Compare investment in railroads in the 19th century to investment patterns today. As Eliezer once said, that sounds like the sort of problem a financial system would solve. Too bad our society doesn’t have a financial system.
The civilized world wasn’t ever rational enough to develop AGI safely. It just used to be rational enough to plug holes in the Gulf of Mexico, to build Levees that worked, and to avoid rapid successions of speculative bubbles.
The ultimate test, IMHO, is GDP growth rate, but then again, I don’t believe the official numbers for that, so…
It just used to be rational enough to plug holes in the Gulf of Mexico, to build Levees that worked, and to avoid rapid successions of speculative bubbles.
1) My understanding is that historically there weren’t any holes in the Gulf of Mexico that were as hard to plug as the one that is currently a problem.
2) Bubbles are most likely becoming more frequent as a result of more liquidity in financial markets. Fortunately the best evidence on bubble behaviour suggests that this trend is self-defeating, once a significant proportion of traders have been exposed to bubbles, we should see a decline in bubble activity, at least for a while cite
3) The New Orleans levy failure looks like a run of the mill bureaucracy SNAFU to me, I think it says more about our government institutions than our wider culture. Basically we like our government to be more risk averse than it was in the past, and that means it takes longer to do anything.
The ultimate test, IMHO, is GDP growth rate, but then again, I don’t believe the official numbers for that, so...
Out of curiosity, what are your concerns with official GDP statistics?
Compare investment in railroads in the 19th century to investment patterns today
Many people say that railroads are quite comparable to the internet bubble. The investors did badly. Maybe Victorians were better at deploying capital to useful endeavors, but that’s not the same as being good at investing. Also, one example doesn’t demonstrate it. You’ve complained about the slow spread of farm tech [McCormick?].
I agree, the 19th Century railroad surge was most likely bubble driven. Some bubbles drive investment in capital goods (these tend to have some positive spillovers for non-investors) and some don’t. In recent times the tech bubble was a capital good bubble and the housing bubble was pretty much a consumption bubble. In the 19th Century the railroad bubble was a capital bubble and the tulip bubble was consumption good based.
That’s what happens when I try to comment from memory. I think the basic point stands though. Bubbles of different kinds have existed since financial exchanges have existed and I don’t think there’s a pattern toward particularly destructive ones.
Compare investment in railroads in the 19th century to investment patterns today. As Eliezer once said, that sounds like the sort of problem a financial system would solve. Too bad our society doesn’t have a financial system.
The civilized world wasn’t ever rational enough to develop AGI safely. It just used to be rational enough to plug holes in the Gulf of Mexico, to build Levees that worked, and to avoid rapid successions of speculative bubbles.
The ultimate test, IMHO, is GDP growth rate, but then again, I don’t believe the official numbers for that, so…
What would a financial system look like?
1) My understanding is that historically there weren’t any holes in the Gulf of Mexico that were as hard to plug as the one that is currently a problem.
2) Bubbles are most likely becoming more frequent as a result of more liquidity in financial markets. Fortunately the best evidence on bubble behaviour suggests that this trend is self-defeating, once a significant proportion of traders have been exposed to bubbles, we should see a decline in bubble activity, at least for a while cite
3) The New Orleans levy failure looks like a run of the mill bureaucracy SNAFU to me, I think it says more about our government institutions than our wider culture. Basically we like our government to be more risk averse than it was in the past, and that means it takes longer to do anything.
Out of curiosity, what are your concerns with official GDP statistics?
Many people say that railroads are quite comparable to the internet bubble. The investors did badly. Maybe Victorians were better at deploying capital to useful endeavors, but that’s not the same as being good at investing. Also, one example doesn’t demonstrate it. You’ve complained about the slow spread of farm tech [McCormick?].
I agree, the 19th Century railroad surge was most likely bubble driven. Some bubbles drive investment in capital goods (these tend to have some positive spillovers for non-investors) and some don’t. In recent times the tech bubble was a capital good bubble and the housing bubble was pretty much a consumption bubble. In the 19th Century the railroad bubble was a capital bubble and the tulip bubble was consumption good based.
FWIW, the tulip bubble was in the 17th century. The South Seas bubble was in the 18th.
That’s what happens when I try to comment from memory. I think the basic point stands though. Bubbles of different kinds have existed since financial exchanges have existed and I don’t think there’s a pattern toward particularly destructive ones.
The Victorians had a MUCH higher rate of return on capital than we do, in inflation adjusted dollars. Fair point about slow farm tech.