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Virtuals vs. Physicals; Imagology vs. Reality — 60 Comments

  1. 30 years ago it was harder to get alternative information. Now, it’s a few clicks away.

    Over the past 30 years my cynicism / lack of trust in the so called experts has declined significantly. I’m amazed at how corrupt and incompetent they are. One of Trumps greatest feats, was unmasking this.

    This is part of the trend of the US in transitioning from a high trust society, to a low trust one.

    One of my pet peeves is how hard it’s to find real crime information for my local area. Facebook and next door are censoring this.

  2. I read this the other day and thought it an excellent analysis to define the basics of society. We use to call the Virtuals “pencil-pushers”. The trajectory since those days has been upending.

  3. So basically we have an entire class of people who are largely disconnected from the immediate maleffects of the policies that have been enacted by the people that they voted for.

    For example, the policies that increase our dependence on foreign oil by curtailing domestic production in various ways, oestensibly in the hopes of slowing anthroprogenic climate change. These so called “virtuals” may not directly notice the increase in gasoline prices since they generally live in cities and thus often walk, use public transportation, or use ride sharing services to get around. Therefore they’re not physically pumping gas into a vehicle on a regular basis and seeing those numbers climb at an alarmling rate.

    Of course they do eventually feel the effects of the higher oil prices, since all the products they consume necessarily have to be transported to them by conveyances that almost exclusively require fossile fuels. And so they do notice the price increases in the products themselves because of the fuel costs, they just may not connect it directly with their beloved “green” policies, but instead attribute price increases to greedy corporations or whatever.

    So unfortunately it seems like things need to get really bad for virtuals before they are able to connect policy with outcome. And in the meantime, physicals suffer even more.

  4. That is an excellent essay. The financialization of our economy has contributed. The rich no longer make things. They manipulate money or create online products that do not exist in the physical world. One related problem is the creation of unemployable college graduates with student debt. The pressure to forgive such debt is a big issue to the left.

    The same left looks down on auto mechanics and truck drivers who make 5 times their annual income. Mike Rowe, who got rich from “Dirty Jobs” is a rare media figure who tries to get kids interested in trades. His background was not in trades; he was an opera singer and a TV guy.

    The “Cleresy” is another useful term for the strivers who seek status in that virtual world and hate the dirty hands people.

  5. “This clash will continue because the Physicals will resist and the Virtuals will insist on control.”

    I don’t know if the clash will last all that much longer because while most of the Physicals produce actual value to society, many if not most of the Virtuals do not.

    Mike

  6. Whatever happened to “It takes a village”?

    (Hint: It morphed into “Those deplorables!…” faster than you can say “Follow the science”….)

    Oh…yeah…
    Right.

  7. There is the thing called “ground truth.” You can use AutoCAD to develop 3D models of the physical world using GPS data to locate a borehole and so to avoid hitting underground tanks, pipelines, cables. Trying to keep the job boring. But if the AutoCAD guy doesn’t convert his feet to meters correctly, well, your physical dill bit may find a well known physical feature of a bad kind. The physical wins every time.

  8. I probably mentioned this film a while ago, “The Fearmakers” (1958). A guy’s PR firm is hijacked while he was away fighting WWII. Upon his return he discovers that his firm now produces manipulated polls for their Wash. DC masters.
    _______

    When I read, “America’s First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837” by Alasdair Roberts, I was surprised to learn that in America’s big cotton market they used futures contracts rather extensively even then.

    Most of the cotton consumers were Brits and just the communication and shipping times and delays were considerable. Instead receiving an actual delivery of goods, you get a paper contract for its future delivery which is tradable. There was no discussion of how these things were traded, but I’m relatively sure there were no organized trading sessions back then.

    I guess my point is that it is easy to forget that at least in the beginning many of these virtualizations usually serve a real serious need in the physical world.

  9. A reporter asks Biden why he didn’t cut off Russia’s access to the SWIFT electronic banking system. “Oh, what we’re doing is more severe than that,” he responds.

    Is it? I wouldn’t know. Let’s take a poll of U.S. citizens on that, and get a consensus of ignorance. Assuming it’s not a manipulated poll, which it probably would be.

  10. In broad general terms, I agree that the physical vs the virtual describe quite well the driving force that has led to the West’s societal division. Obviously there are individual exceptions, perhaps most notably Sowell Thomas.

    Clearly, Milan Kundera was ahead of his time in this regard. That said, like our om, I disagree with Kundera’s conclusion that the virtual will always remain in control of the physical.

    When all is said and done, external reality has the last and final say. Putin’s current actions being the latest example of such.

  11. Geoffrey Britain:

    I think Kundera doesn’t mean a permanent triumph. I think he means that it will always react and get ahead of reality for a while, by “reframing” it or whatever you want to call propaganda about it. But yes, at a certain point – usually a very late point and a very bad point – reality trumps imagology. It’s just that things have to really degenerate a lot for that to happen, and much damage is done.

  12. One related problem is the creation of unemployable college graduates with student debt. The pressure to forgive such debt is a big issue to the left.

    They’re not unemployable. They’re just saddled with debt. There’s been no secular decline in the employment-to-population ratio.

