The Indian Challenge to Blockchains: Digital Public Goods
In my post, Blockchains and the Opportunity of the Commons, I explored the potential of blockchains to create new commons:
Blockchains and tokenization are a way to incentivize the creation of a commons. A commons is an unowned place, platform, or protocol that helps people to meet, communicate and transact. Commons underlying modern life include TCP/IP, SMTP, HTTP, GPS and the English language. We don’t see these commons clearly because they are free, ubiquitous and, like air, taken for granted. What we do see are platforms like Airbnb, Uber and the NYSE and places to meet and communicate like OkCupid, Twitter, Facebook and YouTube. What blockchain and tokenization offer is the possibility of creating commons to replace all of these services and much more.
For the most part, the potential has not been realized. But the core idea of substituting a protocol for a firm has been taken in a different direction in India. Instead of blockchains, India has been experimenting with digital public goods. A digital public good is open source software with open data and open standards–available for use or even modification and adaption by anyone. The blockchain community, for example, has long aspired to develop a blockchain-based Uber, connecting drivers and riders without a corporate intermediary. India has achieved this through digital public goods instead.
Namma Yatri is an open-source, open-data Uber-like protocol with 100% of the commission flowing directly from rider to driver. Namma Yatri is built on the Beckn Protocol, a product of the Beckn Foundation which is backed by Infosys co-founder Nandan Nilekani (Tyler and I had the opportunity to talk with many people behind the project including Nandan on a recent trip to India). Namma Yatri has booked over 15 million trips in just one year of operation, mostly in one city, Bangalore. I expect it will expand rapidly.
Namma Yatri is only one example of a digital public good in the India Stack, a collection that includes identity (Aadhaar), payments (UPI) and digital data sharing (e.g. digital lockers). Since its launch in 2008, for example, India’s Aadhaar system has created a digital identity for over 1.2 billion people allowing them to open some 650 million bank accounts. This has enhanced financial inclusion and facilitated direct government payments of pensions and rations, reducing corruption. Likewise, the UPI system built modern payment rails which are then leveraged by banks and firms such as Google Pay and WhatsApp. The resulting payments system does some 10 billion transactions a month and is one of the fastest and lowest cost in the world.
Challenges remain. The development of digital public goods relies on funding from non-profits, governments, and private consortiums, raising questions about long-term sustainability. These goods need regular maintenance and updates, and some require backend support. Namma Yatri began as a completely free app for drivers and users but if there is a problem who do you call? To support the back-end office, and to pay for updated inputs (such as maps) the service has started to use a subscription fee. Nothing wrong with that but it’s a reminder that firms are not so easily dispensed with. Privacy is another concern. While blockchains offer privacy at the technology layer, privacy for digital public goods depend on legal and normative frameworks. For instance, India’s Aadhaar system is legally restricted from police use, a smart balance that needs to be maintained in changing times.
Despite these challenges, there is no denying that India has built digital public goods at scale in a way that demonstrates an alternative pathway for digital infrastructure and a challenge to blockchains.
Solving for the equilibrium
We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners. We look forward to getting to know Emmett…
— Satya Nadella (@satyanadella) November 20, 2023
And here is from Emmett Shear.
My favorite fiction books of 2023
These were my favorite fictional works from this year’s reading:
Mircea Cartarescu, Solenoid. About communist Romania, long, profound, a major work of fiction which can justifiably enter the pantheon.
Tezer Özlü, Cold Nights of Childhood. A Turkish novella, originally published in 1980, newly translated into English and the first English-language book by her. Here is more on the author. Only 76 pp., can be read in one bite.
Rebecca F. Kuang, Yellowface.
J.M. Coetzee, The Pole.
Dostoyevsky, The Brothers Karamazov, new translation by Michael R. Katz. I am on about p.200, so far my favorite of the major translations.
Juan Rulfo, Pedro Páramo, new translation.
Ovid, Metamorphosis, new translation by Stephanie McCarter. I have only browsed this one, but expect it to be very good.
I will of course provide an update by the end of the year, if only because the new Ha Jin novel is coming soon.
What would you all recommend?
Labor market evidence from ChatGPT
So far some of the main effects are quite egalitarian:
Generative Artificial Intelligence (AI) holds the potential to either complement knowledge workers by increasing their productivity or substitute them entirely. We examine the short-term effects of the recent release of the large language model (LLM), ChatGPT, on the employment outcomes of freelancers on a large online platform. We find that freelancers in highly affected occupations suffer from the introduction of generative AI, experiencing reductions in both employment and earnings. We find similar effects studying the release of other image-based, generative AI models. Exploring the heterogeneity by freelancers’ employment history, we do not find evidence that high-quality service, measured by their past performance and employment, moderates the adverse effects on employment. In fact, we find suggestive evidence that top freelancers are disproportionately affected by AI. These results suggest that in the short term generative AI reduces overall demand for knowledge workers of all types, and may have the potential to narrow gaps among workers.
That is from a new paper by Xiang Hui, Oren Reshef, and Luofeng Zhou, via Fernand Pajot. And here is an FT summary of some key results.
I would stress this point, however. As more ordinary life and commerce structures itself around AI, more and more AI-driven or AI-enable projects will become possible. That will favor those who are good at conceiving of projects and executing them, and those longer-run effects may well be less egalitarian.
Sunday assorted links
2. My New Statesman interview about the UK.
3. Electric air taxis for NYC?
4. Metaphor does something with MR’s assorted links, don’t ask me exactly what.
5. EA commentary from Brian Chau, his representation of my remarks is accurate.
What do we know about non-profit boards?
