Vīta Brevis, Wit Artefāctōrum Ætērna Podcast

Ash Stuart

Exploring innovation, progress and achievement: a first-principles approach to everything that matters; combining history, epistemology, economics, anthropology, geopolitics, finance, philology, etymology and more... for, life is short, knowledge forever. ashstuart.substack.com

  1. 9h ago

    The Story of Money: The Matter of Monopoly

    Back in Episode 022 while on the topic of mercantilism, we touched upon the idea of cartels - a small band of merchants grouping together for market abuse and unfair advantage. Let’s take it a notch up. Let’s first go back to where we left our fictional friends way back in Episode 003 when discussing price. Back then, at the idyllic townsquare market, Brenda and Irene strolling around, on inquiring the price of a sack of grain, get quoted 8 and 10 copper coins by Steve and Bryan. They may have been surprised by the difference in price, maybe they first thought of shopping around a bit more. Maybe they were happy to pay either price, the lower for obvious reasons, the higher for the less obvious reasons I explored back in that piece. A fortnight later, when Brenda and Irene are both out again, they only find Steve. And this time he’s charging them 15 copper coins! When they grumble, he’s like take it or leave it (with a look of it’s my way or the highway!) So Few For So Many So what’s going on here then eh? Maybe by undercutting the other seller, he gained an edge and the other seller moved shop to the next town. Maybe the other seller found a better market to sell his goods at a better price anyways. Or some other set of circumstances. But right over here, potential buyers are left with only one choice of seller. Intentionally or not, Steve has a monopoly. In the much more complex world of modern commerce, there could be a myriad other factors that lead to monopolies, although underhanded measures like deliberate undercutting (charging lower while taking a profit cut until bleeding your rivals out), can and do occur. To extend the phenomenon we discussed in the mercantilism episode, where a few sellers got for themselves an unfair advantage by using the corrupt and coercive arm of the State to block newcomers, and thus formed an oligopoly, taking that process to its ultimate end is what leads to monopoly - “a few sellers only” to “only one seller”. Sole Seller or Sold Soul? We have all likely seen and dealt with monopolies in our lives. We might even use the word ‘monopolize’ in non-commercial contexts. But let’s look at its repercussions in the wider context here. We saw back in the price episode that in a functioning market price is not purely in the hands of the seller, but subject to a bunch of other factors, including what other sellers are offering. Now, obviously, some such constraints are weakened, and the sole seller can charge higher prices without restraint - and thus even distort the market equilibrium I touched upon back there. Alongside that, in line with the newly found take-it-or-leave-it nonchalance of the seller -- I mean if the potential buyer has nowhere else to go..., the seller doesn’t have to bother so much about the quality of their goods, again leading to worse outcomes for the buyers and the economy as a whole. It’s also important to note that the monopolist seller, such as Steve here, might not even be a bad person, but the whole incentive structured is so skewed to enable such undesirable behavior - whether on an individual or an institutional level. So what is the answer to this? We all perhaps instinctively know the answer, but from an economic angle I’ll elaborate on the matter in the next episode. Furthermore there are some services that can, in many cases, not be provided by the market, and falls into the arms of the state to deliver. The obvious ones are defense, justice, what we call public infrastructure and indeed the apparatus of the state itself - which is by definition, within a sovereign realm, a monopoly. (Oh you don’t like this army? Go subscribe to that army down the road, they do Tuesdays half price!) And then there are often politicians who, fairly or unfairly, denouncing a particular industry for abusing its powers, ask for the state to take over. (”Bro, I had too much to drink last night, I have a hangover.” “Here, have this Bourbon, it’ll cure you of your hangover.” ) So given what we have seen so far, that monopolies can lead to undesirable outcomes, how is it that some services are widely to understood to be best dealt with by the state - say for example the trains (Anyone tried the coffee in a State-run train?) For then they are still a monopoly? How can we justify those politicians’ argument purporting to solve the problem of market abuse by, well, erecting a monopoly? What is the metaphoric price -- for the state could hide the actual marketprice by routing the production costs via taxes, we are willing to pay in terms of lower quality and less choice? Or can we find a balance where we can, via partnerships and collaboration, harness the best abilities of both the state and the market? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * The Watermellon Sellers - hilarious video depicting how a monopoly can form - watch on mute This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  2. Jul 24

