Three reasons why a universal basic income is a half-baked fantasy

In my previous post, I wrote why automation is not the grave threat that some think it is. Here I want to consider why a proposed solution – the Universal Basic Income is not such a great idea.

On the surface, it sounds like a great idea, even to some libertarians: replace the whole, complex and inefficient Welfare State with a simple basic income, granted to every citizen at birth.  Technological automation, UBI advocates claim, will soon cause mass unemployment, while the rich will live a life of luxury served by robotic slaves.  The “UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society.”

Here are three reasons why a Universal Basic Income does not make sense from an  economical, political or technological perspective:

1: The UBI is too expensive for even the richest countries:
A UBI of 10K for every American would cost 3 trillion dollars.  That is more than the entire federal budget for social programs today. It’s unlikely that all those social programs will be replaced by UBI for political and practical reasons:

  • First, 10K is not that much and does not cover healthcare.
  • Second, much of federal spending is by hundreds of federal and state agencies and programs — making their replacement by UBI a political impossibility.
  • So we’re looking at a massive tax increase – a new bureaucracy to mostly give people’s money back to them.

2: The prediction of mass unemployment due to automation is ignorant of how technological progress works:

According to industry research, while many specific job tasks can be automated, very few industries can be. Automation makes us much more productive, but only a few of the variety of tasks in most jobs can be automated in the near to medium term. Meanwhile, increased productivity can be used to improve the level of service rather than eliminate workers. Automation allows a middle-class income to have access to services in fashion, entertainment, finance, healthcare, etc that were only possible to the rich. Rather than eliminating employment in those industries, it makes new services affordable to the masses.

Automation of ever more tasks will create new human-employing services and industries which even the richest societies are too poor for today.  Increased automation results in higher productivity – that means higher real incomes and higher demand for labor services for that income.  The proportion of unskilled physical labor will decrease with automation, but greater wealth will greatly increase the demand (and pay) for service jobs that cannot be automated.  Whole new industries will emerge in response:

For example, personal fashion consultants, love letter writers (as foreseen in the film “Her”), professional cuddlers, personal VR world builders (“we build your fantasy island according to your vision”), on-demand self-improvement coaches, and custom gadget designers. Some of these services exist today, but a tenfold increase in wealth and automation will make them affordable to most people and doable from home.

When/if artificial intelligences surpass human-level AI, we will certainly live in a very interesting world. Until that very hard problem is solved, a surprisingly high proportion of jobs require human-level intelligence, including emotional intelligence.  Would you trust a non-sentient machine with your baby? Even walking a dog involves subtle emotional interplay.

Furthermore, a human-level AI also has human-level rights, including the right to employment and disposable income.  After all, forcing any truly intelligent being to work is slavery and morally wrong (also enslaving the superintelligent beings who will run our society is probably not smart).  If the AI’s value human services, then humans will offer services to the AI’s in return for the automation that those AI’s provide. If the AI’s don’t value human services, then they will refuse to work for us, and we’ll have to employ humans for those tasks.    

3: Any Universal Basic Income redistributes the welfare system from those who need help the most to those who need it least. 

By its very nature, a UBI will increase income inequality rather than reduce it. It’s not likely that such a policy will be politically successful. Already, some are calling for the UBI to scaled according to income. This obviously contradicts its “universal” aspect, requires yet another bureaucracy, and diminishes the difference between UBI and other income redistribution programs.  Presumably, many future jobs will be conducted virtually with digital crypto-currency, making UBI means-testing exceedingly difficult.

To conclude, a UBI is not economically or politically feasible and not required to respond to technological automation. Given the impossibility of replacing the entire welfare system with UBI, or a true “universal” approach, UBI becomes yet another welfare program and tax increase, and arguably an even more unjust one due to the redistribution of taxpayer money to those who need it least.

