Author Topic: MAGA is a cognitive fallacy  (Read 1890 times)

DTEJD1997

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Re: MAGA is a cognitive fallacy
« Reply #20 on: October 07, 2019, 10:51:46 AM »

One cannot help being a little confused with the constant bragging that ďThe United States is the greatest country in the worldĒ.

But if that is true, why would it be necessary to  ďMake America Great AgainĒ?

Isnít that a rather demeaning slogan?

After America came out of WWII, it was undisputed leader.  There was wealth & prosperity across almost the whole of the country.  It was so powerful, and so much ahead of most of the other countries, it was almost silly.

Fast forward to today.  America is still a great country...BUT...while America has kinda/sorta progressed, other regions/countries have made tremendous progress.  There are also TREMENDOUS areas of America and segments of the population that are much worse off than they were 30,40,50,70 years ago.

This is VERY easy to see in Detroit.  Detroit was once the richest city in America, was 4/5 largest in the country, was the "Arsenal of Democracy".  There was manufacturing, engineering, scientific knowledge in such quantities that the world had never seen before.  Now?  Not so much.  While Detroit has come back somewhat, it is but a shadow of it's former self.

Unfortunately, Detroit is not the only city to share this fate.  Look at Gary IN, Baltimore MD, St. Louis MO, and many others.  There are also rural areas that are hurting badly.

I think the slogan is meant to rouse people to make things better and that while America is a great place, it can be so much better in the future.

You also have to look at regions of the U.S. that have gained in influence...while Detroit has declined, the triumvirate of San Francisco, San Jose & Sacramento has thrived.  Probably more money, innovation and economic power centered there, than during the heyday of Detroit and Chicago combined.   Cheers!

I would counter that Detroit/Chicago had it's wealth spread out to more people than is currently the case in the USA/CA in general.

In the year 1914, Ford Motor instituted the $5/day pay scale.  This made headlines all over the world and drew literally MILLIONS of people all around the world to Detroit to work in the factories.  $5 a day back in the TEENS would easily allow you a middle class standard of living.  This wage was the baseline paid to all workers in Ford.

The auto industry also pulled along a lot of other feeder industries (coal, steel, glass, tires, paint), these also allowed high(er) wages to be paid.

There was also a lot of wealth and an incredibly advanced civilization in Detroit 80-90-100 years ago.  Take a look at Cooley high school explored by "The Proper People" in their YouTube video. 

Please see: https://www.youtube.com/watch?v=pZwpcGbGmco&t=773s

Note that this was a high school in an average working class area.  This was NOT for the wealthy or well to do.  When it was built, it was better than just about any high school that I can think of today.  The dang video reminds me of some type of crazy sci-fi movie.  Something after the end of the world, and people are exploring the ruins.

As to what has changed society more....cars, transportation and mass production OR Facebook?  No doubt the internet is a great innovation and is changing society, but what would you rather have?  Cars/transportation, electricity, indoor plumbing, or the internet? 

I would argue that the time frame between 1900-1920 had more innovation/change for society than 2000-2020.


Spekulatius

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Re: MAGA is a cognitive fallacy
« Reply #21 on: October 07, 2019, 03:17:35 PM »
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I would argue that the time frame between 1900-1920 had more innovation/change for society than 2000-2020.

I believe this to be correct. Look at the overall productivity growth , itís the slowest it has been for a long time:
https://www.wsj.com/articles/u-s-productivity-dropped-at-0-5-pace-in-the-second-quarter-1470746092
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Re: MAGA is a cognitive fallacy
« Reply #22 on: October 07, 2019, 05:30:11 PM »
The speed now is pretty slow actually. The only major invention is the computer/internet and possibly the smart phone. And though they have the potential to be revolutionary...the truth is that the real computer revolution hasn't even happened yet. If go back to the nineteenth century when the railroad were invented, there was electrification, light bulb, telephone, indoor plumbing. Or you even look at the period when these technologies were rolled out to the masses from 1920-50...the progress was much much more rapid.


I think your statements are a bit overly focussed on new products for consumers that are easily visible, which might be a type of an availability bias. The truth is the world is changing rapidly in improving the products that already exist, plus new applications and network effects of pre-existing technology, but those changes are failing to capture your attention in they way they are my attention.

As to what has changed society more....cars, transportation and mass production OR Facebook?  No doubt the internet is a great innovation and is changing society, but what would you rather have?  Cars/transportation, electricity, indoor plumbing, or the internet? 

I would argue that the time frame between 1900-1920 had more innovation/change for society than 2000-2020.

When the question is the rate of growth, and whether that rate of growth is causing displacement, then the rate of change over a period of time is what is relevant and not any personal preference for a specific technology. Plus technology and history builds on the past, so we don't have to choose, we just have to pick a base to calculate growth from in the beginning of each period assessed.

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I would argue that the time frame between 1900-1920 had more innovation/change for society than 2000-2020.