    The Story of Money: The Intricacies of Money Supply

    I started this series by emphasizing that money is rather simply a measure of value than having intrinsic value itself. (Episode 001.) Later, in Episode 017 we looked at the dynamics of supply and demand. Let’s now look at the interplay of these with money itself. Specifically, when we talk about supply and demand, it’s with regard to, in this strict sense, the items we want or can offer in exchange, and not the measure itself. Can there be such a thing as ‘too much money’ in the economy? Too little? What are the repercussions of either? Especially now that we have clearly categorically distinguished between ‘money’ and ‘wealth’ in the previous episode. Let’s go back to the metaphor I offered there to depict this: that money is like the measuring tape rather than any actual tailoring. If a tailoring team completes 5 suits a week, there might be a need for, say up to 5 tapes in the course of working on those suits, perhaps 10, two for each. (Note to professsional tailors, this is just an example, tailor-made for non-tailors by a non-tailor!) So as in the example last time, if a tailor hoards several dozen tapes while still at 5 suits at any time, what’s the point of all those tapes? In quite the same way, the amount of money - the money supply in an economy must reflect the real economic output, the value being created, to measure it adequately. Simply jacking up by printing lots of cash simply recreates this tailor-made problem across the economy. Similarly if there is only one tape that has to go around managing 5 suits being worked on by the team, it’s not hard to see how it slows down the work. Everyone’s fighting to get their hands on that one tape. So correspondingly, a fall in the money supply can have severe repercussions. Like There’s no Tomorrow Most of us might have a sense of what happens when there’s too much money chasing the same goods - inflation, and as we saw in the very first episode, when governments overdo this, hyperinflation. We instinctively know that inflation is undesirable, you don’t want to see the price of goods in the supermarket keep climbing every day you’re out shopping. But deflation, the opposite phenomenon, can have its problems too, in particular in raising the costs of servicing a debt. We will dedicate specific articles to each of these to be explored in their own right. And more broadly, the question of money supply has had such rigorous research and debate that a lot more can be said later on at a more advanced stage of this series, which is some way off. But even before we get into the depths of Monetarism and monetarist policies, terms we routinely hear in the news, I may add that a huge part of the focus and attention of Central Banks, the banks that print money in an economy, has come to be dedicated to controlling the money supply. After the 2008 financial crash, the term quantitative easing was thrown around quite a bit. Quite simply it referred to printing tons of money to alleviate the damage done by developments such as the credit crunch that followed the sudden loss in trust. Some commentators bemoaned that central banks were printing money like there’s no tomorrow. But the counterargument is that it was this that stopped a repeat of the Great Depression, at which point there was a severe drop in the money supply. So regulators and authorities did learn something from that catastrophe, and we may say, didn’t repeat those mistakes. The Pain in Spain I will in due course have a lot to tell about these two recent crises, but for now, keeping it simple, let’s look at that older case which I presented in the last episode as the classic case of getting this wrong, that being perhaps the most dramatic case in history. The Spanish crown, among other kingdoms in the vicinity, back in the 1400-1500s were hugely motivated in their explorations by the lure of gold and silver. And silver they did eventually find, even a whole mountain of it in South America, which they extracted with brutal consequences to the local population and the environment, and shipped them over to Spain. So suddenly, there’s a lot more silver in Spain and in Europe more widely. But here’s the thing, there was no corresponding increase in the industry or production within the Spanish economy. So just as in the above analogy, that silver now meant much less, and there was inflation. It’s one thing to think that conquered peoples invariably suffered, being subject to forced labor in very toxic conditions to extract that silver, which the indigenous populations in the Americas did have to endure, but the ordinary people of the ‘conquering’ nation saw their lot worsen as well. Let’s take an example (these figures are only representative): say an ordinary peasant in Spain would pay one silver coin to purchase his weekly supply of food and other essentials. With that rampant inflation, the price of the same goods shoots up to 5 silver coins. But the peasant’s wages are the same, he still has only 1 silver coin at hand for the same goods. We cannot change the past. And as I said last time, these early explorations had other motivations too, but can we say the lack of an understanding of basic economics was a significant factor in the misery that ensued on both sides. They say charity begins at home. Economics also begins at home. We each have to first seek to understand such basic economic ideas and apply them in our own lives before we expect our public institutions to properly do so? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * The Fifth Sun (A history of the Aztec conquest based on indigenous sources) This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  3. Jul 17

