OK, I Have More to Say About Antitrust

I don’t think you need to worry about linkage here. I’m just going to yammer on for a bit.

In our country, antitrust actions can be brought by the government, or they can be brought by a competitor (there might be additional mechanisms, like, for all I know a consumer could bring an action. I am not a lawyer; this is not legal advice). The first and only really important component of antitrust is the definition of the market (did you see where I said, I Am Not a Lawyer, This Is Not Legal Advice). If you can get the definition of the market to be what will benefit your side of the dispute, you will win. But it has to be defensible as the thing winds its way through layers of the court system, because in order for you to convince any judge at all — even a quite biased and/or crazy one — that the company you targeted is engaging in trust type shenanigans, you have to show that they have power, and if they have power, then they will come back around for another bite out of this thing.

If you go after someone for trust-like behavior via the courts (and I am NOT going to talk about alternatives here), then you must _also_ have a great deal of power — these sorts of actions, whether brought by the government or brought by a competitor are expensive and uncertain. Part of the uncertainty comes from how that market definition thing works out.

Looking at Epic / Apple and Epic / Google, one is forced to conclude that (a) Epic has picked its _smallest_ market (in terms of gamer dollars coming in for Epic). I am sure that Epic will be portraying this as Woe R Us I mean See They Took a Huge Cut, but as I noted, the numbers are such that if accurate, 30% is not going to move Apple or Google up into the Top 3 outlets for Epic Games in terms of money back to Epic.

One of the recent responses to Epic / Apple and Epic / Google, and the Epic / Steam thing (which is probably at the heart of this entire struggle among titans) is Microsoft reducing its revenue share. Commenters on Epic / Apple have wondered what the possible desired relief could look like and some somewhat snarkily suggested that the court might order a different revenue share, but what would it be, when the entire market was where Apple was in terms of percentages. Well, that’s not really true any more.

I have extended periods of time in the course of my life when I feel quite negative about people and their motivations and goals. At times like that I sit around and wonder if Epic’s goal here is to take away the Beautiful Walled Garden that is the App Store and the Apple Universe. I know my husband prefers the more open universe of the Squish (and my daughter has gone over to the dark side as well), and my son prefers the simplicity of Chrome and Chromebooks. I, personally, am quite satisfied to live in a multi-platform household, while personally using Apple hardware and a variety of services and other hardware from other platforms (kindles, kindle fire, Portals, Alexa devices, Nest, etc.). I don’t think that is Epic’s goal in my more sane moments; I think Epic is attempting to deploy its cross-platform power to improve its negotiating power on each of those platforms individually. And as long as, like Taylor Swift, they cover this behavior with efforts to Look Out for the Little People As Well, I am mostly okay with that.

However, there is just no guarantee that the court, or, separately, the DOJ, won’t look at Epic’s behavior and think something very different from what I think. Epic better make damn sure that not only are the Little Game Producers benefitted by their maneuvering, but that consumers get lower prices as well.

Rethinking the Dependency Ratio

There is a sort of core set of tenets of modern demography and societal structure that goes like this.

Once upon a time, people had a lot of kids, and a lot of them died before reproducing, and then the parents died comparatively young. This combination resulted in population growth, but not necessarily super fast.

Then, a series of changes — and there are a LOT of arguments about which changes matter the most, but clean drinking water and better sewage handling as a package are pretty clear winners in every list — happened that resulted in people living a lot longer. ALL people. Kids survived to become adults and have children of their own. Parents stuck around to become grandparents and sometimes great-grandparents. And the women — lots of argument about this process — started having fewer kids, once it was clear they were all going to live (lots of debate about what target number of kids the women were aiming for, also).

So for a period of time, different by country / region in when the process started and when it more or less was complete, a society evolved from having a lot of kids around vs. the number of working adults, but not very many very elderly people who required substantial care, to a society with a small number of kids and a Metric Moose Load (™) of working adults (the last big group of kids, grown up), but still, not that many elderly people.

The “more or less” complete part is tricky, because for a long time, demographers had this idea that women were going to suddenly decide to start having more kids again, and it has been a bit of a scramble to reassess and figure out what things look like when that ... does not happen. Some societies went through the process in a very compressed time frame; others it was more gradual. Some societies just flat out stopped having kids (Italy, Japan); others just dropped down to a little below replacement and hung out there. And the number of Very Olds is variable for reasons which will be left as an exercise for the reader. In any event, economists tend to think of the Lots of Workers, Few Kids, Few Olds as the “Demographic Sweet Spot”, because they are focused on the non-reproductive economy.

Obviously, that range of human activity which is devoted to reproduction (to have another generation of people) is far, far greater than the non-reproductive economy. Some elements of it (hospitals where babies are born, public schools, paid formal child and elder care, nursing homes, the funeral industry) are part of the official, formal measurement of economic activity. But most of it still isn’t. And the part that isn’t is pretty clearly much larger than the formal measurements of non-reproductive economic activity, and _may_ be larger still than the entire formal economy, including the parts which are reproductive (hospitals, schools, elder care).

Every time a component of the reproductive economy moves from the informal, unmeasured realm of human activity to the measured realm of economics, the economic measurements “suffer”. And every time women are freed up from their reproductive activities (kids in school, women engage in formal, paid employment), economic measurements “benefit”. This is absolutely bonkers, and it’s one of the many reasons why I try not to talk about economics with most people because as near as I can tell, economists continue in blissful failure to realize these basic truths.