In fact, however, a reasonable consensus of experts on NPOs [non-profit organizations] agrees that their governance is generally abysmal, worse than that of for-profit corporations. NPO directors are mostly ill-informed, quarrelsome, clueless about their proper role, and dominated by the CEO — as proponents of shareholder primacy would predict.
Here is the full paper by George W. Dent, Jr. Here is the more general literature.
My summary views on AI existential risk
That is the topic of my latest Bloomberg column, written and edited by the way before…all that stuff happened at Open AI. Here is one excerpt:
First, I view AI as more likely to lower than to raise net existential risks. Humankind faces numerous existential risks already. We need better science to limit those risks, and strong AI capabilities are one way to improve science. Our default path, without AI, is hardly comforting.
The above-cited risks may not kill each and every human, but they could deal civilization as we know it a decisive blow. China or some other hostile power attaining super-powerful AI before the US does is yet another risk, not quite existential but worth avoiding, especially for Americans.
It is true that AI may help terrorists create a bioweapon, but thanks to the internet that is already a major worry. AI may help us develop defenses and cures against those pathogens. We don’t have a scientific way of measuring whether aggregate risk goes up or down with AI, but I will opt for a world with more intelligence and science rather than less.
As for the corporate issues, I am hoping for a good resolution…
The cross-sectional implications of the social discount rate
Maya Eden has a new paper on this topic, I believe it is forthcoming in Econometrica:
In this paper, I consider two normative questions: (1) how should policymakers approach tradeoffs that involve different age groups, and (2) at what rate should policymakers discount the consumption of future generations? I demonstrate that, under standard assumptions, these two questions are equivalent: caring more about the future means caring less about the elderly. Even small differences between the social discount rate and the market interest rate can have significant quantitative implications for the relative value placed on the consumption of different age groups.
To get to the paper, look here and then click on the first link. Some of you will recall that I make a similar argument in my Stubborn Attachments.
Elsewhere on the discount rate front, the OMB is calling for lower discount rates in policy analysis. I’m all for that, but the trick is to apply them consistently, not just use them to rationalize particular government expenditures. Will we at the same time start spending less money on the elderly and more money on the young? Otherwise obsess over growth-enhancing policies? To ask such questions is to answer. If only our institutions took their own work seriously on discount rates…
Saturday assorted links
Ken Opalo is more optimistic about Africa (from my email)
Just a quick note that the story isn’t a straightforward “lost decade.”
Human development indicators (health, education, housing) are up. Lots of infrastructure is being built all over the place. The real challenges behind the growth slowdown are:
1) productivity increases have stalled since about 2014 (and was higher than India’s for a while
2) delayed fertility transition continues to depress the per capita income measure.More on this here: https://kenopalo.substack.com/p/there-is-an-urgent-need-to-unlock
Best,
Ken
*Lineages of the Feminine*
That is the new book by Emmanuel Todd, subtitled An Outline of the History of Women and mostly on the feminization of society. It does not cohere, and spends too much time wallowing in pseudo-anthropology, but it has a number of interesting bits. Here is from the preface:
The feminist revolution is a great thing (I’m an ordinary Westerner on the point) but we are not yet able to see how much the emancipation of women has radically altered the whole of our social life. Because we always see women as minors, as victims, we do not place them, for better or for worse (i.e., like men) at the centre of our history: they are the protagonists, for example, in the rejection of racism and homophobia, but they are also the unconscious protagonists of our neoliberalism, or deindustrialization and our inability to act collectively….we must accept that the inequalities between human beings in general, in the West, have increased at the same rate as the decrease in inequalities between men and women
The original pointer was from Arnold Kling’s review.
What is your favorite book that no one else you know likes?
I do mean no one. You have to really like this book, have no other friends or colleagues who like it, and still think the book is very good, not just the product of your own contrarian snottiness.
I have my pick: Nancy Scheper Hughes’s 1992 study Death Without Weeping: The Violence of Everyday Life in Brazil.
Part of the GPT-4 summary runs as follows:
The central premise is the apparent paradox that mothers in this region seem to accept the death of their infants without the expected level of grief or weeping. Scheper-Hughes explores the sociocultural and economic factors that have led to a situation where such high infant mortality is normative and somewhat “accepted” as a part of life. This acceptance is a survival mechanism in a context where the death of children is so common due to factors such as malnutrition, dehydration, and lack of adequate healthcare.
It’s not that I know people who reject this book, rather I don’t currently know anyone who would read a 556-page work on medical anthropology/conflict studies in northern Brazil.
A long time ago, I would have nominated Rene Girard here, perhaps Theatre of Envy. But he has since grown in popularity.
What are your picks, and why?
Two simple points
1. In a basic Cournot-Nash model, as the number of firms increases, price falls and very often the pace of innovation increases.
2. The more competitive a market, the more likely that a more “conscientious” firm is only epsilon “better” than its competitors.
Think about it! #Strauss
*Holy Spider*
A very good Iranian movie, the first half feels like David Fincher but in Farsi. It is about a serial killer, so you must be able to tolerate some difficult scenes. The second half takes some brilliant and creative turns, concerning broader Iranian society. I dare not divulge those for fear of spoiling the suspense for you. The movie also bears on the current role of Iran in the Middle East conflict and has a definite Straussian side. Recommended, for those who can. On Netflix.