I believe this to be correct. Look at the overall productivity growth , itís the slowest it has been for a long time:
https://www.wsj.com/articles/u-s-productivity-dropped-at-0-5-pace-in-the-second-quarter-1470746092

One of the problems with trying to quantify this revolution is that GDP is doing an increasingly poor job of capturing the value created because the new technology can create so much value without ever being captured in a GDP figure. The productivity measures all utilize GDP, so those productivity measures must also be suspect.

Here's an example to try to prove the point. Imagine, for example, that several CoB&F members decided to give up their non-working hours in order diligently work harder a posting great investment ideas or other posts that CoB&F readers find valuable. Assuming that this group's ideas are as good as the best among CoB&F, then this would create a huge amount of value for some readers, but GDP would likely be unaffected. In fact GDP might go down (an imperceptible amount) because many of us would be giving up leisure consumption that would contribute more to GDP. For users of CoB&F, the costs to consume CoB&F are almost entirely fixed, and yet the value creation is scalable, so that value could continue to go up, while costs continue to go down. You might imagine this as being explained by an increasing consumer surplus in each successive year. (https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus)

So part of the issue is that new technology and wealth allows so many people to create content with real value and yet that value is created in ways that are either uncompensated or captured in GDP.

As another exercise, consider how much you would have paid in 2006, before the first smart phones, in order to have all the services available today on your mobile devices. How much would you have had to pay to replicate that value? What would it have looked like? An army of technicians following you around in a bus full of connected technology?

What we are talking about to some extent is that the consumer surplus is growing rapidly in ways in which GDP and our economic models do an increasingly poor job of capturing.

Plus, there is tons of data that indicates technological progress is not slowing, but is continuing on the same path. Here's a result from a quick google search:

https://ourworldindata.org/technological-progress

If you want to dive a bit deeper, I have pasted a link below from the International Association of Science, Technology and Medical Publishers. One way Economists attempt to assess the rate of change of technology is to look at the new technological titles published per year. The data series available in the publication below are not the same, but there is a lot of surprising datasets showing fast growth in a variety of fields. I was surprised to see what appears to be a continuing exponential growth in publishing within the field of Physics for example.

https://www.stm-assoc.org/2018_10_04_STM_Report_2018.pdf

Cigarbutt

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Re: MAGA is a cognitive fallacy
« Reply #23 on: October 08, 2019, 04:24:48 AM »
Here's an example to try to prove the point. Imagine, for example, that several CoB&F members decided to give up their non-working hours in order diligently work harder a posting great investment ideas or other posts that CoB&F readers find valuable. Assuming that this group's ideas are as good as the best among CoB&F, then this would create a huge amount of value for some readers, but GDP would likely be unaffected. In fact GDP might go down (an imperceptible amount) because many of us would be giving up leisure consumption that would contribute more to GDP. For users of CoB&F, the costs to consume CoB&F are almost entirely fixed, and yet the value creation is scalable, so that value could continue to go up, while costs continue to go down. You might imagine this as being explained by an increasing consumer surplus in each successive year. (https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus)

So part of the issue is that new technology and wealth allows so many people to create content with real value and yet that value is created in ways that are either uncompensated or captured in GDP.

As another exercise, consider how much you would have paid in 2006, before the first smart phones, in order to have all the services available today on your mobile devices. How much would you have had to pay to replicate that value? What would it have looked like? An army of technicians following you around in a bus full of connected technology?

What we are talking about to some extent is that the consumer surplus is growing rapidly in ways in which GDP and our economic models do an increasingly poor job of capturing.

Plus, there is tons of data that indicates technological progress is not slowing, but is continuing on the same path. Here's a result from a quick google search:

https://ourworldindata.org/technological-progress

If you want to dive a bit deeper, I have pasted a link below from the International Association of Science, Technology and Medical Publishers. One way Economists attempt to assess the rate of change of technology is to look at the new technological titles published per year. The data series available in the publication below are not the same, but there is a lot of surprising datasets showing fast growth in a variety of fields. I was surprised to see what appears to be a continuing exponential growth in publishing within the field of Physics for example.

https://www.stm-assoc.org/2018_10_04_STM_Report_2018.pdf
A part of one the link shows that, when 'human' services are involved, the weakest link in the chain tends to show up and drag productivity growth. I've come to think that productivity growth has 'really' stalled into a new normal. A finding that is frequently manifested is how people 'feel' they are productive when using hedonistic technology gadgets when, in fact, that may not be the case. Another frequently forgotten issue is opportunity cost. In the COBF example mentioned above, one may leave a productive activity to contribute content to a forum which, in the end, is based on a zero-sum game. Whatever outperformance obtained would be matched by underperformance elsewhere (no value is created in the aggregate). Of course, if one manages money for others, this contributes to GDP because of fees. Also, humility may require to consider that, as esteemed KJP member recently alluded to in a different thread, one may not even contribute positive value versus the average!

