Hollywood Economics (was Sentism)

Anders Sandberg (asa@nada.kth.se)
27 Aug 1998 19:29:48 +0200

"J. Maxwell Legg" <income@ihug.co.nz> writes:

> Yes, people here have proposed that the first SIs or what have you will come
> from the super wealthy. Also, excuse me; but when you sandbag by saying it
> takes a limited understanding of economics and politics to become worried over
> these matters aren't you being patronizing, to say the least?

Sorry if I did sound patronizing, that wasn't the meaning. But I'm really serious about the need for understanding more about economics before making assumptions that "only the rich will have access to technology X" (and the common implication that they will transcend and use the rest for feedstock).

The problem here is the assumption that technology doesn't spread, or that it spreads very slowly. This is not borne out by observation (see http://www.forbes.com/forbes/97/0707/6001170a.htm), and economics suggests that there are strong incentives for the makers of technology X to sell it to as many people as possible rather than a small minority.

A typical example is cellular phones - ten years ago they were only for the fairly well-off, today they are becoming extremely common among ordinary people. Another example is penicillin. If you look at how new technologies have spread, you will find that the rate of spread in our society has increased over time (I'm not sure of the between-society rate).

Limiting the production to keep the price high is usually unprofitable compared to selling a lot more products to a lower price (especially if you can get advantages of scale in the process and if the spread of the technology is in the early stage when you don't have to compete with many others for the still untapped market).

I'm not very knowledgeable about the theory of monopolies (which is a rather contentious area), but as far as I know technological monopolies are rather rare and unstable. If you can come up with an invention, I most likely can do the same - there are today not many "secret formulas" around that are impossible to replicate. Most of the products are based on well-known information, earlier patents and local engineering and design skills. This means that if you build a frobnitz you will have a monopoly for a little while, until I come out with my own version (it seems to be rather hard to patent away all the competition; I think Xerox managed it for a while, but they lost it in the end).

If somebody discovers a life extension therapy that works well, then it will likely first be used by the rich and neophiliac. But the market and demand is so huge, that even if it is very expensive a lot of people are going to spend extraordinary amounts of brainpower to find ways of bringing down the costs and mass-market it. In addition, the competitors to the originators (if we assume the method has been patented by a company) will be looking for something similar too - if they can bring out their version, they might catch a large market share. In the end, it is very likely (unless the method hinges on something intrinsically expensive - which is rather unlikely) that most people would have access to the therapy. The early adapters might have got therapy a few years earlier than the others, but in the long run that doesn't matter.

Now to my main rant (?):

What I really hate to see on this list is the postings that are really based on "Hollywood" science, technology and economics, the kind of stuff you see in movies: inventions are usually made by solitary geniuses with no outside support, working completely from their own principles in such a creative way that nobody else can replicate their discovery without reading their secret notebooks; companies prefer to sell products for exorbiant fees to ultra-rich people than go for the mass-market, and they immediately try to use illegal means to squash any competition; new inventions are always so profoundly new that they give the owner nearly unlimited potential power and nobody can stop him or her, and so on.

This is complete bullshit, of course. Scientists and engineers work in large teams, exchanging information all the time and leaking quite a bit, not even the theoretical breakthroughs are the domain of single geniuses anymore, people often replicate each other's work (usually by accident). Big companies are big because they sell to the mass market, that's where the money is. Squashing competition or rival inventors is very rarely done through illegal means, and as history shows technological monopolies doesn't last. New discoveries and inventions are usually gradual and never seem to be orders of magnitude better than everything else (or invincible), and when the occasional breakthrough occurs, the first prototypes are usually equivalent or worse to the currently dominant technology, never totally superior.

What I want to warn against is basing arguments about the future on "Hollywood thinking". If you try to think about (say) the Singularity and fall for the Hollywood style of economics, it makes a lot of sense to worry about evil geniuses taking over the world. But that has very little to do with real world economics and technology, which predicts something completely different.

Just think about what Hollywood would do with my life extension scenario above: most likely the result would be that an evil monopoly immediately is created, selling longevity only to the rich, hiring agents to squash all competing research everywhere in the world and becoming awfully rich (and then the hero will appear to steal the secret formula, or destroy it since there is only one copy and nobody can replicate it...). It is dramatic, but in the end unrealistic and silly.

Some might object that the rules may change in the future. This is true, but then it is up to the person arguing that (say) nanotechnological monopolists will emerge and rule the world to give evidence for why this is more credible than the alternative that their monopoly will be broken by the emergence of competitors, and show how this relates to known economics and other areas. This is exactly the same situation as discussing future technology - you have to base what you say on what is known, not handwave "Oh, the superintelligences will find a way".

Anders Sandberg                                      Towards Ascension!
asa@nada.kth.se                            http://www.nada.kth.se/~asa/
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