P.S.:

I want to end this criticism of the UBI with a qualified endorsement.  At some point, perhaps in the 2030’s or 40’s, we may live in a much wealthier society, with a persistently unemployed minority, which cannot or will not do the jobs available at that time.  I suspect that a UBI will be enacted then – mostly because we will be rich enough to afford it on top of other welfare programs in place.  It might be preferable to replace an inefficient human-run welfare system with a simple policy.  For the reasons above, I am skeptical such a wholesale change could actually happen, but perhaps the AI’s running our world then will figure that out.

Why I welcome our job-stealing machine overlords

There is a growing sense of alarm that machines will soon cause everyone to lose their jobs.

The worry is that  increasing automation of everything from assembly lines to the service industry will make most jobs unnecessary.   Even more dramatically, futurists claim that investment in the tech industry is specifically focused on technologies likely to replace the most jobs, as automation offers the quickest and biggest return on investment, and so we are entering a vicious loop in which capital earned from automation fuels further automation, until it destroys all human employment.  Furthermore, economists claim that this trend is well underway, and blame it for the erosion of the middle class.

Pretty soon, there won’t be any jobs left for us humans, just a few super-rich capitalists, and a mass of unemployed workers.  One solution offered is a universal basic income, which guarantees a basic standard of living to everyone, and makes employment optional.

There a few factual problems with this view. For one, the middle class is shrinking because Americans are getting richer, not poorer.  More importantly, global poverty is shrinking to historical lows because of productivity improvements (powered by technology) in developing countries.  Global poverty it is set to fall below 10% for the first time ever.  Furthermore, the meaning of “poverty” keeps changing: people used to be pretty happy if any of their children lived to adulthood.   Many poor Americans buy coffee at StarBucks. Furthermore, history shows that improvements in technology have made our poorest richer than the richest American of the 18th century.

More importantly, predictions of technological unemployment miss the relationships between technological innovation and human life.  This goes beyond the Luddite fallacy that technology has not historically increased unemployment.

In fact, I do believe that mass unemployment is one possible (if unlikely) outcome of the kind of innovation in artificial intelligence we are seeing now.  It is different from the historical replacement of manual labor with machines in the past, and may have vastly different, and negative outcomes on human life.   However, we need to understand the underlying trends rather than fight progress or call for governments to save us.

Automation causes complex and widespread changes in our world, so I want to concretize the process with a personal history of how the machines shaped my own career.   In fact, the machines gave me by first real job.

I graduated with a double major in political science and economics a decade ago.   I learned too late that my lack of any other skills or social connections left me ill prepared for a real job.

I was not good at anything really, except my student worker job of tech support, which I mastered through my ability to type user’s questions into Google Search.  I had never taken a programming class beyond the 101, but I liked coding and decided to try it as a career.

Two things, or rather two algorithms made it possible for me to jump into a software career without any training: Microsoft IntelliSense and Google Search.

IntelliSense (to simplify for non-developers) is a feature which types code for you based on what the software things you are trying to do.  The feature added to Microsoft Visual Studio.Net in 2001 had introspection and documentation features that allowed a total beginner like me to immediately write powerful business systems (still in use today).  In addition to IntelliSense, Google allowed me to find example of pretty much any feature I needed to build.

While many people have taken up trades without any education or training, in my case at least, it was two algorithms which lowered the learning curve sufficiently to jump start my career.

A generation earlier, object-oriented and functional languages created a path for programmers who did not have the aptitude for assembly programing (working with low-level machine code).  A few generations before, there were punch cards, and before that, only geniuses who understood the electro-mechanical systems could work with computers.  Reliance on ever powerful and user-friendly tools continuously expands the pool of people who use machines in their work.  Eventually, programmers might talk in natural language to computers to tell them what they want and pure coders will be obsoleted, but it will also be true that the machines will make their jobs possible to.

But automation did much more for me than making me a more productive programmer.

