occam’s razor applied to poverty steve villee altexpo #19 march 7, 2015
TRANSCRIPT
Occam’s Razor Applied to Poverty
Steve VilleeAltExpo #19
March 7, 2015
Occam’s Razor
Devised by William of Ockham (ca. 1285-1349) Numquam ponenda est pluralitas sine necessitate
[Plurality must never be posited without necessity] Other things being equal, an explanation with fewer
assumptions is preferable
Copernican Model (Heliocentric)
Poverty Thresholds
National poverty lines Defined by each country
World Bank international poverty lines $1.25 a day $2.00 a day
$1.25 a day
$1.25 a day
$2.00 a day
$2.00 a day
Poverty is ...
pervasive persistent
On Negative Causality...
On Negative Causality...
The book not levitating has no cause
On Negative Causality...
The book not levitating has no cause Frequently, a negative statement has no cause
On Negative Causality...
The book not levitating has no cause Frequently, a negative statement has no cause For this book, resting is natural
On Negative Causality...
The book not levitating has no cause Frequently, a negative statement has no cause For this book, resting is natural Frequently, poverty has no cause
On Negative Causality...
The book not levitating has no cause Frequently, a negative statement has no cause For this book, resting is natural Frequently, poverty has no cause Poverty is natural
United States
GDP per capita highest among major countries Where did our prosperity come from?
Before Independence
Vibrant colonial economy Exports increased twelvefold from 1700 to 1774 Noticeably fewer destitute people than in Europe Most able-bodied people could find employment Very high material standard of living
Source: Edwin J. Perkins, The Economy of Colonial America, Second Edition (1988)
Frontier Land
Land at any frontier has potential value For settlers For speculators
American frontier land was especially valuable Arable land, suitable for corn and wheat farming Temperate climate Proximity to Europe
Disappearing by end of 19th century
Industrial Revolution
Transition to new manufacturing processes Started in Britain at end of 18th century Rapid expansion in U.S., late 19th century
“Second Industrial Revolution”, “Gilded Age” Plentiful land, natural resources, e.g., coal
By early 20th century, U.S. overtook Britain in GDP per capita
U.S. Monetary Base
Monetary Base Per Capita
U.S. Debt
U.S. Debt Per Capita
Sources of U.S. Prosperity
Historical Frontier land Natural resources, e.g., coal
Present (artificial, not sustainable) Exponentially growing monetary base Exponentially growing debt
Net Consumption Hypothesis
In the economic sense, people tend to consume more than they produce, despite their best efforts and good intentions
NCH – Life Sustaining Labor
People need food, shelter, health care People depend on life sustaining labor of others
Farmers, truck drivers, carpenters, plumbers, electricians, doctors, nurses
NCH – Life Sustaining Labor
People need food, shelter, health care People depend on life sustaining labor of others
Farmers, truck drivers, carpenters, plumbers, electricians, doctors, nurses
Hypothesis: most people don’t do enough useful work to earn this life sustaining labor in a free market
NCH – Galt Emigration
Hypothesis: in a typical society, there exists a minority subgroup who would benefit from emigration to a “Galt’s Gulch” Minority subgroup would be economically better off Economy of remaining people (majority) would collapse
Practical challenges to such an emigration Recognizing net producers Overcoming guilt felt by net producers about leaving Keeping net consumers out of Galt’s Gulch
NCH – Charity Demand Rate
Hypothesis: in a sustainable, clonable society, the charity demand rate is more than 100%
Sustainable
The society’s activities can be sustained for the foreseeable future
Examples of unsustainable activities: Deficit spending Quantitative easing
Clonable
Another society can clone the model of this society, and achieve similar success
Things that make a society not clonable: Unusual natural resources, e.g., oil in Norway Unusual population mix, e.g., in Galt’s Gulch
Charity Demand Rate
Example: Charity Demand
Example: Discretionary Expenses
Example: Charity Demand Rate
Generosity Rate
Libertarian View
0%
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120%
Charity Demand Rate
Generosity Rate
Statist View
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Charity Demand Rate
Generosity Rate
Net Consumption Hypothesis View
0%
20%
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Charity Demand Rate
Generosity Rate
How Could NCH Be True?
Wouldn’t the world economy collapse? Hypothesis:
Net consumers tended to die off before ca. 1850 Since then...
Food has become cheaper, health care more expensive In poor countries, net consumers still tend to die off In rich countries, various unsustainable measures have the
effect of masking net consumption Deficit spending Exponentially growing debt
Exponentially Growing Debt
Bitcoin as a Test of NCH
Bitcoin monetary base Cannot grow exponentially Grows only through mining, up to 21 million
Be careful of wallet services Potential for fractional reserve banking
If Bitcoin goes mainstream Loans will be harder to obtain It will feel like a big recession The Net Consumption Hypothesis will be tested
NCH predicts a big surge in the charity demand rate