    The Story of Money: The Mafia of Mercantilism

    Back in Episode 020 I said that the system that existed in Adam Smith’s time, which he worked to overthrow, was a lot worse than what he ushered in, without in as much naming that older system. Let’s get to it now. In the High Middle ages there existed a system called feudalism, centered around serfs living a miserable life bound to their lords, and the system of guilds which were essentially rackets - these I have explored in some detail in TecC 39 and TecC 43 in my series on innovation and progress. However with an increase in economic activity in Europe that marked the end of the Middle Ages and ushered in the Renaissance/Early Modern Ages, there arose a new system, driven by the increased competition between rival polities and emerging nation-states. This is what we call mercantilism. Madness in the Methods The idea was simple, or one might say, simplistic: in any exchange, one party wins and the other party loses, that it was always a zero-sum game, the economic pie was fixed and wouldn’t grow. Furthermore, the idea of wealth was solely the amount of gold and silver stockpiled in the country, that’s it! The consequence of this was, given bullion was the means of international trade, countries gripped by mercantilism sought to minimize imports and maximize exports: after all, if you bought goods from abroad it might a drain on your gold/silver reserves, and vice versa. In summary, trade was seen as a war, not as a dance. This led to a raft of restrictive measures promulgated and enforced by the State, notably trade restrictions on imports including the imposition of tariffs, which is simply an onerous tax levied on the goods making the inflow of goods prohibitive by raising the costs to the consumers in the importing country. You Scratch my Back I Stab yours But here’s the thing, as I hope we’ve seen in the course of the last 21 episodes, with the concepts of value creation in particular, in a normal, emergent scenario, trade happens when both parties see a benefit to it. You might not necessarily like the price of something but you might buy it anyway because that’s a better course than not having the said item. Sometimes it’s the best course available given the vagaries of scarcity of goods and resources. So why didn’t that apply, as was asserted by the proponents of mercantilism, to nation-states across international borders? Again, we have seen the answer to this - it’s in fact what we started this series with: money itself has no intrinsic value, it’s simply a measure of value. And given gold and silver have been used to measure value, since they have acted as ‘money’ this value proposition applies to bullion too. It’s akin to hoarding measuring tapes instead of using it to carry out productive tailoring. And the pursuit of maximizing exports and minimizing imports had ruinous consequences. Mighty Cannons and Silver Bullets If, as it became the done-thing in Europe in the early 1500s, you want to export lots to hoard up gold and silver, what do you do, you go overseas and aggressively seek buyers abroad, and given this mindset, the aim is not mutually beneficial trading partners, but captive markets, that captivity being enforced by the force of the cannonball. Sound familiar? The poster-boy in this enterprise was the Kingdom of Spain, freshly united and having expelled its Muslim population after 8 centuries of their presence in the Iberian peninsula. (There are other factors at play such as being fired by a fervor never to be invaded, and the missionary zeal, as part of that fervor, to spread their Catholic religion far and wide, but let’s stick to the economic angle, important as these other factors are to the wider history.) So when the Spanish conquistadors arrived in the Americas that they had only recently discovered, pretty much all they did was ask the locals if they had any gold or silver - simply looking past the vast quantities of actual natural resources the new continents had aplenty! (Imagine being invited to the most incredible banquet ever, every dish imaginable, and you go, do you have any ketchup?) Eventually they did find massive amounts of silver -- literally a mountain of silver, this makes for a juicy story in its own right so I’ll come back to it another time, and the focus of Spanish crown was in simply extracting the silver. As a consequence of the flood of silver into Europe, obviously its value fell (ie, inflation) with the authorities having no clue as to why, and in fact with the lives of ordinary Spaniards getting far worse in this project of royal debasement of money. Bruges, Antwerp, Amsterdam, and then London being early pioneers of financial innovation and progress, the Dutch and the English mindsets started off slightly less mercantilist, as compared to their southern rivals, and thus more economically sound, relatively speaking. Until one man from Glasgow fought to change it all. Adam Smith struck a dagger at the very heart of the system of Mercantilism. As we saw in the earlier episodes mentioning him, he was fiercely against the monopolistic practices of the merchant class that had had the State in their grip. Smith specifically insisted that the idea of mercantilism was in fact a stitchup by the monopolistic merchant class to entrench their own incumbent advantage and power by eliminating competition, with the regulatory might of the State in cahoots. So, in the place of mercantilism, as I’ve written at length previously, Adam Smith sought to describe and usher in a system that was concerned with many more economically sound concepts such as the mutual benefit of trade and myriad others we’ve explored. Luckily in our own current enlightened times, as nation-states we don’t take a beggar-thy-neighbor attitude to international trade erecting barriers such as tariffs, right? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC 39 - Alchemy’s Forbidden Fruit - On Feudalism * TecC 43 - Making Work Art, Making Art Work, Engineering Excellence - Touches upon Guilds This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  4. Jul 10