    A great deal of what passes for tertiary schooling in this country is a labor market signal. No applicable skills are acquired in the course of study and precious little of that for which liberal education was once intended. It’s just an indicator of trainability to the people who sort applications in the personnel office. You have this arms race among families to acquire the credential and it’s primary function is to avoid a relative disadvantage vis a vis the children of other families. It would be socially optimal to discontinue these practices in favor of (1) improvements in secondary schooling and (2) occupational testing. Less deadweight loss.

    Another problem is that the degree architecture and its composition is such that there’s considerable bloat even when the subject is not unsuitable for tertiary schooling per se. Allan Bloom called attention to this, saying that absent a properly constructed core curriculum, there wasn’t much justification for holding students longer than two years, and that students he was acquainted with were taking courses in a meandering fashion. It’s not a particularly common complaint among critics of higher education.

    There are all kinds of solutions of which one could conceive. However, schooling is an organized appetite and more than anything else the institutional purpose of the Democratic Party is to protect those rice bowls. Hence you get student loan forgiveness, which avoids direct injury to Democratic Party constituencies.

  13. With my philosophical background, I see it as a face-off between the Rationalists and the Empiricists.

  14. It’s a useful model, but of course an oversimplified one. Consider Andrew Carnegie: I believe the only *physical* work he did was when very young, as a bobbin boy and then a boiler operator in a cotton mill. His next big career step was as a telegraph operator: the quintessential information technology job of the age…and then he became a supervisor for a railroad: managing people and trains, but not actually doing physical work. His developments in the steel industry were entirely a matter of management and acquisitions, not of doing physical work, or, I think, of any particular expertise in metallurgy.

    Yet he *made things* on a very large scale.

  15. As someone who has 45 years in the industry at question, no, the concept as stated is very, very flawed.

    True virtualization expressly ties itself to the Real World — after all, you’re modeling something… something real and verifiable. When the model fails to connect to the actual Real World it models, it’s a broken model, and desperately needs to be fixed.

    No, the problem here has far more to do with the infantilist nature of The Left.

    If you think of a liberal as being very much “in touch” with their inner 3yo child, and NOT “in touch” with the real world, it is amazing how much their behavior Makes Perfect Sense (sense in, “yes, that is how 3yos think”). This maps far far better than the “virtual vs physical” connection being suggested.

    First, the obvious — if they can’t see it, it does not exist: “Peekaboo!”. Cover their eyes and the real world ceases to exist. So pollution in china, caused by products they use which are “clean”? Doesn’t exist. When a city hosts a Dem convention, they round up all the homeless and chase them elsewhere — because, hey, “No homeless HERE!” Deny the most egregious corruption possible, because, “Who are you gonna believe, ME, or your damned lying eyes?”

    Second, 3yos have zero time-binding. They cannot connect events they’ve seen with the consequences later… which is why you punish a 3yo immediately, not “when your father comes home” — because they won’t make the connection of what they did 6h ago with the punishment they’re feeling NOW. Same thing with liberals — they cannot grasp how a failure of Marxism NOW means it will fail the NEXT time it is tried, as well. They cannot grasp how a government program that repeatedly fails can’t be fixed by just throwing more money at it — because, face it, it must have not had enough money. It cannot be because, well, government programs often just flat out don’t work, as **experience** leads one to learn. “Experience” does not exist to a 3yo.

    Thirdly, 3yo children are known, as are liberals, for having temper tantrums when denied what they want. And since, unlike 3yos, they don’t get punished enough for “acting out”, they keep having their tantrums, because all too often, it does get them what they want.

    Finally, Children want the world to be what THEY want the world to be, whereas adults accept the world as it is and work to change things they believe can be changed. To a child, they can demand the world be what it “should” be. Reality don’t enter into it. Human nature don’t enter into it. The Grand Inertia of Reality don’t enter into it. “I want it I want it I want it!!!! WAAAAAAAHHHH!!!!”

    Clearly, this assertion oversimplifies things, but it does cover a lot of liberal behavior, one hell of a lot better than “virtualization” does.

    P.S., the “imagology” assertion. No, again. This propaganda works because it lies to the child and tells them that the way they want things to be is how they are. Unless and until the Big Bad Universe steps in and rubs their face in it, they are happy and content, and more than ready to reject any notions expressed in their presence which challenge it. It’s basic observation bias and rejection of countermanding data as outliers and false connectives. Feed that inner child, and the social leaders get to keep power.

  16. }}} A great deal of what passes for tertiary schooling in this country is a labor market signal.

    LOL, I was joking 40y ago about how college got you so used to the BS being up here (hand held at eye level), that, when you got out into the Real World and the BS was only up to here (hand held at knee level), you went,
    “Wow, this is great !! There’s *no* BS here!!”

    😀

  17. The ZMan calls it the Cloud People and the Dirt People. Others, the Laptop class.

    He’s drawing a distinction, so there’s a good bit of over-simplification I think. Most city people I know have at least a connection to the practical aspects of living life. I believe it’s a small population of people, relatively, that live in an absolutist bubble that he describes.

