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Comment by Animats | Hacker News Reader

“the extreme brevity of the financial memory.”

Yes. It's only been since 2008 since the US economy tanked, it took five years to dig out of that one, and real wages never fully came back. That wasn't long ago.

It's about time for Silicon Valley to tank. There's nothing big in the pipeline comparable to the Internet or smartphones. Laptops, notebooks, tablets, and phones have all passed peak sales. The businesses that assume endless growth are maxing out.

The next big thing may be solar, wind, and storage taking over the energy industry, which is a good thing. That's a slow, capital-intensive, heavy-industry infrastructure upgrade, driven by manufacturing cost reduction. It's going to happen, but it's not a go-go business.

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> real wages never fully came back

Real median usual weekly earnings for full-time Americans 16 and over went from 332 1982-84 CPI-adjusted U.S. dollars in Q4 2007 to 350 in Q1 2018 [1]. Americans are in the midst of record high real wages.

Hourly wages for manufacturing employees haven't recovered to their 2004 peak, but they too are well above where they were pre-crisis [2].

Broadly, the country's balance sheet is healthier in 2018 than it was in 2008. Savings are higher, banks are plumper and then economy's productive capacity has grown. The next recession will be a regular one, not a full-blown crisis.

> It's about time for Silicon Valley to tank

Wall Street may beat us to it:

"Christopher Ricciardi, a former Merrill Lynch banker, was known as the 'grandfather of CDOs' for helping popularize these complex structured products that blew up during the financial crisis.

Now, he is bringing his experience to another corner of the financial world with mounds of debt: student loans" [3].

[1] https://fred.stlouisfed.org/series/LES1252881600Q

[2] https://fredblog.stlouisfed.org/2018/02/are-wages-increasing...

[2] https://www.wsj.com/articles/grandfather-of-cdos-trying-to-d...

> Americans are in the midst of record high real wages.

The article shows a different view: total wages dropped as a percentage of GDP from 50% post-WWII to 42% in 2011. This is the basis for the Ponzi-economy argument:

consumption is largely financed by accumulating debt liabilities to supplement inadequate wages and salaries, where government runs massive fiscal deficits, not only to support the income shortfalls of its citizens, but increasingly to serve and enhance corporate profits themselves

> The article shows a different view: total wages dropped as a percentage of GDP from 50% post-WWII to 42% in 2011

The article and I are in agreement on this narrow point. Wages as a fraction of GDP are down. Wages, themselves, are up.

Broadly, I disagree with the assertion that our economy's growth is unusually debt-fueled. Total debt as a fraction of GDP is worryingly high [1]. Strip out financial sector indebtedness, however, and we're where we were in the 80s. Household debt explains a relatively narrow slice of recent GDP growth.

[1] https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...

But the big problem with CPI is that it fudges housing costs so that it doesn't properly take into account the massive rise in property prices.

Heres how it could be fixed: http://www.slate.com/blogs/moneybox/2014/02/24/housing_infla...

The U.S. measures mean real wages adjusted by cost of living to the county level. For example, Manhattanites earned 39.9 1999 U.S. dollars in 2009; that went up, adjusting for cost of living, to 50.36 in 2016 [1]. This trend, of higher real wages today than pre-crisis, is substantiated across the population.

Real wages have not gone up as much as productivity. And their gains have been unequally distributed. But it is important, in such discussions, to maintain objectivity. Most Americans are better off than they were before the crisis.

[1] https://fred.stlouisfed.org/series/MWACL36061

The page you linked: https://fred.stlouisfed.org/series/LES1252881600Q Is employed wages which is why it went up from 2007 to 2009. It's really not measuring what you're describing.

https://www.statista.com/statistics/192398/employment-rate-i...

Employment rate in the United States from 1990 to 2017. 63% in 07 60% in 2017. So we still have not gotten back, and it's still down.

PS: On very long timescales employment rate is a poor metric, but over the short term it says a lot more about the economy than 'unemployment' rate or employed wages. It for example very clearly shows the last 2 recessions unlike employed wages.

See [1]. It's really hard to tell and there are big short-term swings.

[1] https://fredblog.stlouisfed.org/2018/02/are-wages-increasing...

