having stupid policies for those that continue to be a good fit through Year 5 and beyond. If a former employee ever says of a previous employer, "I liked it there, I just got a way bigger salary increase at my new company" or "I liked it there, but after I was promoted to Senior Engineer, the only real way to advance was through management/business," then that company lost a software engineer over something completely controllable. I see so many companies locking themselves into 2.7% annual cost of living raises for their current employees while they offer 20% more to new hires, and then complain "it's so hard to find good engineers." Well, no shit.
The OP has essentially managed to set parameters with his current employer where he's essentially in control on how his job will evolves, so he can ensure it evolves organically with his preferences, which is probably why he likes working there so much. But in lieu of having every engineer negotiate such a framework with their employers, it'd probably be a lot more effective for those employers to recognize that this "Year 5" phenomenon happens, and adjust accordingly (ie. not holding it against employees who no longer feel like a good fit, and compensating those who continue to be a good fit and produce)
This is false. For example, it's not contradictory to believe in Keynesian fundamentals and supply-side economics, if you think tax cuts would indeed stimulate private spending to the point of increased tax revenue (which actually did happen when marginal tax rates were cut from 91% to 70% as was done in 1964[0]). You can also be a Keynesian and believe in a balanced budget, if you think deficits are causing inflation that the Fed needs to keep interest rates high to fight, and thus those high interest rates are suppressing private sector economic activity (as was true in the 1990s[1]).
The Great Recession has caused the bizarre circumstance of a liquidity trap[2] -- simply lowering interest rates isn't stimulating economic activity, and inflation is low. The Keynesian prescriptions for this are unconventional monetary policy (the Fed's "quantitative easing," which can be done because there's little risk of inflation) and government fiscal deficits (to make up for the lack of consumer demand). Somehow this gets warped into thinking that people like Ben Bernanke and Paul Krugman think you can solve any economic problem by printing dollars and/or getting into more debt.
[0] http://en.wikipedia.org/wiki/Revenue_Act_of_1964
[1] http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/06/w...
This article does a good job explaining it's hardly that trivial. It reminded me of Steve Yegge's blog post about legalizing marijuana[0], and a simple concept becomes impossibly complicated when you consider all the practical scenarios and edge cases. Hopefully, you'll never be in a situation where the government has to rule on something like a disputed inheritance, but it has and will do so, often basing its decision on previously established precedent.
What struck me was the logical step that this is a good defense against the slippery slope arguments, because gay marriage is ultimately an incremental step. We have laws and legal precedent for marriage between two people, and we're effectively just saying those laws can apply to a marriage of two people of the same gender. A typical Republican counterargument to the legalization of gay marriage is that you open the door for marriage to be between multiple partners, or between children, or animals, or whatever absurdity. It's impossible for gay marriage to trivially lead to say, marriage to an animal, because the state will have to define and rule on an entire cohort of new edge cases. If you're gay and married and have a child and you die, it's pretty uncontroversial that your partner would maintain custody of the child. But if you are married to your dog and adopt a child and die, does your dog get custody of the child? That's basically absurd.
So, I feel this essay gives me a good answer the next time a right-winger asks me if the government allows gay marriage, what's to stop them from allowing other sorts of bizarre marriage scenarios: the government would have to come up with a bunch of different rules that are way more complex than gay marriage, and we probably won't want to do that.
[0] http://steve-yegge.blogspot.com/2009/04/have-you-ever-legali...
- Bank runs. It's standard practice that banks will loan out more money than they have in deposits, because it's unlikely that all their loans will go bad at once, and/or it's unlikely that all their deposits will want their money back at once (this is known as fractional reserve banking[0]). But if your currency is anchored to something fixed, this can happen. FDIC insurance is guaranteed in the US because even in some absurd financial economic meltdown scenario, Ben Bernanke can print out USDs to make every depositor whole, if necessary. The only "cost" to that kind of "bailout" is the potential inflation. But you can't do this as a government if your monetary supply is limited because it's fixed to something you can't directly control. The government can borrow money and then make depositors whole, but those that you borrow money from may impose conditions, and those conditions may exacerbate the problem you're trying to solve. See: Cyprus[1].
