Travelogue day 12: Little Vumbura

Little Vumbura (pronounced voom-bra, not voom-boo-rah) is on a island in the middle of one the permanent channels of the Okavango, so the only way to get there is by boat.



It was very nice, but the physical plant needed a little bit of TLC.  Our tent had a large rip in the rain fly, and the flaps that covered the windows were held in place by velcro, which had started to wear out.  It didn't take a lot of wind to blow the flaps open, and as they were attached at the bottom of the window, once they blew open they stayed open.  Fortunately, we were home during the storm so we could keep closing them up again.  If we hadn't been there, we probably would have been washed out like we were at Duma Tau.

The wind was strong enough to blow over a tree, which landed on the boardwalk:



After the rain the termites and midges began to swarm.  The termites in particular are attracted to light, which made it challenging to eat dinner.  The termites don't bite or anything, but it is a little disconcerting to have them flying around your head and landing in your food.

The next day, this was the aftermath:



Those are termite wings covering the table.

We also had some bees.  They didn't bother us, but they did want their honey back:



And of course we saw a lot of critters.



A-wim-a-weh-a-wim-a-weh...






Spotted heyena.





Maribou stork.



Red-headed weaver.

Two data points

I happened to stumble across two interesting data points today.  One supports my beliefs, the other doesn't.

The one that does is a study reported in the Washington Post that shows that wealth inequality is more likely a result of rent seeking than innovation.

The one that doesn't is the apparent inability of billionaires to stem the populist tide in the Republican party and buy themselves a president.

I'm actually quite happy to be proven wrong about the power of money in politics.  Maybe there's hope for democracy after all, though it is staggeringly ironic that this hope should come in the form of Donald Trump and Marco Rubio.

(Well, actually, I don't think I'm completely wrong.  It's pretty clear that money can buy a lot of influence, particularly behind the scenes.  But it is encouraging that the Koch brothers still can't buy the presidency.)

What should be done about wealth disparity (if anything)?

A while back, commenter Peter Donis asked:

But what should we do? That's the question.

Indeed it is.  It's a monstrously complicated question, and because of that I put off answering it.  But I'm going to take a crack at it here.

Part 1: The quality metric

Let us begin by taking note of an important fact: policy questions like this do not not and cannot possibly have an objectively correct answer.  The reason for this is that people can legitimately disagree on what a good outcome for an economic policy looks like.  There are myriad ways of measuring macroeconomic outcomes: total wealth.  Mean wealth per capita.  Median wealth per capita.  Life expectancy.  Different quality metrics lead to different policy conclusions.  And there is no such thing as the One True Metric.

On the other hand, if you're going to claim to be rational, then you must be explicit about what your quality metric is, otherwise there is nothing against which to measure the success or failure of policy decisions.  I think this explicitness is manifestly missing from most discussions of economic policy in the U.S. and this is the root cause of much of the intractable disagreements.  If you don't agree on what a good outcome looks like, then of course you are not going to agree on policy.

So I'm going to start by describing what looks like a good outcome to me.  Of course, this is only (and can only be) my opinion.  I think the world would be a better place if more people adopted this point of view, but of course I would think that.  I am, by logical necessity, more than a little biased in this regard.

I don't think that any simple statistic is a good measure of economic outcome.  I think we need to be much more nuanced than that.  Some of the usual suspects (like GDP) make not entirely unreasonable proxies for what we really ought to care about, but none of them are what we really ought to be caring about at root.

It is easy to illustrate this with an example: suppose some of the more extreme elements of the Republican party manage to sway policy to the point where they are able to re-legalize negro slavery in some of the Southern states.  And suppose they source all of their slaves from Central African Republic (or Malawi, depending on who you ask) the poorest country on earth by GDP per capita.  They pay a fair market price for them, enough money that all the usual macroeconomic indicators in the C.A.R. go up.  (In fact, imagine that the C.A.R. is completely revitalized by the influx of capital from the slave trade.)  And suppose that the ROI on imported slaves in the U.S. beats the stock market (that's not asking much nowadays).  Let us suppose even that government regulations require a certain minimal level of human treatment and health care for slaves, rather like we currently do for livestock, and this leaves the slaves strictly better off than they would have been back in the C.A.R.  So by every conceivable economic measure, importing slaves from the C.A.R. is a net win for everyone including the slaves.

Does that mean that slavery might be justifiable as an economic policy?  Slavery has become so unfashionable nowadays that I have probably caused offense in certain circles simply by asking this question.  But it was not that long ago — less than 200 years — that people fought and died to defend slavery on its merits as an economic policy.  (Of course, many fought and died to defend it on political, social, and religious grounds as well, but that's beside the point.)  The last Confederate veteran only died in 1959.  At least some of the Confederate mindset is alive and well today.