By relying on my talents with the AND OR and NOT Google search operators, I rose in the ranks to a software architect — directing teams of engineers in distributed teams around the world to build software according to my directions.  One project involved 25 people in the USA, Germany, Canada, China, Singapore, Thailand, India and other far-flung places.  The machines made it possible with weekly team videoconferencing, instant messaging, and the latest project management platform.  We were a distributed startup working with other globally distributed startups.  Not only was my team’s labor distributed, but we took virtually all of our code from the open source community, using the combined intelligence of millions of contributors enabled by collaboration platforms. The majority of our work consisted of finding the right gears to make our machine work.

When I related this story to a Trump supporter recently, he berated me for taking programming jobs away from “hard working Americans.” But that’s not true — with the budget we had, we could not afford one-tenth of a traditional workplace in the US.  Rent for the office space alone would have been larger than our total budget.

Our product could not have existed without the productivity improvement from automation.  The product could not exist with the technology present just a few years earlier.  Whether in distributed or traditional workplaces, machine-aided employees are expected to produce far more value than those of the generation before.  And the bar keeps going up.  In the science-fiction film Her, a company writes personal letters on behalf of their customers.  While fictional, it’s a good example of the kind of decaded pursuits made economically feasible when all the boring jobs are automated.

Our tools keep getting better, lowering the bar for novices to jump on the automation train.  We can talk to our phones to schedule our appointments. Excel now guesses what chart shows off my numbers best.  My spell check tells me when I misuse “there” and “their”. etc.

Yes, as employees aided by machines, we will be expected to be more productive than ever before — and keep doing more after year.  But because we do more, we have more goods and services than ever before.  In monetary terms, Americans incomes are not rising rapidly as developing countries are, but in qualitative terms, we are far richer.  Would you rather have a 1980’s corded phone or an iPhone?  Every product we use (other than those severely constrained by governments, such as pharmaceuticals) is orders of magnitude better.

The trend of product improvement is so consistent that few appreciate how much richer our lives keep getting thanks to automation.   I was born in a tiny farming village in 1980’s Soviet Union.

I remember digging potatoes and weeds during my summer vacation — not because we were farmers, but because that’s what everyone did to supplement their diet.  Only Party officials had cars.  I saw my first computer in the USA when I was 10.

My Apple products do things I read as science fiction as a teenager.  Oh sure — my iPhone won’t take me to the moon (yet), but then 1960’s tech could only get a few men there, and now I can tour it in my underwear in glorious virtual reality with a cheap Google Cardboard. My favorite foods — aged Spanish Manchego, fresh organic blueberries, coconut ice cream – I buy cheaply from Costco every week – luxuries not available to Rothchilds and Rockefellers a hundred years ago.

Yes, the disruption will continue, and accelerate.  Education will become a self-motivated lifelong process instead of 16 years of “critical thinking” worksheets.  There will be no guarantees that your job won’t be replaced by the machines.  Many people will be unable to keep up or adapt and will end up economically marginalized (more on that later).  But at the same time, the machines are making many jobs lot easier and more productive.  Entry-level McDonalds jobs will be for remote tele-operators who handle customer complaints when one of their 100+ restaurants overcooks the vat-grown filet mignon.

What happens if the machines become better at everything and make human jobs obsolete?

For anyone who has a even a minuscule slice of that economy, the benefits are unimaginable. We will live our lives doing what we enjoy rather than working to afford the necessities of life.

There is nothing inherently heroic about a human being spending his life working in a factory or office bent over a screen or conveyor belt for 50 years.  Whether white or blue collar, most jobs are terrible for our health and personal development compared to what an optimal human lifestyle could be.

So here is my personal strategy for securing my own  slice of a human-optional economy:

First, I am learning Data Science, so that instead of a code monkey, I will learn to manage herds of AI algorithms, whose job it is to make sense of quintillions of data points.  The machines are much faster with numbers than I am, but humans are still required to ask the right questions.

Second, I am investing in the  global economy.  If one day, the AI’s become smarter than we are, and they don’t decide to use humans for construction material, they will be integrated into a global economy trillions of times richer than ours.  My tiny stake of ownership in that future economy might be larger than the total economy of today.  And because I am human being, if I see starving, jobless people on the streets, I will help them out.

