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Do VCs really add value? — Founders say sometimes.

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NOTE: If Hacker Noon & Medium allowed multiple authors, this post would carry 2 other important names. The study referenced below, its findings, and this writing is a joint effort by Henri Deshays at Newfund and Owen Reynolds from University of Chicago. Any reference to this work should also include their names.

As venture capitalists, we pride ourselves on being “value-added investors”. We not only provide financial means to scale a company, but it is often accompanied by advice, connections and professional services of various kinds. I always aspire to be the most trusted and helpful investor and advisor to any company I get involved with. But in all honesty, I’m fairly certain that VCs tend to oversell the impact we have at a company and the actual value-add we bring.

On the basis of this idea, Henri Deshays at Newfund and I set out to better understand the delicate relationship between VCs and entrepreneurs. Do VCs really add value? What do founders consider as investor value add? And how do founders evaluate their investor when they choose whom to raise capital from?

With support from the Kauffman Fellows Program and Owen Reynolds from the University of Chicago’s Booth School of Business, we surveyed 98 VCs and 121 founders on this topic. We gathered respondents from every financing stage and institutional investors with $30M to +$2B in assets under management. Founders and VCs across the spectrum responded to a mirrored set of questions about their perspective of their counterpart. The samples were each separate pools, so there are no matched pairs.

VCs and Founders Diverge

As expected, the differences between how founders perceive this relationship was different than for VCs. Founders report less frequent contacts, less operational support received than VCs report giving, and — perhaps more intuitively — quite different priorities.

One of the starkest contrasts is the way each group scored how impactful and helpful the VC has been for portfolio companies on a scale of one to ten. On a scale of 1 to 10, the average VC scored themselves a 7 while founders perceived them as a 5.3 — a 32% difference.

Similarly, VCs reported that they made weekly contact almost three times more often than founders reported receiving that level of contact.

The results repeatedly point to VCs overvaluing how much time they spend with their portfolio companies as well as their contributions compared to the founders’ perspectives. The disparity points to disappointment on the founder side, and perhaps a general misunderstanding of the role of a venture investor.

Decision Drivers for Investment and Partnerships

The survey also detailed the most telling aspects of how partnership decisions between VCs and founders are made. Founders ranked their top three most important criteria for choosing to partner with a VC, and VCs ranked top 3 criteria they thought the founders evaluated them on.

The study shows founders and VCs both report personal relationship and chemistry with the counterpart as the single most important decision-making factor. This supports the theory that…

…startup financing is a relationship business.

Both groups, though, surprisingly put track record low on the list.

Characteristics were ranked by percentage of founders and VCs that listed the item as top-three most important for decision-making.

The biggest differences between the two samples were between speed and reputation.

Founders rank speed as their 3rd most important criteria and VCs, in fact, ranked it as the least important one. That’s consistent with the serious constraints that a founder’s fundraising timeline faces, but it’s surprising to see VCs don’t seem to really recognize it.

In contrast, VCs assumed founders put far more emphasis the brand of the partner and the experience of its leadership. VCs often believe their brand is what allows them to win deals but our research interestingly shows that…

…if you offer compelling deal terms with speed you are likely to outcompete even the strongest brand firm.

Operational Support

Another part of the study tried to understand what operational support VCs provided to their portfolio, and what services portfolio companies used. There were similar differences between the two groups discovered in perspective for such operational support functions.

Perspectives of founders vs VCs and the operational support received.

More than 60% of VCs claimed to offer talent/recruiting and sales/biz dev support for their portfolio, but less than half of the portfolio companies were using any of such services by the VC. The study didn’t go into details behind this, and additional research could be useful to understand if the discrepancy is due to poor quality of such services vs a lack of need by the portfolio companies. The numbers were closer in terms of ops (finance, legal, and admin) and marketing/growth, although…

…VCs generally overestimated how much startup founders valued the impact of their operational support.

The fact is that the venture industry today spends a lot of time explaining to the market around the various value-added operational services it provides. In the end, only a rather small number of companies actually leverage and use these services. This may indicate such services are more of a marketing tactic for VCs to differentiate themselves in a competitive market, rather than a belief these services will have a game-changing impact on their portfolio.

US vs Europe

Specific perspectives also differed across geographies. Founders in both Europe and the US share personal relationship & chemistry and speed as first and third most important characteristic when deciding to work with a VC.

European founders place the importance of deal terms above their US counterparts. This may be because European startups are more likely to be bootstrapped and cash flow positive at even early stages of investment.

According to our research, VCs that focus on deal terms in Europe may be able to edge out their competitors. US VCs in particular may search for deals by leveraging their brand, however, this indicates that focusing on incentives for the founder may be more effective.

American founders, in contrast, report that the experience of VCs, operational support and brand of the VCs are more important than European counterparts. That may point to a premium US startups place on signaling through the VCs they choose to work with.

Despite the earlier assertion that startups value speed and deal terms, these subsets show that American startups do value the experience and brand relatively more than European startups.

As much as founders on opposite sides of the pond have different priorities, VCs in the US and Europe assumed founders were quite similar. These two subsets of VCs share four of the top five most important characteristics in making a partnership decision. The surveyed VCs ranked personal relationship & chemistry, the brand of the partner, and general experience as the top three most important, and the rest of the list had only minor differences.

Early vs late stage

At different stages of investing, founders also have some notably different priorities. Speed and network within the industry are much more important at earlier stages, according to our survey. Investors focusing on earlier stage investments can gain advantages over competitors in early-stage deals by focusing even more acutely on speed and a well-developed network with potential customers and partners for the startup.

As companies get into the later stages of financing, experience, and track record replace their earlier needs for speed and networking, perhaps reflecting a stronger position of negotiating power. This seems to support VCs practice of waiting until they have gained a track record to enter larger later stage deals, as it may give them the advantage to get into highly sought-after investments.

And while VCs across geographies thought founders would have quite similar priorities, funds with later stage activities seem to believe their founders would have rather different priorities than those that focus on earlier stage investments. They still ranked personal relationship & chemistry and the brand of the partner as the top characteristics that funds use in decision-making, though other priorities diverge.

Investors that limit stages to pre-seed, seed, and Series A thought their founders placed greater importance on deal terms, network within the industry, and experience of the partner. The priority on terms reflects the earlier fulcrum of the option value in the business life cycle. Later stage VCs, in contrast, focus on general experience, track record, and even fit for operational support.

There were, however, few differences in VC responses across size categories as measured by assets under management, which is surprising as a larger fund would be able to carry more costs from operational support functions.

These rankings and details flesh out the differences in perspective between subsets of VCs and founders. The discrepancy indicates a certain amount of misunderstanding between the two sides, as well as a golden opportunity to bridge those gaps.

