Urgent need to develop new integrated platform for IOT, to prevent the worst as it (inevitably?) does take over the world, sooner than most people expect. This essay does get into more undiluted specifics than you will find anywhere else, on the basic big question of the future of humans (if any) in the IOT:
One person on the list said we should not worry about any of the threats I mentioned, because "natural markets" will take care of all of them. He also objected to the concept of "market design" in general. Here is my reply to him:
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First consider an analogy: some people assume that God or fate will determine the outcome anyway, so why should anyone think about it? There are people who apply that attitude to all large issues, to the issue of whether they might lose their job, and even to the issue of finding a new job when they lose it. Personally, I regard such attitudes as a kind of neurotic defense mechanism, one of the many such common neuroses widely prevalent even in the high performing sectors of our society. I highly recommend the book by Valliant of Harvard, who tracked the life success and failures of Harvard graduates over many decades, and established connections between people's success or failure on their own terms, with their choice of defense mechanisms. At www.werbos.com.com/Mind_in_
In my view, the idea that "natural markets" will take care of everything is very similar to the idea that God or fate will take care of everything.
To begin with -- what the hell IS a "natural market"? What are the words actually supposed to mean, apart from the obvious vigorous emotions they are attached to? Are they just a new synonym for God or fate, and a new phrasing of the same old Idea? Or are they more like "natural foods," defined as foods produced by plants or animals and not by Humans?
So is a "natural market" one created by nature and not by humans? That's a rather odd ideas because all markets I ever heard of were created by humans, one way or another.
Or is a "natural market" one created by unconscious humans, with a strict rule that market design should not be tainted by anything like conscious thinking about how the system Works? Is consciousness a kind of taint which corrupts everything, and should be repressed? Or is it just altruism which should be outlawed? How could one try to make any real sense of such cultural beliefs?
When people say "natural markets ensure optimal outcomes," perhaps they are trying to give us a simplified interpretation of the serious work of Adam Smith, Walras , Samuelson, Ken Arrow and such. There DOES exist a serious and thoughtful effort in economics to understand WHAT kind of markets (what kind of market design) lead to optimal results in what sense. Some markets do, some don't. (Arrow actually was on my thesis committee at Harvard, when one of the two possible topics was a deeper understanding of what people's utility functions are, but dropped out when I chose the other topic, how we actually maximize their expected future value.)
I would guess that the markets of feudal rural England would count as "natural" and "organic" much more than the more formal organized free markets developed after decades of intense intellectual and political work by the Liberal party of England, with lots of lawyers creating and implementing new explicit rules. (In those days, "liberal" simply meant promoting freedom.) In fact, simple banditry was a big part of the older more natural markets, and limited trade reduced not only the level of productivity but the rate of growth.
All of the optimality theorems show a limited type of optimality, only when certain assumptions are satisfied. One of the required conditions is "perfect competition." Serious market economists all respect the great classic work of Joan robinson, who gave us a basic quantitative understanding of how much lose at any time when we face a certain DEGREE of lack of competition.
So this leads to a kind of first grade understanding of what market design is about. Truly natural markets, like the dark ages of Europe or wars between animals in the jungle, reduce the degree of (effective, honorable) competition, and reduce not only output but growth. (I'd say more about the growth aspects.. but later. If there is a real economist on the list interested in joint authoring a paper, please let me know.)
First grade market design works to create more competition, more effective, more fair, etc.
But it goes beyond that. In the early days of electric power deregulation, there were some enthusiasts who basically thought that any kind of market would work. Then came Enron. There is now a huge literature on auction systems which work and those which don't. This is one of the big inputs from economists to the development of the new economic dispatch and unit commitment computer platforms which now control most of US electricity generation.
Another key assumption in the optimality theorems is perfect information by all players, including clairvoyant knowledge of the future. (Don't believe me? Fine. I don't claim to be God. Just Google dynamic general equilibrium models.) Imperfect information causes all kinds of problems, again not only for the current standard of living but also for growth -- and in truth for the probability of survival.
Serious policy economists also know about the private goods assumption, usually discussed as the externalities problem.
Market design, in my view, may start from first grade market design but really should account for the other aspects as well, to get closer to real .optimality.
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LOTS more can and should be said about this subject! For example, lack of competition in energy markets has been a huge problem for US national security, among other things. See http://drpauljohn.blogspot.com/2017/09/reminder-that-hard-left-threatens.html for gross market imperfection/failure in the electric power sector. See this IEEE policy statement for ways we could have improved competition in the market for car fuel, which would have been of huge benefit to the liquid fuels companies (who now face possible extinction due to lack of alternatives to gasoline and electricity) but was blocked by lobbyists with same monopolist anticompetitive ideology as what really blocks interstate transmission. I still remember the warnings I received from Boyden Gray, then general counsel to president Bush, in the west wing proper, about problems even the president had in trying to cope with.. well, after a lot of floods, I can't help thinking of a swamp, and I'm grateful that other parts of Texas are doing better. I am very grateful to the friend who sent me privately some passages from the book of Mormon directly relevant to that. The stakes are very high here.
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