    Still – nothing like a rude awakening every so often, ehh? I wonder what the Ottawa Cloud People are thinking right now, seeing the Kyiv Cloud People on television with smoke rising, airports closed with new bomb craters, and MIGs screaming by overhead. Probably wishing there were some truckers around right about now, so they could hitch a ride and make tracks outta Dodge City.

  18. One of the things about being a Virtual is that you can edit the Rules of Success. Because they’re virtual. Doing so gives you better credentials, more prestige, more money, more power.. So you do. More and more power accrues to the most Meta members of the Elites… and of course the rules of the game remain in perpetual flux and the ends become lost in obscurity (or worse any fixation on the ends becomes a game-losing déclassé stench) because you end up playing games with the rules and making rules about rules upon rules.

    And you keep on doing so until you are so utterly detached from reality that you crash your civilization.

  19. Were it not for my hippie detour into the blue collar world, I would probably still be a leftist-virtual.

    That and some 60s liberal’s advice to read opposing viewpoints.

  20. America as a woke imperialist superpower is akin to the dead dragon being hauled out of the frozen lake and turned into a zombie. Adorned in the garb of its new rainbow attire Brand America seems now to be doomed to stalk the land as an affront to all that is natural, good and holy.

    Zaphod:

    Nice bit o’ writing. However, it is a metaphor, not fact. If the map is not the territory, the metaphor is even less so.

    Perhaps America has played out its string and its decline is inevitable. Perhaps some unexpected rebirth is in the wings.

    Who can say?

    I don’t know if you’ve ever played the stock chart game seriously. It can be so damn convincing that a stock is in some classic pattern … until it does something different.

    Then that difference looks obvious and inevitable.

    I was a leftist activist in the 70s/80s because it seemed the right thing to do. Though in my heart I knew it was a ridiculous long shot. I am rather surprised at today’s status quo.

    I see no reason history can’t swing in the other direction. I don’t understand the pessimism I read among conservatives that the left is some terrible inevitable undertow which can’t be resisted in the long run.

  21. @Huxley:

    While I respect your optimism because nobody should just give up, there’s still this:

    https://thepostmillennial.com/office-of-nuclear-energy-deputy-assistant-partook-in-puppy-play

    How do you as a nation walk back from this? This is not an isolated case. Plenty more where it comes from. This is your Ruling Class. At the very least you’re going to have to do some difficult things. On a wide front.

    And until you do so, the rest of the World which is Outside the Empire (i.e. exclude Europe, Anglosphere) is going to think thrice before trusting you to give the correct time of day when asked, let alone anything else.

    No real future in Playing at Empires anyway… It’s proven to be bad medicine for the core Imperial Power in all previous historical cases… so why bother? Seems to me that resources best spent Scouring the Shire.

  22. Zaphod:

    We had a good ruling class, then we had a bad ruling class.

    Change.

    Are you saying things only change in one direction?

  23. @Huxley:

    I’m saying that peaceful changes from Bad Ruling Classes to Good Ruling Classes are Uncommon (to say the least).

    Your Older Gooder (sic) Ruling Class had few if any antibodies to the creeping rot because (seems to me) that Progressivism is a cancerous mutation in Western Culture. Just as you can’t have life itself without the potential for malignant tumors — it’s baked in. Worm in Apple… Snake in Garden… yadda yadda.

    A true and lasting reversal will require some major irreversible surgery on the Culture and on the Ruling Class at the very least. That’s my optimistic take. The pessimistic take would encompass the broader populace.

  24. Zaphod:

    And I’m saying things change, often unexpectedly, and sometimes for the better.

    In the long run, historically, one does better to bet on better.

    I don’t know what will happen and I don’t believe you do either.

  25. @Huxley:

    Of course I cannot know how History will pan out.

    All I know is that I am against Drag Queen Story Hour and Men in Gimp Suits in Government and the slaughter of the Unborn, etc. And I will support those who actively stand against (not merely posture against) these against those who support them or who are indifferent. At every single step of the way. Regardless of Optics or complex philosophical or ‘moral’ speculations. And regardless of the personal self-interest of a Putin or a Domestic Caesar wherever I happen to reside. All that matters is that there be less degeneracy and net evil. The rest is ‘Details’.

  26. I think om, OBH, GB, and David Foster allude to this, but it is and has always been the case* that “manufacturing” is the use of information and knowledge applied to the manipulation of materials to create goods. Goods for direct use or as tools or to support supplying services. Thus, basically the Venn diagram of the physical is totally within the virtual, while as stated in various ways herein, the extra virtual portion can often lead to silliness or worse. All useful imagology existed initially in someone’s mental architecture before being transferred to a real object or to instructional information and knowledge for another to use (e.g., sheet music). So our real problem is how to avoid or reduce all of the extraneous virtual crap.

    The comment about Carnegie providing management direction and expertise reminds me that as an engineer starting out I thought engineering was the most important part of the company’s activities. Only over time did I come to better appreciate that the whole range of company functions were needed to actually get that profit delivering good or service “out there” to users and purchasers. DIE not withstanding, even the HR dept. had to bring real talent into the organization while threading all of the other legal needles involved if success was to continue.