- The deflation-debt spiral[2]. Yes, inflation "punishes savings," but deflation punishes debt. Generally, debt becomes a big problem in recessions. If you owe $20,000 on your car, and you get a 20% wage cut because your company can only sell goods at 20% of the price they were previously able to, your debt does not go down to $16,000. It's still $20,000. So more of your income will go to paying off debt, which means less of it will go to discretionary spending, which means even more economic slowdown, which means more deflation, which means more wage cuts, which means debt becomes an even bigger burden, etc.
The only real danger to a fiat currency is whether your government's central bank will be so irresponsible with the money supply that inflation spirals out of control. If you're a resident of a third-world country like Zimbabwe[3], transacting in bitcoins will be great because you'll happily trade potential deflationary pain for not being at the whim of a dictator that will print money to increase inflation to one thousand trillion bazillion percent. But if you're the resident of a first-world country which has a responsible central bank, then increasing the monetary supply to fight off deflation is a very good thing.
[0] http://en.wikipedia.org/wiki/Fractional_reserve_banking
[1] http://www.theatlantic.com/business/archive/2013/03/why-the-...
Because healthcare payments are not functionally a government-controlled monopoly (ie. socialized healthcare) in the US, this doesn't happen. So Novartis can sell Gleevec for $75,000 in the US, because a healthcare provider will agree to pay and just bill it to private insurance companies, and those private insurance company will agree to pay and just increase their premiums on the customers, who probably won't notice because, assuming they have employer-provided health insurance, their employer won't take anything more out of their paycheck, but then say increased operational costs means nobody can get a raise.
So US healthcare leads the way in innovation because device and pharmaceutical manufacturers can make a lot more money than in countries with socialized healthcare. So these companies make most of their profits in the US, and then they'll grumble and accept lower prices in every other country, because at that point it's just icing to them. After the profits made in the US, getting $2,500 from Indians for Gleevac is better than getting $0.
The US is effectively subsidizing advanced healthcare for every other country in the world. This is pretty crappy, obviously, but this is a complex problem to solve. Because if you move to a cost-controlling system, then you will stifle legitimate innovation. Why jump through all our FDA clinical trial hurdles if there's no promise of a big payout at the end? Why invest in R&D without the protections of patent law to prevent your drugs from being trivially replicated?
I'm not trying to say, "oh, those poor profits of the drug companies." I recognize this may not be a sympathetic argument. But it's likely to be tough to control costs and yet maintain R&D and innovation. Right now, every other country essentially gets the US to pay the bill for the innovation and they reap the benefits at a lower cost, but with US healthcare already consuming 1/6 of our economy, this isn't sustainable.
Well, I'd say this is only true for your typical corporate entity, where their products are basically just web applications that represent a state machine using some sort of database store for persistence (which is... basically everything). By the time the company has achieved some size, there's enough process and bureaucracy and projects mostly consist of what the OP described -- migrating from one framework to another, or some other incremental enhancement that's hardly pushing any sort of business of technology threshold. At previous employers that fit this description, I could have easily been 10x more productive if I didn't have to endure four hour sprint planning meetings or be required by an understaffed QA/DBA/sysadmin team to approve my code before release, all to do completely routine development changes that required no serious problem-solving.
This doesn't mean I'm a 10x developer. It probably means I'm a 1x developer, so a 'true' 10x developer would have been 100x more productive without the aforementioned bureaucratic crap. At these companies that would dogmatically follow Agile and had two week sprints, I might spend four hours, across two days, actually developing -- with the rest of the days filled with various meetings, interviews, waiting for QA/DBA/sysadmins, fucking around, etc. I could easily see how someone could spend only 15 minutes on what took me four hours, and his solutions would likely be more elegant. It doesn't matter -- the limiting factor isn't the development time, or even the development quality. In that environment, there is literally no difference in productive gains between a proficient developer and a 10x developer.