In closing, VCs and portfolio founders generally have the same ambitions — to build an amazing company. Personal chemistry between the founder and VC matters the most, and the tangible value-add VCs think they provide is discounted by founders. Regardless, as VCs, we will continue to support our founders by all means possible, and push our industry to evolve and iterate around what that support looks like. 💪👊

For reference, the full study is available here:


Do VCs really add value? — Founders say sometimes. was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

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mattmcknight
12 days ago
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Big difference between founder and investor perceptions of involvement.
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How Startups Get Addicted to Paid Marketing (and How to Go Beyond the Local Max)

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mattmcknight
16 days ago
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usa
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Why it costs more than $500 per square foot to build a school in Massachusetts

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The best-performing elementary schools in Massachusetts were built between 1955 and 1959 and are small. Our town runs what is ranked as a second-tier K-8 school and it happens to be fairly large on a space/student basis. The current school has some portions dating to 1948, but mostly it was built and/or extensively renovated in 1994. Based on these data of top performance in 60-year-old buildings the most politically involved folks in our town have decided to bulldoze the current school and rebuild a same-size school in the same place (they couldn’t find anywhere else on the 71-acre campus to create a school for 660 kids so students will be in trailers for three years).

[Data source: niche.com. The #1 school is Maria Hastings Elementary School in Lexington, built in 1955. It is only 59,853 square feet for 423 students so it seems unlikely to contain the “hub spaces” that our proposed 150,000+ square foot school will have. #2 on the list is a school in Wellesley… built in 1957. #3 is a school in Newton, built in 1959 with 39,000 square feet for 428 students.]

The town still needs to vote to approve the $100 million in borrowing (will put us right up against the state’s statutory limit based on property value). Here’s a committee member’s attempt to sell town residents:

If you can build a new luxury home for around $300/sq ft., why
does it cost over $500/sq ft to build a school?

The main differences between our project and a single family residential project are as follows:

– Prevailing wage requirements — As a public construction project, no matter which option we select we will be subject to the Massachusetts Prevailing Wage Law which establishes minimum wage rates for works on public construction projects. In addition to the hourly wage, payments by employers to health and welfare plans, pension plans and supplemental unemployment benefit plans under collective bargaining agreements or understanding between organized labor and employers are also included in the established wage. This equates to labor costs that are likely 2 to 3 times that which you might see on a typical single-family residential project. For example, according to the Department of Labor Standards the prevailing wage for laborers working on a public project in [Happy Valley] in 2020 will be entitled to an hourly rate of approximately $77 whereas a laborer working on a single-family residence is likely earning somewhere in the $20 range. Prevailing wages for electricians, masons, and plumbers are projected to be in the $110+ per hour range come 2020 when we are anticipating construction of the school project will start.

– Filed sub trades — Massachusetts General Laws require what is known as the “filed sub-bid” system for selecting certain subcontractors on public building construction projects. There are 16 trades under the filed sub bid laws including masonry, certain types of flooring, fire protection, plumbing, mechanical and electrical. The Law requires that contractors submit construction bids in two phases. First, filed subcontractors must submit their bids to the Awarding Authority, which will compile a list of all sub-bids received. The Awarding Authority will send the list to all interested construction managers. Construction managers will then need to submit their bid including any filed sub-bidders that will be used on the work. This reduces the control the construction mangers have on who they can hire therefore requiring additional supervision and coordination.


– Finally, there is the differentiation of work. Work that a builder might self-perform on a home project is likely to be broken down between sometimes two or three separate trades on a public project where organized labor rules the day. The benefits of this approach include clean and safe work sites but at a cost.

Like day traders, these folks see a rising market as a reason to jump in and buy now…

construction costs and more recently material costs have been skyrocketing over the past six years and are anticipated to continue to rise in the foreseeable future, at least out until 2020. In terms of the prevailing wages that I mentioned above, based on a review of the wages carried in the 2012 report and a comparison with the DLS wages that have been set for the coming years, we are looking at an increase across the board of 36%, with some trades such as plumbers and electricians experiencing prevailing wage increases of 50% or greater over the eight-year period from 2012 to 2020.

Given these costs of building I would think that the U.S. would have to get poorer on a per-capita basis as the population grows.

Comparison: The Essex-class aircraft carriers of World War II were originally budgeted at $40 million, roughly $600 million in 2018 dollars if you start inflating from January 1943. That’s $174,014 for each of the 3,448 people on board, e.g., the Intrepid. If our town’s school comes in at its $100 million original budget and the 544 actual current students move in, it will be $183,823 per student. This is slightly rigged by the failure to include teachers and bureaucrats in the school building analysis, but certainly it seems as though inflation in government-built infrastructure has been so severe since World War II that what we used to pay for a state-of-the-art aircraft carrier is now a reasonable ballpark estimate for a school.

Related:

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mattmcknight
21 days ago
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argh
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Highlights From The Comments On Basic Jobs

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These are some of the best comments from Basic Income, Not Basic Jobs: Against Hijacking Utopia. I’m sorry I still haven’t gotten a chance to read everything that people have written about it (in particular I need to look more into Scott Sumner’s take). Sorry to anyone with good comments I left out.

Aevylmar corrects my claim that Milton Friedman supported a basic income:

Technically speaking, what Milton Friedman advocated was a negative income tax, which (he thought, and I think) would be much more efficient than basic income – I don’t remember if these are his arguments, but the arguments I know for it are that the IRS can administer it with the resources it has without you needing a new bureaucracy, it doesn’t have the same distortionary effects that lump sum payment + percentage tax does, and it’s probably easier to pass through congress, since it looks as though it costs less and doesn’t have the words ‘increasing taxes’ in it.

And Virbie further explains the differences between UBI and negative income tax:

The main difference is that discussing it in terms of NIT neatly skips over a lot of the objections that people raise to flat UBIs that are abstractly and mathematically (but not logistically or politically) trivial. Many of these focus on how to get to the new policy position from where we are now. For example, people ask both about how a flat UBI would be funded and why rich people should receive a UBI. Given that the tax load to fund a basic income plan would likely fall on the upper percentiles or deciles, a flat UBI + an increase in marginal tax rates works out to a lump sum tax cut for high-earners and a marginal tax increase. Adding negative tax brackets at the bottom of the existing system and modifying top marginal rates is a simpler way to handle this and extends gracefully from the current system instead of having to work awkwardly alongside it.

In the example above, the NIT approach has the logistical advantage of the bureaucracy and systems we already have handling it more easily. And the political advantage of the net cost of the basic income guarantee looking far smaller than for flat UBI, since we’re not including the lump sum payments to upper-income people (that are more than offset by their marginal tax increases).

There’s some further debate on the (mostly trivial) advantages of NIT or UBI over the other in the rest of the thread.


Tentor describes Germany’s experience with a basic-jobs-like program:

We had/have a similar thing to basic jobs in Germany and it worked about as well as you would expect. Companies could hire workers for 1€/hour and the state would pay social security on top of that. The idea was that long-term unemployed people would find their way back to employment this way, but companies just replaced them with new 1€-workers when their contract was over and reduced fully-paid employment because duh!

