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Cake day: July 5th, 2023

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  • I understand that and I agree the approach under these assumptions must be needs-based. I’m saying, that it’s worth examining how much of this new phenomena is needs-not-met vs falling prey to a new kind of profit-driven entertainment. I have no idea what the numbers are. Could be mostly unmet need. It’s not necessarily following the same dybamics as drug use.




  • This is to say that we’re facing a coordination problem around executives being honest around the AI gains they’ve witnessed – if they co-operate, they keep their jobs. If they defect, they will possibly be fired by their embarrassed peers (who have now been implicitly called liars, cowards, or incompetents) and then replaced with someone that will toe the line anyway. If they could all admit the truth at once there might be some hope, but there is no way to coordinate that event.

    I think it’s interesting to notice that this is not AI-specific. He kinda alludes to that in a different context but I think it’s important for people in the industry (and any industry really) to understand. This is driven by the incentives built into the system. Specifically the competition for profit. Whenever there’s a thing (technology, process, method) that promises significant profit, everyone and their mother jumps on it. For the simple reason that if they don’t, they’re getting replaced by someone who would. For the simple reason that if they don’t jump in, capital is going to leave their company and enter another one that promises to jump in, and therefore has higher expected profit. This can look as simple as large investors dumping your shares for the shares of a different company, sending your stock price in steep decline. Everyone competes for capital which requires competition for growing profits. Capital goes where the expected profits are higher. Without capital, firms can’t hire people and buy what they need to conduct business and create new products. This incentive makes it very difficult to avoid a situation like the one above. We’ve seen this in corporations with the move to the cloud, with outsourcing development to CHWTIA and so on.














  • aren’t people entitled to revenue of the brand they build?

    Perhaps no. Take the capitalist system at its best - the brief periods in an industry when a competitive environment delivers good products at low prices. That kind of environment means competitors can very easily start producing an alternative of what the other guy is producing and undercut their prices. This is the desired status quo that actually delivers wealth for most people. In such status quo, the firms that make things can only make as much money as to pay their costs and salaries with little leftover for shareholders. Conversely - the vast majority of society gets more things and has more money to buy more other things, instead of padding the pockets of shareholders. This is what competition is and obviously firm owners, large or small, don’t like it.

    The fact that we can’t make a whole lotta things in (Canada) without costing 3x what China makes it for is a separate but related issue. Personally I think it’s got a lot more to do with how much money Canadian firms make at various sides of the supply chains. People like talking abt cheap labour but Chinese labour isn’t nearly as cheap as it used to be and labour isn’t the main cost in a whole lotta things. E.g. in automotive, labour is 10-15% of the cost and if we assume free labour the Chinese cars are a lot cheaper than 15%. The rest is tools, machines, and parts like nuts and bolts. A Canadian-blessed machine screw set from my local hardware store costs $20. A significantly larger set from AliExpress (not the cheapest place in China) costs $2. This speaks to the profit margins involved in the two screw sets. Most of our industries have gone past their competitive stages and are now largely consolidated into 1 to several firms so they can extract significant profit margins. I think the avg for North American corpos is 10-15%. In China that’s about 5% and the state-owned sector which provides a lot of inputs operates as non-profit. Margins across suppliers for a product stack like compound interest and the price grows exponentially. If you have a product that starts at $1 at the beginning and you have 5 suppliers till the final product, you get $1.28 with 5% avg and $2.01 with 15% avg. If you have 10 suppliers you get $1.63 vs $4. The difference between the two is also exponential. The exorbitant profits of our industries make it not only too expensive to make things here, it makes it very difficuly to even attempt anything by people who don’t have significant capital.

    So yeah, the answer is def in-house manufacturing for more than one reason but for it to be viable, shareholders have to make less, a lot less. If we get to such a point, down to just the difference in price of labour, I’m pretty sure we’d be able to easily handle that. The state we’re in at the moment is def not healthy but I don’t think we’ll solve it by protecting shareholder value while keeping domestic worker salaries low - a reflection of the high margins. When margins go down, either prices would go down, or wages would go up, or both. Both make it possible for more people to buy the domestically manufactured product. In other words the in-house manufactured product won’t be 3x market price in real terms anymore.