This is not an academic question.  The face of slavery has changed considerably since 1861, but it is actually alive and well today, even in the U.S.  One could argue that slavery is bad because it ultimately does not maximize economic growth (or something like that), but that would be missing the point rather badly, which is: slavery would be bad even if that were not the case.  Even if slavery did lead to undeniable across-the-board economic benefits, it would still be bad.  (Note that one clue to this is the fact that in order to make the slavery story hold up you need a source of desperately poor people for whom slavery is potentially a step up.)

The badness of slavery cannot and must not be justified in purely economic terms, at least not as long as there are desperately poor people on earth.  There is something else in play here, perhaps more than one something.  There are myriad non-economic factors that one can mix into one's quality metric: Human rights.  Fairness.  Happiness.

My economic quality metric derives from my core belief that we should try to maximize the number of ideas in the universe.  Because at the moment the primary habitat of ideas (as far as we know) are human brains, it follows that we should strive to maximize the number of human brains.  But brains by themselves are not enough.  In order to support a robust ecosystem of ideas, brains have to exist in an environment where they are capable of learning, of thinking about things, and, most importantly, of generating new ideas.

Slavery is not such an environment, which is why slavery is bad.  Schools, universities and libraries (and national parks) are such environments, which is why they — and the social and economic structures that give rise to them — are good.

Part 2: Wealth disparities

I'm a big fan of democracy, capitalism, and free markets.  But I am not a fan of these things for their own sakes.  I am a fan because these things tend to bring about good outcomes according to my quality metric.  Free market capitalism, for example, creates wealth more effectively than any other system we humans have been able to come up with.  All else being equal, more wealth is better than less because it gives you more options.  But wealth is not (by my quality metric) an end in itself, it is a means to (what should be) the end: the creation of a world where ideas can thrive.

Now, an awful lot of our wealth gets deployed in what I consider to be constructive ways.  For example, we humans live longer and healthier lives than ever before, and that's a good thing because (you're going to start recognizing this theme after a while) long-lived healthy humans generally have more and better ideas than short-lived sick ones do.  Famines are mostly a thing of the past: a good thing.  We have cars and airplanes and the internet, which allow humans and their brains and their ideas to travel and intermingle in ways that would not otherwise be possible.  All good things.

We also have peace.  I know it's hard to tell from watching the evening news, but we are actually living in the most peaceful era in human history.  There is reason to believe that one of the reasons for this is the spread of democracy.  No two democracies have ever gone to war with each other.  And peace is good because... well, you can fill in the blank here.

It is easy, then, to fall into the following rhetorical trap: democracy, capitalism, and free markets (which I'll start abbreviating DCFM) are all Good Things.  But wealth disparities are an inevitable result of DCFM.  Therefore, wealth disparities must also be a good thing (or at least not a bad thing, or at least a thing that we need to be willing to put up with in order to enjoy the fruits of DCFM.)

That this reasoning is fallacious is easy to see.  It would apply equally well to, say, pollution, which is also an inevitable result of DCFM (unless we choose to do something about it).  Just because something is a result of DCFM doesn't necessarily mean it's a good thing.

I believe that extreme wealth disparities are more like pollution than they are like libraries and universities.  Why?  Because extreme wealth disparities do not help to foster a robust ecosystem of diverse ideas.

We already live in a world where the concentration of wealth is snuffing out ideas.  Yes, anyone can write an publish new ideas and put them out on the internet for everyone to see (just as I am doing right now).  But as a practical matter, the vast majority of people are getting their input from a smaller and smaller number of sources.  90% of the media in the U.S. is controlled by six companies.  In 1983 that number was 50.

This is not yet a catastrophe.  Six is still better than one.  But the trend is very worrisome.

What makes it even more worrisome is the positive-feedback effects that make wealth disparities more and more difficult to dislodge the larger they become.  Wealth is power if one chooses to wield it that way.  So, for example, I have Comcast internet.  I hate Comcast.  They are the worst company ever.  And yet I do business with them.  Why?  Because I have no choice.  Why do I have no choice? Because Comcast uses the money they get from me to hire lobbyists to influence state and local politics to make it all but impossible for effective competition to enter the market.  And it's not just Comcast; the other big players do it too.

So are wealth disparities bad?  Yes and no.  They are indeed an inevitable by-product of DCFM, which on balance do vastly more good than harm.  But, like pollution, if you get too much wealth disparity it can undermine a lot of the good the DCFM does and so, like pollution, I think we ought to try to do something about it.  Also like pollution, I don't think it makes any sense to try to eliminate it entirely.  But I do think that it's time for some emission controls, and that we can put them in place without killing the golden goose.

Part 3: Policy recommendations

The first step to any recovery is admitting you have a problem.  The first step to addressing extreme wealth disparities is deciding that they are a problem.  I've presented an argument here that they are indeed a problem with respect to some quality metric.  Moreover, I've actually told you what that quality metric is.  I think any discussion of this issue needs to start with those simple steps.