Given a "10x developer" is literally defined by his productivity/quality, if you think they're effectively overhyped/nonexistent, ask yourself this: are you in an environment where a 10x developer could actually demonstrate 10x productivity? At most companies, the answer is no, because a 10x engineer is doing in hours what takes people days, and nobody notices. But in the right environment, the 10x engineer will do in weeks what would take proficient engineers months, or do in months what would take years. They're the people that Steve Yegge calls "Done and Gets Things Smart"[0] or that Rands calls "Free Electrons"[1].
And if you work at a company that can't think in terms of months because it's always concerned about quarterly earnings, then they have no use for 10x developer, and chances are you couldn't even tell if one was even there.
[0] http://steve-yegge.blogspot.com/2008/06/done-and-gets-things...
[1] http://www.randsinrepose.com/archives/2005/03/20/free_electr...
Well, this is what I'm personally concerned about. I agree with everything you just said. But what is the politically optimal way to cross over that inflection point? Or to rephrase: what kind of rules should we have in government/society so that the transition doesn't effectively cause a revolution and end up derailed? Should we consider an education system oriented around high-skill labor? Should our system of taxation and assistance account for this new concentration of capital? And can you do this without impeding the very technological/economic growth you're accounting for? Too much taxation may stymie private sector advancement, too little taxation may cause an elective or literal revolution, and the wrong adjustments can easily introduce moral hazards (e.g. nobody working at all before our technology is advanced enough to require zero human capital).
In the past, the value of human capital -- the amount you got paid for selling your time for money -- used to be more lucrative. At one point nearly half of Americans were in a labor union, which artificially constrained the supply of human capital so it would be worth more. Conversely, our previous industrial revolutions required a great deal of human capital (building factories, sewers, etc), generating lots of demand that would keep the value of human capital high. Due to political and technological changes, this is basically no longer the case.
If you're a software engineer, then none of these models apply to you because you are high-skill labor (also sometimes called "talent.") You're paid for your time, but your productivity can be orders of magnitude higher than your pay. In the OP's "expendability of labor" graph, the "sweet spot" is enormous. In my nearly ten years as a software engineer, I've seen colleagues laid off/fired for all sorts of reasons, but none of them were due to, "well we did the math, and we decided your production is not worth your salary." I've seen layoffs where the executives literally admitted they would make less revenue/profits due to the lost productivity of the laid off workers not offsetting the savings in salary, but they had to hit a certain "profit percentage" or some other absurd reason that justified the layoffs.
In any event -- I've thought a lot about the macro-society impact of this new model of economy, if we're truly destined for a world where human capital is just not that valuable. My interest in politics and healthcare has largely been based on this -- what should we consider "subsistence living," and what happens if we reach an inflection point where most jobs paying for human capital are below it?
It's possible, of course, that this will all be moot, and our next industrial revolution will have a huge demand for locally-based human capital (e.g. a "renewable energy industrial revolution scenario," where there is a huge demand for laborers that can install solar panels on houses, or something), and the median income for Americans will increase. Or it's possible for a more gradual shift to happen (e.g. the graying of the baby boomers causes a gradual increase in demand for local caretakers of the elderly). But I'm not sure it's a good idea to just assume that will happen.
We could also get into the further perverse incentives specific to the US healthcare system, but I've yet to see a fundamental argument about how efficient market forces can work Adam Smith's magic on healthcare.
In the past when I've worked with friends on side projects, the conversation would sometimes go like this.
Me: "Hey, let's try and meet like three evenings a week for two hours to work on this. Let's start tomorrow?" Them: "Yeah -- wait, I have to meet a friend for dinner tomorrow. Can you do the day after?" Me: "Sure."
[two days later]
Me: "Hey, we're still meeting up tonight, right?" Them: "Crap, I have to work late. Let's meet on Saturday and just bang out some work all afternoon."
