Perhaps we can change the nature of bubbles and economic cycles
Recently I read a article from MIT technology noting the possibility of bubbles in AI . We have all heard or got the impression that alot of money are being thrown into AI developments even though really it is a process that requires barely physical asset other than the GPUs. I do think there is a bubble, but AI development will still be a revolutionary forces that changes everything in the future in one way or form. Just like yes there was a 1990 internet bubbles even though internet has still managed to change the landscapes of business and society today.
This got me thinking about the nature of economic cycles. I remember Ray Dalio in his explanation of economic cycle mentions that the economic cycle is a pre-determined rule that will always repeat itself because it is a reflection of human psychology. I don’t believe it is. I think it can be changed, but it takes a fundamental change in society to seek happiness in a different way. We know that overmaterialization is not sustainable environmentally , but we seems to fail to address if this process is sustainable emotionally, in terms of happiness.
Daniel Kahman's work has already some valuable insight into this. He broke down the happiness to wlel being and satisfaction, While well being caps off at around $70000 worth of materials per household, satisfaction do increases as more money is made.
But today I want to challenge this element of happiness: creating satisfaction, as it is crucial to to change the nature of unsustainable economic growth and boom and bust.
The overall economy is not a zero sum game as our living standard improves. it is natural to expect economic growth overtime, as we do things more efficiently, we can naturally produce more things and improve our economy. Well, actually these things only have value and adds to economic improvement if people are willing to pay for it
It probably isn’t a revolutionary statement to say the drivers of bubbles consists of people who are after success and money. Man people want to make money, lots of it and fast. This expectation of performance in certain field of tools, which leads to “hype” , typically has a much shorter lasting emotional effect than the actual time it takes for values to be created. It is similar to a typical passionate romance, it shines so bright yet burns so fast.
We entice this to students as well and exacerbate this type of values in society. I don’t know how many entrepreneurship programs I have seem in Toronto alone, whether it is from universities or incubators that are private and public subsidized. On top of that there are dozens of courses and seminars offered to train you to be a good entrepreneur. I have been to one of those, and a typical question students ask is what is a promising start up idea? And the speaker answers: well you try to find questions that you actually see in real life. So in the back of my head i am thinking, these people are gonna go home and look for anything they see as a potential problem to be solved, not because they care about about the problem, but they need to find an economical idea. And this is the type of mentalities we are encouraging in these programs.
Why are we encouraging students to do start ups instead of encouraging students to solve issues that adds great values to the society? It is not like we have none : economic inequity, unsustainable living, political conflicts, people doing repetitive boring work and killed creativity, you name it. Even if the students do find a idea to build an app for, the type of viral success are not sustainable, and whats worse is these kind of success eats away the money that could have been actually used for value production, instead it is just adding to the blank cheque and the bubbles.
And of course, this type of value promotion in our society naturally adds to people aggregate towards the whole economic bubble, which is only in there in the first place because we don’t care about adding productivity or real value to the society, we care about maximizing returns on promising leads.
Why is there a constant bubble fluctuations in bio-tech ? why was there a internet bubble despite it being one of the most powerful tool changing the whole landscape of our lives and businesses? And why do i believe we are burning money into multiple AI incubations and businesses despite i believe it will make important impact in the future? Why was there a bubble in the states on solar tech even though it is one of the more promising clean energy idea? All of these tools are valuable, but we fail to acknowledge it takes time to see productivity, it takes time to develop and apply, and it takes time to let things fail but improve iteratively again.
This goes the same way from the other side too. I see many people dismiss ideas or technology that have been there long time and repeated many times before, or get discouraged if new ideas barely adds incremental value to the innovation of things. This is in fact a huge mistake and a bug in our tendency in thinking. The onset of initial innovation seems to be the only memorable moment in time that takes all the values and expectations of the society(and bubbles), but the diffusion of technology and applications of it will take decades and decades to come. It is much like an idea, every-time you repeat it it is slightly different, and it is through these iterative fine movement you find yourself finding new pieces of information and links that you have not thought before.
Daniel kaheman mentioned that satisfaction is correlated to money. But i want to argue that happiness can be satisfied, at $70000 worth of food shelter and entertainment, and satisfaction not from a number, but gained from solving problems of the community, the relationship, the other communities, and environment, and more.