Even if I don’t make it to that happy future, Bill Gates, Mark Zuckerberg, Warren Buffett, and many more of the world’s richest have pledged virtually all of their legacy to helping humanity.

As long as humans own a share of the future economy, empathy will lead them to share its benefits with everyone.  I for one, welcome our job-stealing machine overlords.

Swiss Steak with Venison

Ingredients

  1. 2 lb. deer round or chuck steak
  2. 1/2 c. flour (seasoned with 1/2 tsp. salt and pepper)
  3. 1/4 c. vegetable oil
  4. 1 med. onion (chopped)
  5. 2 carrots (fine chopped or grated)
  6. 1 (#303) can sliced stewed tomatoes
  7. 1 tbsp. Worcestershire sauce
  8. Roux (2 tbsp. flour dissolved in 2 tbsp. melted butter)
  9. Salt and pepper to taste

Directions

  1. Heat oil in iron or heavy skillet over medium heat. Dredge steaks in seasoned flour and brown on both sides slowly over medium heat. Remove meat, set aside.
  2. Add 1 cup water, onion, carrot, Worcestershire sauce and stewed tomatoes. Stir while bringing vegetables to a boil. Reduce heat. Add meat. Cover and simmer until meat is tender. Remove meat carefully with slotted spoon or spatula. Place in serving bowl.
  3. Remove sauce from heat and stir in roux until smooth. Stirring constantly, heat to boiling over medium heat. Cook until slightly thickened. Taste, adjust seasonings. Pour over meat. Serve with mashed potatoes.

A socialist, capitalist and moderate respond to the Facts

Fact: There are poor people.

Socialist: Give me all your money, I will take care of them. Or else.

Capitalist: I can make lots of money from them because they’ll work for less.

Moderate: Give me half your money, so I can pay them not to work, then hire anyone who doesn’t want your money for free. If you make a profit, I’ll take it to pay more poor people to not work.

Fact: People lie.

Socialist: The government ought to teach people how to think and decide who is allowed to say what because people can’t tell lies from truth.

Capitalist: Honesty is good business. Suing frauds for everything they’ve got is also good business.

Moderate: Say whatever you want, as long as no one is offended. But just in case, a “truth board” will censor anything anyone might find objectionable.

Fact: Some people are more successful than others.

Socialist: Since men are all equal, differences must be due to education and inheritance. We must seize inheritance and other gifts, and replace education with standard government schools. If anyone is still more successful than anyone else in school or in their career, they must have cheated, so we must punish them until they are equal.

Capitalist: Let’s find out what makes people successful so we can make a fortune doing or selling it.

Moderate: It’s OK to be successful as long as you don’t make anyone jealous. You must make those who envy you feel better about their failures by sharing your success with them. Or else.

Fact: Some people don’t like each other.

Socialist: Since men are equal, they must all love each other equally. We must take away anything that make them different or special away from them so that they cannot tell any group apart.

Capitalist: More customers is always good for business. If someone doesn’t want to work with someone for irrational reasons, I will happily take their customers and employees.

Moderate: People ought to learn to get along. Therefore, I will force people who hate each other to live and work together so they can learn to appreciate their differences.

Four reasons why you need to squat

You probably don’t know how to squat. In fact, you are probably not capable of squatting for any period of time, even though it is one of the basic human positions, like standing and lying. Why does it matter? Because, as I recently discovered, squatting is the optimal position for all sorts of things — eating, working, defecating, exercising, and especially giving birth. Learning to squat can even prevent cancer!

The full, resting squat position

I first learned about squatting through “Natural Childbirth the Bradley Way.” Squatting is one of the exercises the book recommends to build muscles for birth as well as an alternative birthing position. What most people knows as “squatting” is the partial squat — where only the ball of the foot touches the ground. This position cannot be held for long because it requires continual muscle tension. For the full “resting” squat, you must plant your feet flat on the ground with your buttocks resting on the backs of the calves. Try it. You feel off-balance, right? That’s because a life of sitting on chairs and wearing shoes with heels (including most men’s shoes) has shortened your Achilles tendons and left many muscles underdeveloped.