    The Story of Money: Exploring Abundance

    They say things like love and hate are two sides of the same coin. Back in Episode 011 we looked at scarcity, let’s now flip the coin! Furthermore, under that topic we explored how scarcity is indeed the mother of the invention of the very discipline of economics, so is this about, given a future state of abundance, in fact escaping economics? We broadly know what abundance is, it’s what our political leaders have been promising us from time immemorial, a promise whose fulfilment, one might say, remains perpetually an election cycle away! Anyways, now that we have established what it isn’t, let’s take a proper look at what it might be. Abundance can be a bit formally defined as the presence of unlimited, or practically unlimited, quantity of a given resource. Abundance of any resource can occur naturally, like water next to a large river, or is man-made. As we’ve explored previously for example in discussing value creation, human wants being much greater than what’s naturally available (Nature: here’s some water, berries, a few trees. Man: cool cool, but how about a thousand types of cheese, a hundred varieties of fermented hop and grape with fancy names and notes, a pocket device to send unlimited cat pictures), we humans have to step up to produce them - raw materials to finished goods. And is thus born a discipline such as economics to help direct the act of production in the best possible way -- not just in maximizing production but also ensuring an ecologically sound way of doing so -- leading to a whole bunch of concepts we’ve already covered in this series (capital/resource, the market, price, risk, debt, specialization, standardization etc) Rolling Dice or Flipping the Coin? Thus the logical progression has been to explore how to utilize fields such as economics to improve technology such that we can arrive at a state of abundance in many areas, a few obvious high-priority ones being food, clothing and other essentials. But then, if we say economics is concerned with scarcity, there can arise the reasonable question: is seeking abundance via this discipline not a contradiction, will it not be counterproductive, is it a paradox? I would offer that there need be no problem on those grounds - but I’ll caveat that different political philosophers have taken strongly different positions on this. But here’s one line of thinking: scarcity and abundance being two sides of the same coin, it’s by understanding and managing scarcity well that we may even seek to mitigate or eliminate it. (Doctors study diseases not to spread them but cure them?) In other words, isn’t it the case that if economic concepts and their practical applications are managed properly, there is room for ushering in greater abundance, as we have seen in a great many items since the dawn of the industrial age (just compare the modern middle class and their consumptive insistence with the medieval peasantry and their precarious subsistence.) And the onus of getting that right is on us humans rather than anything else? From Paucity to Plenty Let’s go back to the middle ages, imagine you happened to do some time-travel, back to the year 1000. Imagine you told a peasant tilling the field that one day in the future you will be able to send a message to the other end of the earth for practically zero cost. Forget one message, you could even send a thousand, and in fact folk would be tired of how many messages they’re getting from across the world every single day! We may safely guess that they would have you burnt at the stake for witchcraft! But let’s pause to think about this witchcraft! Back in the year 1000 only kings, and a few noblemen, could afford to send out a message beyond the confines of their town or local region. It required a man on a horse, food and supplies, the risk of going through bandit territory, days or weeks, and then, often no certainty he even made it. (And of course widespread was the practice that if the other king or nobleman didn’t like the message, they’d shoot the messenger, but I digress..) Fast-forward to the industrial revolution: the telegraph, revolutionary but you still had to count every word, then the telephone, eventually email and SMS, text messaging on the iPhone while still in bed with eyes half closed at 6am! Assuming the monthly subscription costs baked in as a given, what is really the cost of sending a single message today, do we even think or blink about it, about how long it’s getting, how many words are being used! So yes, we’ve come a long way. With regard to the information industry, we have indeed achieved abundance. (And are confronting new challenges such as information overload, but that’s another story!) With the ever-accelerating advances in machine intelligence, robotics, space and related areas, there is a chance that within our lifetime, if managed properly, we could get to abundance in many more areas, including, as I discuss elsewhere in depth, material commodities such as food and clothing. In the meantime, the best we can do is develop a greater awareness of the underlying concepts that economics offers us to start with? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  5. Jul 3

