Sacred Cash

post by Zvi · 2018-03-03T13:20:00.382Z · LW · GW · 27 comments

Contents

  The Profane
  Slack Tax
None
27 comments

Previously: Categories of Sacredness, Eternal, and Hearthstone Economy versus Magic Economy, Slack

Related (Compass Rose): Kidneys, Trade, Sacredness and Space Travel

Remember when money was sacred?

Thanks to The Great Transformation, there is an increasingly free market in money. We spend money continuously, and get paid continuously.

This is relatively new. Or at least, its universality is relatively new.

It wasn’t so long ago that money was sacred at the bank. They had to give you a toaster instead.

My parents grew up in a different world. They taught me money was sacred. You had a job for a fixed number of hours, paying a fixed amount. That was all the money you got. Earning more was very difficult. Side jobs were lousy and rare. You’d spend lots of time to sell unwanted items at yard or sidewalk sales, at severe discounts. Everyone kept a strict budget. The edge was never far away.

Money spent other than on necessities was a special treat, a grand honor or dire emergency.

This cultural attitude is hard to learn. It is also hard to unlearn. It is quite jarring when you first see it violated.

The Profane

When I moved out to Denver to work at Social Games on the Cyperpunk TCG, I met a group that neither had enough money, had ways to earn more money nor treated money as sacred. 

They’d think nothing of paying a dollar for a Slurpee. On payday, they’d all get takeout. Far from payday, they’d (literally in one case) search their seat cushions to find change with which to gas up their motorcycle, to get to work.

Anything they had, that could have been reasonably sold, would eventually have been.

I did not understand.

In a start-up with one angel investor who lacked the ability to reinvest, and little hope of raising additional funds, they did not prepare for the inevitable cash crunch while trying to sell enough to stem the bleeding. I don’t know if we could have stabilized if given a few more months, but we had a shot only with those months. We likely fail anyway, but to see it all thrown away infuriated me.

MetaMed’s final blow was similar. My replacement as CEO increased our spend, leaving insufficient runway to do the things necessary to raise additional funds, and failed to realize (despite my repeated warnings) that this meant 0% chance of success. The plan’s timeline didn’t work. It was incoherent. Again, we probably fail anyway, but to do that which inevitably fails? Infuriating.

I did not understand.

What was wrong with these people? Money was sacred. 

Sure, it wasn’t automatically sacred, but it was sacred in context. Supply was limited. Being flush today doesn’t change that.

On The Wire, a character who not a day ago was about to be killed for lack of funds burns hundred dollar bills in a bar. His explanation? “When I’m flush, I’m flush.”

In Denver I had some savings, but fully understood I had a terrible salary and acted accordingly. I rented a $400 apartment, lived on $1,000 a month, agonized over buying an occasional luxurious Quiznos sandwich or a pizza, and worked to solve the local Indian casino poker game (it had a strange unique structure for legal reasons) to pay the rent while getting paid in equity to help the company.

Later, I had to train myself out of that. I taught myself that increasingly large amounts of money weren’t sacred to me. It is still a sin (in my code) to waste money or make a bad trade, even for trivial size. I’ve kept some amount of sacredness. I think this is important in a makes-my-12-rules-for-life kind of way. Don’t lose that cringe! But ‘throw money at the problem’ is an option, and ‘buy it even if it’s expensive because you’ll enjoy it’ has its place.

Slack Tax

Money moving from sacred to non-sacred is a huge change.

When money is sacred, so are things one can buy. All worthwhile possessions are prized possessions.

When money isn’t sacred, neither are things one can sell. Only things you cannot efficiently sell can still be prized. Potential trade becomes an enemy.

When one is flush, one buys experiences, memories and hard-to-sell assets.

If one does not, one falls victim to the wealth tax.

The slack tax takes many forms.

In Denver, it took the relatively benign form of obliviousness and hyperbolic discounting. People spent money on themselves, voluntarily, acting as if they were more wealthy than they were, leaving them poorer still.

It has less benign forms. Governments and other bandits look for wealth and take it. Sometimes those bandits are your friends, family and neighbors. A little giving back is a good thing, but in many cultures demands for help and redistribution rapidly approach 100% – life is tough, and your fellow tribe members, or at least family members, are endless pits of need, so any wealth that can be given away must be hidden if you want to remain in good standing. Savings, security and investment in anything but status are all but impossible. There is no hope for prosperity.