If you accept that wealth disparity is a problem then the solution is actually pretty straightforward: the economic equivalent of a catalytic converter is a progressive tax structure, which we currently don't have.  At the moment we have a regressive structure that takes a smaller percentage of Warren Buffet's income than his secretary's.  The main culprits are payroll and sales taxes, and the carried-interest loophole.  So I'd eliminate those and adjust marginal rates on regular income taxes to be revenue-neutral but more progressive, i.e. I'd raise the top marginal rates.  (I would also eliminate the mortgage interest deduction.  It does nothing but distort the housing market.  But I'd do it very gradually, over 30 years or so, so as not to shock the system.)

I would also impose a (very small) per-transaction tax on stock markets in order to discourage high-speed trading. The extra liquidity that HST provides is nowhere near worth the market distortions that HST gamesmanship introduces.  I would happily wait two or three seconds longer for my trades to execute if it meant that there wasn't a quant shaving a few basis points off every transaction.  I'd use the proceeds from this tax to fund basic research and education.

I would limit the ability of for-profit corporations to lobby politicians.  I would get around Citizens United by passing an amendment to the dictionary act of 1871 stipulating that a for-profit corporation is not a "person" for the purposes of ascribing Constitutional rights to it.

I don't know if that would solve the problem, but I think it would be a step in the right direction.  At the very least, I think it would be an experiment worth conducting.

Travelogue day 11: Duma Tau

From Victoria Falls we were supposed to fly to Kasane, Botswana, where we would get on a small bush plane to fly into the Okavango delta.  But on our way to the airport our driver got a call that our flight had been cancelled due to bad weather.  You didn't have to be a pilot to know that this was total BS.  Yes, there were a few clouds in the sky, but it was still an easy VFR day.  Most likely, our driver said, the pilot just decided he wanted to take the day off and go fishing or something.  Happens all the time, he said.

Plan B was to drive to Botswana, which was fine because it actually wasn't very far, only about an hour or so.  The only tricky part was that our driver wasn't allowed to cross the border, so we had to change to a different car.  But we made it in plenty of time to catch our connecting flight.



Despite the fact that we were getting on a Cessna Caravan headed for the middle of nowhere, they still made us go through the standard security procedures for a regular commercial flight.  Post-9-11 security theatre has infested the furthest reaches of the globe.

We flew from Kasane to Duma Tau ("roar of the lion"), the first of three camps we would be staying at in the Okavango delta.  (BTW, Wilderness Safaris, which runs the camp, has one of the best 404 pages on the internet :-)  Unfortunately, I don't have very many photos of the camp itself (the camp's web site has a nice gallery).  The reason for this is that on our first day there we had a bit of an, um, incident.  To set the stage for this story, I have to tell you a little bit about the layout of the camp.

Duma Tau has about a dozen tents laid out in a line along the shore of an estuary.  Well, OK, it's not technically an estuary since it doesn't connect with the ocean.  But the whole Okavango delta doesn't connect with the ocean, so all the nomenclature gets a little weird in there anyway.  The Duma Tau web site calls it a lagoon, but that's not really right either.  Maybe it's a lake.  In any case, the tents are stretched out along a shore line, with a central common area in the middle.  The tents are all connected by a boardwalk, and they're spaced pretty far apart.  At the far end of the boardwalk is a small swimming pool that also looks out over the estuary/lagoon/lake/whatever-the-heck-you-want-to-call-it.  From the central area to the pool is quite a hike, nearly a quarter of a mile.

The routine at these camps is to wake up at 5AM (!), go out for a morning game drive, come back around 10 or 11, have lunch, and then take a siesta until about 4.  It can get beastly hot in the afternoon and the animals mostly just try to hide in the shade so there's not much to see.  Our first full day there was typical, so after lunch I decided to go take a dip in the pool.  The sun was shining, it was nice and toasty, and the tents don't have air conditioning, so it seemed like the thing to do.  And it was.  For about half an hour.

It was the most dramatic change in the weather I have ever seen in my life.  First the sun went away.  Then it started to rain.  Within five minutes the wind was blowing so hard that I wasn't sure it would be safe to get out of the pool.  There were two large beach umbrellas on the pool deck; the wind picked them both up, turned them inside out, and deposited them about ten yards from where they had been.  My guess is that the wind was probably blowing about 50 knots.

And then I remembered: our tent was open.

Now, the tents at Duma Tau are not your ordinary camping tents.  They are semi-permanent structures built on wooden platforms with very heavy-duty wooden frames and covered with industrial grade canvas.  But they are still tents.  And most of the time in the middle of the afternoon the problem is not rain but heat, so the walls of the tent can be rolled up to let air in (there are floor-to-ceiling screens to keep the bugs out).  Which is the configuration our tent was in.

Only two of the walls were open, but they were facing in exactly the wrong direction, into the wind.  When I got to our tent it looked like someone had taken a firehose to the interior.  Everything (and I mean everything!) was soaked.  The floor.  The walls.  The ceiling.  The bed.  The towels.

My computer.