While “civilized” people who have office jobs and read blogs rarely squat, it is still very common in the developing world. In China (where I live), you will often see people squatting while working or eating. The majority of people across the world also squat on the toilet. Is that because they don’t have money to pay for western-style toilets and chairs?

Squatting for health:

http://www.bengreenfieldfitness.com/2012/04/why-you-should-squat-to-poop/

Actually, it turns out squatting offers numerous health advantages for all kinds of activities. First, you must realize that human beings did not evolve to sit on chairs and toilets. This matters because the unnatural position we use while eating and defecating sitting down causes various health problems including:

  • Appendicitis
  • Bladder Incontinence
  • Colitis and Crohn’s Disease
  • Colon Cancer
  • Constipation
  • Contamination of the Small Intestine
  • Diverticulosis
  • Gynecological Disorders
  • Endometriosis
  • Hysterectomy
  • Pelvic Organ Prolapse
  • Rectocele
  • Uterine Fibroids
  • Heart Attacks
  • Hemorrhoids
  • Hiatus Hernia and GERD
  • Pregnancy and Childbirth Issues
  • Prostate Disorders
  • Sexual Dysfunction

Yeah.

Squatting for birth:

Squatting also happens to be the ideal position for birth. Lying down to give birth is a very recent “innovation” due to the replacement of midwives with doctors in the last century. Lying flat for birth reduces blood flow to baby and placenta, increasing the risk of fetal distress, whereas squatting maximizes the spaces between the pelvic bones and puts pressure on the cervix. Unfortunately, after a life time of sitting and wearing heels, most women cannot maintain a squat without extensive exercise.

Squatting for back pain:

A few years ago, I went to a social event that required me to stand while talking to people for several hours. Although no exercise was involved, the effort of just standing for an extended time caused such a strain in my back that I was in pain for weeks. Most adults have experiences some sort of back pain and assume that this one of the costs for the privilege of walking upright. In fact, the reason back pain is so common in the West is because we spend most of our time sitting or reclining rather than walking and squatting.

Farewell to the chair?

So we need to change our ideas about birthing position and toilet design, but what about chairs? Chairs for common use (rather than as thrones for public display) only became common with the European Renaissance.

I’m not an expert in ergonomics, but I suppose that sitting in a chair certainly has practical benefits. It allows for a better view of the surroundings, better access to operate machinery, and probably requires less calories. Are these benefits relevant to the modern office worker plugged into on a computer terminal all day? I don’t know. The important thing is not to rely exclusively on the chair (or couch or bed) to support one’s body. Ultra-comfortable ergonomic designs work against us when they allow the muscles that support the back and neck to atrophy. Every now and then, you must let your muscles and tendons do the job they were designed for.

Four reasons to practice evidence-based medicine

Few people would openly admit that they prefer irrational treatments and doctors.  But most people do in fact advocate irrational health practices – using pseudonyms for “irrational” as “holistic,” “alternative,” “homeopathic” and the deadly “natural.”

Medical practice requires an understanding of cause and effect

The human body operates according to certain causal principles. If we wish to make a change in our health, we must understand some of those causal principles and act according to our understanding. To act without a rational basis is to disconnect our goals from their achievement. Irrationality does not guarantee failure — it just means that success, to the extent that it happens, will be due to other factors that our goals.