In between is commercial pressure, price discrimination and hold-up problems. Agents see free energy and work to extract it by charging for access to complementary goods, holding out promises, creating perception of needs and manufacturing expensive status competitions. The manufacturer of a key component, or the head of the union, demands almost all of your profit margins. Products advertise miracle effects that might solve your problems; you know they’re lying, but what else is there to do? And what would you do without the hot sneakers, the latest handbag, the hip new phone or the most prestigious college degree?

The most insidious traps are explicit slack traps. You must send the signal that you have spent all your resources. Any diamond (or college, or house..) is fine, so long as it cost you everything you had, so I know you love me. You can raise more capital for your start-up, but first you must be broke, or it would be irresponsible to give you more yet. Also would mean I wouldn’t have as much leverage. 

The Slack Tax’s most popular form is the Wealth Tax. But it works on any resource. Thus, for example, the need to create socially acceptable, legibly sacred time.

Without strong defenses, those forces out to get us will find a way. All slack, and thus hope, will be lost.

27 comments

Comments sorted by top scores.

comment by Dagon · 2018-03-03T17:17:48.736Z · LW(p) · GW(p)

The Slack Tax’s most popular form is the Wealth Tax. But it works on any resource. Thus, for example, the need to create socially acceptable, legibly sacred time.

This is key, in my opinion. Every resource is important, and every resource is under attack. Your time, your attention, your privacy, your range of future actions, as well as your money. Money is the most fungible of these things, but it still can be traded for the others.

So, if everything is sacred, does "sacred" mean anything? Wouldn't "valuable" and "valued" be better words?

Replies from: Zvi
comment by Zvi · 2018-03-04T14:02:52.126Z · LW(p) · GW(p)

I think strongly no, that has very different implications. Under your model where one should trade anything for anything else, I think it's the right word. For the world in which such trading is dangerous, it's exactly the wrong word. As an example, if my time is valuable that has a true and good implication, but it also implies that I should think of a game I play as 'costing' some huge amount per hour, and that doesn't go anywhere good.

Replies from: Benquo, Dagon
comment by Benquo · 2018-03-04T21:23:10.363Z · LW(p) · GW(p)

We need to distinguish between units of exchange and units of valuation here.

Money is an unit of exchange - things in very different domains can be converted into money, and monetary trades can occur in very small or very large quantities among many far-away strangers as well as next-door neighbors, and it all gets factored into One Price (so far as transaction costs and liquidity permit).

But, it's backwards to figure out the cost of playing a game, by pricing your hourly rate. You already know how much an hour of play costs you - an hour, plus setup time and recovery time. Money is useful for estimating how many hours of gaming (or time with your family, or health care services, or square feet per month, or and of those things for friends, or contributions to a community center, or whatever else you're buying) something is yielding you or costing you.

Time is a more natural (though still highly imperfect) unit of valuation. Warren Buffett's time can probably command a price orders of magnitude higher than your time can, and his wife probably isn't orders of magnitude better to spend time with than yours is, but you probably spend a similar share of your time - well within an order of magnitude - with your respective wives.

But the labor theory of value is terrible at market pricing. For markets, you need a currency. So, there's a tendency to slip from the awareness that anything could be traded, into the habit of assessing the value of everything in currency terms even when that makes no sense.

Replies from: Dagon
comment by Dagon · 2018-03-04T22:35:29.046Z · LW(p) · GW(p)

Oh, once again I think I see a misconception. I have no expectation that everything be valued or priced in dollars. Value (to each agent) is multidimensional, and costs (resources used) are multidimensional, not always even with the same dimensions. Money is just one flattening of a small set of dimensions, and does not capture anywhere near everything about a preference. Values flatten only in an actor's decision of which future universe-state they prefer, and for that purpose value is unitless and only ordinally-comparable.

The cost of playing a game is that you won't experience the universe where you didn't play that game. You trade one universe for another with each decision you make. Whether money is involved is a tiny subset of that decision.

Replies from: Benquo, Raemon
comment by Benquo · 2018-03-04T23:30:41.072Z · LW(p) · GW(p)

It seems to me like Zvi's trying to use the commonsense meaning of "trade" with all of its connotational loading and built-in implicit biases, to describe a common cluster of actual human behavior, and compare that with sacredness, and you're getting hung up on the fact that you want to use the word in a more formal way that doesn't commit to those connotations.