The shift in demographics to what will likely become a steady state (roughly flat age distribution, instead of an age pyramid — I mean, there will be a little slope, because unfortunately people do die before they die of being Old, but very little slope) is going to require us to recognize the activity associated with Not Engaging in Full Time Paid Employment in the Formal Economy. And I really think this is going to be amazing in so many ways, but a whole lot of people don’t really want to write about it, and when they do, they say breathtakingly awful things. The “dependency ratio” — explicitly relating the number of people too young to participate in the formal economy as workers plus the number of people too old to be of “prime working age” in the formal economy — is the breathtakingly awful in its purest form. But efforts to “fix” that ratio bring in lots of other awful, so it is hard to rank where the Worst of the Worst really lies.

Here is something that is NOT breathtakingly awful:

https://www.brookings.edu/blog/future-development/2020/10/26/rethinking-aging-societies-growing-young-as-you-get-old/

I’ll try to find more.

Where Does Deflation Come From?

For more or less my entire life, I have been seeing pundits in print complaining about inflation: that it was about to happen (whether or not it ever did), that it was happening (the glory that was the 1970s), that it was so painful ending inflation but It Must Be Done (the horrifying shit show that was the 1980s), that surely it couldn’t go any lower (from 199x on), until now.

Now, we finally have some inflation. In fact, we might actually have some Core Inflation. And, bonus, we have people out there prepared to say in their out loud voice, Glory, Glory Hallelujah!

I’ve been reading a Very Bad Book that I’m trying not to name about current demographic trends. It is looking at inflation and deflation as an artifact of the “demographic sweet spot” : lots of prime age workers, not very many “dependent” consumers. (<— I do not endorse this perspective.) They only really mention technological developments in very limited contexts and them mostly to say that OMG there will be so many butts to wipe and so many Depends to change and Where Will We Get The (Female) Workers (Probably Africa) Because Robots Can’t Do This.

I mean, I can provide quotes to support all of that, including how they don’t think young men should be encouraged to do these jobs because they lack emotional resilience and empathy. It’s super clear these people have never engaged with reproductive activity (except as sperm donors, maybe), because where the hell do they think that empathy and emotional resilience come from? We learn by doing.

I _firmly_ believe that deflation comes from solid-state circuitry becoming ever smaller and more capable. Moving shit breaks down and requires lots of maintenance and has a very short mean time to failure whenever it gets past a certain extremely limited degree of complexity. But solid state stuff, built well, can be nearly immortal and error free forever. It’s awesome. AKA chips. The smaller it gets, the less power it uses (<— yes, please, go lose yourself finding the exceptions and we’ll talk about it later) and the more places you can use it for both reasons. The first stages of this process happened in the United States and, with startling rapidity, resulted in a chunk of former farmland being renamed Silicon Valley, and then abruptly moved overseas where it became increasingly invisible on every level while simultaneously becoming relentlessly ubiquitous. We live in a world where we really don’t have to do anything any more to even maintain shit. We replace stuff because of unrelated problems that are easily reparable, because the new versions have better solid state circuitry that lets it do Even More Awesome Stuff with less power, water and better for the environment (<— often not all true, and sometimes not true at all).

Until _this year_. This year, we finally hit the cliff. The wall. Making it smaller has become immensely expensive and difficult. Also, this year, the Olds finally started selling their houses to the With Young Children, resulting in a ton of new demand for everything. Before this year, the With Young Children were crammed into tiny apartments and could not buy new things because there was no space, and so they kept themselves happy at bars and gyms and with better electronics the better to consume virtual goods. But this year, the With Young Children cannot go to the bars or the gyms and need space to work from home and also the Young Children need full kit because you know, I’ll just stop now.

Also, lots of electronics involved in building out broadband everywhere to support all the With Young Children moving out of the dense urban areas to suburbs and ex-urbs.

So, to recap: lots of things use — or can use — older, bigger, more power hungry chips, but were not because they did not sell in great lots and so the older, bigger, more power hungry chip making operations _shut_ _down_ _permanently_ because it was more cost effective to just run off newer, smaller, power-sipping chips even for applications that did not need them because there was unaccounted for space on the modern line.

I think the thing that makes me _most_ angry about the demography book I am reading is that it advocates for — while realizing that it does not actually happen — deferring consumption to save for retirement over the course of the life arc. It is _precisely_ _that_ _deferment_ _of_ _consumption_, aka, Boomers Refusing to Adopt Tech, which has landed us in this pickle. The modern lines were scaled with the assumption that demand in the next decade would look like demand in the last decade and it is all well and good to say that, oh, gosh, who saw a pandemic and WFH moving up all this demand?

Basically, we designed a world around older _prime working age people_, who _did not consume_, and expected it to continue.

Wow. That was not smart.

Anyway. Deflation happens when it is easier to produce than it is to get people to consume. Inflation happens when you cannot produce what people want to consume. At this point in time, it is _so_ _easy_ to produce the ability to produce more (<— yes, that is a little complicated), that we have held off on it explicitly to contain the damaging effects of deflation. That’s really what the chip shortage is all about. I know I said, it’s going to take years to resolve, but I really meant that: it’ll take 3 years to resolve. This is not going to generate structural inflation, and whatever structural inflation comes from having more Olds is going to be utterly manageable, because that is just not big enough an issue to swamp the reality that we can make all the food and clothes we could ever need using a tiny fraction of one percent of the global population. Structures, transport and communication take a few more percentage points; everything else is basically entertainment and nice to haves. We’ll be fine, and by making everyone of all ages participate in the glorious, human project of living together and supporting each other, we’ll all become better people, too.

OK, Not Everyone.

Also, none of this fixes the climate problem, so we really should get on that.

ETA: Also, if you are going to do what the authors did, and come at me with, BUT DEMENTIA! SO RESOURCE CONSUMING! Here are my responses in order:

(1) We are working on the smoking problem, which will likely bring down the curve on dementia.
(2) The population with dementia has been significantly dented worldwide this last year. I hope you enjoy that, because no one else has been.
(3) You’ve mistaken labor-resource-intensive-memory-units for the only way to manage dementia.