    *Even the paleolithic man making a stone axe head had an image of what he wanted in his head. The same applies to craftsmen making weapons or whatever, leading eventually to the concept of replaceable parts, etc. The various representations of the required information evolved from mental to pictures to paper to data scrawled on factory walls to computer equivalents such as CAD. And the more successful engineers tended to have a solid grounding in the manufacturing processes needed to make what they were designing.

  27. }}} Your Older Gooder (sic) Ruling Class had few if any antibodies to the creeping rot because (seems to me) that Progressivism is a cancerous mutation in Western Culture.

    I believe I’ve been making this point here and elsewhere for the last two decades. PostModern Liberalism — as opposed to Classical Liberalism (which probably represents not more than 5% of self-defined “liberals” these days) — is a social cancer — literally, not figuratively.

    I also assert it developed first as a response to WWI, and has been metastasizing ever since. I concur, the rot is deep, and the procedure for cleaning it out unclear and fraught with danger of an overstep and a tumble into a very dark territory. We are talking Robespierre territory, here. And on the other side of that phase change, there’s no guarantee what arises after is anything we’d recognize as America.

  28. I think much of this effect can be explained by advances in hardware vs. software over the last half-century or so. Silicon Valley was so named because of HP, Apple, and a myriad of other start-ups that created physical things made of silicon (i.e., computers and electronics hardware). Most of the tech geniuses of the late 20th centrury, such as Gates and Wozniak, got their starts with hardware-oriented pursuits, such as phone phreaking and soldering computer kits in their garages.

    That changed, probably around the 1990’s. Advances in silicon-based hardware have opened up an expontentially growing area for software-related innovation and freed software developers from much of the need to consider physical world constraints. Even up to the 1990’s, software developers had to expend a considerable amount of effort molding their programs to the physical constraints of their hardware. (E.g., limited memory, limited processor speed, slow busses to disk storage, even limited instruction sets for processors.) Nowadays, advances in hardware give software developers much more freedom from hardware constraints. If you need more processing power, you can just purchase additional capacity from a cloud provider.

    The result of this has been a gradual shift in Silicon Valley and the tech industry as a whole away from hardware companies and towards software-oriented companies. The biggest tech companies now, such as Google, Twitter, and Facebook, are entirely software oriented, as are most of the new start-ups. Apple designs hardware to be built in China, but for years Apple’s has primary product has been its brand. Maybe Tesla is the exception that proves the rule, but it is also doubtful that Tesla would exist today without government subsidies.

    There are still companies and universities working on hardware innovations, such as quantum computing and even more advanced memory, but the folks becoming millionaires and billionaires are doing it with software, with an emphasis on soft.

    I think that software developers liberated from (many) hardware-related constraints develop a way of thinking that becomes detached from the physical world and leads to nonsensical results when applied to the real, physical world. Since those same software developers are seen as near-demigods by our non-technical elite (and also fund the political compaigns of the same elite), the floating, unmoored metaphysics of modern software developers have become the de facto philosophy for large swaths of our elites.

    I’m not sure this theory completely explains the virtual v. physical divide, but it might explain why the division is so bitter and difficult to bridge.

  29. Wow. What a wonderfully thought provoking post by neo, set of articles by NS Lyons, and thoughtful set of comments. Much to ponder, and much to reread – Christopher Lasch’s Revolt of the Elites to start. OBH’s comments were also especially helpful in thinking about VR and AI as they were intended.

  30. Bauxite on February 25, 2022 at 8:10 am
    I have always resisted the idea that software is “technology”. For me technology is when the physical processes and science from physics, chemistry, or biology are applied to achieve some desired goal in real material space. For some reason I never really got the programming “bug” (the Coding-79 virus ??), although I have done a little of it. But mostly I consider software to be more analogous to literature: instructional, helpful, entertaining, etc., as sheet music instructs the musician what to do to obtain the desired sounds.

  31. Follow-on: now if someone wants to address the ideas behind “information science” and communications/networks, such as Turing, Shannon, and Gilder have considered, I might be persuaded to change my mind. To the extent that I understand it, that sounds very helpful, but also a bit “woo-woo” to me.

  32. A most excellent alt look at the societal processes that contribute to our ailments.

    OBloody Hell’s layering in of the fundamental immaturity is absolutely correct, an ailment which ironically comes from the lack of having lived a more “physical” existence from K to their post college virtual jobs. This immaturity which cannot be cured without some form of “shell shocking” experience, will continue our society’s drive to ruin.

    I would add that the childish anger this laptop class expressed yes erupts from being told they are not control, it is exacerbated though by the acquired arrogance in their belief that they are the new priests of our society.

    Their immersion in the divine ether of electrons they manipulate whether as FB content moderators, NYT opinion editors, a webmaster who has the electronic keys to the backbone of a website, to the IT guy deciding what would be seen on a customer receipt, they have control what the rest of us see. Their insecurity is not only placated, they become intoxicated by the power they possess.

    They are the priests of old whose interpretations of scripture were unassailable. Their speaking with their most on high God(s) like Obama or Zuckerberg, or the high priests like Fauci, the needed message they are entrusted to bring to the people are the new tablets. Like their predecessors with the feather quill strokes on parchment that became gospel, they with a few keystrokes manifest their belief system onto us.