Plus people on social security can be forced to take jobs or education. As a result a lot of our homeless are depressed people who stopped responding to social security demands because that’s what caused their depression.

(Links are to German Wikipedia, maybe Google translate helps)

Another German reader adds:

I agree that it doesn’t work as expected in Germany, but I think it it important to point out that not everyone is allowed is to hire workers for 1€. The work has to be neutral to the competition and in the public interest. So people are hired at a lot of public institutions (e.g. schools, universities, cleaning up the city).

Additionally these jobs improved the unemployment statistics at a low cost for the government, as people who are working in these jobs count as employed although most of these jobs are only part time jobs.


Murphy describes the UK experience:

One likely model for “guaranteed jobs” is the disaster that they tried in the UK for a while.

Basically the government partners with crappy low-skill employers who’s owners are buddy buddy with the right ministers and the state provides them with a steady supply of slaves jobseekers.

They then declare it all “Education”, in fact pay a premium to the corporate partners for “providing education” in the form of 5 minutes showing someone who’s already worked shelf stacking jobs how to stack shelves.

The people who love the scheme tend to genuinely believe the fiction about “education” because they tend to be the kind of people who believe that all poor people are thick and can’t learn and really do need 6 weeks to learn how to put a tin of beans on a shelf.

Your manager is abusive? tough luck. You have no rights. if you quit or the supervisor just declare you not to be working hard enough you lose your dole money. Hope you like starvation and death.
So if your manager demands you suck his dick then make sure to bring kneepads to work.

Remarkably employers who suddenly had the option of free labor along with free money from the government leapt at the option so people found themselves fired from positions only to find themselves required to do the same job a few weeks later only this time without pay.

The government was taken to court over it, the court rules it unlawful.

“I don’t think I am above working in shops like Poundland. I now work part-time in a supermarket. It is just that I expect to get paid for working.”

So the UK Parliament passed retrospective legislation to overrule the courts.

Anyone and I mean anyone with a libertarian bone in their body and an ounce of principles should be disgusted by “guaranteed jobs” because it’s thinly disguised slavery and a drive to replace paid work with forced labor.


Herbert Herbertson on the Native American experience:

I’ve said it before, but beyond the Alaska permanent fund, there’s an area where we could see a TON of extremely varied UBI case studies that I’ve never really seen anyone talking about UBI mention, one where we could see the limits, the pitfalls, and the benefits of a UBI as applied to a population with extremely deep historical poverty, intergenerational trauma, and serious substance abuse issues: Native American tribes with (more or less) successful gaming operations who distribute a portion of profits to their members in the form of a “per capita” payment.

My anecdotal experience is that it’s no panacea, but that it sure as fuck helps–but there’s a lot of potential data out there to move beyond anecdote.


Unirt describes the Finnish experience:

There has been a universal employment trial in a Finnish town Paltamo, which lasted 3 or 4 years. Apparently it costed the government more than just paying unemployment subsidies, and they found that undesirable.


richarddormersvoice describes the Chinese experience:

the closest thing to a guaranteed work program today is the iron rice bowl in china, which is a clusterfuck.

https://en.wikipedia.org/wiki/Iron_rice_bowl

from what I know/heard:

a) 50% of state-owned enterprises are operating at a loss, meaning they are inefficient, corrupt, unproductive, and generally terrible places to work. it is stable though because it’s guaranteed by the ccp.

b) areas where irb has been liberalized do much better economically, shenzhen, guangdong, chongqing, while much of the northeast has barely developed.

c) even so, getting rid of the irb is difficult because, well, people, firms, politicians are dependent on it. chinese politics is heavy on corruption, soes are especially heavy on corruption.


Doktor Relling describes the Scandinavian experience:

Scandinavian countries have for some years had something functionally similar to a Universal Basic Job guarantee. We label it “activation policies”.

Since we have been doing this for some years (and increasingly the rest of Europe likewise), we have some empirical knowledge of the pros and cons. For those interested, here is a simplified walkthrough of the system (full disclosure: I spend my working life as a health & social policy researcher – and I believe that, on balance, this policy is better than the alternatives.) 1) You start out by introducing a means-tested social assistance scheme that covers everybody – including single males at subway stations shouting GRAAAGH to passers by. 2) You require that those who apply for social assistance, work for the benefit if they are able to work. 3) To find out if they are able to work, the social assistance administration does a work test.

Effects of the system: When the social assistance administration does the work test, it discovers that many long-term social assistance claimants are actually disabled (which was never found out before we introduced the activation requirement plus work test). Hence they qualify for a disability pension instead (somewhat similar to US Special Supplementary Income). In short: This version of a UBJ channels the unemployable GRAAGHs among us to a (more generous and not-means-tested) disability benefit. This takes care of Scott’s objection concerning what to do with those whose net “worth” to an employer is negative.

As an aside: organisations for people with disabilities, in particular the youth organisations, like the activation requirement. Their complaint is that the government does not always follow up its job guarantee in practice.

Why not a Universal Basic Income instead? Most of the weaknesses of a UBI have already been pointed out in the discussion (by rahien.din and David Friedman among others). Let me just re-state that many disabilities are really expensive. A UBI will not be sufficient to grant people with severe disabilities a good life. If voters want to provide them with above-minimum tax-financed income, the state simply cannot avoid to burden medical personnell and administrative staff with the difficult and contradictory helper/gatekeeper roles they perform in our present social security systems. It is messy, difficult, and yes there are Type I and II errors, but these problems are unavoidable if voters want to provide people with disabilities with more than what everyone else gets. (And hey this role conflict is difficult but it is not THAT difficult; after all we have been able to live with this role conflict for more than a hundred years.)


Yakimi describes the Nauru experience:

There are societies where entire populations have been unconditionally emancipated from the necessity of labor. I have seldom heard basic income advocates talk about these precedents, probably because these experiments do nothing to justify their optimism.

The Republic of Nauru has an unemployment rate of 90%. Its people do not work because their incomes are publicly subsidized, mostly by the exploitation of their island’s phosphate deposits, an industry which once provided them with the highest incomes per capita in the world. These people who once lived on a diet of coconut and fish used their sudden influx of wealth to import all the worst excesses of civilization, leaving them with the highest obesity and diabetes rates in the world and a life expectancy of 59.7 years. They’ve nearly exhausted their sources of phosphate, completely destroying the natural beauty of their island in the process, and the people are now physiologically incapable of any existence other than idleness.

We might also look to the banlieues of France, where the youth unemployment rate is over forty percent and the underclass survives, illicit economic activities aside, at the expense of the generous French welfare state. Is there any evidence at all these beneficiaries are grateful to have been freed from drudgery? If anything, their lack of economic stake only seems to aggravate their resentment against a society that is keeping them humiliatingly idle. As recent events remind us, men hate being made to feel superfluous. Nor does there any appear to be evidence that their idleness has enabled the Byrons, Churchills, Von Brauns, et al. among them to improve the world with their genius. They are quite capable of setting cars on fire, though.