> It's really hard to tell and there are big short-term swings

I completely agree. That said, we have enough data to conclude that real wages are higher today than they were pre-crisis for the vast majority of Americans. The uncertainty is more pronounced if one were to ask the same question in respect of the last 4 or 5 years, in which case I'd have to say "we don't know".

"for the vast majority of Americans"

That isn't quite right. Labor force participation fell after 2008, and it has never recovered. While wages might have seen a revival for those lucky enough to have a job, there remains a large block of people who were pushed out of the work force and never found a way back in. See the chart here:

http://www.smashcompany.com/business/labor-force-participati...

Labor force participation is age dependent. If someone is 45 they expect to work another 20 years. But if they lose their job, they have little hope of finding another job that pays as much as their previous job. Generally, an unemployed 50 year old would be lucky to get a minimum wage job. Presumably they made more than that during their career. They won't get back what they used to make (exceptions for those at the peak of their professions).

So folks with jobs are seeing slightly higher wages, but you also need to take into account all the folks who lost their jobs permanently.

> you also need to take into account all the folks who lost their jobs permanently

Another group that needs to be taken into account is the younger generation that is having problems even starting a career.

My sister graduated from university a few years ago, and - like almost everybody else she knows in her generation - is bouncing between unemployment and terrible minimum wage jobs (some are de facto lower than minimum wage due to wage theft).

Baby boomers had the luxury of low housing prices, a massive stock bull market, and low education costs. There was never a better time to start a business -- overhead was low. The generation coming up now has to hit the proverbial lottery to have a similar chance today given the high fixed living expenses of housing, student loans, and health care.

Don't forget about biotech. The whole medical/pharma industry hasn't really changed for over 20 years. CRISPR is pretty much common knowledge but there's tons of other less-known tech being developed in this field that's going to slowly hit the market in next 10 to 20 years.

The biggest change in pharma in the past 20 years is that the FDA loosened direct to consumer advertising restrictions in 1997. Now 9 out of the top 10 pharma companies spend more on advertising than they do on research.

https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

That's because the nature of drug development has been changing significantly over the last 20 years as the well of small molecule blockbuster drugs runs dry. Large pharmaceutical companies are becoming acquisition machines for startups that show promise in the early stages of drug development instead of spending their own capital on research. They do this to increasingly dump more and more of their risk onto venture capitalists and other institutional investors as the cost of drug development climbs slowly upward. Public numbers for pharma R&D budgets rarely reflect the acquisition costs, focusing only on the follow up approval process.

The consumer advertising change did contribute to this though, by allowing pharma companies to concentrate their core competency on acquisition, distribution, and marketing instead of R&D.

I'd push back against biotech/pharma/medical industry not really changing for 20 years. The advances of computation and biostatistics that leverage increasing computational power are huge waves to hit the industry. The field of pharmacoepidemiology, for instance, which uses computer programs to analyze big pharma data, that barely existed in 1998. Consider all the analysts and researchers using tools never even dreamed of in 1998, whether we're talking modeling of biological processes, advanced microscopy, advances in countless biological fields that make the process of manipulating cells much more easy. It's just not accurate to say the field hasn't changed for over 20 years.

Talk a walk around MIT 20 years ago and this year and there would be a MASSIVE build-out of biotech companies. That alone is evidence to refute your claim.

too unreliable for the purposes of economic growth, tbh.

based on my time in the industry, the typical biotech company lives with one foot in the grave -- and we're talking about the ones which have a product on the market.

Based on my time in tech, every company lives with one foot in the grave unless they're a post-exit giant. Hell, I have a whole sheet in my budget dedicated to what I'm going to do when Uber goes bust or stops subsidizing my transportation.

Data from the Venture Capital Association show that annualized returns from biotech investments were double that of the tech startup scene at 8% to 4% with comparable investment volume. Throw in the biotech companies that have multibillion dollar IPOs with zero revenue and you're just looking at a higher risk, higher reward version of tech.

the extreme brevity of the financial memory

is a product of the extreme brevity of political memory. These people know exactly what they are doing.