The camps don't have air conditioning, but they do have enough electricity to run light bulbs and chargers, so we travel with a sizable collection of electronics: cameras, laptops, phones and their associated chargers, adapters, dongles, dingles and miscellaneous accessories.  They were all laid out on the little desk in the center of the tent.  And they were all soaking wet.  We were hosed.  Literally.

Fortunately, some spare towels in a cabinet had been spared so I grabbed one of them and started toweling off the various gadgets.  Fortunately, everything actually seemed to be OK.  My computer was even still working despite the fact that it was soaking wet, but I knew better than to take too much comfort from this.  It can take some time for water to do its bit, so I shut everything down, set up a fan to blow on it, and prayed to whatever gods might be out there to spare my poor little computer who had never hurt anyone in its life and deserved to live.

Meanwhile, the entire camp was a minor disaster area.  All of the major structures had held, but so much rain had come down in so short a time that many of the roofs were sagging under the weight of enormous bulges of water.  Most of these could be drained by pushing up on them from below, but some were so heavy that this wasn't possible and the staff had to dismantle the tent in order to get the water out.  And of course there was debris everywhere.

The staff was amazing.  They just hunkered down and cleaned it all up, and within a few hours it was as if nothing had ever happened.  They moved us into another tent (which had been closed up — and hence dry — because it was vacant).  It was all done in time for afternoon tea.

So we went out on the evening game drive and saw some amazing wildlife.  This is just a brief highlight reel; I took over 800 photographs just at Duma Tau alone (my motto was: film is cheap, so shoot first and ask questions later.)  I'm making these smaller than usual so this post doesn't take up so much space.  Click on the photos to enlarge them.

A waterbuck.

A giraffe (obviously).

An oxpecker.  They hang out on the large herbivores and eat the parasites that live in their fur.

Wild dogs.  It's rare to see them because they are endangered.

Elephants (obviously!)

Du hoerst nachts die trommeln drehen
Doch du wirst nie verstehn
Was die augen eines elefanten sehn

A red-billed hornbill.  Not to be confused with the yellow-billed hornbill.  (There are, it turns out, five different species of red-billed hornbill.  I don't know which one this is.  But there are some people who are seriously into birds who know these things.)

Saddle-billed stork.  It's hard to tell from this picture, but this bird stands about five feet tall.  Their wingspan ranges up to nine feet.

A woodland kingfisher.  There are a ridiculous number of different kingfisher species in the world.

A lilac breasted roller.

A leopard with a freshly killed baby impala (a.k.a. leopard chow).

Red in tooth and claw.

I still can't believe I got that shot.

Travelogue day 10: Victoria Falls

Getting to Victoria Falls was quite the adventure.  From there we were going on a Safari in the Okavango delta, so we had to reconfigure from cruise-ship mode to safari mode, i.e. a mode where we had a lot of space to put stuff and we didn't have to repack every day to a mode where everything we needed for two weeks had to fit inside a single small duffel bag that would fit in a small plane.  Arrangements had been made to store our excess luggage, but there was some confusion over the logistics.  To make things worse, one of our bags got damaged during the transition and the handle wouldn't retract.  Fortunately it turns out that airlines deal with this sort of thing all the time, and so it all got sorted out, but not before I had accumulated about a year's worth of stress in two hours.

When we finally made it to Vic Falls it took forever to get through immigration.  You have to buy a visa at the airport, and there was a Japanese family who had cut into line ahead of us that had some sort of problem that took forever to resolve.  There were half a dozen immigration agents behind the counter, but it apparently never occurred to any of them to shunt this family off to the side so that the rest of the people in line could be processed.  I learned that there's a local expression for such situations: TIA: This Is Africa.

Victoria Falls is both the world's largest waterfall and the name of the adjacent town in Zimbabwe.  The falls themselves mark the border between Zimbabwe and Zambia, and the town on the Zambian side is called Livingstone, after the British explorer who discovered the falls in the mid-1800s.  In doing the research for this entry, I found this interesting passage on the Wikipedia page for David Livingstone:

The expedition lasted from March 1858 until the middle of 1864. Expedition members recorded that Livingstone was an inept leader incapable of managing a large-scale project. He was also said to be secretive, self-righteous, and moody, and could not tolerate criticism, all of which severely strained the expedition and which led to his physician John Kirk writing in 1862, "I can come to no other conclusion than that Dr. Livingstone is out of his mind and a most unsafe leader".

We stayed at the Victoria Falls Hotel.  It dates back to 1904, but none of the original construction survives, and the current physical plant only goes back to the 1980s.  But they've done a nice job of keeping the old-school feel.

Vic Falls is in the middle of nowhere, and there is a lot of wildlife that freely roams all over the town including the hotel grounds. You almost don't have to go on a safari after staying here.









That's a baboon, a banded mongoose, a warthog, and a vervet monkey who has gotten into the trash and made a horrible mess.