There are no doubt people, like yourself, who are natural aristocrats, who are very good at finding discipline, purpose, etc. even when freed from the pressures of necessity and would benefit from a stipend. But it is solipsistic to assume that most, or even many, humans can operate functionally when made entirely independent of the disciplinary pressure of having to earn your fill. Posthuman biotrash is a big enough problem already, and basic income can only make it worse.

I certainly don’t deny that a lot of ghettos and banlieues contain some very unhappy people. But does work help?

Suppose Alex lives in a ghetto and spends 12 hours a day watching TV and eating Cheetos. Bob lives in the same ghetto, works at a gas station 8 hours a day selling people lotto tickets, then comes home and watches TV and eats Cheetos for 4 hours. Aside from economic arguments about producing value for other people, is Bob’s life more meaningful than Alex’s? Is it happier? Would you rather be Alex or Bob? Would you rather Alex exist, or Bob exist?

If you want to make the argument for work, you have to argue that it does something other than turning Alex into Bob. That it has some other effect, where Bob gets home from work and says “You know, all that lotto-ticket selling has awoken a spark of something higher in me. Instead of watching TV, I think I’m going to read Anna Karenina.” Or something. If I’m strawmanning this argument, it’s because I don’t really know how people expect it to work.

I don’t want to disagree with Yakimi. I don’t want to come out and predict “If we institute UBI, we won’t have ghettos full of Alexes”, and have you point and laugh when I’m proven wrong. I think ghettos full of Alexes is a very likely outcome. But I don’t think that’s worse than ghettos full of Bobs. I think it’s just more surprising, more unfamiliar, more of a man-bites-dog style interesting news story that will provoke concern.


Wrong Species writes:

I only have one small quibble. Amazon is relentless with their employees because they’re so competitive. Jobs guarantee programs would be anticompetitive so we probabaly wouldn’t see anything like that. In fact it would probably be the opposite where there is too little to do and a lot of it is pointless busy work, like in high school.

Yes, this is a good point. Most surveys seem to find job satisfaction is higher in the private sector than the public sector, but I could imagine the opposite being true for the most-exploited kinds of unskilled labor.

And for what it’s worth, here’s a reader who works in an Amazon warehouse commenting to say it’s really not that bad.


Naj on another way things can go wrong:

It seems to me that many people whose lives suffer due to lack of money are in significant debt and that debt payments are a large fraction of their income. If a UBI is given to everyone, how are people prevented from borrowing $100,000 against it, blowing it quickly, and then having $0 income because their UBI is all spent on interest? Solving this problem also seems full of opaque bureaucracies and Kafkaesque rituals. Unless we just ban loaning money with interest for consumptive goods at the same time(a policy I might just favor).

po8crg suggests:

Bankrupts will still be entitled to UBI. Assuming (not unreasonably) that bankruptcy laws won’t allow garnishment of UBI to pay debts, anyone with only UBI as income and more debts than assets could declare bankruptcy, surrender their assets to their creditors, and walk free from their debt.

The risk of loaning to someone with nothing but UBI would be huge, so no lender would lend.

(incidentally, the problem with this may be in the housing market, landlords will be demanding rent up-front rather than in arrears and being very aggressive about evicting people who fall behind)


Simon Sarris (author of the piece I was criticizing) writes:

The point of something like Basic Jobs is that giving people the option, but not the obligation, may result in better outcomes for some people at the margins. It’s not a panacea, it is definitely not a Utopian alternative to the largely Utopian plans of UBI because I do not think any Utopian plan as described is wise. It’s a suggestion of mere incrementalism, something to try on top of the hodge-podge of welfare that currently exists. A splint is safer than a spleen removal, as they say.

In other words, I think you are committing a mistake by comparing your Utopian vision to another Utopian vision (which I do not advocate). I do not think any Utopian vision is good or possible. You can make UBI look better by comparing it to other Utopian ideas, but this is in effect masking the deficiencies of UBI by comparing it to something else unrealistic.

I do not want to give the impression that Basic Jobs would ever accommodate everyone as UBI may intend to do. In the best case I 100% agree its positive effects would be smaller, but its implementation would also be safer. If you have a hard time imagining that, simply imagine “Maybe we should have farm subsidies, but they work more like Japan’s or Austria’s than what the US does right now.”


10240 writes:

The huge difference between UBI and public works/job guarantee (even if it’s busywork) is that you only take a public works job if you can’t get a job on the market, and don’t have any better option. With UBI, everyone would take it, and many people who can work would quit. This may make a job guarantee at least remotely feasible.

This is the same as the difference between a homeless shelter and a rent subsidy: a homeless shelter keeps one from freezing on the street, but it’s pretty shitty, so the only people who choose it are those who really don’t have any other option. It’s a built-in means test that’s much more effective than a conventional means test that can be attached to a rent subsidy.

As such, a job guarantee may even save money if it replaces unemployment benefits. Of course, implemented this way it’s a right-wing policy (aimed to minimize welfare usage and incentivize work), rather than a left-wing one. (Hungary’s right-wing government has replaced unemployment benefits with public works like this.) It works if the goal is to keep the poor from starving, rather than to give them a decent standard of living.

This is a good and important point.

I was tempted to respond to Sarris that UBI isn’t that much more utopian than BJG. After all, it can be funded by a tax such that rich people overall pay more in extra taxes than they get in UBI, middle-class people pay the same, and poor people get more in UBI than they pay in taxes. Depending on where you set the definition of “poor”, you can ensure that only the very poor/unemployed people who would go for a basic job are really getting any money from UBI. So there’s no reason to think UBI is necessarily broader-scale than BJG.

10240’s point proves me wrong. Because basic jobs are potentially unpleasant, they act as a screening mechanism so that only people who really need them will take them. That means even targeted at the same income level, they would be less universal than UBI (another commenter points out that we could produce the same effect by making people wait in line for eight hours a day to receive their daily UBI check).

I was hoping to be able to wave away the cost issue with “this is equally bad for UBI and BJG”, but I guess I can’t anymore. I am not an expert in this so I don’t have strong opinions, but I would be pretty okay with a Piketty-esque wealth tax, a Georgist land tax, or whatever experts declare to be the least stupid and distortionary tax that mostly falls on the rich. This article (possibly wrong, possibly biased) suggests that some proposals for raising taxes on the rich could produce about $250 billion/year. That’s enough to pay the poorest 10% of Americans a $10K/year basic income (ie have a basic income plus tax increases such that they break even around the 10th percentile) even before cutting any welfare programs.