I keep seeing you defend the coherence of the way you use the concept. I grant that it's coherent, at least locally, but attention spent on that is attention not spent on engaging with what Zvi is actually trying to say. Asking for clarification can be a way to build a solid basis for interaction, but we've pretty much just repeated the exchange we had here.

Replies from: Dagon
comment by Dagon · 2018-03-09T17:48:03.423Z · LW(p) · GW(p)

I wonder if you (and maybe Zvi) are confusing "trade" with "market". I make no claims that any given market is capable of generating a "correct price" for any given individual trade, or even that such a concept is coherent. Instead, each trade is idiosyncratic to the involved parties and their particular valuations of the actions or objects exchanged.

comment by Raemon · 2018-03-04T22:55:12.536Z · LW(p) · GW(p)

FYI this was helpful to me and apologies if I was rounding you off to a stereotype.

comment by Dagon · 2018-03-04T15:34:26.216Z · LW(p) · GW(p)

Just for clarity, I think "one should consider trade (of anything) among one's choices", which is different than "one should trade anything..."

A game you play does have a cost in time. It costs one hour per hour (plus setup and coordination costs, plus usually-trivial monetary costs). It also has a value to you in happiness and perhaps social cohesion. I highly recommend that trade, and make it myself often.

Time is an excellent resource to focus on for this discussion, as you're going to lose it no matter what - it proceeds regardless of your choices and you can only choose how to spend it, not whether. Which gets to the next step - "value" isn't a property of the thing, it's a property of a relationship between an agent and the thing. If some specific hour of my time is more valuable to me spent gaming than, say, responding to comments on a philosophy post, I should do that. If that marginal hour is more valuable to me than the money offered by a potential employer, I should do that. If those other things are more valuable, I'm better off doing those instead and maximizing my value for this resource. I'm losing the resource regardless - the hour will pass and no longer be mine. It's just a matter of how I trade that for some future value (money, social connections, enjoyable memories, skills usable in future activities, etc.).

Calling some of my activities "sacred" is a fine negotiation mechanism between myself and others who'd like to influence my choices (many will accept "this is pre-committed" more readily than "this is important/valuable to me"). And even between my current self (who declares what's "sacred") and my future self (who actually makes the resource-use decision). But at root, it's "just" a decision of how to spend the resource.

Replies from: Raemon
comment by Raemon · 2018-03-04T15:54:46.954Z · LW(p) · GW(p)

This is a hard comment to make well without coming across as status oriented ("Oh really? That sounds like such a Kegan Level 4 thing to say*"), but I think is important, and even if I screw it up I think it's important that there's a thing here I might not have screwed up that I'd like to learn how to do correctly.

There's a common pattern of thesis, antithesis, synthesis. Or, "naive/contrarian/metacontrarian."

In this case, the default view is "trade is for marketplaces, it has no place in how to think about personal relationships and free time and stuff."

And then the antithesis view is "actually trade is everywhere, often going on under the hood in ways you can't see, and this is in fact good because it enables a lot of value that wouldn't otherwise be there".

And there's a synthesis view of "actually trade is one frame among many, and it's not always the best frame, and while yes there is a sense that trade is literally the best thing ever, thinking in those terms comes with side effects you wont always see, at least as implemented on human wetware."

And if a default-view person tries to skip to the synthesis view without grokking the antithesis view, they miss something important. You need to actually grok trade before you can say "well actually trade is good but has it's place" – otherwise you're still in the default view, just... more smug about it or something.

But you're arguing with Zvi as if he's in the default view and needs to grok the antithesis view, and he's actually very definitely in well past that point, and is trying to get you to see the synthesis view. I don't know how long you've been following Zvi but holy hell does he definitely get the points you're saying, and the problem is not that you need to explain your points better or something.

I won't say "and therefore you should just listen to him because Authority", because that's also not the point. But, either you think Zvi has something worth learning here, or you don't, and if you don't, this particular conversation carried over several threads isn't a good use of anyone's time.

*apologies to Kegan

Replies from: habryka4, Dagon
comment by habryka (habryka4) · 2018-03-04T18:00:50.940Z · LW(p) · GW(p)

Hmm, what you outline here is not obvious to me. It seems fine to me, to see that someone proposes an antithesis and to then respond with “I do not see how this antithesis adds anything to my existing model or how it makes better predictions, and it seems internally inconsistent, so I don’t see any need for synthesis here”. I would even argue that this should happen with 95%+ of antitheses that are presented to you.

