Musings on Zero to One

Sunday October 12, 2014

There are clearly a lot of smart ideas in this book. My favorite good ideas from the book

  1. Realize how common power laws are
  2. Importance of reasoning from first principles and following logic
  3. Importance of monopoly.
  4. Necessity of comparative advantage or Secret
  5. Categorize thinking in terms of in/definite pessimism/optimism.

My biggest take-away is thinking about power laws, and the implications of that. As one example, it's better to be an employee of an amazing company than the founder of a mediocre one. (Although realize this depends on the underlying distributions. If you think you have better than uniform random chance of founding an amazing company, this result becomes less true.)

One thought I mulled over for a while is whether the quality of humans or relationships follow power laws or normal. Do certain individuals or relationships contribute dramatically more to your quality of life than others? While I think it a weak exponential coefficient, the answer intuitively seems to be yes. Some individuals have vision that makes them dramatically more productive than others. Some friendships inspire your own hard work, expand your thinking, or increase the fun in your life dramatically more than others. By order of magnitude, or by standard deviation?

In short, there are many excellent economic ideas. I find the social predictions extremely naive, however. His argument that computers complement humans is incredibly outmoded. Computers will replace more and more of the 'intelligent' tasks that we currently assign to humans. This does not increase the total number of jobs. It of course creates more jobs, but obsolesces more than it creates. There is also a second critical issue that while society will adapt to these changes in the work force, individuals will find this adaptation much more difficult. As a consequence, ever-growing numbers of people are going to find themselves without jobs. This picture is increasingly becoming reality, and it is a massive issue that we will be forced to face going forward.

I also found his graphs of progress to be fairly naive. First, it is unclear what is meant by progress. If you look to the incredibly narrow concept of technological function, this is almost trivially a monotonically increasing curve, only because short of global loss and destruction of knowledge, the world's sum of knowledge can only ever increase. Certainly there are segments of the population for which we have had ever-increasing quality of life and progress. Certain demographics have had steadily increasing wages, increased leverage through technology, greater personal freedom, and generally better quality of life. On the other hand, many have seen their purchasing power stagnate or decrease. Privacy rights have been eroded. There is extreme and ever-increasing wealth disparity. So progress is a tricky concept to measure, and it's hardly convincing that we've been on the steady upward trajectory that Thiel paints.

I interpret progress as prosperity, and continue from that assumption. He dismisses the boom/bust cycle which has seemingly existed since the dawn of civilization for no apparent reason:

Recurrent collapse seems unlikely: the knowledge underlying civilization is so widespread today that complete annihilation would be more probable than a long period of darkness followed by recovery.

But prima facie this outcome seems most likely, as it continues the existing trend. Technology gives no immediate reason why it would change that trend. It seems only possible (not given, but possible) if it moves us into a post-scarcity society. Society's current trajectory is towards a two-tiered society. One society for which post-scarcity is a reality, the other is left for dead or alternatively exploited to depletion, used as Matrix-esque batteries fueling the other. This perhaps paints a graphic picture, but I believe it is our current path. Technology fundamentally seeks to accomplish one or both of two things: commoditizing human labor and increasing the leverage of individuals. Legislating universal post-scarcity (through universal income, as one example) seems the only way to avoid this schism.

As an aside, I consider competition perhaps the most core aspect of being human. It's interesting to consider what happens once factions and competition make their way into the utopian society.

I didn't intend for this post to take such a dark turn. Personally, I'm extremely excited for the future. But, to use Thiel's phrasing, let's use Definite Optimistism to plan for the future - and channel our competitive spirit towards pushing technology forward and exploring physical and knowledge frontiers.


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