I had a lot more to say on this great again topic but I have some productive activities lined up today. :)

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Re: MAGA is a cognitive fallacy
« Reply #24 on: October 09, 2019, 07:13:01 AM »
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I suggest two books that are quite popular among investors that rebut the cognitive fallacy of Declinism (both are recommended by Gates
and I received copies from some of the best investors I know).

Previously in this thread ,I recommended two books that reject the declinism bias inherent in MAGA, but failed to link to their CoB&F threads:


http://www.cornerofberkshireandfairfax.ca/forum/books/factfulness-ten-reasons-we're-wrong-about-the-world-and-why-things-are-better/

http://www.cornerofberkshireandfairfax.ca/forum/books/enlightenment-now-steven-pinker/

Spekulatius

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Re: MAGA is a cognitive fallacy
« Reply #25 on: October 10, 2019, 05:00:39 AM »
Quote
One of the problems with trying to quantify this revolution is that GDP is doing an increasingly poor job of capturing the value created because the new technology can create so much value without ever being captured in a GDP figure. The productivity measures all utilize GDP, so those productivity measures must also be suspect.

Here's an example to try to prove the point. Imagine, for example, that several CoB&F members decided to give up their non-working hours in order diligently work harder a posting great investment ideas or other posts that CoB&F readers find valuable. Assuming that this group's ideas are as good as the best among CoB&F, then this would create a huge amount of value for some readers, but GDP would likely be unaffected. In fact GDP might go down (an imperceptible amount) because many of us would be giving up leisure consumption that would contribute more to GDP. For users of CoB&F, the costs to consume CoB&F are almost entirely fixed, and yet the value creation is scalable, so that value could continue to go up, while costs continue to go down. You might imagine this as being explained by an increasing consumer surplus in each successive year. (https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus)

Itís a bit of a quirky example, but I get your point. Another point that was made is that technological progress is mostly deflationary. I think the progression on how pictures are made now (digital on your smartphone) versus analog ( on a dedicated camera on film). I think the number of pictures shot went up by orders of magnitude, but the cost is virtually zero. In the analog age, you had a film industry (Kodak, Agfa Gevaert - all gone), Film processing labs (mostly gone), film paper. So I guess in that part, even counting the cost of the camera part of the smartphone, the development of the digital Photography, the net effect is that it reduced GNP, despite the fact that far more pictures are being made.

The point that I am struggling  a bit with, is why hasnít all that adoption of new  caused higher productivity growth in the service industry. Manufacturing  still has a few percent of productivty growth annually, but service seems close to zero.
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Read the Footnotes

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Re: MAGA is a cognitive fallacy
« Reply #26 on: October 11, 2019, 06:34:18 AM »
Quote
One of the problems with trying to quantify this revolution is that GDP is doing an increasingly poor job of capturing the value created because the new technology can create so much value without ever being captured in a GDP figure. The productivity measures all utilize GDP, so those productivity measures must also be suspect.

Here's an example to try to prove the point. Imagine, for example, that several CoB&F members decided to give up their non-working hours in order diligently work harder a posting great investment ideas or other posts that CoB&F readers find valuable. Assuming that this group's ideas are as good as the best among CoB&F, then this would create a huge amount of value for some readers, but GDP would likely be unaffected. In fact GDP might go down (an imperceptible amount) because many of us would be giving up leisure consumption that would contribute more to GDP. For users of CoB&F, the costs to consume CoB&F are almost entirely fixed, and yet the value creation is scalable, so that value could continue to go up, while costs continue to go down. You might imagine this as being explained by an increasing consumer surplus in each successive year. (https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus)

Itís a bit of a quirky example, but I get your point. Another point that was made is that technological progress is mostly deflationary. I think the progression on how pictures are made now (digital on your smartphone) versus analog ( on a dedicated camera on film). I think the number of pictures shot went up by orders of magnitude, but the cost is virtually zero. In the analog age, you had a film industry (Kodak, Agfa Gevaert - all gone), Film processing labs (mostly gone), film paper. So I guess in that part, even counting the cost of the camera part of the smartphone, the development of the digital Photography, the net effect is that it reduced GNP, despite the fact that far more pictures are being made.

The point that I am struggling  a bit with, is why hasnít all that adoption of new  caused higher productivity growth in the service industry. Manufacturing  still has a few percent of productivty growth annually, but service seems close to zero.

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Itís a bit of a quirky example

Yes, I intentionally created a quirky example. For one thing an example that quirky should indicate I can think logically for myself rather than just parroting a talking point from a politician.

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Another point that was made is that technological progress is mostly deflationary
The deflationary nature of technical progress was also one of the points of my quirky example.

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but service seems close to zero

Part of the point I was trying to make is that services and "experiences" are a larger part of the economy on a relative basis and the deflationary aspect of this part of the economy is more likely to be hidden. I think progress in information oriented services and any associated deflation can be particularly difficult to capture by economic measurement.

Qualitative improvements in manufacturing are a well known flaw in measurement, but capturing qualitative improvements in services would likely be even more subjective and difficult to quantify.