Review
I wouldn't call it evaporation of improvements. They are not disappearing. It's more like they are diffused. After all, it is about genuine improvements. These save time or cost or energy. It is just that when you look at it locally, what seems like an improvement for you alone is indeed something that doesn't happen in isolation. If many people save cost/time, the overall system will, as you write, settle into a new balance where the improvements are shared by many. Often unequally, which is just reflecting unequal power that existed before.
Yeah, maybe "diffusion" is a too optimistic view. A large part of improvements get captured by those who can create an artificial scarcity of some necessity - currently it's housing, in the past it used to be physical safety. And many other improvements happen as part of arms races, so on net they lead to more waste and no benefit - like improvements to advertising in a fixed size market, or improvements to weapons. I think these are the two main mechanisms that "eat" improvements and prevent us from having a 15-hour work week.
This isn't really true though. Over time, people keep working fewer hours, for fewer years, doing easier work, and getting paid more in exchange.
https://ourworldindata.org/working-hours https://ourworldindata.org/grapher/daily-median-income?tab=chart
Housing is definitely a problem, but it stands out because it's an outlier, not because everything is like that.
The houses do seem to get smaller and I think this is related to property being inherently finite or the effects of concentration that lead to urbanization (or both).
The houses do get better in quality though (higher standards, more facilities etc.).
That's not really true either. The average house size in the US is getting larger while the average number of people living it in is getting smaller:
https://www.thezebra.com/resources/home/median-home-size-in-us/
Mh hm, yes. House area per person seems to have tripled since the 60s everywhere from Japan to India, Germany, or the US. But it didn't lead to shortages everywhere.
There are two things that are fixed: Land and attention. For these, I agree.
And there are, of course, improvements to tools of destruction, but Viliam was not talking about those.
But everything that satisfies human needs (without at the same time hurting them, e.g., thru production) can grow until all are satisfied (if that is even possible). Some or even most of those benefits will be captured, but not all, thus I'd argue for such products, it is still diffusion.
There are two things that are fixed: Land and attention.
I think that's a red herring though. The current scarcity of housing is far below the limit set by land, so I just call it artificial. There can be artificial scarcity of other necessities as well, all that's needed is that the providers of that necessity act as a cartel.
Hm, yes. In the current regime. Tokyo is a also a counter-example. There are strong incentives for property owners to keep the supply limited.
Land is only a raw input though. What matters to people is something like useable floor space, which isn't fixed. One way to increase usable floor space is to build further from population centers (in which case you're using land, but the main cost is building infrastructure and reducing productivity), but another way to increase usable floor space is to build it in top of or below existing buildings, which doesn't require additional land at all (although it has other costs).
This is the usual misunderstanding of 'land' as a macroeconomic factor. 'Land' is not merely 'floor space' such that you can easily manufacture more of it by simply hiring some construction workers (even assuming no issues like regulation).
For example, adding another floor on a building next to the stock exchange does not create new Land from the perspective of a high-frequency trader, because that floor space must be an additional X meters (and Y nanoseconds) away from the stock exchange central computer compared to the HFT traders on the floor below that. There is a certain sphere of space around that computer which is, due to the finite and unchangeable speed of light, going to be <Y nanoseconds away from it, and no matter what you do, that will always be true (barring some major breakthroughs in string theory or something); and that Land is of fixed finite supply, neither created nor destroyed, only rented out by its current owner for whatever the market will bear.
But my argument is about literal land and floor space for living. Literal land is fixed but it doesn't matter because floor space for living isn't (or is fixed at a level way higher than we're likely to reach any time soon).
It's the same thing. People do not need 'literal land and floor space for living'. If you want that, there's plenty of empty abandoned buildings in, say, rural Japan you can go buy which will provide 'literal land and floor space' - because everyone moved to Tokyo. What people need is Land: scarce, finite housing slots with relevant meta-properties like plumbing and garbage collection and low crime rates within X travel-minutes of their job and relevant amenities. Building another floor means additional load on elevators, electricity, garbage, roads and public transit, etc. And to the extent the local residents think all that is already barely adequate and legally bar new entry, then that is the real limit on Land and why it is necessarily scarce and generates high rents.
Well, in some sense: "Yes," but in another: "No". Sure, land on a global scale is plenty. But you mention infrastructure yourself. It matters how efficiently you can get together. Proximity to other people, businesses, facilities, etc. matters. It is no accident that more economic activity goes on in cities like San Francisco or New York. Or generally is the biggest cities in a country. And within these cities the center is the most attractive. I hope that remote work will partly solve that, but after some promising development, the trend seems to have reversed.
Yes, but my point is just that you can bring more people in proximity to NYC without more land, either by making transportation faster/better (make the desirable part of NYC bigger) or by building in 3D.
Well, I'm not disagreeing with that. But there are limits to that. Technical, but more importantly in terms of coordination.
(I'm tapping out of this thread)
I think one way of looking at this is that all of your examples are negotiations. (Between buyer and seller, tenant and landlord, employer and worker). So of course, anything that makes the deal much sweeter for one of those two parties ends up split between them. Roughly if the negotiating strength of the two parties is such that your boss get 50% of the value, and you get 50%, then if something adds extra value to the equation (a more productive tool), you only see half of it. If your negotiating position was only getting you 10% then you will see very little indeed, even from large improvements.