We also went on a lion walk, where you hang out with lions who (they said) were being raised in captivity for eventual release into the wild.  They had been acclimated to humans, but were allowed to hunt so they would not become fully domesticated.



My caption for that shot is: "Mmmm.... tourists!"

We found out after the fact that these programs are very controversial, and their record of actually releasing lions back into the wild is not good.  Indeed, it is not even clear that this sort of program is necessary at all.  One knowledgable source told us after we got home:

The problem is that the operators are completely misleading travelers (and even their own staff) about the purpose of their operation, and there is no conservation benefit at all from what they are doing. There is no need for captive bred lions anywhere in Africa – the problem is a lack of habitat, not a lack of lions (lions are prolific breeders and will very quickly establish themselves naturally in an area where they can survive). Every suitable piece of habitat on the continent is already occupied by lions, and none of these organizations involved with captive bred lions has any record of ever having relocated a lion to a National Park or other conservation area.

Still, I would like to think that programs like these have enough value in raising awareness to justify their continued existence.  The experience of getting this close to these animals was very profound.  We were also able to get some awesome close-up photos that we could not have taken any other way:

They really are magnificent creatures.

The falls themselves were spectacular, notwithstanding that it was the end of the dry season and the flow was low (by local standards).

Normally the falls extend across the entire face of that cliff, and well beyond on the right hand side.  It's impossible to get the entire waterfall in one frame from the ground.  You have to get into the air, so we did:

On the right hand side of that shot you can see the famous bridge built by Cecil Rhodes (of Rhodes scholar fame) that connects Zimbabwe and Zambia.

I walked across the bridge to get my passport stamped (which was the only use I got out of the multi-entry visa we'd waited in line for at the airport).  It's an interesting though not particularly pretty walk through a territorial no-man's-land surrounded on all sides by barbed wire fencing and inhabited mainly by truckers and the odd street vendor.  One of the most common trinkets on offer is old Zimbabwean banknotes.  Hyperinflation got so bad in the last decade that they printed ridiculous denominations, like 100 trillion dollars, but the largest one I was able to find was a mere 20 billion.  Today, the official currency of Zimbabwe is the U.S. dollar, which makes it very convenient for tourists.  One of the biggest problems traveling through Africa is that you want to buy things from people, but they don't want the local currency (because it's worthless), and they can't (or won't) make change in dollars.  So if you run out of small bills you can end up wedged.  That's less of a problem in Zimbabwe, though now there's talk of them adopting the Yuan as well.

Of course there were the usual not-in-kansas any more moments.  I thought this one was particularly cute:

Nothing like a glass of freshly squizzed orange juice after a hard day of touring.

My simplified response to Paul Graham's simplified essay

Paul Graham published a simplified version of his essay on income inequality.  Here's my simplified response:

It is true that many socially worthwhile activities (like developing technology, and starting startups) produce income and wealth disparities.  And a certain amount of income and wealth disparity is not a bad thing.  In fact, having no income and wealth disparity is a bad thing.  We tried it.  It didn't work.  No reasonable person disputes this.

However, too much income and wealth disparity is also not a good thing.  I hope I don't have to convince you that if all of the wealth in a society is controlled by a single family or individual, that's not good.  The optimal point lies somewhere in between those two extremes.

Today, the top 1% control fully half of the planet's wealth.  That is awfully close to the second extreme.  It's very unlikely that this is where the happy medium lies.

It's particularly worrisome because, as income and wealth disparity increases, there is a positive-feedback effect that tends to drive it further and further towards the second extreme: the extremely wealthy use their disposable income to buy political influence, which they then use to get laws passed that favor them at the expense of others (e.g. through regressive taxation).  This lets the already-wealthy accumulate more wealth not by creating more value, but by collecting economic rents.  In the long run this leads to oligarchy and possibly even economic and societal collapse.  We are nowhere near there, but by the time it becomes apparent that this is happening it will almost certainly be too late to do anything about it.  The time to act is now, before it becomes an even more serious problem.

(Paul Graham, like nearly everyone in today's politics, fails to appreciate the near-universal validity, at least when it comes to social and economic policy, of Ron's First Law: All extreme positions are wrong.  :-)

The pernicious myth of individual productivity

This is a followup to yesterday's post about income inequality, possibly the first of many.  This is a complicated issue, and it's very hard to reduce it to a pithy slogan.  Even "income inequality" is a problematic catch phrase because it leaves out at least half of the real problem (political corruption).  And, as an unknown commenter pointed out, it's entirely plausible that corruption isn't really a problem either, at least not by itself.  Corruption may be survivable if wealth is more evenly distributed because then everyone has equal opportunity to buy politicians, and the net result is still something approximating a representative democracy.