I also don’t think that it’s obvious that the right thing is to assume that Zvi already understands the thesis. If I am stuck trying to understand one of Zvi’s points, then it seems better to me to make a comment explaining my confusion/explaining the inconsistency I think I found in the argument, than to stay silent in my confusion. I benefited from reading the exchange between Dagon and Zvi, and would like to see more of it, since I don’t think I get the point Zvi is trying to make, and why it is in conflict with a classical Hansonian signaling-resources model.

Replies from: Zvi, Raemon, ESRogs
comment by Zvi · 2018-03-04T23:57:18.825Z · LW(p) · GW(p)

There's no conflict with Hansonian signaling other than emphasis; it's a thing that happens, it's important, I don't think it's as important as Hanson thinks.

One thought that occurs to me is that this framework is partly an attempt to defend against Hansonian signaling - to keep X being about Y. That often seems super important to me.

Good feedback though that you don't see the contrast, thank you.

comment by Raemon · 2018-03-04T21:34:35.618Z · LW(p) · GW(p)

I think I don't endorse my final paragraph as written – among other things it doesn't mention value to third-parties reading along.

I also very much don't think it should be obvious to Dagon that my claims here are true, if he started reading Zvi a few days ago – just that if you've been reading Zvi for years it's clear that he gets the class of trade-based-thinking that Dagon is pointing to here. I may have picked a bad comment to make this sort of reply – as standalone comment Dagon's most recent remarks seem pretty fine at trying to clarify his position and tease out what exactly Zvi is talking about, and I don't think my reply is worded fairly.

(In my defense, I said I'd probably not do a good job) [Does that count as a defense? :P)

But here's an attempt to reword my final paragraph:

It seems like the default course this conversation will take would be exploring all the different ways trade could resolve a given problem, but I'm pretty confident that the interesting disagreements here aren't about trade, so much as about other factors outside of the trade lens (I think mostly relating to human psychology, although I'm not sure)

So while one could continue having the long, extensive conversation of doublechecking that Zvi does in fact understand all the reasons that trade is a good and versatile lens, my comment was geared towards skipping past all that to get to the substantial, interesting disagreement at the end.

comment by ESRogs · 2018-03-04T21:35:41.572Z · LW(p) · GW(p)
I benefited from reading the exchange between Dagon and Kegan

Dagon and Zvi?

Replies from: habryka4
comment by habryka (habryka4) · 2018-03-05T01:23:34.534Z · LW(p) · GW(p)

Lol, yes. That's a weird typo.

comment by Dagon · 2018-03-04T22:25:01.377Z · LW(p) · GW(p)

I fear I'm doing this wrong - I have a pretty large lump of respect for Zvi, and I'm honestly confused at what seems to be something important that I just don't get. I don't know if I skipped the thesis, so I'm stuck on the antithesis, or if it's the case that this model of conversation doesn't apply to my understanding, but people keep saying things that just don't fit my experienced nor my considered decision-making process.

Historically, one of the best ways for me to figure out where I'm wrong is to make specific-enough statements for people to correct and tell me why. That's not working very well on this topic, and I apologize for the churn.

Replies from: Zvi, Raemon
comment by Zvi · 2018-03-05T00:04:00.378Z · LW(p) · GW(p)

It's clear that this model doesn't resonate with you, at all, despite your putting a lot of effort into it. I can think of any number of reasons for that, including my not being as clear as I'd like. From some of your other comments, it sounds to me like you've found a way to frame these issues that works reasonably for you, so I wouldn't worry too much about it.

comment by Raemon · 2018-03-04T23:21:40.488Z · LW(p) · GW(p)

I'm a bit worried about speaking too much on behalf of Zvi (also apologies if my OC came across overly harsh). A couple concepts that seem relevant to me:

  • legibility. I think this is less relevant to this conversation than I first thought (based on your other comment). i.e I think there's a failure mode than comes from saying "Ah, I can make N dollars an hour. Is playing this game worth N dollars?" And somey people feel like they then have to justify the cost, and the N dollars is very concrete and easy to point to, but the other things aren't, so the system ends up punishing illegible things. I think this may sometimes be relevant even if one has internalized that money isn't the only universal metric.
  • Choices are bad – comparing things to other things that might have been is often unhelpful or at least costly.
comment by drethelin · 2018-03-05T00:22:25.362Z · LW(p) · GW(p)

I like this but the main thing I think is missing is the concept of capital. Money making money, leading to a surplus in the future. There's also a big difference between spending your interest and spending your principle.

comment by ESRogs · 2018-03-04T20:11:40.374Z · LW(p) · GW(p)
The Slack Tax’s most popular form is the Wealth Tax.