I suppose the silver lining is that if something adds value for the other party you will benefit. You might not even know what it is.
Reminds me Parkinson's Law, which states work expands to fill the time given to complete it. So if at your job you manage to improve your efficiency and decrease your workload by 50%, your employer's "reward" for you is to fill that time with more work.
Entrepreneur Naval Ravikant has said previously that one of his favorite employees was this one guy who was more productive than all other employees while only doing 2 hours of work per day. The rest of his 8-hour work day (6 hours) was spent watching cricket matches.
Naval had to constantly tell managers to leave that hyper-productive employee alone because they wanted to fill his day with more work to do. Those managers failed to realize that if the productive employee was forced to work (or pretend to look busy) for a full 8 hours, that he might get burned out and quit.
The most frequent expression I see used for this is alpha, by which people mean the temporary advantage that comes from new things in finance. It has since moved into entrepreneurship lingo. However, I note that alpha speaks to a competitive environment, where you lose the advantage because other people are doing it; it isn't normally used to cover the situations you describe where a company shoots themselves in the foot, for example.
Three related effects/terms:
1. Malthusian Trap as the maybe most famous example.
2. In energy/environment we tend to refer to such effects as
3. In economics (though more generally than only the compensation effects you mention): "equilibrium" effects; indeed famously often offsetting effects in the place where an original perturbation occurred, although as mentioned by Gunnar_Zarncke, maybe overall there is often simply a diffusion of the benefits to overall society. Say, with competitive markets in labor & goods, and making one product becomes more efficient: Yes, you as a worker in that sector won't benefit specifically from the improvement in the long run, but as society overall we slightly expanded our Pareto frontier of how much stuff we like we can produce.
This would seem related to the notion that "Nature abhors a vacuum", and to the thesis of 'Meditations on Moloch', and to Ilya Prigogine's concept of "Dissipative Structures"... Perhaps one could simply say that it is a natural result of the interplay between entropy and various systems which 'fight' against it.
Yeah, "Moloch consumes your slack" seems to be the common pattern.
It is not a strict law; Moloch doesn't eat all existing slack, but there seems to be such thing as "too much slack" that Moloch notices and starts doing something about it.
A new tool increasing your productivity by 10% might go unnoticed for a long time, but a tool increasing your productivity by 100% overnight will get noticed. (Just guessing here.)
The dimensionality of possible improvements is both hopeful and also daunting. Lots of improvements being possible feels pretty cool in high agency states. Things needing lots of dimensions of improvement before they aren't terrible feels hopeless from low agency states.
Another example is risk compensation: You make an activity safer (yay) and participants compensate by taking more risks (oh no).
Yeah, this is close, but a perfect match would end with you being forced to take more risks -- because if you don't, you are no longer competitive. Otherwise, you can opt out of taking more risks, in a way that you cannot opt out of e.g. inflation.
A situation like: there is a machine that is dangerous to operate; it has a certain probability to kill you during every day you use it. The government decides that a non-zero probability of an employee dying on the job is okay, as long as it doesn't exceed let's say 1:1000 per person per year. Your company crunches some numbers, and concludes that you should operate this machine exactly 10 working days each year, and spend the rest of the year operating some much safer but less productive machinery.
Then a technological improvement reduces the chances of getting killed by this machine to a half (yay), and your company updates the rules so that now you are required to use this machine 20 working days each year (oh no); you get fired and replaced by someone else if you refuse; and your wage remains the same, all the extra profit goes to the company. (A naive expectation would be that a safer machine would reduce your chances of dying per year.)
People who voluntarily take more risk by e.g. driving their cars faster when wearing seat belts, at least actually get faster from point A to point B, so its a trade-off, they are now at a different indifference curve.
No reason to believe safety-benefits are typically offset 1:1. Standard preferences structures would suggest the original effect may often only be partly offset, or in other cases even backfire by being more-than offset. And net utility for the users of a safety-improved tool might increase in the end in either case.
"A slow sort of country!" said the [Red] Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!" -- Alice through the Looking-Glass
I don't know if there is a standard way to express the idea that "if something seems like an obvious improvement of your situation, the advantage will probably (almost) disappear after everything settles in a new balance".
Examples:
This is different from skepticism ("a new tool that makes you twice as productive? sounds like snake oil") in that we accept the premise ("the new tool makes you twice as productive"), we only reject the implied naive conclusion ("...and therefore your job will become easier and/or your wage higher and/or your workday shorter").
This is also different from mere pessimism ("you say, an improvement? it will probably only make things worse") in that the familiarity with this concept gives you an approximate direction showing which specific bad things could happen as a consequence. For example, if someone said "what if humanity invented drugs that would reduce your need to sleep to two hours a day, and would have zero negative side-effects", this concept points you towards "something will consume the extra time", so you only need to make a guess what specifically that would be (possible candidates: longer workday, longer commute, you would need two jobs, you would need to do some certification or other job-related activity in your supposedly free time, or maybe bureaucracy would expand, your kids would get much more homework...).
I think this is also slightly different from "when you solve your old problems, you will find new challenges". Yes, if you have many problems, you solve the most painful one first, and then the second painful one comes to your focus. But this is about the second problem appearing or growing as a consequence of getting more slack after solving the first problem. So the second problem in some sense wasn't actively attacking you until you solved the first one; kinda like a fisherman who won't catch a small fish because he is waiting for it to grow up.
Of course, more examples are welcome!