We're fucked. We're fucked before we've even started. If every "dinner with a friend" or "I have to work late" is going to sideline you, then how the hell are you supposed to do anything? Even if we do work for six hours on Saturday instead of three two-hour sessions during the week, it's just not the same. We'll have no cadence or rhythm and feel stressed and probably a lot like the people in the OP's study.
A few years ago I recognized this anti-pattern and so I don't really take on new projects or goals unless I'm literally willing to prioritize everything but the bare essentials (ie. family) above it. PG's "Top of Your Mind" describes what 'mental prioritization' looks like, and I think this study points describes what 'schedule prioritization' looks like.
I realize that my own conclusions are my projections completely based on own anecdotes, and I'm sure many people on HN won't hesitate to point out the logical fallacies for why that's dumb. But look back in your life and think about the times you've consistently said, "Sorry, I can't make it, I have to do X first." Did you eventually reach a level of achievement with X? I'm guessing you probably did.
But I agree with him on the first two misconceptions he tries to correct. The iPhone was never a market share game. In 2004, the original Motorola RAZR was like $400 at launch, and three months later it came free in cereal boxes. That's what you do when you are trying to gain market share. Apple's products are effectively a luxury brand for consumer electronics, and criticizing Apple for not winning the market share game is like criticizing Lulumelon for selling fewer yoga pants than Target.
Also, the iPhone and iPhone 3G were objectively great products. It would have been great even if RIM wasn't releasing awful products by comparison. Their other product lines have continued to be popular even as other companies have learned how to make products that are just as thin or have screens just as sharp. So I agree with him on that point, that there's not much merit to the argument, "well the iPhone only sold well because everyone else sucks, and now the Galaxy is just as good so they're screwed."
But, his third point is where I diverge with him on his conclusions. "Apple is a great competitor. In the PC industry they’ve fought back from the brink of bankruptcy to become the most profitable and fastest-growing PC maker in the world. They came in and stole the music player market, and have dominated it for over a decade."
Well, look. To suggest that this is a fait accompli, without even mentioning the fact that Steve Jobs is no longer with the company so maybe they're going to struggle in learning how to 'fight back' without him, is extremely misguided to me. I never knew Steve Jobs personally, but I'd like to think that if he visited Apple now, he'd say something like, "I've been dead for two years and we're still talking about which company is better at making flat touch screen computers? That's boring now. Let's invent something new. And by the way, fire whomever thought it was okay to have 21 icons on the iPhone 5."
Like I said, I don't know Steve Jobs, and I don't work at Apple. But it would seem like if you're going to suggest Apple's still on the ball and market share is irrelevant because they're focused on 'advancing the human race,' you'd probably want to explain how they're going to do it without the one guy that coined the motto to begin with.
I had assumed the OP was talking in terms of the federal government, as that is the government debt that is most criticized. Also, did state and local taxes not exist in 2000? I would assume the tax and spending ratios would be close to the same.
Also, if the government got to do accounting the way businesses do, then they would be able to capitalize things like infrastructure costs. But because our governments can't, transportation funds dry up and we end up with decaying infrastructure.
You seem to suggest I'm being deceiving here, but all I'm pointing out is this: We had a recession caused by the private sector. As a result of this recession, tax revenue went down, because taxes go down in a recession. Spending also went up, because spending on safety net programs intended to mitigate recessions goes up. And certain people, like yourself apparently, think this is an unprecendented catastrophe. And our long-run debt projections are almost purely a function of healthcare costs and have nothing to do with aging or population trends.
You fail to mention who's going to pay it then? It must wonderful to be an Entitled One and write checks that someone else has to cash.
Where is it written that a country is required to eventually reduce it's national debt to $0? The US will not "die" and leave a bunch of credit card bills to its heirs, like human being. China is not going to knock on our door, throw a bunch of IOUs in our faces, and demand we pay up or they'll break our legs. The figurative way this could happen is if our debt causes expensive borrowing costs or massive inflation. Why don't we wait for either of those to start to happen -- none of which has happened in countries with much greater debt than US that control their own currency (as we do), like Japan -- before you throw the "future burden of our kids" argument out?
