Life After Google

Author: George Gilder

Snapshot

Life After Google makes the case that the model of big data companies, and Google in particular, will not survive the ongoing advancements in encryption technology. This, Gilder argues, is largely because the big data model relies heavily on free access to the personal information of users, which users will choose not to give when that option becomes easy and inexpensive.

Gilder points out that another potentially devastating liability of big data is their reliance on high-cost, centralized server-centers. These must be built, maintained, and run (with ample supplies of electricity) even as the tech they were built on becomes more and more outmoded. All of this must be paid for through advertising revenue collected by offering free services to people who don’t want to be advertised to — people who are willing to pay for services that circumvent both ads and the hidden surveillance those ads depend on.

At the root of Gilder’s critique is the idea that the ad-based model of big data is an attempted end-run around value-for-value market transactions. Google, he suggests, is in the business of conjuring the illusion of free — while funding that illusion by surreptitiously commodifying its users. Even if Gilder is right in the long run, it’s anyone’s guess how long most users will be content with the status quo: we’ve become quite comfortable paying for access to tech (think global communication, navigation, etc.) by turning a blind eye as huge corporations monetize our personal information.

Scope of the Book

Although the finer points of this book may elude the average reader (as they did me), one aspect that is hard to miss is how multi-faceted and interdependent internet technology has become — not only as the infrastructure for myriad forms of communication, but all the more so as a forum for monetary transactions. Gilder takes on the full scope of these interdependent, evolving relationships, from the historical development of information theory to the code behind our browsers.

He chronicles and explains a philosophy of money, the evolution of microchips, the limits of A.I., the rise of cryptocurrencies, remote graphics rendering services, fintech, 5G, graphene, Markov chains, net neutrality, an alternative “trust-to-trust” design for the internet, the role of gold in monetary systems — while interweaving over a dozen vignettes of important innovators and entrepreneurs, from Isaac Newton and Kurt Gödel to Peter Thiel and Satoshi Nakamoto.

Gilder is driving at the idea that these men and women are ushering in a new “system of the world” that will supplant Google et al.— a system built on new technology that restores the security of personal information and data rights, severing our dependence on the data centers and processing power of the leviathans.

Sundry Notes & Quotes

*Where I’ve quoted the book, I use quotation marks. Otherwise, the verbiage is my own synthesis of, or commentary on, the information Gilder presents.

An Exemplary Underdog

In Silicon Valley, it’s seen as suicidal to compete with Amazon and Google by building infrastructure. This consensus was powerfully confirmed by two of the greatest success stories of the past decade, Netflix and Instagram, both of which scaled up to a valuation of scores of billions by using AWS. Through a risky gamble and lots of hard work, Stephen Balaban and his team at Lambda Labs discovered a profitable niche in the space dominated by AWS and Google.

After developing an image-augmentation app and paying AWS’s exorbitant rendering fees, Balaban decided he would invent a better solution. Once he had done so, he marketed his “Deep Learning Devbox” to others who needed powerful cloud-based processing but, like him, didn’t want to pay ongoing premiums to the tech giants.

Our Own Frankenstein

The experts keep warning us about the day when our real-life Frankenstein will arise and wreak havoc: too powerful and too autonomous for us to control. Yet even as we wait for some general A.I. to become self-aware and self-serving, we have already unleashed a technological apparatus of global influence and power that threatens us spiritually, emotionally, socially, intellectually (rather than physically) — but because it doesn’t look like the threat we envision, we don’t see it as a threat at all.

Recursive Self-reference

“Every logical system necessarily depends on propositions that cannot be approved within the system… [Alan] Turing showed that just as the uncertainties of physics stem from using electrons and photons to measure themselves, the limitations of computers stem from recursive self-reference. Just as quantum theory fell into self-referential loops of uncertainty because it measured atoms and electrons using instruments composed of atoms and electrons, computer logic could not escape self-referential loops as its own logical structures informed its own algorithms.”

“The currencies that central banks manage today have no anchor in gold and thus suffer from the self-referential circularity of all logical systems not moored to reality outside themselves.”

C.S. Lewis’s essay, “Transposition”

“If you lived in a 2D landscape painting, how would you respond to someone earnestly telling you that the 2D image was just the faintest reflection of a real 3D world? Comfortable in the cave of your 2D mind,” you would have theories that explained all your experiences in 2D terms. (The terms themselves are developed within, and in order to make sense of, the 2D environment. By design, therefore, they can only confirm the 2D hypothesis).

Gold, Double Standards

Even under historical gold standards, the expansion of the money supply (of gold coins) has borne no proportionality to gold mining production. This is because there are other sources of gold, apart from new production, that can be minted into coins. In order for a gold-backed money supply to grow in lockstep with gold mining, it would have to limit its expansion to mirror mining production, but this limiting has never been truly practiced.