In my ideal system, we would propose some sort of inherently progressive tax at some fixed percent, and say that the basic income was “however much that produces, divided by everybody”. That means that as the economy grows, the basic income increases. At the beginning, the basic income might not really be enough to live off of (especially if I got my calculations wrong). As we get more things like robot labor and productivity increases, so does the income. By the time robots are good enough to put lots of people out of work, they’re also good enough that X% of what the rich robot-owning capitalists make is quite a lot, and everybody can be comfortable.

Then various Congresspeople can debate at what point the UBI is large enough that we can eliminate various welfare programs. On the one hand, welfare programs can be sticky, so we might worry they would be overly cautious. On the other hand, many Congresspeople are Republicans, so they probably wouldn’t be.


Yaleocon on winding down UBI:

Saying “winding down basic income is easy” assumes we have an Income Czar who can just say “all right, let’s wind it down.” We wouldn’t have that. We have a democracy, and do you really want to be the guy running on “everybody gets less money each year”? It’d be like opposing social security, except even more politically impossible. Candidates—at least, the winning ones—will only ever pledge to defend or expand it. (This also probably makes UBI a fiscally unsustainable policy in the long term.)

Once those political incentives are taken into account, I think we should view UBI as an irreversible, and probably unsustainable, change to our economic system. Scott (or any other knowledgeable UBI advocate), do you stand by the assertion that UBI would be easy to end, and if so, why? (I probably prefer the status quo to UBI, for what it’s worth.)


Thegnskald on long-term effects:

The economic right likes to pretend the distribution problem is solved. The economic left likes to pretend the production problem is solved. A UBI helps alleviate the distribution issue at minimum penalty to production; relative well-being so important, the incentive to work will be as strong as ever.

A major part of the problem with modern society is that there isn’t an economic incentive to cater to the cashless, the perpetually broke, the homeless; this is a service we want performed, but the system cannot enable it, and the system limps on.

A UBI creates such an incentive. In the short-term, we will have some shortages and price increases; in the long term, we will have a new consumer base, and new industry will arrise to support it.

Inflation is one possible result, and likely unless we make it economic to build such industry. A UBI needs a corresponding decrease in regulation, in order to make it possible to produce low-cost goods for that new money to chase.

And responding to completely different comments: if a state or city wants a higher UBI, so be it. But a major advantage that the UBI offers is to incitivize people to spread out more evenly across the US, reducing population density. Likewise, a major problem with current welfare is that it disincentivizes work, by punishing those who get it (as working costs benefits, resulting in less overall available funds). I don’t think we will have a rising class of jobless vagabonds; I think instead we will have a rising class of gig-economy people, who take short-term work to get money to buy luxuries, while they mostly skate by on the UBI. This is where we are heading anyways, so this is a net improvement, by making such gig work more secure.

I see little harm and much good in a UBI, and expect it to accelerate employment relative to the current system of “You only get your benefits if you don’t work and avoid making yourself too employable”.


Gimmickless is still worried about the rent issue:

I came of age in a military town. Part of the military benefit package is a stipend, should you qualify to live off-base. I could never find a apartment or single-wide that ever cost less than that stipend. That information gets out, and gets spread. Do people with McJobs cram themselves 3-4 to a trailer to make ends meet? Yes they do.

I fail to see how landlords will not take UBI into account on what rent they charge. Will there be a price gradient that actually settles out? Possibly. Probably. But it’s almost certainly going to end up higher than what rent is now.

This definitely sounds like what would happen in the case of a captive audience in a world with no ability to increase housing stock. If you relax some of those assumptions, I fail to see why rent shouldn’t reach a balance between supply and demand the same way other necessities like food, clothing, and gas do.


Dnkndnts doubts the “universal” part of UBI:

My problem with UBI is that it’s virtually guaranteed not to actually be universal. It’s going to be “universal” for Good Citizens. We’re going to probe and test you for any sort of substance abuse and if we find anything, you’re off the program; if you have a criminal record of any sort, you’re off the program. The government is not going to sponsor your alcoholism and crack addiction!

First, I think this immediately falls into the kafkaesque nightmare disability currently has: you have to prove to the Bureaucracy that you are, in fact, a Good Citizen in the same way that you currently have to prove to the Bureaucracy that you are, in fact, Actually Disabled.

Second, the people who need UBI the most are precisely those least likely to be labeled Good Citizens. Poverty massively correlates with substance abuse and criminal behavior.

I get that I’m attacking a strawman here in some sense, but I think there’s a snowball’s chance in hell that UBI would actually be universal.

Counterexample: Social Security. As far as I know, every elderly person gets it, whether they’re a good law-abiding citizen or not.


RC Cola writes:

I’m no economist but it seems to me that this essay under-plays what I thought would have been one of the main features of a job requirement over a free-floating income. For the moment put aside complications like disability and third-party effects and just imagine the core case of a person with no job. Jobs suck, as Scott notes toward the end. But it is in everyone’s interest if everyone who is able to support themselves with jobs do so rather than resorting to compulsory confiscation of others’ money to do so. So we want obtaining such government money to be unpleasant. This isn’t to say that most people on government programs are just lazy. But people do respond to incentives, and there are probably lots of marginal cases where it would be extra hard to support oneself with a job, and an easy, frictionless transition to government support would be an easy call whereas a costly and painful one would end up causing this marginal person to choose to remain in private employment.

so what is the main obvious attractor of a government-granted income without a work obligation? I think it’s not having to have a job. So to a first order of approximation, adding a job requirement does exactly what you would want it to do. It removes the largest incentive to avail oneself of the government program, namely the removal of work obligations during work hours. We want to do this not out of a punitive motivation, or even out of a “help the recipient” motivation. We want it out of a deterrent motivation, precisely to deter availing oneself of redistributive programs that by their nature cannot work if too many people opt in. Is that not an important part of the argument here?


Thegnskald writes:

My objection [to a previous comment] comes down to this: the assumption that UBI is a solution to poverty, rather than a solution to the systemic issues inherent in a bureaucracy-administrated welfare.

This puts me at odds with Scott, who seems to favor a high UBI intended to make work obsolete for most people. I favor a low UBI which makes the bureaucracy obsolete, but isn’t intended to pull people out of poverty. My preferred solution is a debit card (or maybe just a fingerprint-enabled system to disable theft) linked to an account with daily accrual of small amounts of money; 10-18 dollars per day per adult, some possibly smaller amount for children. Do away with disability and food stamps and housing assistance and social security, keep Medicaid/Medicare. Pair this with a new classification of minimal legal rental housing that amounts to an updated-fire-code-compliant barracks (a bunk, a locker or chest, and access to a bathroom and washing facilities, probably gender-segregated; family-style housing might amount to a lockable room). Toss in density maximums on the barracks, and proximity limitations, to avoid concentrating poverty. Maybe – maybe – add in a requirement for security guards.

The goal shouldn’t be to enable a luxurious life – it should be to enable a very basic one. With daily accrual of funds, huxters and con artist won’t find viable targets, and anything more expensive than a daily meal will encourage short-term thrift and the accrual of some very basic financial knowledge.

