[pagliara]

He never said convexity is a new concept. In the context of the industrial economy, convexity is a new problem because the past 100 years of industrial economic development has relied on concave work that is now being outsourced to computers.

[shawn-butler]

Ok. That was not my interpretation of his long essay which includes no context of existing literature on the subject the absence of which leads me to believe the author believes the term or concept is novel.

Your interpretation is equally fair and interesting but seems off-topic because isn't the efficient creation of correct source code almost exclusively the domain of human work? I probably misunderstand you.

[michaelochurch]

I would say that I've "independently discovered" convexity. I'm the first (to my knowledge) to use it to describe human performance at work. I'm far from the first to have the idea. Traders talk about gamma (yep, one of those Greeks) which is the second derivative of an asset's sensitivity to an underlying price. If your portfolio has positive gamma with respect to an underlying, that means you benefit from (zero-mean) volatility in it.

What I realized at some point was that labor tends to be split between "fun" work that has extreme inequality (e.g. writing novels) and volatility, and boring, commodity work. I started reading up on the economics of labor and S-curves (logistics) kept coming up and I realized what was going on.

An industrial enterprise is, in truth, much like an artificial neural net, because it's a bunch of logistic input/output relationships feeding into each other.

It's a simple matter of calculus to show that the old industrial optimization (maximum yield on capital, within bounded risk constraints) favors concave work, and that explains a lot about why businessmen have favored it. But now it's all being automated, because machines are even better at it (more precision) than we are.

That leaves us doing convex work, but there are some serious social problems in a world where (a) concave work is increasingly being gobbled up by machines, but (b) there's no basic income for people who can't supply convex work (again, the only stuff that needs humans) to the market at a living wage. See: http://michaelochurch.wordpress.com/2013/04/03/gervais-macle...

We're in the beginning stages of seeing Convexity on the larger scale, as people struggle to get the corporate jobs that our parents' generation took for granted.