    The Story of Money: Meeting Adam Smith

    It is said about ‘the classics’, or classical literature that everyone has an opinion on them but nobody’s read them. In this decimilestone episode of the series, we meet the author of one such great classic work relevant to our subject. A Fertile Island No man is an island, it’s also said, and no great cultural and intellectual output emerges from a vacuum. Let’s explore the context and the background before we get to the person. In my parallel series on human achievement (tecc), I’ve traced the evolution of human intellectual progress from the earliest days. By the time we get to the 1700s, there arose in Scotland an effervescence of intellectual output which has been termed the Scottish Enlightenment which developed within the fertile soil of the wider British context of rapid innovation setting the stage for the industrial revolution in Britain shortly thereafter. The Enlightenment within Britain itself was part of a wider movement in Western Europe as a break from the medieval past (all of which I’ve been covering in the said other series with more to come.) It was into this milieu of extraordinary intellectual output that was born Adam Smith. Adam Smith in a sense needs no introduction. He’s widely regarded as the ‘father of economics’ or even the ‘father of capitalism’. (Although check out TecC 48 and TecC 49.) Smith is seen as having pioneered the idea of so-called ‘free-market capitalism’, and based on who you ask, unfettered economic activity and industrial expansion with profit-seeking as the sole motive, and with the State moving out of the way with no role to play. And of course such ideas are claimed to have been crystallized by him in his landmark book ‘The Inquiry into the Nature and Causes of the Wealth of Nations’, or simply ‘The Wealth of Nations’. But was he really all that and was that really his tenet, message and goal? Notions and Sentiments Much as some people may love to hate this Gordon-Gekko image of Smith, I have disappointing news for them - he was indeed a very different person than his popular caricature. He was first and foremost a moral philosopher mainly concerned about understanding and improving the human condition, in particular that of the less fortunate sections of society. This manifests in what might in fact be an even greater work of his, ‘The Theory of Moral Sentiments’ published much earlier, and so thought even by the author himself. Even though some of the notions of morality and similar values have changed in the two and a half centuries that have passed since, scholarly research and opinion have pointed out some ‘surprisingly modern’ treatment by Smith on these topics, such as, as per research, around concepts like mutual empathy, egalitarianism, individual sovereignty, and human dignity. An Inquiry in Earnest So his subsequent inquiry into economic questions that form the substance of his more famous work can be traced to stem from this deep concern for improving the human condition as just mentioned. Let’s take a few examples of this as emanating from that work. We saw in the previous episode his description of the notion of division of labor as underpinning (sorry, can’t help the pun) the new economic system that was emerging leading to the Industrial Revolution in Britain, an economic system others later, approvingly or disapprovingly, have called ‘capitalism’. In the episode on specialization I mentioned how the philosopher Karl Marx, perhaps the one person most opposed to the so-called ‘capitalism’, railed against specialization. Now guess what, in fact Adam Smith in his discussion of the division of labor expressed deep concerns on the same matter. Let’s next look at the other popular misnotion: that a ‘free market’ should be allowed to operate unfettered by the interference of the State. Adam Smith’s work evinced no such ideological position. Smith expressly insisted that the State had a very specific role in ensuring the good functioning of markets and the well-being of society thereof. As part of this, he explicitly called for State programmes, such as on-going access to public education, to help alleviate the sense of loss of dignity that can arise by being a small cog in a big industrial wheel. Yes, don’t take my word for it, he said it! And perhaps most strikingly, he looked upon wealthy merchants who then try to game the market system to their incumbent advantage - the fatcats as we may call them, with extreme scorn. (”...the mean rapacity and monopolizing spirit of the merchants and manufacturers...”) He spoke of their oligarchic tendencies to form cartels, to stifle new competition, to bend the State with tax preferences and protective tariffs, to suit their own interests... A more recent economist, or a few of them, have spoken about the need to “save Capitalism from the Capitalists”. While Smith wouldn’t have used such terms in his time, he was probably the first man (he wasn’t named ‘Adam’ for nothing!) to recognize and express the danger of such excessive concentration of wealth and power by people who rose within the system as posing the biggest threat to the system that made them! Ultimately, all these need to be taken in context, not just the ‘contemporary context’ I provided above, but for us looking back into the past and connecting it to the present, a wider evolutionary or historical context. Adam Smith in essence sought to debunk an older economic (and political) system that had existed into his lifetime. We may think our system is bad, and most of us would agree it’s not perfect (what is?) but to understand what we have, we must, as I’ll come back to, recognize how awful the system before it was. And it is in this light that we must look at what Adam Smith did: describe and help elevate an economic system that was, and despite everything remains, a huge improvement over what existed before. Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC 06 - The First Great Acceleration: The Birth of Industry - The Revolution othat changed Everything * The Theory of Moral Sentiments, Adam Smith - Gutenberg * An Inquiry into the Nature and Causes of the Wealth of Nations - Gutenberg This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  6. Jun 26