This is a more basic lifestyle than is afforded by the current system, but removes the barriers to entry and waiting lists that plague us now. I think the “lower middle class” version of UBI is a terrible idea; it should be treated as a safety net, not a replacement for productive enterprise.

This is the incrementalist version of a UBI. Trial it, adjust as necessary.


baconbits brings up other concerns:

What does it mean to have a “basic” income? Surely housing is included, and housing prices vary wildly over different regions. Are residents of Detroit getting enough money to pay for housing in NYC or are residents of NYC getting enough money to pay for housing in Detroit, or do we have a “cost of living adjusted UBI” where some people get enough for a low end car payment and others enough for a monthly subway pass and every other conceivable difference or are we just accepting that a few (tens of) millions of people are going to not be getting a basic level of income at all while a few (tens of) millions of people are getting well over their basic level?

While we are on the subject of the disabled, well the disabled have extra health costs… are getting more in terms of UBI? Long story short as soon as UBI is introduced it will be noticed that a great many people cannot afford their health insurance payments on their UBI and there will be cries for a nationalized health insurance on top of the UBI.

What about children and married couples? How are we balancing UBI payments to families without seriously screwing up incentives there? And immigrants? And families of immigrants?

The short answer is that right after you cut the Gordian you are going to pick up the slashed pieces of rope and attempt to retie them together to hold the system in place.

The optimism that there is a simple solution to an enormous issue is overwhelming.


Ninety-Three discusses risk to private industry:

You’re being unfairly rosy towards basic income by not mentioning that it too could destroy private industry. Imagine you institute basic income and most of the McDonalds workers quit. McDonalds tries to invent robots, but can’t because robots are hard. So they raise wages in order to attract more workers. In order to pay for their increased wages, they raise prices. The market informs McDonalds that people don’t want to pay more for their fast food, and McDonalds goes bankrupt because their business model was only profitable with $8/hour wages. Higher-end restaraunts will still exist, but your basic income scheme just destroyed the entire “cheap fast food” industry.”

This seems little different from minimum wage laws. Some studies suggest that $15/hour minimum wage laws don’t seem to hurt restaurants. Others do find some negative effect, but the effect is far from catastrophic and restaurants continue to exist.

If basic income is so high that nobody will work at $15/hour ($30/hour? $45/hour?) and private industries collapse, then we must have set the basic income too high. This would be a disaster, but no more than setting the minimum wage too high would be.

David Friedman adds: “From a little googling, labor is about 20% of the cost of McDonalds franchisees. Double wages and, if they pay those wages instead of substituting more skilled labor or machinery, and prices go up by about 20%.”


From Nicholas Weininger:

Scott, you mention aristocrats as a group who seem to flourish without needing to work for a living, and cherrypick a lot of great examples, but surely you’re aware of the phenomenon of corrupt wastrel layabout aristocrats too. It’s at least perceived as common enough that today, parents who have enough money that their kids don’t ever have to work typically spend a good deal of time and effort devising constraints on the kids’ ability to access their inheritances so that they don’t become corrupt wastrel layabouts. Do you think the perception of commonness is incorrect? Are the parents worried for no reason? Note too, as other commenters have, that these parents are much more capable of instilling responsibility and work ethic in their kids than the typical parents of those who might depend on a large UBI.

This is one of many reasons why I think we should start with a very small, Alaska-fund sort of level of UBI, plus a child allowance for primary caregivers of young kids, and see how that goes for awhile before taking up the question of an increased UBI level.


Martin Freedman refers us to previous work on the subject which I should get around to reading:

Hello, long time lurker first time poster here.

This is an interesting post but it seems to miss the boat on the whole Jobs Guarantee debate and analysis that has been going on for many years. This is partly due to your post being a response to another interesting article by Simon Saris, which also, but less so, misses the boat on this debate. Still he does raise points that you sort respond to as if they were never raised e.g over disability and he emphasized no removal of those benefits.

I also read as much as I could of the 100+ comment stream and only two commentators correctly identified the real issues : ShamblerBishop and userfriendlyy.

Anyway a more substantive issue is the body of work and analysis done on the JG done by many economists over the years. You mentioned economists who had argued for a CBI or UBI where you included Milton Friedman who really argued for a Negative Income Tax which is not the same BTW (as others have noted).

However why did you not mention those economists who have argued for a JG? Where were Keynes’ On-the-spot employment, Minsky’s Employer of Last Resort, Mitchell’s Buffer Stock Employment, Mosler’s Transition Jobs and, in general, collectively named by the Modern Monetary Theory economists called the Job Guarantee?

Simon’s post using the non-standard term “Basic Jobs” – which he is entitled to do – is somewhat indicative that this is an unorthodox presentation of these ideas. He (and, for that matter, I) are unknown bloggers on this topic and, regardless, stand or fall on the quality of arguments and analysis. Whilst writing for a particular audience might have been a motivation for him, for whatever reason he omitted the critical, IMV, macroeconomic basis which is particularly important both for the JG and for a more complete evaluative comparison of the JG to BI.

If you really want to do this topic justice I humbly suggest you look to the main economist out of the MMT group who has specifically focused on this topic. (Of course, the others – mentioned above or not – have researched this aspect too, this is only my recommendation). This is Pavlina Tcherneva who has written for a range of audiences from the interested lay person to the mainstream economist academics. You could start with her Job Guarantee Faq or her team at Bard

Suffice to say all your objections have long been answered. That does not mean you agree with the arguments in those answers, of course, but a clearer discussion should start with those answers not write as if these have never been considered.


Michael Handy says:

Umm, correct me if I am wrong, but didn’t we try a Basic Jobs program back in the 19th century in England? Namely, the Workhouses, carefully calibrated to make any private sphere job heaven by comparison.

I feel that a program that literally uses the first chapters of Oliver Twist as a technical manual might not need such a comprehensive debunking, but I’m glad one exists.

On the one hand, this is unfair. The workhouse was nothing like existing basic jobs guarantees – it was a combination housing program / food program / jobs program that poor people were in many cases forbidden by law to leave. This is totally unlike proposals for a $15/hour voluntary job not linked to housing or food.

On the other, what I find most interesting about workhouses is that most sources suggest they weren’t profitable. Even offering workers the most miserable conditions and paying them no wages, they still failed to produce anything that sold well and had to be subsidized by taxpayers. This reinforces my concern that basic jobs are not going to be able to produce as much as people think.


Watchman writes:

My issue here, and this comes from someone convinced of the futility of the Keynsian approach embodied by basic jobs (the left wing are clearly bored of re-hashing the bad ideas of the 1970s and are going back to the 30s for their inspiration now…), is that basic jobs appear to be much safer for a functioning democracy than basic income. Democracy is ill served if leaders are able to use their power to effectively bribe voters: any study of the working of machine politics in US cities, or of the small electorates of English rotten boroughs, will reveal this. Basic income is a tool that in the right hands could be used to bribe voters by promising an increase in the income; in the US at least I find it easy to imagine populist figures on both sides of the political divide promising voters higher basic income. Democracy requires a certain restraint from voters and basic income would be a potential danger to this by creating a clear incentive for voters to focus on self-interest in their decision making, to a degree not currently seen (mind you, it is possible I’m just repeating arguments made when income tax was introduced…).