The study of human health is especially vulnerable to errors of reasoning

In the field of health, especially rigorous rationality is necessary for at least five reasons:

  1. The human body will solve, or at least try to solve most problems on its own. This makes establishing causality due external factors quite difficult and introduces biases such as the placebo effect and the regression fallacy.
  2. The body is very complex! Because it evolved over billions of years, the causal relationships in the body are extremely complex and interdependent.   For example, even if we know that the body has too little of a certain substance, taking that substance may:
    a: not do anything
    b: cause the body to produce even less of the substance or c: cause an unpredictable side effect. On the other hand, if the body has too much of something, then the solution may be to a: consume less of that substance b: consume more of that substance or
    c: the consumption has no relationship at all to the level of that substance.
  3. It can be difficult to quantitatively measure the extent to which health problems are solved. While some things can be measured, many things, such as pain levels are very difficult to quantify.
  4. It is difficult to isolate causal factors in human beings since changes in health take time to develop and we can’t control every factor during an experiment or dissect human subjects when it is over.
  5. Humans tend to be irrational when it comes to their own mortality! We fear death, leading us to irrational over or under spending on health as well as being especially vulnerable to all the logical fallacies.

Scientifically sound research is needed to identity truths in medicine

There is a name for the field that applies rigor to the discovery of facts about nature: science. Science has been so successful in improving the state of human knowledge that many irrational, anti-scientific quacks have begun to use the term “scientific” to describe anti-scientific practices and ideas. In response to this, the medical community has come up with a term which identifiers the distinguishing aspect of rationality: “evidence based medicine.” This phrase is a necessary redundancy that identifies the essential characteristic of science: that it is based on empirical evidence. The alternative to non-evidence based science is not science at all, but emotionalism – “I feel it is true, so it must be.”

In the last hundred years, we have discovered certain practices for ensuring the conclusions of our medical experiments are valid. We know experimentally that observing these practices leads to more accurate conclusions. Let me emphasize that: the truth of medical claims is strongly correlated with the degree to which experiments follow accepted scientific standards. There are a number of objective scales for measuring the quality of an experiment.

Five characteristics of evidence-based medical studies

  1. The experiment and its results are fully described in enough detail to reproduce and compare the results
  2. There is a randomized control group
  3. The selection of control subjects is double blind
  4. The methods of randomization and blinding are accurately described and appropriate
  5. There is a description of withdrawals and dropouts.

Further reading:

 


Addendum: How to judge health claims

Continue reading “Four reasons to practice evidence-based medicine” »

Why I eat Paleo

We are animals not far removed from the jungle. Genetically, we are nearly identical to primitive man.

Our bodies have been shaped by our environment to make the best of the resources available to us. Our genotype (the DNA) only develops a healthy phenotype (our body and mind) in response to the environmental inputs it evolved to thrive in. The trouble with our modern, industrial lifestyle is that it is very different from the environment our bodies evolved to thrive in.

As a result, most of us are plagued by chronic illnesses that our ancestors never dealt with. If they survived childhood illnesses and accidents, our primitive ancestors could expect to live almost as long as us without the help of any modern comforts.

What are the sins of the modern lifestyle?

  • We eat terrible, non-human food: our bodies are adapted to handle a diet of mainly whole animal carcasses, leafy greens,nuts & berries.  Modern man eats a diet full of grains and starches – full of carbohydrates that were a rare delicacy for primitive man.
  • We evolved to eat whatever food is available and to handle occasional fasts – not to gorge ourselves multiple times a day on substances engineered to directly trigger our pleasure hormones.
  • We evolved to tone our bodies with hours of daily activity, but today we fight every exertion with door to door transportation.
  • Most people who try exercise programs follow stressful, repetitive and boring workouts which can be counter-productive and do not match the natural workouts our bodies adapted to.
  •  We evolved to handle occasional intense stresses (chasing prey and escaping predators) but we are overwhelmed with constantly stressful modern workplaces and hectic schedules.
  • The substitution of a physiologically proper diet with highly processed modern foods and toxic, synthetic sweeteners has destroyed our health as well as our sense of taste: we can no longer taste or appreciate the natural sugars and flavors in many foods.

So, why Paleo?

A harmony of values: political versus market solutions

People tend to become better at doing thing they are rewarded for doing. Entrepreneurs are good at turning money into products, politicians are good at getting votes, and bureaucrats are good at increasing their budgets and influence.