It's complicated.  But a good place to start is to dispel the persistent and pernicious myth that a free market does a good job at objectively measuring individual productivity.  The reason this myth is pernicious is that people conclude that it is good policy to let the market distribute wealth because it's good to reward productivity.  I do not dispute that it is good to reward productivity (of course it is!)  What I dispute is that the market reliably measures productivity.  Hence, letting the market distribute wealth does not necessarily reward productivity.  It can (and often does) reward productivity, but it can reward a lot of other things as well (like luck, or gaming the system), and so we have to be more careful when making policy than simply trusting the market.

Take this example from Paul Graham in a footnote to one of his essays:

[I]t is certainly not impossible for a CEO to make 200x as much difference to a company's revenues as the average employee. Look at what Steve Jobs did for Apple when he came back as CEO. It would have been a good deal for the board to give him 95% of the company. Apple's market cap the day Steve came back in July 1997 was 1.73 billion. 5% of Apple now (January 2016) would be worth about 30 billion. And it would not be if Steve hadn't come back; Apple probably wouldn't even exist anymore.

This reasoning is flawed.  Just because the value of Apple + Steve Jobs is 200x the value of Apple - Steve Jobs, it does not follow that Steve's value is 95% of Apple + Steve.  Why?  Because companies are not linear systems.  In fact, it is trivial to debunk this: just take away the rest of Apple.  By PG's theory, the value of the result (i.e. Steve Jobs working alone) should be 95% of Steve + the rest of Apple.  That's obviously not the case.  Steve was only able to do what he did because the rest of Apple existed.  (But, one might argue, the rest of Apple existed because of Steve!  No, it didn't.  Steve did not build Apple single-handedly.  When Steve built a company single-handedly, the result was not Apple, it was NeXT.)

Here's an analogy: the value of a car lies in its ability to transport you from place to place.  If you, say, remove the spark plugs, the car becomes useless.  If we stipulate that a working car is worth 20 times as much as a non-working car, then by PG's reasoning it would follow that the spark plugs ought to be worth 95% of the value of the car.

Another counter-argument might be that yes, Steve may have just been a spark plug, but he was unique.  Spark plugs are cheap because they are plentiful, but if they were scarce then they would be worth more.

But how do we really know that Steve was unique?  It's possible that there are hundreds — maybe thousands, maybe more — people out there who are capable of doing what Steve did, but we don't know about it simply because Apple never ran those experiments.

In fact, it is extremely unlikely that Steve was actually unique, in the sense that he was the only human being with the innate ability and drive to do what he did.  Why?  Because Steve was born in San Francisco in 1955, which was the exact right place and time to be born to come of age during the semiconductor revolution that made Apple possible.  It was the exact right place and time to be born that let him meet Woz, without whom Apple probably would not have happened.  The odds that the one human being in all history capable of doing these things just happened to be born under these auspicious circumstances are very, very low.

Much more likely is that there are lots of potential Steve Jobs's out there, but they never get the opportunity to demonstrate their abilities because their life circumstances don't allow it.  Maybe they have to work to pay off student loans.  Maybe they are refugees (Steve's biological father was Syrian).  Maybe the reason that Steve Jobs seems like a scarce resource is simply because the world hasn't bothered to try to cultivate more people like him.

Let me be clear: I am not making the Marxist argument that everyone is equal.  Steve was clearly exceptionally talented and motivated.  But what made Apple possible was not just Steve's exceptional talent and motivation, but a whole host of other circumstances and people that happened to put him (and them!) at the right place at the right time.  And if any one of those circumstances had been different, the outcome for Steve and Apple could have been very different.  Steve had a lot of help from people like Woz and Jony Ive.  (But, I hear you saying, Steve hired those people!  Sure, but if you're going to give Steve credit for that, why not give the Apple board credit for hiring Steve?)

My pont here is just this: simply because Apple + Steve was worth 20x what Apple - Steve was worth, it does not follow that paying 95% of Apple + Steve for Steve is a good deal for anyone but Steve.

So we can't measure individual productivity simply by looking at the value of an organization with and without them.  It's a non-linear system.  The whole is greater than the sum of its parts.

So how can we measure individual productivity for creative endeavors like running companies?  It's really hard.  It may actually be impossible.  Certainly we don't have any way to do it today.  The market is clearly not efficient in this regard.  We have CEOs getting paid tens of millions of dollars for running companies into the ground.  (Attention, boards of directors: I will bankrupt your company for half of whatever you're paying your current CEO!)

This is only a tiny sliver of the real problem, but it's an important one because so many people base their reasoning on the false assumption that a free market is a reliable measure of productivity, and that rich people are rich because they are so much more productive than non-rich people.  No.  Rich people are rich because they happened to find themselves in a confluence of many, many circumstances that ended up with their becoming rich.  One of those many circumstances may have been (usually is, but often isn't) that they worked hard and took risks.  But working hard and taking risks is no guarantee of success (that's why it's called "risk").

Note that this observation says absolutely nothing about policy or quality metrics.  That will have to wait for another installment.  Like I said at the beginning, it's complicated.  But if we're going to deal with this situation rationally we have to start by being honest without ourselves about the ground truth.  And part of the ground truth is that there's a lot of noise in the system.  That's one of the things that makes it resistant to simple solutions.