Did I miss the definition? What is the wealth tax?

Is it this:

You must send the signal that you have spent all your resources.
Replies from: ESRogs, Zvi
comment by ESRogs · 2018-03-04T21:44:10.782Z · LW(p) · GW(p)

I guess it just means: something that costs you more the more you have. As contrasted with wealth generating returns, as per this sentence from one of Zvi's comments:

If you're making and selling widgets, wealth pays dividends rather than being taxed.
comment by Zvi · 2018-03-04T20:38:28.045Z · LW(p) · GW(p)

I just meant wealth tax, as in effects that cause those with material wealth to lose some or all of that wealth over time.

comment by habryka (habryka4) · 2018-03-04T01:04:28.946Z · LW(p) · GW(p)

Promoted to frontpage.

comment by Elo · 2018-03-03T20:16:04.499Z · LW(p) · GW(p)

I don't believe this is a race to the bottom. Considering you care about the spare cash - other people do too. You just need better friends.

comment by Emiya (andrea-mulazzani) · 2021-02-24T12:38:33.649Z · LW(p) · GW(p)

It has less benign forms. Governments and other bandits look for wealth and take it. Sometimes those bandits are your friends, family and neighbors. A little giving back is a good thing, but in many cultures demands for help and redistribution rapidly approach 100% – life is tough, and your fellow tribe members, or at least family members, are endless pits of need, so any wealth that can be given away must be hidden if you want to remain in good standing. Savings, security and investment in anything but status are all but impossible. There is no hope for prosperity.

I'm not sure of how literally I should interpret this part. Governments and systems seem to be in a trend of taxing poverty more than they tax wealth, after a certain level of wealth you definitely pay less per dollar earned that someone who's poor, even considering official taxes alone.  

Poor people do seem to be forced to dissipate any extra wealth they accumulate through societal obligations, and for slack and status purchase it seems to definitely hold true, I'm just puzzled by the government thing.

comment by Dagon · 2018-03-04T15:39:24.396Z · LW(p) · GW(p)

I'd like to expand a bit on

In Denver, it took the relatively benign form of obliviousness and hyperbolic discounting. People spent money on themselves, voluntarily, acting as if they were more wealthy than they were, leaving them poorer still.

vs

It has less benign forms. Governments and other bandits look for wealth and take it.

What is the distinction between benign and less-benign? In both cases, valued resources are lost without any return in other valuable resources. These seem like very similar failure cases to me. In fact, they seem very nearly like two views of the same phenomenon - obliviousness and hyperbolic discounting makes it near-trivial for vendors (and time/attention sinks) to tax you very easily.

comment by Chris_Leong · 2018-03-04T00:14:20.685Z · LW(p) · GW(p)

I've heard quite a bit about there being a kind of wealth tax among the poor. But you also claim that there is a wealth tax among startups. I'm pretty skeptical about this being widespread. Firstly, I suspect that startups tend to have less experienced CEOs, so they are more likely to engage in irrational spending rather than become the bad guy by reigning it in. Secondly, I suspect that startups are worried about the signalling implications of cutting back spending as this may trigger employees to jump ship and may indicate to potential investors that they aren't confident that they'll get funding from other people as well.

Replies from: Zvi
comment by Zvi · 2018-03-04T14:10:50.245Z · LW(p) · GW(p)

There are different kinds of start-ups. I don't think this effect applies to start-ups that are actually doing business. If you're making and selling widgets, wealth pays dividends rather than being taxed. But I do think that if you're basing around venture capital rather than profitability, the effect is quite real.

Vendors charge you very differently if they think you're cash-rich, employees demand far more pay, venture capital holds out until you're broke, and so forth. You could think of this as a subsidy for being cash-poor (you get out of the charges that would normally apply to trying to get high-quality people and services to come together and build something for you) rather than a wealth tax, but functionally both are the same. It also doesn't help that yes, being concerned about money sends the signal you're not successful, and everything is compounding so fast, so there's huge pressure to spend everything you have all the time. There's jump-ship worries, but it goes far beyond that.

Then, because you end up poor from all that, you get the anti-poor wealth tax hitting you as well, now that you're actually cash constrained. I think of the whole thing as, doing things for real is such a hugely productive thing to be doing that there's a ton of ruin in the system.