Even then the government was obviously bloated beyond all recognition, with government "jobs" that required little or no work being handed out as political favors.
I posted this link down below, but public sector employment has completely collapsed since the recession[0]. So, I can't imagine too many jobs are being handed out this way.
Greece had multiple problems, and yes, government corruption was one of them. It also has no control of a central bank to increase/decrease the money supply. Its government does not also does not possess roughly $100 trillion in asssets[1]. I don't like the idea of selling Yellowstone to Disney (for example) in the face of fiscal deficits, but if you're going to make the "future generations" argument, it's more accurate to compare the government debt to government assets than the government's tax receipts in a single year.
[0] http://krugman.blogs.nytimes.com/2012/04/25/american-austeri...
[1] http://business.time.com/2013/02/05/the-federal-governments-...
In any event -- all I'm saying is that I'm very much a "deficit hawk" in any condition where the Federal Reserve has to keep interest rates above. Cut the deficit, offset the spending by lowering borrowing costs, so the private sector can borrow more cheaply for the purposes of growth. Hooray! The problem is when you have such a bad recession that borrowing costs are effectively zero, for the government and anyone else, and you still have high unemployment and no inflation.
You cannot go bankrupt if you print your own currency. You can always print more money, which is why Japan has no problems borrowing money at low interest rates even with a 250% debt to GDP ratio[0]. Yes, I know, "OMG Weimer and Zimbabwe HYPERINFLATION!" This is why the US government doesn't just print money, it issues bonds that the Federal Reserve buys by printing money, giving the Federal Reserve the ability to constrain said money supply if the economy recovers. And by the way, if we have inflation, that is a good thing, as it means enough people have enough jobs and income that they are spending enough money. If you can give me a scenario where we have inflation without full employment, I'd love to hear it. the same people have been ranting about hyperinflation for years. Alan Simpson and Erskine Bowles presented their famous "Simpson-Bowles" budget in 2011, and prefaced it by saying the US needed to take these budget steps or else they would face issues with rising interest rates or inflation in about two years[1]. 2011 was two years ago. Hmm.
If Social Security needs to be a little means tested and the age raised, so be it. If Medicare needs to be means tested, age raised, or what have you... then so be it.
Let me get this straight. Because some entities in our private sector did some really dumb (or malicious) things, and the resulting speculation bust led to massive unemployment, the solution is... cutting core government programs that had nothing to do with it? And you want to do it by turning Social Security into a welfare program (bet it'll still be politically popular after that!) and by raising the age of Medicare, which means all the poor people that will actually need it will probably be dead, because even fewer of them will live to 67 or whatever age you want to raise it to. And we need this to prevent "financial collapse," even though countries with much more debt relative to us have not come anywhere near collapsing.
Yeah, we have a lot of useless bureaucrats in government. But I'd love to see how much of our federal budget they actually take up, because it's probably not as much as you think. I don't like my taxpayer money going to useless bureaucrats either, but it's a complete exaggeration that this is the reason why the US is on the "road to ruin." In general, public sector employment is the lowest it's been in decades[3]. Apparently the man who has "spent more than any person in the history of the world" has not spent enough money to keep all those public sector employees employed.
If for no other reason, we have NO RIGHT to burden future generations with exorbitant debt.
Sadly, perhaps one of the biggest fallacies that usually comes up with the discussion. As I gave in my example, because of Medicare, I don't have to pay for my parents to have health insurance. If the government needs to tax me now or later because of that, I don't consider that a "burden." I consider that something that has freed me to take greater capitalist risks in starting my own company, that should hopefully provide even greater gains for the country's economy. And if we're spending too much on Medicare because we're spending too much on medicine in general, then we should solve that problem, not cut Medicare. For a much more eloquent description of this concept, I refer you to Paul Krugman[3].
And that's all the time we have for today, ladies and gentlemen. After I post this, I'll be editing my /etc/hosts file, as it's now 3pm, and I really need to get some work done. Sadly, arguing economics on Hacker News doesn't grow our economy nearly as much as coding.