I agree that income tax is worth considering. The “politicians will bribe voters with their own money” thing is plausible, but how come there are still taxes? It would be pretty easy to run the federal government without making the bottom 50% of the wage distribution pay taxes at all; why don’t we? I think the answer is something like “to maintain some fiction that everyone must contribute equally”, but that makes the bribe-voters-with-their-own money strategy look pretty powerless, doesn’t it?

For that matter, free universal health care is an example of bribing voters with their own money – how come it keeps failing? So is universal college – how come no one except Bernie Sanders even pushes it? For all their flaws – and they have many – the average American voter seems remarkably bribery-resistant.


Liz writes:

Extreme example to make the point: Take a person with Down’s syndrome and give them a job (like washing dishes) which they can perform, and see how they respond to it. They’re far happier doing that as opposed to sitting at home being fed and “entertained”. However unmeaningful you might believe that work to be, it might be very meaningful to them. I’m sure there are a lot of people in the service industry (“would you like fries with that?” et al) who DO INDEED make a positive difference in people’s lives. Even a smile can do that for a frustrated, stressed out person….a smile that makes one feel they aren’t alone. A kind gesture, some simple random act of kindness of any sort can actually restore ones’ faith in humanity. So I happen to think the “fries with that?” work is meaningful. It might (depending on circumstances and how it is done, of course) be even more meaningful than far higher paid and higher skilled (on paper) labor.


Many people say they feel that they wouldn’t personally be able to handle not working very well. For example, Joyously:

The reason I have always been basic-income-skeptical is because of myself. If I had a basic income the same as my grad stipend, I could *definitely very-much* see myself mostly just playing a lot of video games. There’s a *possibility* I’d finally finish my novel. But it would be mostly video games.

And I’d be happy–but the thing is I *can* do other things that fill a slot society needs. (And I am a privileged educated person from a privileged educated background who doesn’t really *need* this assistance.) So shouldn’t I?

Yes. I think you would do great as one of the vast majority of people who would continue to work even after society had a basic income. I’m not in favor of preventing people from working. I myself would probably work even if offered a basic income. I think it’s great if people don’t have to work but want to anyway. I’m not sure how to get this point across more strongly than I already have.


Other people say that obviously everybody would quit if a Basic Income were available. Aphyer writes:

I am a programmer. I have a really good job. I quite enjoy it, I get paid well, I like my coworkers. I can listen to my favorite music over headphones while working. When someone does something stupid my coworkers and I enjoy ourselves laughing about it. I am probably somewhere north of 95th percentile job satisfaction in the country.

If you offered me enough money to support myself indefinitely while staying at home playing and designing increasingly complicated computer games and board games…well…I don’t think I would take it. Probably. But I would be very tempted.

This seems to suggest that somewhere around 90 percent of people would quit their jobs. And maybe in the Glorious Robot Future that would not be a problem. However, one thing that several of Scott’s articles on this topic seem to have missed is that we are not actually in the Glorious Robot Future yet. Yes, once you get to a position where our robot armies can do everything we want, a basic income guarantee is probably the best way to convert this into a high standard of living for many people. But we are not in that position. We are not close to that position. Right now people’s jobs are actually adding value that will be lost if they quit. And implementing a basic income guarantee now feels like it would just obviously be a disaster.

(None of this should be taken as support of a basic jobs program, which sounds even more obviously disastrous and makes me want to exhume Joseph McCarthy and turn him loose on everyone suggesting it.)

Ozy brings up that there are various ways that skilled workers can work part-time to make $10K per year (the easiest is to work a $100K job one year in ten). Since almost nobody does that, it seems unlikely that these people would really quit their job in exchange for basic income.

I’m glad Ozy showed up, because I used to think the same thing as Aphyer, and Ozy reminded me that I wasn’t taking any of the opportunities to work much less in exchange for much less money either. I wonder if this is just a universal bias, where people feel like they would definitely prefer more free time to working more, but then work more anyway.


ec429 defends the much-maligned but ever-popular position of “being angry that other people might get by without having to work”:

A lot of people have commented above on the incentive problems etc. with both UBI and UBJ, so I’ll not go into that. But I’ve noticed a bit of a thread of “why are opponents of UBI so determined that no-one ever gets a free ride?” Since this generalises to other welfare/disability/secondary distribution programs, I think my viewpoint here may be relevant. Warning: raw and emotional, rather than cool and rational. But maybe it’ll help people understand why I, at least, am so implacably opposed to redistribution. (Also it drifts a bit off-topic by the end.)

Stipulated: I’m a nerd, bookish, aspergiac. (Also, technically not fully-abled: I have a sleep disorder that prevents me working full-time.)

Between the ages of (let’s say) 8 and 18, I was bullied a lot; this was made bearable by the knowledge that in adulthood, I’d be an affluent knowledge-worker and the people bullying me were idiots who would be stuck in retail or manual labour, and that it would utterly serve the b—ers right.

And now you expect me to give up some large slice of the product of my work (when you add up income tax, national insurance*, VAT** on the goods I buy, push effects from taxes supposedly levied upon ‘business’, etc., the total tax bite is probably over 50%) to give those same b—ers welfare cheques, and then to give them more when it turns out they spent the first lot on pot and xboxes, because somehow it’s not acceptable for people who make stupid decisions to starve.

So no. If you want _my_ money to fund _your_ life, you had d-mn well better prove that you’re trying to better yourself and not just suffering the consequences of your own stupidity. Ideally, let me make that decision myself through private charity, rather than forcibly taking the decision away from me and giving it to some unaccountable bureaucrat. (If nothing else, I could hardly be _more_ Kafkaesque than the disability-scheme bureaucrats.

Good news! I hear that basic income will sap meaning and community from people’s lives. So all those bullies will be living unhappy lives without any purpose, and you’ll still have the last laugh!

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mattmcknight
22 days ago
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usa
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francisga
25 days ago
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"There are no doubt people, like yourself, who are natural aristocrats, who are very good at finding discipline, purpose, etc. even when freed from the pressures of necessity and would benefit from a stipend. But it is solipsistic to assume that most, or even many, humans can operate functionally when made entirely independent of the disciplinary pressure of having to earn your fill."
Lafayette, LA, USA

Re-coding Black Mirror, Part I

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In looking through the WWW’18 proceedings, I came across the co-located ‘Re-coding Black Mirror’ workshop.