A Mercurial Measuring Stick

One of the main functions of money is to measure value, just as a yardstick measures length. This is an important, essential function. The problem is that money is not based on a physical constant, as are our other primary metrics, such a seconds, amps, etc. Instead, the value of money is based on demand. Fluctuations in demand for money change its value. Therefore, our unit of value-measurement is inherently unable to render consistent measurements.

In order for the value of money to be stable, as the length of a meter is stable, its measuring function has to be separate from its exchange function. Meters and seconds have coordinating value as standards, but they do not have exchange value; they cannot be traded for other goods because they are merely static ideas in the public domain. Indeed, their entire value proposition depends on their constancy.

Time Is Money

“Time is what money measures and represents — what remains scarce when all else becomes abundant.”

Time is a feature of the physical world; its equivalent in the world of economics is what we call Money. The value of money is rooted in the value of time, and the value of time is rooted in the inevitability of our individual deaths. In this sense, death is a physical constant that makes Time valuable by enforcing its scarcity. The pursuit of infinite speed is the attempt to escape the prison of Time.

Price Stability

To achieve ongoing price stability (without coercion), there would need to be a 1:1 ratio between monetary expansion and economic productivity. If the money supply outpaces productivity, more dollars chase fewer goods. The goal of a stable monetary measuring stick is incompatible with the goal of stable prices. If we prioritize price stability, we have to control productivity or manipulate the value of money, because technology is forever improving economic efficiency, increasing productivity.

Financial Hypertrophy

“The hypertrophy of finance — up near 40 percent of business profits — has coincided with the decline of GDP growth.”

“Currency trading is roughly 100 times greater than all the world’s stock market transactions and 26 times more voluminous than the world’s GDP.”

“Derivatives, exchange traded funds, and other specious forms of liquidity separated the scale of bank balance sheets from the scale of real household business activities… Lending to companies is limited by the amount they wish to borrow [but] there is no corresponding limit on the volume of transactions in derivative financial instruments.” Mervyn King, former governor of the Bank of England

Bitcoin’s Appeal

“Bitcoin appreciates every time a central bank promotes spurious growth with negative interest rates and inflation targets, raiding the retirement savings of pensioners. The Federal Reserve’s inflation target is currently 2% per year, a program of massive ultimate evaluation. As Socialism advances in many countries, debauching their currencies, people incrementally flee to the one global and relatively secure haven accessible through the Internet.”

Net Neutrality

“Internet Neutrality” is a misleading term. The main issue is not the neutrality of the internet, but the impartial transfer of internet data by telecommunications companies, such as AT&T and Verizon. However, this ideal ignores the critical differences in the many types of data handled by these carriers:

“Engineers know that voice, video, 3-D interactive games, virtual reality, financial transactions, 911 calls, streaming music, messages, content delivery networks, email, radio ID systems, software downloads, the Internet of Things, and machine-to-machine links are technologically different in almost every aspect. No carrier can treat them the same. A law that requires treating them the same is merely a mandate for constant litigation and arbitrary government power.”

“In practice, the only factor that makes any serious difference for Internet neutrality is investment in bandwidth. If bandwidth is scarce, it will have to be allocated preferentially, regardless of the laws… If band with is abundant, neutrality laws are unneeded… Strangely enough, the key threat to actual network neutrality today is the national network neutrality campaign, which deters investment in bandwidth…”

“The reason for the inadequate investment is that, apart from alcohol and tobacco, telecom is the nation’s most heavily taxed and regulated industry, and it is capital-intensive and changing more rapidly than any other industry. Now with 5G and the blockchain, it is entering an era of new opportunities. Yet companies such as Google urge politicians to treat this turbulent arena as a public utility.”

Noteworthy Tidbits

“Prosperity only happens when there is no easy way for people to produce money, and instead they have to produce useful things.” Saifedean Ammous

Wahsington’s rule: If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.

The FCC auctions off swath of airwaves for billions of dollars, regulating who is allowed to use which bands of the electromagnetic spectrum.

Yuan Fen, the Chinese concept of the fate that brings people together.

“The vast resources of the data centers, costing Google an estimated thirty billion dollars to build, are provided essentially for free.”

Parallel processing was the solution to Mundie’s Wall, the limit of smallness in transistors.

Both Turing and Gödel proved that logical systems such as computers require an “oracle” beyond the system to provide values, objectives.

“Bitcoin is really a massively multiplayer online game… ingeniously designed to infiltrate and transform our world.”

Bonds, which are an investment in the eyes of the buyer, are to the issuing government a means of injecting or extracting liquidity in its ongoing attempts to regulate the economy.

Carnegie Mellon information theorist, Herbert Simon: “What information consumes is the attention of the recipients. A wealth of information creates a poverty of attention, and the need to allocate that attention efficiently among the overabundance of information sources that might consume it.”