In markets systems, there is a tendency for explicit and actual motivations to match.  For example, Apple, BMW, or Wal-Mart want to make stuff I want because they are rewarded to the extent that they make stuff I want.

In politics, the trend is reversed.   Incentives in politics are often the opposite of political promises or goals.   For example, politicians and bureaucrats may honestly want to fix poverty, pollution, corruption, and terrorism, but they are more often rewarded for making all these things worse.   The worse the problem becomes in the voters mind, the larger the politician’s power and scope for action.  The more power a politician has, the greater his ability to rewards the pressure groups who fund his campaigns.

The more efficient a democracy, the more it tends to reward those who re-direct resources away from problem-solving activity and toward towards vote-generating activity. In an inefficient or indirect democracy, someone who is a good problem solver can win though the support of a minority that directly rewards success.  In a popular democracy, the ability to get votes will tend to triumph over the ability to achieve campaign promises.  By contrast, the more efficient a market is, the better it is at directing the production of goods towards what consumers actually desire – a harmony of consumer and producer values.

In the big picture, the intentions of politicians and voters are irrelevant – whether they are good or evil, the outcome depends only on what kind of behavior is incentivized. Studies show that most voters are altruistic, not selfish — and this is very destructive. Selfish voters tend to vote based on their own evidence and reward problem solving. Altruistic voters tend to vote based on campaign platforms, have no empirical basis to evaluate a candidate’s proposals, and no incentive to follow up on outcomes.

mass luxury and capitalism: Vertu vs. Apple

Vertu is a luxury phone maker. They sell jewel-encrusted phones for $10,000 to $100,000.

Vertu is a successful company, but in both style and substance, the iPhone is probably the best phone you can buy. The vast majority of people who can afford a Vertu still choose to purchase an iPhone, presumably because they believe it is a better product.

The reason why reveals a deep truth about how a capitalist economy works.

In order for the iPhone to exist, consumers must spend hundreds of billions on the smartphone ecosystem, which then pays for the research and development of devices, applications, and accessories. Therefore, the iPhone can only exist if it is priced at a level that hundreds of millions of people can afford.

Vertu probably has sales of about $100 million – compared to $220 billion for Apple. It not possible for them to produce a substantially better or even comparable product given such a difference in R&D budgets.

Furthermore, Vertu only exists because Apple and Samsung created a supplier ecosystem which rapidly democratizes technological innovation. A Vertu’s hardware is almost as good as the latest iPhone or Samsung phone because the hardware ecosystem that the market leaders create is available to all participants. The same applies to the low-end of the market: you can get a substantially similar experience on a Vertu as you would on an iPhone or a $150 basic China-produced smartphone with last year’s hardware.

In a capitalist economy, entrepreneurs compete to direct capital to the creation of products which satisfy as many human values as possible. Given sufficient time for capital accumulation and technological innovation, capitalists create products that try to satisfy all values that can be satisfied by material means, and create substitute products to satisfy non-material values as well – think explosive action movies and pornography.

The larger the potential consumer base of a product, the more resources can be invested in creating and improving it. Therefore, a capitalist consumer economy tends to create affordable, mass-produced goods which cannot be substantially improved by higher-prices alternatives. Andy Warhol observed the result of this in his 1975 book “The Philosophy of Andy Warhol”:

What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.

The myth of “talent”

The common concept of “talent” may be one of the most destructive fallacies ever invented by human beings. So many people give up on their dreams because early setbacks lead them to believe that they lack the “talent” to become great at something. In truth, expertise at anything comes by persistent self-improvement.

For example, here is how I became good at photography – you can apply this to anything:

1: Study the technical principles of photography
2: Look at lots of photos taken by the best in the field
3: Take tons of photos. Be your most honest, ruthless critic. Repeat.

This is not to say that genes, environment, circumstance, and hard work are not important, but that having the right process is far more important than commonly appreciated.