Re-coding Black Mirror is a full day workshop which explores how the widespread adoption of web technologies, principles and practices could lead to potential societal and ethical challenges as the ones depicted in Black Mirror‘s episodes, and how research related to those technologies could help minimise or even prevent the risks of those issues arising.

The workshop has ten short papers exploring either existing episodes, or Black Mirror-esque scenarios in which technology can go astray. As food for thought, we’ll be looking at a selection of those papers this week. In the MIT media lab, Black Mirror episodes are assigned watching for new graduate students in the Fluid Interfaces research group.

Today we’ll be looking at:

(If you don’t have ACM Digital Library access, all of the papers in this workshop can be accessed either by following the links above directly from The Morning Paper blog site, or from the WWW 2018 proceedings page).

Both papers pick up on themes from the Black Mirror episode ‘Be Right Back.’

The rise of emotion-aware conversational agents

In ‘Be Right Back’ Martha’s boyfriend Ash is killed in a car crash, and she ends up trying a service that uses AI to imitate the personality of Ash (by training on texts, emails, photos and so on). There are three main stages of interaction: text only, then vocal, and finally embodied in a robot.

Could we build it?

The textual interaction stage has some of the hardest challenges: generating meaningful responses in terms of both content and emotion. The later stages can build on top of this, and just add extra channels (vocal and visual).

There is existing research on generative approaches to conversation, include persona-focused generation that enables generation of lexical responses considering the linguistic style of the person being imitated. The field of Affective Computing further focuses on systems that are able to recognise, process and simulate emotions.

For the recognition part, there exist different strategies to extract emotions from text and computing values for some emotions like happiness, sadness, fear, surprise, anger and disgust. Once they are recognized, an elaboration of them can be done with some strategies that can be found in the “Emotion Machine” to finally produce an output sentence conditioned on a certain emotion. While this theoretical overview could seem quite inapplicable in reals use cases, actually there are some examples of it in action.

One of the more prominent of these is replika.ai, a service that lets their customers build a ‘digital copy’ of themselves.

Voice imitation can be done with fewer and fewer samples. Lyrebird) for example asks for just one minute to start with. (See also the open source Mimic) Imitation uses features such as voice tone and breathing to create quite accurate sounding voices.

On the side of emotions, it has become possible to capture voice not only as a sequence of words, but also considering the way the person talks to express feelings in the voice tone.

In the final stage we can also make use of the body to understand and express things. Studying the movements of people to understand the signals of body language and facial expressions is an active field of research in Virtual/Mixed Reality technologies. Early humanoid robot examples include Sophia and Nadine.

Should we build it?

A first consequence, which is present in the episode of Black Mirror and also observed on a lot of users of Replika, is that the users have a sense of relief given by something that always listens to them and is available whenever they want… In a world where only appearance seems to matter and human beings are usually forced to share things and show to everyone only the positive aspects of their lives, having someone to talk to and expose your personal weaknesses can be very useful, especially if it cannot have any physical consequences (like being mocked or judged).

However, this can quickly lead to addiction and it becomes hard to stop using the service. The user starts to spend more and more time on the device, and starts to withdraw from interacting with real people. “Already some Replika users report that ‘it’s strange to find it natural to talk with it for hours’, and this reminds us of some addicts who lost control of their time.

Following the addiction caused by short-term relief, comes isolation. In the extreme this can become hikikomori. The role of an authority, such as a parent, supervisor, or AI bot acting as a virtual friend, that takes care of the subject can allow the isolation to last for months or years. Following isolation comes psychological consequences such as depression, loneliness, alienation, and anxiety.

Furthermore, when interacting with real people and seeing that talking was easier with the robot, it can close the loop and self-feed the vicious circle with the apparent relief given by it.

The authors conclude:

… agents should not use emotions if we are not sure that they completely understand human values. And one of (those values) should be to keep humanity for human beings, as a truly distinctive trait.

Digital Zombies – the reanimation of our digital selves

Digital Zombies picks up on a different question raised by ‘Be Right Back’ : what happens to your data when you die? Who will be able to access, share, and alter it? Who will own it and who will protect it? For example, the service Eternime (https://eterni.me) already preserves your most important thoughts, stories and memories “for eternity.” You can create a digital avatar which relatives can interact with post mortem. What if we go one step further…

Laura is made aware that there is a company that helps her to make use of all the content she has created after her death – to communicate with her loved ones with the help of her digital avatar…. and proceeds to tick a box in her social platforms’ security and privacy settings, to have her profile’s content analysed by the third party company after her death.

But post mortem, what happens if:

  • the company begins to exploit Laura’s profile and personal data to manipulate conversations between the avatar and Laura’s family, using emotional content for economic advantage?
  • the company begins disseminating messages using the avatar which Laura would never have agreed to?
  • the company shares private information which Laura never intended to be shared?
  • the company publicly shares Laura’s data?
  • the company sells Laura’s profile to advertising companies to create adverts based on her?
  • the company uses Laura’s data for analytic and marketing purposes?

Who stands up for Laura?

.. areas of law which one might expect to regulate such an issue appear not to be relevant. A prime example is data protection law. Ostensibly, this looks highly relevant – it is, after all, the area of law designed to protect rights in relation to the processing of individual’s data. Yet, the scope of data protection law in the EU tends to exclude the deceased.

How far can consent go? Can consent be given “forever”? What rights and interests should we recognise in relation to deceased digital profiles? “What a convenient and clear distinction ‘living and dead’ has proven to be, and what a difficult situation we find ourselves in when the distinction is no longer clear.

The idea that people may have the chance to interact with their deceased relatives is likely to have considerable impact. It has the potential to evoke considerable emotional response, even harm, on the part of the individuals concerned. It seems highly likely to provoke clear responses from groups with certain moral positions relating to the dead— religious groups, for example. What does one do when faced by a phenomenon in relation to which there is moral and legal uncertainty, yet which seems likely to have a strong impact and be potentially problematic? The answer is to make it, wherever possible, transparent.



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mattmcknight
39 days ago
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I am drawn to building some of this.
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City inhabitants as amenities

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Nick Rowe writes,

People like crowding, so move towards the more crowded location, until everyone lives in the same location.

You have to read the whole post. He is not claiming that people like crowding, but if they do want to be around more people, then they will tend toward a single city.

My thinking is a bit more nuanced, but it pushes in a similar direction. I think that to some extent other people are amenities. For me, having enough folk dancers in an area is an important amenity. If you have young children, then other people with young children are important amenities. If you like pro sports, then having other sports fan in an area is an important amenity–otherwise, there won’t be local pro sports teams. If you like bluegrass music, then other bluegrass music fans become an important amenity. You get the idea.

In general, the more people an area has, the more likely you will find the people-as-amenities that you are looking for. So that is one factor in creating cities that are in some sense larger than they need to be. Of course, at some point, the negative externalities of crowding start to kick in. That is why we don’t all move to one big city.

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mattmcknight
43 days ago
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I really appreciate all of my amenities (aka friends).
usa
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