    The Story of Money: Division of Labor

    Back in Episode 013 we looked at specialization, let’s now look at a very closely related concept. Just as in that episode, the fictional anchor for this episode is going to be the story already narrated in TecC 43, where we saw how, after a disastrous start in a joint initiative, with everyone stepping on everyone else’s toes, our four fictional friends eventually manage to allocate each of themselves specific areas of focus and work things out. The Coordinates of Cooperation What they do can be explained either as specialization or division of labor, in fact it’s kinda both - it’s the division of labor that allows for specialization to take place. And in the specialization episode, we correspondingly focused on some of the more human elements of the phenomenon, given that specifically relates to one’s role, identity etc, here let’s look at a few other parameters. We can in fact look at division of labor as related to process more than the people per se. It’s the overall system of coordination, cooperation and indeed specialization. There are thus the questions of how the overall set of activities is broken up into discrete parts each of which can be handled separately from the others but in tandem, whether simultaneously or in sequence. Beyond this, there’s the question of how the coordination/cooperation is ensured or enforced. All this said, there has to be a certain amount of scale to justify division of labor: the requirement of making artisanal jam to be sold over a full week of an annual market event justified our fictional friends in the fictional story to apply these concepts. But if it was just a matter of preparing 3 jars of jams to gift a visiting aunt, it’s probably best done solo. (Hello aunt Margaret, what time are you arriving this weekend? And don’t worry I have a team of 12 people working on a small gift for you!) Pinning it Down The classic example of division of labor in economics literature is the famous one provided by Adam Smith in his landmark work on the subject: the pin factory. He contrasts a solitary worker with a specialized team of 10 workers. Having broken down the overall task of making a pin into 18 subtasks, such as drawing the wire, straightening it, cutting it, making it a pointy on one end, adding a head on the other and so on... The contrast Smith draws is the sole worker’s handful, about 20 pins a day to the ten-worker team’s around 48,000 pins in a day! The Division that Multiplies That’s roughly 4800 per worker, where applying division of labor has yielded an improvement of 2,400 X. We can appreciate some of the factors that make any such improvement possible. Apart from allowing each worker to become more dexterous in their task at focus, and avoiding the costs of code-switching both by way of cognitive load and the time lost in the transitions, this division of labor and the intense focus can facilitate the discovery of better techniques or even newer labor-saving tools, as Smith outlines. This way, as we delegate more and more of these subtasks to technology - new tools built specifically to handle them, we save ourselves of the drudge. So paradoxically division of labor itself might be helping us rid ourselves of the monotony of division of labor? There are other advantages too, it’s more viable to find a substitute worker or quickly train one for one particular task should the original worker not be available for some reason, since there is less of a learning curve. This of course entails lower disruption and downtime and thus increased overall productivity. Division of Labor exists everywhere in our modern world. For example, much of the music we are used to enjoying would be impossible - imagine your favorite rockstar hopping between the drums, the bass and singing mic + guitar all at once! Imagine how much more time and effort it would take to make the movies, fabricate the machines, build the buildings we are all used to seeing around us, if at all! In fact in the modern world, even the simplest device is the result of extensive division of labor. As the author Matt Ridley has said, nobody, no single individual, knows how to make a computer mouse! *** I mentioned Adam Smith given it’s sort of mandatory to do so when discussing this concept, but I haven’t introduced him in the series yet, the father of economics in a series relating to economics! I had originally planned to introduce the topic of division of labor alongside Adam Smith in the same episode, but then, that wouldn’t be division of labor, would it? So yes, we shall next meet the man himself, buckle up! Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * Who knows how to make a computer mouse? - Matt Ridley This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  7. Jun 19