    Like the old, these new ones, ironically operate in a virtual world, not a physical one.

    All the truckers did is turned off the holo deck program.

  33. Nancy B….”Rites of Spring_ by Modris Eksteins?”

    Read it a long time ago, IIRC, it was more about the WWI impact on *European* society than the US.

  34. There’s an interesting book, ‘Tragedy and Challenge’, about the decline of UK manufacturing. The author, Tom Brown, rose from a low level to Managing Director and had broad experience both in the UK and in Germany.

    Starting out, he worked for an old-line metalworking company in Scotland. Customers would send the drawings for the part they wanted made (axles for a car, for example), then the company’s die engineers would design the sequence of dies required to actually forge the part. The forging actual operations were carried out in a heavily-unionized plant with workers paid under a rather bizarre incentive program which led to a lot of conflict.

    Brown says that the die designers rarely went into the plant—understandable, given that it was a very noisy and generally unpleasant environment–but that they would have been better able to do their design work if they had been more involved with the actual production process. Similarly, the people who designed the incentive plan had no interaction with those who were paid under it or with those who directly managed those people.

  35. “Were it not for my hippie detour into the blue collar world, I would probably still be a leftist-virtual.”

    For me, it wasn’t really a hippie detour, but rather delaying graduate school a couple years, after receiving a liberal arts degree, that really qualified me to do nothing else really besides go to grad school. Looking back, I had wanted to go to an engineering school (CO School of Mines, when I didn’t get into MIT). My mother pushed me to go to a liberal arts college, as she and her father had done. Afterwards, she regretted that decision over the next 3-4 years when I couldn’t find gainful, long term, employment. I worked in a silk screen print shop, cutting trails at a ski area, painting condos, making bricks, selling insurance, etc. The brick making was the hardest physically, but turned out to be somewhat enjoyable. I worked with a crew of illegal Mexicans, who would send most of their money home every paycheck and then live like kings, with their families back in Mexico every year, when the plant shutdown for 4-5 months in the winter. They all worked very hard, but made it enjoyable. And that rubbed off on me. We just had our backyard put in, in brick pavers, by a crew of Mexicans. It was an excellent job (we saw the results with our big rain earlier this week), at a very fair price. And if you looked carefully, you could see the exact same thing that I saw at the brickyard almost a half century earlier – hard work made enjoyable. But it isn’t just Mexicans – I have people working for me in MT, who work hard pounding nails, pouring concrete, etc, and are proud of what they build.

    I spent the rest of my working life in more esoteric pursuits – first software, then patent law. But I seem to have never really to have lost my ability to communicate with those in the more physical world. Turns out, a lot of the time, they are a lot more interesting. We have another contractor here in AZ, who used to jump a lot out of perfectly good airplanes, before getting bored, so took up BASE jumping. Father was a Hell’s Angel, and he got beat up for leaving them. Worked as a building contractor (where he does beautiful work) and a chiropractor, after leaving the Army. Much easier talking politics with him, than my son-in-law, who opened up a discussion with me by listing his pronouns and admitting his White Privilege (former college O Line football player, so I knew his pronouns, and knew his parents, so knew his privilege). I was so tempted to respond that my pronouns were “We” and “Our”, and proper address included HRM. Daughter would have laughed. But probably not him.

  36. }}} OBH…”I also assert it (post/modern liberalism) developed first as a response to WWI”….could you explain the WWI connection?

    It’s my interpretation, but it came to me some decades ago when I first read

    What We Lost In The Great War
    by John Steele Gordon
    https://www.americanheritage.com/what-we-lost-great-war

    An excellent and interesting read in and of itself — fairly long, mind you.

    Combine this with the fact that postModernism seems to have developed following the war, and even a casual analysis shows that it targets everything that is a basis for Western Civ.

    I assert that it was an outgrowth of the disgust and dismay that a certain (arrogant) sort of Classical Liberal had with their own society given what it did with the fruits of the Enlightenment and Rationalism. They were unable to accept that humans had not been perfected, so of course they could do both right and wrong with those fruits. They could not admit the fault lay within themselves, so they turned on the civilization and its ideals, for failing to perfect humanity in the process.

    How much of that is/was conscious decision, I can’t assess, but I do think the innate self-loathing — both personal and societal — at the heart of PostModern Liberalism is obvious and indisputable. And America, as the pre-eminent leader of those ideals is, thus, labeled evil inchoate.

  37. P.S., there should be another post from me, I’m guessing the spamcatcher grabbed it for some reason.

    =========================

    }}} There are still companies and universities working on hardware innovations, such as quantum computing and even more advanced memory, but the folks becoming millionaires and billionaires are doing it with software, with an emphasis on soft.

    Well, this ties to the fact that we are now an IP & Services Economy. I’ve long had a running argument with some people at a site (Chicagoboyz) which David Foster and I (and others) hang out at, regarding the fact that we don’t “make things” any longer because there really isn’t any money in it. All real future wealth is going to come from creating IP or providing a service. This is, actually, true even for most of the things you’re probably thinking of as “Silicon Valley”. Apple does not make money off iPhones because of the equipment (total cost for an iP4, retailed for US$600 in 2010, was made in China for under 7 bucks to China — the rest went to Apple for design and marketing, and to various component designers for their IP involved)

    One thing no one comments on is that the US Manufacturing Economy, all by its lonesome self, is the #3 manufacturing economy in the world, behind, of course, China and Japan. This despite the fact that “we make nothing”. We actually design the stuff people make, and get far far more money for doing that than the people who actually make it.