[0] http://en.wikipedia.org/wiki/List_of_countries_by_public_deb....
[1] http://blogs.wsj.com/washwire/2011/03/08/bowles-simpson-fisc...
[2] http://krugman.blogs.nytimes.com/2012/04/25/american-austeri...
[3] http://krugman.blogs.nytimes.com/2012/10/12/on-the-non-burde...
One of Japan's issues has been that its central bank was not with loose with monetary policy as it could be. Investors expected the central bank to raise interest rates at the slightest hint of a recovery... which they did, thus limiting recoveries. Ben Bernanke wrote a paper in 2000 (when he was a professor at Princeton) criticizing this -- http://books.google.com/books?id=WAgXuZxPvrUC&lpg=PA149&....
You really have to go back to the Great Depression for events that would enable a good analysis of the impact of federal deficit spending. I refer you or anyone else to Christina Romer's paper -- http://elsa.berkeley.edu/~cromer/What%20Ended%20the%20Great%...
Romer was one of Obama's economic advisors in his first term. She suggested the 2009 American Recovery and Reinvestment act should have been $1.8 trillion, instead of the $800 billion it ended up being[0]. She also, under political pressure, gave the estimate that the stimulus would keep unemployment under 8%. Oops.
This is typically what happens in practical execution -- due to political posturing, the stimulus isn't as much as it needs it be or is oversold in its ability to help. Then the opponents say "nyah nyah, stimulus doesn't work, all toy did was cause a bigger deficit, so let's cut government programs instead!" And then everyone acts surprised when cutting spending leads to an economic contraction and everyone ends up with an even bigger deficit. The UK has acted out this drama to the tee, to disastrous consequences[1].
[0] http://www.huffingtonpost.com/2012/02/14/escape-artist-noam-...
[1] http://www.guardian.co.uk/business/2013/jan/24/imf-george-os...
This is like saying my weight has stayed within a fairly narrow window of 150 pounds to 275 pounds. Your "narrow window" is massive. And it's not even accurate, because there is not one single year prior to 2009 in the Tax Policy Center link showing tax receipts under 16%. Historically, the window is more like 17%-19%.
How can you look at historical revenue AND expenditure levels and call the unsustainability of spending "demagoguery"?
I'm not arguing our government should spend 24% of GDP ad infinitum. I was just as enraged in the 2000s during the W. Bush deficits. Had we been running balanced budgets and not fighting absurd wars in Iraq, running deficits to get out of a recession would not nearly be controversial.
But please, to crusso or anyone else, please explain to me what the causes of our "spending problem" are. The only projected growth in spending is due to Medicare, which is a healthcare spending problem, not a government program problem[0].
So are you suggesting we should cut Medicare? My parents have some health issues, and if it wasn't for Medicare, they'd probably be dead. I left my day job in 2011 knowing that I was unlikely to be financially burdened by their well-being, otherwise I wouldn't have done it. But how many startups will die before they're even born because software engineers are too worried about leaving their day job and covering not just their health insurance but their parents? And when will the deficit-mongers finally realize that while government programs technically require taxation, they can provide a basis of society for us to unleash our maximum capitalist risk-taking potential?
[0] http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/09/t...
If you have a high burn, you either have insufficient revenue or excessive costs. I have gotten so frustrated the past four years at the demagoguery of the national debt as a result of excessive costs.
These are the data points I want to point to every time someone suggests our national debt is "unsustainable":
- In 2000, the federal government collected tax receipts of 20% of GDP[0]. From 2009-2012, these tax receipts were around 15% of GDP. This is due to, as you'd imagine, the huge private sector deleveraging that happened in 2008 and the fact that, politically, any suggestion at raising taxes gets you called a Kenyan Muslim Communist. Yet we didn't seem to have a problem with growth when taxes collected were much higher than they were now, as a percentage of the economy.