    The Story of Money: Decoding Efficiency

    I’ve discussed the concept of value creation in the past, both in Episode 004 of this series and elsewhere in my writing on here. Let’s go further. But first a quick, and of course efficient, detour to check on our fictional friends. Steve, Bryan, Brenda and Irene are sat around the garden table discussing the week’s matters. Bruno the dog and Iris the cat are of course... well you know them by now! Recently both Steve and Bryan have taken up a new business - in parallel: shirt-making, thanks to a surplus of cotton in their region. While they don’t say as much, they each want to do a better job than the other. So Brenda and Irene are like, how’s it going lads? Steve is like, well, I keep running out of stock, in this last cycle I made 10 shirts from the stock that came through at the beginning. Bryan is like, hmm, I got the same amount of stock too, I got 15 done. Something must be done. The next day Brenda and Irene walk into Steve’s workshop, followed by Bruno and Iris, and what do they see, tons of pieces of cloth strewn everywhere. He has more equipment than can be seen in Bryan’s workshop. Brenda is like, Steve, where are your manuals? Steve’s like, what manuals? Irene’s turn, and where are your accounts, how are you keeping track of how much stock is getting consumed. Steve’s look doesn’t get any less bewildered. Bruno the dog and Iris the cat walk out in disgust. Yardstick’s Yields So it’s obvious where we are going with this. And on the face of it, we all know what efficiency is: how well we get something out of what we put in -- there is some nuance with related terms such as effectiveness and efficacy but those are for another day. And while discussing value creation previously, I’ve formalized that general concept by way of the production equation: inputs + processing = output. Only, here, with efficiency, we are concerned with more consciously measuring the inputs and outputs with some degree of accuracy. This broader notion has been expressed in slight variants severally before, for example, by Lord Kelvin and much later, Peter Drucker. In my own paraphrasing to capture that essence: if you can’t measure what you’re doing, you do not know what you’re doing. (The variants of these famous figures having ‘manage’ or ‘improve’ in the second part.) Because quite simply, unless we know the baseline for today, how can we tell how we did tomorrow? As I trust I’ve demonstrated in this series so far, economics is about more than numbers and charts. Economics straddles science (including mathematics) and the social world - areas such as psychology and anthropology. It’s an attempt to apply mathematical rigor to such aspects of human behavior, which is why it gets tricky, and one may say, economics therefore ends up disappointing both the scientific types and the humanities types. Still, the concept and application of efficiency, which reflects this desire for mathematical vigor, is vital and fundamental to the pursuit of economics, with its ultimate aim of improving the human condition within our environment. Metrics and Optics But even before such a discipline as ‘economics’ was formally constituted, there had been efforts to understand and apply efficiency, albeit haphazardly or, as the economists might say, unscientifically. But in essence, all technological progress can be seen to be part of an endeavor to achieve better efficiency: writing, printing, even the wheel! (Yeah, I mean just try tugging any amounts of material on wooden logs like the Stone-Hengers did!) (I’ve demonstrated this in action in my series on innovation linked.) But efficiency isn’t everything. You may be justified to say that economics overemphasizes efficiency. Life is a lot more complex than that. Oftentimes in fact inefficiency is the best way or even the only viable way. Consider this: as you sit down to dinner at a nice restaurant on a first date, you can’t ask your date to fill out a form before you process the answers for compatibility and decide to order starters (Sandra, if you don’t mind paying particular attention to the hobbies, preferred holiday destination and especially the Myers-Briggs section on page 17 through 19, and then we can look at the menu...) So how do we know what areas are better off when we seek efficiency and what other areas need other priorities, or at least, what is the right balance between seeking efficiency or not, seeking to measure or not, seeking to be precise or let go? Economics, at this point, one might say, can by definition offer only part of the answer. Still, given the broader principles I’ve applied in my writing beyond just pure economic theory, I trust we have a better way of getting to such answers as relevant to each of us in our own lives. So stick along! Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC - A study of efficiency by way of exploring human progress and achievement This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