Income inequality is both a problem and a symptom

Paul Graham today published two essays in which he challenges the idea that economic inequality is a problem.

Since the 1970s, economic inequality in the US has increased dramatically. And in particular, the rich have gotten a lot richer. Some worry this is a sign the country is broken. 

I'm interested in the topic because I am a manufacturer of economic inequality. I was one of the founders of a company called Y Combinator that helps people start startups. Almost by definition, if a startup succeeds its founders become rich. And while getting rich is not the only goal of most startup founders, few would do it if one couldn't. 

I've become an expert on how to increase economic inequality, and I've spent the past decade working hard to do it. Not just by helping the 2400 founders YC has funded. I've also written essays encouraging people to increase economic inequality and giving them
detailed instructions showing how. 

So when I hear people saying that economic inequality is bad and should be eliminated, I feel rather like a wild animal overhearing a conversation between hunters. But the thing that strikes me most about the conversations I overhear is how confused they are. They don't even seem clear whether they want to kill me or not.

As someone who believes that extreme income and wealth disparities are indeed bad let me be clear: no, Paul, I do not want to kill you, nor do I want to kill Y Combinator, though upon reflection I can see how someone could get that idea.

My first reaction on reading these essays was: he's attacking a straw man.  Surely everyone realizes that wealth inequality is merely a symptom, not the actual disease.  But then I went and took another look at some of the political rhetoric being bandied about and I realized that this is far from clear.  For example, here is what Bernie Sanders has to say about it:

The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time, and it is the great political issue of our time.

The reality is that since the mid-1980s there has been an enormous transfer of wealth from the middle class and the poor to the wealthiest people in this country. That is the Robin Hood principle in reverse. That is unacceptable and that has got to change.

Despite huge advancements in technology and productivity, millions of Americans are working longer hours for lower wages. The real median income of male workers is $783 less than it was 42 years ago; while the real median income of female workers is over $1,300 less than it was in 2007. That is unacceptable and that has got to change.

There is something profoundly wrong when one family owns more wealth than the bottom 130 million Americans.

If you stopped reading there you might be forgiven for assuming that Sanders thinks the solution to this problem is to simply re-distribute wealth from the rich to the poor.  And indeed, some of his policy proposals seem to reinforce this idea.  He wants to raise taxes on corporations and the ultra-wealthy ("Demand... that the wealthy and large corporations pay their fair share in taxes..."), raise the minimum wage, and have the government pay for college tuition.

If you look more closely, though, the Right Answer is actually in there, but it's buried pretty deep inside the leftist rhetoric:

The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country.

This is the problem.   It is not income or wealth disparity per se.  If the differences in income and wealth were entirely reflective of people's productivity and contributions to society there would be no problem.  But they aren't.  Instead what is happening is that the ultra-wealthy are using their disposable income to buy political influence, then using that influence to get laws passed that allow them to collect rents.  They then apply the proceeds of those rents to buy more political influence.  The result is a positive-feedback loop that concentrates power in the hands of a small minority and thus undermines both democracy and capitalism.

Graham doesn't buy this:

Not everyone who gets rich now does it by creating wealth, certainly. But a significant number do, and the Baumol Effect means all their peers get dragged along too.

The Baumol Effect, in case you didn't know, is the tendency of wage increases that come from increases in productivity to "spill over" into jobs where there have been no productivity increases.  In other words, it's trickle-down economics under a fancier name.  The problem with trickle-down economics is that wealth only trickles to a few places.  I can only wear so many clothes, drive so many cars, live in so many houses, hire so many house keepers.  Once I have everything I want, I'll stop spending money on stuff and start spending it on... well, if society is lucky I'll start investing it in startups.  If society is not so lucky, I'll start buying politicians.

Here's Graham's bottom line:

You can mitigate this with subsidies at the bottom and taxes at the top, but unless taxes are high enough to discourage people from creating wealth, you're always going to be fighting a losing battle against increasing variation in productivity.

Graham is saying that you can't solve the "problem" of wealth inequality without suppressing or destroying the wealth-creating processes that led to the inequality in the first place.  And who would want to kill that golden goose?

But this is a false dichotomy.  It completely ignores the other cause of inequality, the fact that "Not everyone who gets rich now does it by creating wealth."

It is possible to address this problem without killing the golden goose.  How?  By rolling back some of the legislation that was put in place by undue political influence.  At the very least, we should strive for a non-regressive tax system, which is what we have now.  If we are to be the kind of nation that we like to think we aspire to be, we should also have enough social safety nets in place that people do not end up destitute through no fault of their own.  We can do all these things without destroying the incentive to innovate.

So why doesn't Graham recognize and advocate this?  Perhaps it's because two of his biggest golden geese — Uber [See correction below] and AirBnB — are actually relying on exactly the kind of political influence I'm calling out here in order to survive and prosper.  Both of these companies have business models that rely to a certain extent on doing end-runs around regulations that apply to their competitors.  It is no accident that both of these companies have quietly hired a small army of lobbyists.