- 2/3 of our federal budget is spent on Social Security, Medicare/Medicaid, and defense. Any issues with Social Security being considered unsustainable is that only $113,000 of payroll is eligible for taxation. It would seem to me that if you made all payroll eligible for taxation, you would only be impacting those well into the upper-middle class, and would ensure solvency for at least 75 years. Legislation to do so was recently proposed by some Democrats in the Senate[1].
- We spend a lot on Medicare because we spend a lot on healthcare. We spend a lot on healthcare because we are the only first-world country in the world that doesn't put a ceiling on how much health care providers (hospitals and drug companies) can charge, even for basic services. Yet those that have good insurance are completely price-unconscious. We essentially have the worst of both worlds -- not enough free market forces for health providers to price competitively, and yet not enough price controls either. If you have a free 30 minutes, I highly recommend anyone read Steven Brill's recent writeup in TIME magazine[2].
- It is a complete fallacy that we're living longer, so therefore we have to jack up the age of eligibility of programs like Social Security and Medicare. Most gains in expected life expectancy over the past several decades are due to reducing infant mortality -- in other words, the only change is that we have less people that died before they could even pay anything into SS. Furthermore, most life expectancy gains are concentrated on the wealthy -- those that don't even need Medicare. The life expectancy for working-class Americans is actually shrinking.[3]. I'm not really sure why we need to cut government benefits for janitors because lawyers are living longer. Paul Krugman is constantly trying to explain this on his blog[4].
- If you want GDP growth after a recession caused by massive private sector deleveraging, Keynesian government budgets are exactly what you want. Beyond stimulating spending when everyone is clinging on to whatever money they have because they're living paycheck to paycheck, with US treasury interest rates under 2% for years, this is the perfect time for our government to run deficits at cheap interest rates.
The OP says "Borrowing money to get ninety growth cents on the dollar does not count, although that may work for a while." But in current conditions mean we'd be getting much more than ninety growth cents on each deficit dollar. Conversely, cutting each deficit dollar results in much less growth than one dollar. This is known as the "fiscal multiplier," and there is a lot of research showing that in depressed economic conditions, the multiplier is much higher than 1.0. The utter economic clusterfuck in Europe is because too many people in controlling the Euro felt the way the OP does, so you have countries like Greece and Spain cutting their budgets to eliminate deficits, yet resulting in such a harsh economic contraction that their budgets end up with even bigger deficits.[5].
- We obviously have a shitload of waste in the federal government. You can't have a $3 trillion budget and not have some dumb stuff in there. But for the purposes of any macro fiscal impact in terms of GDP or unemployment, it's literally irrelevant. After Social Security and Medicare/Medicaid, you're left with $1.3T in the budget, over half of which is military spending[6]. Yeah, we have too many military bases and we probably have some useless bureaucrats in the Department of Transportation. But for the most part this spending is on core government programs that are helpful and that people like, which is why the only specifics Mitt Romney could give on what programs he would actually cut was Big Bird. I'm sure you could cut $100 billion with nobody really caring, and we should obviously strive to have the least wasteful government possible, but are a few wasteful programs the reason why democracy is going to unravel?
- In the early 1990s, it was legitimate to argue the federal deficit was crowding out private sector growth. Deficit spending required the Federal Reserve to keep borrowing rates high to fend of inflation, which meant it was more expensive to borrow money for any sort of investment. As George H. W. Bush and Bill Clinton passed tax increases in 1990 and 1993 to balance the budget, the Federal Reserve was able to lower interest rates in lockstep, thus preventing any fiscal contraction. In other words, counterbalancing public spending with looser monetary policy can be a good receipt for stimulating growth[7].
However, the Federal Reserve rates have been at zero for years now, because the recession of 2008 pales in comparison to 1991. If you make money as cheap as possible the private sector continues to say "meh, I think I'll just hoard profits" and you don't have any inflation even with absurdly cheap money, then there are no more bullets in the monetary policy gun left, but bless Ben Bernanke for still trying (QE, Operation Twist, etc).