  8. Jun 12

    The Story of Money: The Dance of Supply and Demand

    I’ve sort of touched upon this topic before, or at least skirted around it while discussing price and scarcity. But today let’s look at supply and demand in their own right. Back in the first of those two episodes, we posed a question. At the townsquare market when Brenda and Irene each inquired on the price of a sack of grain, Steve and Bryan quoted different prices for the same quantity, 8 and 10 copper coins. But why the difference? Furthermore, the question can be broadened to beyond just the same item or quantity. Without fully answering the question back in that story, we considered a few factors at play, and as we intuitively know, supply and demand are a couple of them. The Ups and Downs While we don’t need a literal textbook definition of these two words, let’s poke them around a bit. Firstly, much of this question arises because of the aforementioned reality of scarcity - things are limited in supply. And then, different people want different amounts of different things. So obviously if more people want something than there is supply of it, the effort needed to satisfy that need gets greater - and that, is signaled by the figure we call price. And of course, in a functional market, if there is less demand for something, the price will correspondingly go down. It generally works in the other direction too. If a seller jacks up the price of some item of utility, it may dissuade people from buying it. And conversely: we are all familiar with those empty shelves in the supermarket for those heavily discounted items - usually perishable goods, like your favorite yogurt brand? The Balancing Game So in a sense this is about equilibrium, every good in the economy is in this game with every other and with people seeking the goods, and in aggregate add up to then confer upon each good a certain price - hence my insistence in that episode that price is essentially a filtered-down signal of the underlying economy. Thus in other words, it’s a reflection of human behavior in aggregate as well. How well the prices reflect the economy depends on how functional (some use the word ‘free’) the market is - how freely such signals can move without the distortion of forces such as subsidies and price controls - topics for another day. And there is a feedback mechanism built in to such a system, each purchase changes the supply, and the prices and purchases act as a feedback loop which further changes the picture, ad infinitum, again, all subject to how freely these dynamics are allowed to play out. Let’s take a simple example - without even money necessarily in the picture. Imagine in your town there is a park that’s getting popular with the townsfolk as a picnic spot. As more and more people decide to go to that park for their picnic, the experience for each group will start to degrade - it’s noisier, more crowded, less fun over all - that’s the price they’re paying, the feedback loop also consisting of the ‘gossip’ or general talk about how crowded the place is getting. And then someone finds another park not really used for picnics, some folk start to go there instead, it’s pristine, initially, and then... you know where this is going. A Delicate Dance As participants in the economy, we are used to the effects of supply and demand. We know, for example, that in the unlikely event of war in the Middle East, prices go up because everything needs energy to function. We know that housing prices are highest where there’s more demand. Even human capital is entwined with the supply-demand dynamic - wages depend on the availability of certain jobs, our skills etc. Ultimately, however, the point I’m making there is supply and demand are in fact everywhere in all aspects of our lives. Consider this fun story: the dance form of the tango developed at a time when there was huge immigration of male population into Argentina (from Italy) which meant very little supply of female contact for most of these young men, the only outlet being a faint chance to find a dance at the overcrowded-with-men weekend ball. So yes, men, it is said, practiced this intimate dance with other men all through the week just so they each could dance the tango well enough to impress and attract the attention of one of the women to dance with them! (So in fact it takes three to tango, right?) But yes, we can’t escape supply and demand - they are more than a graph with 2 lines crossing. But perhaps we can train ourselves to be aware of the dynamic, to spot the trends - that pristine, rarely picnicked-at park, make the best of it, dance the tango well enough! To take one last but more pertinent example, research has found that in recent decades, with the prevalence of social media and its myriad distractions, people’s attention span is starting to shrink quite severely, what with living in a trigger-happy, push-of-a-button, instantly-tweet-my-grievances world! In an era of augmented intelligence where we can offload many cognitive tasks to machines, there is one skill that will still remain key: the ability to pay attention without distraction, the ability to focus deeply, the ability to do deep work. Those who can retain or strengthen this one thing will be in high demand in an era of low supply of it, and these few will have a high price tag on themselves! Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * A Passion for Tango, David Turner * Tango - Album by Julio Iglesias * Carlos Gardel This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com

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Exploring innovation, progress and achievement: a first-principles approach to everything that matters; combining history, epistemology, economics, anthropology, geopolitics, finance, philology, etymology and more... for, life is short, knowledge forever. ashstuart.substack.com

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