So once again, let me be clear: I do not want to kill Y Combinator, nor do I want to kill Uber or AirBnB.  I am in fact a very happy Uber user.  They provide a terrific service.  They've raised the bar on taxi companies, which very much needed to be done.

On the other hand, I also want an effective, democratic government to provide infrastructure, protect people from extreme economic contingencies (like war and hurricanes), prevent people from profiting from economic externalities (like pollution) and provide oversight for well-regulated, free and transparent markets.  And that's not the direction we're heading.  We're heading towards political power being concentrated irreversibly in the hands of a small minority.  We're heading towards oligarchy.

And that is a problem.

[UPDATE:] Turns out Uber is not a YC company.  I could have sworn they were, but I was wrong.  I apologize for the error.  (But AirBnB is a YC company, so my main point still stands.)

Travelogue day 11: Walvis Bay, Namibia

Namibia is not nearly as poor as most of its West African neighbors, but it's still not rich (measured by GDP per capita).  It's right in the middle of the rankings, about the same as Egypt and Indonesia.  So I was expecting to find yet another typical third-world country, but I was very pleasantly surprised.  It is impossible, of course, to get the full measure of a country in a day, but Walvis Bay, at least, turned out to be surprisingly civilized.  There was some low-income housing on the outskirts of town, but no shanties, no vendors selling furniture by the side of the road, no animals in the street, no fleets of broken-down taxis, no one pulling carts by hand.  The town of Walvis Bay itself was virtually indistinguishable from parts of California.



It was at once a relief and a disappointment: western suburbia is comfortable, but it's kind of boring.

Nancy and I went on different excursions that day.  She got to see flamingos:



while I went out into the famous Namib desert, to an area aptly named the "Moon landscape":



It looks barren and god-forsaken (and it is) but there's actually a lot of interesting stuff going on here. There's some really cool geology:



There's some plant life too, if you look closely.  These lichens, for example, are normally black:



but when they get wet they turn green:



These lichens got wet because we tourists were pouring water on them from our bottles, but normally they get their water from coastal fog that blows in from the ocean about ten miles away.  In fact, when we arrived it was actually raining gently at the coast!

This plant is called a Welwitschia:



It's actually a tree (closely related to evergreens like pine and spruce), and this one is probably several hundred years old!  It is found only in the Namib desert.

Of course no self-respecting desert would be complete without sand dunes.  The dunes here are so big and persistent that they have names (or at least numbers).  This is dune #7:



Climbing up was not easy.  Walking was impossible without sinking in up to your ankles.  I tried taking my shoes off, but it was much too hot to walk barefoot so I just made my peace with the fact that my shoes were going to fill up with sand and slogged my way up to the top.



Up there, whenever the sand was disturbed it would flow down the side of the dune almost like water.

Even the art work in Namibia seemed like it was of higher quality than the rest of Western Africa.  Most of the art we've seen in Africa is wood carvings, but here in Namibia we found a lot of really beautiful and intricate stone sculptures:



There must be some poverty in Namibia somewhere, but they did a really good job of hiding it from us.

Travelogue, day 10: Luanda, Angola

Luanda, Angola is the worlds' most expensive city to live in, due mainly to the effects of oil money pouring in.  We were there on a Sunday, so everything was closed.  Hotels and churches were open, but nothing else.  No restaurants.  No shops.  Nothing.  There weren't even street vendors hustling us by the dock.  That was a first.

It was a little eerie.

Despite the shiny modern facade, the smell of urine permeated the 95-degree air.  Did I mention that everything was closed?  So no public restrooms.

Oh, the military museum, built in to an old Portugese fort, was open.



From there you could see the nice spiffy new city under construction on one side:



And this shanty town on the other:



You can't really see it from this picture, and I wasn't able to get any better shots because I never got on the ground down there, but there's a high wall surrounding the slum so you can't see it from the road.  Inside there are mountains of garbage.

Then, next door, so that the slum is literally in its shadow at certain times of the day, is this multi-hundred-million-dollar memorial to Angola's first president:

I don't think I've ever been offended by a building before, but this one did.  If you were going to design a building with the intent of giving the middle finger to a bunch of poor people you could hardly do better than this.  They have the money to build this monstrosity (and don't even get me started about the new Parliament building!  And the presidential palace!), but they can't clean up the trash next door.  Yes, all this is typical of African corruption, but the Angolans have taken the brazenness of it to a whole new level here.

As ever in Arica there were the usual WNIKAM (we're-not-in-Kansas-any-more) moments, like this guy slapping the water with his oar:





Never found out what that was all about.  Nancy suggested that maybe they were trying to stun some fish, but if that's the case it wasn't working very well.

There is apparently some stunning natural beauty in Angola, but unfortunately we didn't get to see any of it.