    The collapse of the small family farm in the 1980s was an outgrowth of the same process of converting, as the USA left behind the Agricultural Economy and finalized its conversion into the Industrial Economy, even as it began converting into an IPSE… The margins for running a farm had gotten too small to support the small operations of the farm vs. the vagaries of the market. To make farming pay, you need to either have a scam like the Ethanol Mandate (Archer-Daniels-Midland) or you have to be big enough to spread yourself around to a number of different products so a major drop in the value of one does not wipe you out.

    Both an AE and an IE have similar functions — For the AE, the highest organizational structure is arguably the Feudal Enclave, with Lords and Ladies as the leaders and directors. Wealth is derived from Land and comes in the form of Food.

    As you switch to the IE, those convert to Corporations, with Presidents and CEOs, with Wealth derived from Factories and comes in the form of Goods.

    As the IE advances, much of the AE processes become subsumed into the Corporate structure, hence the “failure” of the Landed Aristocrat in the early 1900s and onwards into the 20th C.

    Note also the shift, as mechanization allowed agriculture to advance in productivity to the point where, in 1880, ca. 80% of the US Labor force was working in Agriculture. By 1980, only 3-5% of the US Labor force was in Ag, even though food production was UP substantially.

    By about 1965, the IE peaked, as ca. 80% of the US Labor force was involved in goods production. You start to hear references to the “PostIndustrial” Economy at this point, “post-” meaning “after”, but also in this case, “We don’t know what the fuck it is”. By the mid 80s it had become fairly clear, we were the first nation entering into an “IP & Services Economy” — with its own set of organizational principles and directorships.

    At this point, the general understanding and agreement breaks down, because I assert that the processes of AE and IE are naturally hierarchical — they lead to “bigger and bigger” as the way to improve efficiency.

    I do suggest that, for the IE, the “mechanization” process is “roboticization”…. as factories get more and more automated, the number of workers needed diminishes drastically — in the end, we should expect that no more than 3-5% of the US Labor force involved in all forms of manufacturing (and this mainly for things that cannot be done by not-yet-developed “serious” 3D printers that strongly resemble Star Trek Replicators). While factory jobs will still be highly paid skilled jobs, there will never be all that many ever again.

    I assert that the organizational principle of an IPSE is inherently not an inverted tree, but a network. The “IP and services” work by an unrestricted and steady flow of information. While blockages can be a problem in an AE or an IE, they are a critical issue in an IPSE. Hierarchies lend themselves to blockages, as people who have information refuse to let it flow for petty political reasons (Dilberts’ “Mordac, Preventer of Information Services”, anyone?. Networks route around such problems and restore the flow. The information flow in an IPSE is the engine to construct wealth. It’s one of the reasons the modern concept of Copyright needs major revision, as it encourages considerable blockage of flow by its nature (that’s another discussion).

    THIS gets into some interesting queries as to what that organizational structure should be both called and how it needs to be legally treated and dealt with. It is probably something akin to the limited partnership, with one person potentially having multiple limited partnerships they work for/benefit from over the course of their lives.

  38. }}} For me technology is when the physical processes and science from physics, chemistry, or biology are applied to achieve some desired goal in real material space.

    Actually if you read my comments, you will probably find that I tend to assert that programming DOES match your notion of technology. I grant that some USES of programming by the end user might not, e.g., Photoshop.

    But coding almost always, in one form or another, models another process used by people. Even photoshop in one way or another mimics many of the processes used by a “classical” graphic professional to produce something — cut and paste, masking, etc., to produce a visual work which could be done — probably with a lot more time consuming and painfully precise actions — by hand.

    There is even a graphic software, Fractal Design Painter — which completely mimicked the painting process — you defined the material you were painting on (burlap, canvas, vellum, vinyl, paper, etc.) as well as the medium you used (crayons, pencils, oil paints, etc.) and the techniques you intended to apply them with (brush size, shape, including type, i.e., horsehair bristle, plastic, “finger”, etc. and/or airbrushing)

    You can even tell it to mimic some popular styles, such as “pointillism”.

  39. }}} to the IT guy deciding what would be seen on a customer receipt, they have control what the rest of us see.

    Again, not to harp on it, but here’s a prime example. The IT guy is rarely the one making this decision. It’s usually what is called in modern “Agile Software” terms as the “Product Owner”, which is the “client” the IT guy is working for, usually a “field expert” in the specific target for whom the software is being developed — they are helping the IT guy develop the overall model definition of what the software is to do. The function of the IT guy in this context is more about figuring out how to tell the computer how to model what needs to be modeled, rather than actually telling the computer WHAT to model. THAT is usually reserved for a specialist actor in the given field, e.g., a teacher, an administrator, a financial specialist, an insurance specialist, and so forth. The IT person becomes a lower-level expert across disciplines in the course of a career, but often there are still people out there who understand a lot more of WHY do it THIS way (on the front “end user” end, not the model itself) as opposed to some other way. The “SME” (Subject Matter Expert) is the one who understands the model most completely.