Yeah, yeah, "OMG HYPERINFLATION WEIMAR ZIMBABWE!" The same people have been yelling this for years. Wake me up when the Bureau of Labor statistics reports a CPI inflation over 3%[8].
- 2% growth isn't great, but it's not going to cause democracy to unravel. It may cause democracy to unravel when 99% of the wealth generated by that modest growth is concentrated in 1% of the population, however[9].
In conclusion: in principle, there's nothing really too controversial about what the OP is saying. We should absolutely be talking about the ways to grow the US economic pie so that our political process doesn't keep grinding to stalemates over who gets what of the pie we already have.
Our government isn't perfect. It could do a lot to improve a lot of things to encourage growth, and many of them aren't even fiscal in nature (e.g. patent reform). But if you're just going to point to the national budget, echo popular political talk-show points about "$16 TRILLION IN DEBT OUR GRANDKIDS WILL HAVE TO PAY" and "WE'RE ON THE ROAD TO GREECE" then I'd argue you're completely missing the forest for the trees.
[0] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
[1] http://vtdigger.org/2013/03/07/sanders-reid-defazio-introduc...
[2] http://healthland.time.com/2013/02/20/bitter-pill-why-medica...
[3] http://www.nytimes.com/2012/09/21/us/life-expectancy-for-les...
[4] http://krugman.blogs.nytimes.com/2013/03/05/the-life-expecta...
[5] http://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf
[6] http://www.cbo.gov/sites/default/files/cbofiles/attachments/...
[7]http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/06/w...
[8] http://data.bls.gov/timeseries/CUSR0000SA0?output_view=pct_1...
[9] http://money.cnn.com/2012/12/03/news/economy/record-corporat...
But when you have a major health crisis, your "empowerment" is just fundamentally limited. If you get into an accident with a loved one and they're unconscious, you're not doing to be in a position to decide whether you should go to the hospital 1 mile away, that may be X% more expensive than the one 5 miles away. Your ability to price discriminate is also fundamentally limited by your own knowledge of medicine. If you have a tumor and one doctor suggests taking medicine A which costs $50,000, and medicine B which costs $5,000, is A better than B? Is it 1000% better? If it's only 2% better, unlike any other consumer product, are you trying to optimize for "value" or "not actually dying"?
There's definitely things we can do in terms of government policy to encourage more customer empowerment to bring down costs. But ultimately you have a market with unvoluntary participation and opaque pricing, which means Adam Smith can't really do his thing.
http://www.joelonsoftware.com/items/2006/09/01.html
Interesting to see Joel's comments on web stacks built with Python and Ruby back in 2006, and even taking a snipe at Lisp. I really can't decide whether web development has fundamentally advanced in every way in the past 5-8 years, or whether it's essentially the same.
I think Gabe is generally right with the metrics he quotes. It's going to be a long slog to go from 1 million users to 10 million users. But it is completely mind-boggling to me how he discusses 1 million users as an emergency condition that needs to be rectified as soon as possible.
If you're a startup with a consumer-facing app with some sort of business model (ie. some way of making money besides chucking up ads) and operating relatively leanly (ie. not having a huge sales force) then 1 million users should provide plenty of revenue/profit to let you reinvest into the marketing channels he describes and optimize accordingly.
Let's take our theoretical site with 1 million unique visitors a month. If you figure out some way to get 1% of them to pay you $10 a month, then you are now clearing $100,000 a month. Depending on the product, there are lots of different ways to do this. Just because "freemium" is cliched doesn't mean it's not effective. Just ask Dropbox. And that revenue is on top of any sort of ads you'll serve!
The only reason to be depressed if you have a million users is if you have no business model, and your operating costs are so high that making over $1 million in revenue a year is not enough to pay the bills.
Sure, there are some companies where there was an early conversation at some point where someone said, "we're going to hire a huge sales force, and get a ton of users, and not figure out any way to make money on them besides ads" and everyone else replied "brilliant!" and they all toasted their Guinness and got so drunk that they never realized how absurd that was. They should be depressed. Everyone else with 1 million users though, I'd say, is doing just fine.