I pretty much agreed with the rest of your post. If you believe you can create something that will be valuable (where that something could be knowledge) but you lack the capital to invest in creating that something then you need to raise that capital somehow. Convincing someone to supply the capital is one route, self-funding another. If you can’t make either of these work then you should at least consider the possibility that you are wrong about the future value of what you believe you can create.
As a side note, it is an economic fallacy to suppose that salaries should directly reflect the value created by the worker. The price of labour, like any other price, is determined by supply and demand.
As a side note, it is an economic fallacy to suppose that salaries should directly reflect the value created by the worker. The price of labour, like any other price, is determined by supply and demand.
The word ‘should’ would need to be replaced (or added to) for the supposition to be fallacious. The (rejection of) ‘should’ does not follow from the ‘is’ in the next sentence without including an additional normative premise.
True, perhaps I should have said ‘it is an economic fallacy to suppose that salaries will directly reflect the value created by the worker.’
Assuming our extrapolated volitions understood economics however they would have no reason to care about the relative salaries of FAI researchers and store clerks. Their only concern would be whether FAI researchers were undersupplied at the market price.
As a side note, it is an economic fallacy to suppose that salaries should directly reflect the value created by the worker. The price of labour, like any other price, is determined by supply and demand.
Interesting. If value isn’t determined by supply and demand, what is value? I don’t remember such subtle distinctions from my AP Econ classes.
Interesting. If value isn’t determined by supply and demand, what is value?
I was distinguishing between the price paid for the product a worker produces and the price paid for the worker’s labour. These are both determined by supply and demand but are independent. A factory with large quantities of high-tech equipment may be one of very few factories in the world capable of producing a product. This product may be in high demand but limited in supply due to the capital intensive nature of its production. The sophisticated machinery may only require low skilled labour however and the factory may be located in an area where such labour is amply supplied. In such a situation the price of labour (wages) will be low but the price of the product will be high. Think iPads manufactured in China.
Alternatively, in the case of FAI research, demand may be low due to lack of interest or awareness and also perhaps because it is not a very scalable problem (would Eliezer prefer an army of 10,000 random grad students or 10 geniuses?) At the same time supply may be high since a relatively larger number of people think it would be an interesting or important research project. This may lead to lower wages for an FAI researcher than a store clerk if the economics of store clerks push their wages up even if the FAI researchers ultimately produce great value.
It is also true of course that price (exchange value) and value are not the same thing. If they were we would have no trade. Value is subjective. Trade occurs when both parties ascribe higher utility to the post-trade state of the world than to the pre-trade state of the world. When money is the medium of exchange the price reflects that one person values the money more than the item traded and the other values the item more than the money.
Enlightening, thank you. Do you think that inability to obviously and intuitively make such economic distinctions is likely to hurt my rationality? (That is, would it be better to read a computer programming textbook or a microeconomics textbook if I wanted to be a master rationalist?)
It’s a little difficult for me to give a good answer to this. I feel I reached the point of diminishing returns some time ago with computer programming textbooks (I’m a professional programmer) and have only relatively recently taught myself some economics. Both are valuable to a rationalist but I’m not sure which has higher value. I think learning some basic economics may have more instrumental value than learning programming if you’re not going to make a living as a programmer however.
Convincing someone to supply the capital is one route, self-funding another. If you can’t make either of these work then you should at least consider the possibility that you are wrong about the future value of what you believe you can create.
I would never discourage consideration of the possibility but I note that quite often the conclusion will be ‘I have not found a way to solve the cooperation problem.’
I pretty much agreed with the rest of your post. If you believe you can create something that will be valuable (where that something could be knowledge) but you lack the capital to invest in creating that something then you need to raise that capital somehow. Convincing someone to supply the capital is one route, self-funding another. If you can’t make either of these work then you should at least consider the possibility that you are wrong about the future value of what you believe you can create.
As a side note, it is an economic fallacy to suppose that salaries should directly reflect the value created by the worker. The price of labour, like any other price, is determined by supply and demand.
The word ‘should’ would need to be replaced (or added to) for the supposition to be fallacious. The (rejection of) ‘should’ does not follow from the ‘is’ in the next sentence without including an additional normative premise.
True, perhaps I should have said ‘it is an economic fallacy to suppose that salaries will directly reflect the value created by the worker.’
Assuming our extrapolated volitions understood economics however they would have no reason to care about the relative salaries of FAI researchers and store clerks. Their only concern would be whether FAI researchers were undersupplied at the market price.
Interesting. If value isn’t determined by supply and demand, what is value? I don’t remember such subtle distinctions from my AP Econ classes.
I was distinguishing between the price paid for the product a worker produces and the price paid for the worker’s labour. These are both determined by supply and demand but are independent. A factory with large quantities of high-tech equipment may be one of very few factories in the world capable of producing a product. This product may be in high demand but limited in supply due to the capital intensive nature of its production. The sophisticated machinery may only require low skilled labour however and the factory may be located in an area where such labour is amply supplied. In such a situation the price of labour (wages) will be low but the price of the product will be high. Think iPads manufactured in China.
Alternatively, in the case of FAI research, demand may be low due to lack of interest or awareness and also perhaps because it is not a very scalable problem (would Eliezer prefer an army of 10,000 random grad students or 10 geniuses?) At the same time supply may be high since a relatively larger number of people think it would be an interesting or important research project. This may lead to lower wages for an FAI researcher than a store clerk if the economics of store clerks push their wages up even if the FAI researchers ultimately produce great value.
It is also true of course that price (exchange value) and value are not the same thing. If they were we would have no trade. Value is subjective. Trade occurs when both parties ascribe higher utility to the post-trade state of the world than to the pre-trade state of the world. When money is the medium of exchange the price reflects that one person values the money more than the item traded and the other values the item more than the money.
Enlightening, thank you. Do you think that inability to obviously and intuitively make such economic distinctions is likely to hurt my rationality? (That is, would it be better to read a computer programming textbook or a microeconomics textbook if I wanted to be a master rationalist?)
It’s a little difficult for me to give a good answer to this. I feel I reached the point of diminishing returns some time ago with computer programming textbooks (I’m a professional programmer) and have only relatively recently taught myself some economics. Both are valuable to a rationalist but I’m not sure which has higher value. I think learning some basic economics may have more instrumental value than learning programming if you’re not going to make a living as a programmer however.
I would never discourage consideration of the possibility but I note that quite often the conclusion will be ‘I have not found a way to solve the cooperation problem.’