    Agile processes demand there be one and only one “Product Owner”, who is the one telling the “It Guy” (plurals) what to make. This person is generally (or should be) a highly trained SME who interacts with other SMEs at the client agency to define what the software should do. The purpose of this “There shall be only one” is the old “too many chefs spoil the pot”… you don’t want six different SMEs each pushing their own (possibly contradictory) visions at the IT group. By having “only one”, it forces the conflicts to happen before they reach the actual time consuming creation level of things.

    Mind you, there are feedback loops all around this process — the IT people can use experience to ask, “hey, what if we did this, instead of that?” (“Really? we never thought of that. Yeah, that’s a LOT better, let’s do it that way!”) as well as “We feel quite sure, before implementation, that this is going to be clunky and clumsy… are you sure THAT is how you want it to work?” (this can also be helped by mockups that let the client feel and/or see the actual process a bit, while saving lots of time over actually fully implementing it)

  40. The modern process of software development varies from company to company, with old-style “waterfall” processes being largely out of favor but still used due to company inertia, but moving towards modern iterative “agile” processes.

    Modern processes aim to break everything down to parts which can be accomplished in a short time, usually a couple weeks, almost always less than a month, called “sprints”, for obvious reasons. The designers define parts of the process they have prioritized to be done, and the coders then implement that, and the testers test it. then it may be shown to people, if the changes were visually relevant. And so the next iteration begins, with more “features” or qualities of the product added.

    The typical process runs from 3 months to 18 months, though it very much depends on the maturity level of the organization.

    As I understand it, Netflix actually has daily metrics and daily updates of their software. If new software is deployed, and the metrics say it lowers revenue below a certain threshold, it pulls out the changes and reverts to the older version… so they are constantly changing and updating their codebase.

    BTW, some of the above is why software that works just fine gets updated with some “new” ephed up design no one asked for, as the company (such as FB, which had an annoying #$%#^# update they foist off on everyone 6m to 1y ago) has this coding staff they have to keep busy and happy. Telling a software team “Don’t just do something, STAND THERE!” is like telling a bureaucrat not to spend your money. It ain’t gonna happen. 😛

  41. I don’t agree at all with the assertion that making things is inherently unprofitable. Taiwan Semiconductor Manufacturing is a silicon ‘foundry’, in the business of making chips that other companies have designed. Its market value at the moment is $558 billion, which compares nicely with that of $559 billon for Nvidia…which designs chips but has others (mainly TSM) make them.

    The *process knowledge* represented by a manufacturing capability is just as real an advantage as the knowledge embedded in a product design.

  42. OBloody Hell:

    Very imteresting, lots of information, well written!

    Software engineers at my previous job could be divided into three categories:
    those who programmed FPGAs, those who supported current production (bugs, revisions to keep up with hardware changes/end of life problems, etc.), and those involving new products/prototypes. Sort of black magic to me. A small company making very specialized high end instrumentation.

  43. }}} The *process knowledge* represented by a manufacturing capability is just as real an advantage as the knowledge embedded in a product design.

    LOLZ.

    “Process knowledge” is a form of IP. Note the second word of that term.

    This seems somewhat Duh? 😉

    (Not to be demeaning in any regard. I just consider it obvious once you look at it in that form)

    Much of the income from the iPhone 4 (there are certainly more recent breakdowns, but I cannot imagine much has changed) is in the form of process knowledge — how to make the thing, not actually making the thing. As I said, it is “Made In China” — and China got about 1.1% of its retail price, for making it.
    Source: https://mjperry.blogspot.com/2010/07/iphone-designed-by-apple-in-us.html

    The Taiwan fabs are making money for knowing how to make the things, not actually doing it.

    The only other aspect of “manufacturing” that you might apply for here would be the notion that a very very specialized factory that is not easy to replicate (again, though, more process knowledge)

    Another way to think about it… Modern electronic chips are basically very very very very precisely dirtied SAND.

    There is no way the value comes from the SAND. It comes from dirtying it “just precisely so”, i.e., knowing how and where to dirty it.

  44. Wow, very interesting discussion from OBloodyHell. I catch some of this on ChicagoBoyz, as he says, which I find another fascinating website. (David is also one of my favorite authors there.)

    I’m thinking about the Virtuals/Physicals distinction and feel that it still does have explanatory value in spite of OBH’s critique here. But this stems, in my case, from a self-consciousness about the fact that I don’t have a lot of serious hands-on practical skills, like those related to building, home and car maintenance (though I could figure out the more basic car stuff if I had to, at least short of the computer control mechanisms), or gardening, etc.

    I feel that I exist between the ‘virtual’ and ‘physical’ worlds, in a way. That goes in both my personal and professional lives. I work in pharmaceutical quality control, for example, so while my job supports the making of “stuff,” I’m not actually directly making said “stuff”. I’m fully aware that mine is a derivative or ancillary function in that context – not as ancillary or tangential as, say, HR, but at a remove from hands-on-product in any event. I don’t consider myself, from the economic point of view, fully aligned with either ‘side’ in this. Thus, I wonder if there’s room in the model for people like me. I think that, intuitively, there ought to be.