My favorite is Google, Larry/Sergey, and the ad bubble. It is so complex I even wrote an entire essay about it.

Don't forget the acknowledged end of Moore's Law... which may well lead to reduced investment (due to lower perceived ROI), which is a self-fulfilling prophecy. I'd also say that the mobile and Internet Ad spending may peak by 2020...or not.

OTOH, Big Deep Artificial Learning Data Intelligence.

Well, what about Deep Real-time Machine Learning at scale in the Cloud on Big Data powered by Blockchains™?

And to a non-tech this basically translate to "Super Cowboy USA Hot Dog Rocket Ship American Number One"...

As I grew older I start to feel that tech community have the responsibility to stop everything from turning into marketing buzzwords.

That actually sounds like a really good idea if it's possible.

It would be a blockchain-based neural network which people can sell training data to (in exchange for the underlying cryptocurrency) and which other people can use via an API to do pattern recognition on their own user data (by paying in the same cryptocurrency).

It would be a decentralized, autonomous AI.

That sounda like an incredibly bad idea from incentives and exploitability alone. Machine learning on public data is bad enough /without/ paying people for it. At that point you'll get random garbage from a bot at best or deliberate attempts to turn your application as vulgar, violent, and racist as possible. Just look at the Twitch talking banana and the sheer level of effort to make it say racial slurs.

The redditors in /r/machinelearning have shot this idea down many times. A few common arguments:

1) It costs more and isn't as performant as tuned machines. 2) The training data is very valuable and shouldn't be shared on a blockchain and restricted to a closed network.

Maybe there is one advantage though. Crypto people have bought up all the GPU's.

1) There are many possible implementations. Right now the problem is that very few software engineers understand blockchain sufficiently so that they can design efficient solutions. There is always an overhead when coupling a service to a blockchain but it can be minimal if done correctly.

2) People get paid to provide quality training data... So yeah it's valuable but if there is a built-in financial incentive to share data with the system then people will do it. Also, other people could get paid to verify/curate the training data. The system just needs to setup the right incentives.

Why would Tesla share valuable training data with Ford?

Didn’t you to forget to include IoT?

Nah IoT is so 2017.

IoT is definitely going to be a thing, but only after the market realizes that connecting your light bulb to the internet so that you can turn it on and off from the Bahamas makes zero fucking sense.

Are you trying to say that my startup that creates deep learning solutions in blokchain for internet of self-driving things might not be successful?

Not unless your parents donated millions to Stanford.

> It's about time for Silicon Valley to tank.

I think the ZTE dispute may be the inflection point here. Despite their evident complacency to date China isn't going to allow itself to remain vulnerable to US semiconductor embargoes. Silicon Valley will see its core competency commoditized.

> The next big thing may be solar, wind, and storage taking over the energy industry

That, and perhaps also space. If half of the plans on the board are realized we're going to increase the number of operating satellites by an order of magnitude, for starters.

> Silicon Valley will see its core competency commoditized

It's been a long time since semiconductors were Silicon Valley's core competence.

>The next big thing may be

how about autonomous cars, weapons, and everything else in between?

>That's a slow, capital-intensive, heavy-industry infrastructure upgrade, driven by manufacturing cost reduction.

manufacturing cost reduction would come from those autonomous systems and overall tech based approach (when Musk succeeds with his Model 3 production goals it will be only light preview of autonomous manufacturing of the future), and as result the "infrastructure upgrade" will be faster and less capital-intensive.

In general, the SV starts to move beyond the pure computing tech and into the other industries. Again, Musk as an example, with Tesla and SpaceX being more of tech companies in car and space business and less of just car and space companies. Or Uber - a tech company in taxi business. One can also see a rise of a tech company in agriculture, be it farm-in-container or autonomous fleet of tractors doing its stuff on huge people-less farms (kind of next iteration of transition like that described in Grapes of Wrath)

And the "solar, wind, and storage taking over the energy industry" also will be done based on tech, if not by a tech company, as the distributed and less predictable nature of those sources would require orders of magnitude better monitoring of the whole energy grid, real-time prediction, planning and redistribution.

"based on tech" as opposed to based on belief?

as opposed to human labor. In other words, robots and software.

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