  45. @Philip Sells:

    There’s a pod in the Matrix for you until financial modeling and GAAP cum Tax Code Talmuderies decide that there’s not. Then… Poof! You’ll magically disappear in a puff of smoke and fairy dust.

    Now… About the Filioque… 😀

  46. Manufacturing and Knowledge…it was always that way. Andrew Carnegie remarked that “Let flood or fire destroy my plant from the face of the earth, but if I retain my organization, I would be whole again in six months.” Six months was surely optimistic, but his point was that the key factors were the knowledge possessed by the people, and their experience in working together.

    In a 2010 column, David Brooks said: “In the 19th and 20th centuries we made stuff: corn and steel and trucks. Now, we make protocols: sets of instructions. A software program is a protocol for organizing information. A new drug is a protocol for organizing chemicals. Wal-Mart produces protocols for moving and marketing consumer goods. Even when you are buying a car, you are mostly paying for the knowledge embedded in its design, not the metal and glass.”

    This was historically ignorant. The 19th and 20th centuries were also “knowledge economies” (in Karlgaard’s formulation) or “protocol economies” (in the Brooksian terminology). The value of a Boulton & Watt steam engine was not in the “stuff” it was made out of (which could be purchased for a far lower amount than you would pay for the steam engine itself) but rather for the design knowledge contributed by James Watt and the manufacturing process knowledge (protocol knowledge) contributed by Matthew Boulton..and for innumerable additions to that knowledge base by their employees. To take a more recent example, the early 20th century assembly line as implemented by Henry Ford, and the kinds of precise work planning and industrial engineering developed by Taylor and the Gilbreths, certainly represent “protocols” just as much as do Wal-Mart’s supply-chain management procedures.

    One could argue that a “protocol” in the form of pure software has no variable cost, unlike a physical product. But in reality, the software is only usable when it is incarnated into a physical device such as a computer. And many of the highest-value forms of software are in fact sold only as an embedded part of a physical device: iPhones, aircraft autopilots, and CNC machine tools, for example. And Wal-Mart obtains financial value from its supply-chain management expertise only when the results of that expertise are sold in the form of “stuff.”

  47. If a Little Green Man appeared and killed every programmer in Silicon Valley, iPhones would still work. And the code base exists in multiple places so would be back up and running and churning out patches and updates in less than a year.

    If that little Green Man killed the top 100 people at TSMC who have the many man years accumulated knowledge secret sauce tweaks which allows insanely expensive but well-understood precision machinery from mostly Japanese and European manufacturers to work together to produce economic yields… Then all bets are off. The only glass-half full in that scenario is the knowledge that these processes *can* be made to work. At least by a small number of very smart Taiwanese (this is a bit that GloboHomo MBA Man doesn’t factor in properly, too.. That maybe just maybe it’s not all fungible and it might take a certain culture and temperament and lack of PC to pull it off.) of a certain time and place. Zero evidence to suggest that Empowered Shaniqua can make it happen. That’s worth a lot to an investor. But how many years would it take? I for one do not want to find out.

  48. @David+Foster:

    I’ve always wondered how (say) measurement instrument making bootstrapped itself.

    Obviously you’ll know what I mean, but for others maybe:

    I have best set of vernier calipers in the world. They can resolve down to 0.1mm.

    How do I go about manufacturing vernier calipers which can resolve 0.01mm given existing instruments are 10 (or some value of n) times less capable?

    With angular measurements, can imagine geometric construction ‘trickery’ would be the angle (sic) of attack. But for measuring distance or thickness? Reducing Pantograph? (which would be Euclidean Trickery again.)

  49. OBH and others: great set of comments.
    I especially agree with “there are feedback loops all around this process” for things to evolve and zero-in on the better/best solutions, etc.

    And related to that is David Foster’s remark “…the key factors were the knowledge possessed by the people, and their experience in working together.”
    Which leads to Phillip Sells “… a derivative or ancillary function in that context” such that his knowledge and skills are a “cog” within the organization. But it is this type of diversity, multiple layers of contributors across many areas of knowledge, that is what results in our complex but successful interdependent, cooperative, trust based, society and civilization. The DIE type of diversity is irrelevant to this success, and perhaps even harmful to its achievement.

    Not positive, but I suspect the bootstrapping happens by recognizing that additional care, cost, and attention can lead to the next advance. If you needed a 10 tooth gear before, maybe now you need a 50 tooth gear, etc. And you may need to stand on the shoulders of others from the same or a different field. Making a 50 tooth gear may require metal alloy changes for improved strength or toughness or ??? Or improved cutting head materials, etc.

  50. Z, there are videos on screwtube about precision, measurement/metrology, and manufacturing that explain these things and the history of this science and application.

  51. om writes, “Z, there are videos on screwtube about precision, measurement/metrology, and manufacturing that explain these things and the history of this science and application.”

    If om and Zaphod can reach rapprochement can peace in Ukraine be far off?!

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