Why Bitcoin and alt coins will offer “a new money menagerie”
That is the topic of my latest Bloomberg column, here is one excerpt:
Alt coins may be effective hedges for at least two reasons. First, the value of the coin may depend on how well the original rules for the coin were written, or how well it is governed in the case of managed coins like Ethereum or Ripple. Those factors may be fairly independent of what’s driving returns in traditional stocks and bonds, which in turn creates an opportunity for diversification.
Under these scenarios, alt coins are primarily stores of value rather than media of exchange. There is a notable tendency for exchange media to consolidate into a dominant currency in a given geographic region. But the very large number of financial assets in the world shows that thousands of stores of value can coexist and compete without much consolidation.
Second, alt coins to some extent are used for money laundering. If you think the world might be moving toward greater authoritarianism, the demand for money laundering could go up, to evade capital controls or asset restrictions. The value of alt coins would rise in turn, and that means alt coins would provide partial insurance against this very possible but unpleasant future path.
There is much more at the link. Overall I believe it is a mistake to focus too much on the medium of exchange function of such coins (“Can I use it in the store? I heard there are some food trucks taking Bitcoin!”, etc.). Instead think of them in terms of services offered. A new coin also may back, complement, and introduce a new protocol, though I didn’t have space to cover that in the column.
A few of you have asked me about the recent Bitcoin fork, here is one technical look at the issues.
I am struck by the notion that, of the two forked assets, the old-style, slow, and “immutable” Bitcoin retained most of the market value and trading interest. While that happened for a few reasons, I wonder if the market isn’t telling us that, at least when it comes to selecting the most dominant asset, it prefers a “rigid coin” to a coin managed by a company such as Ethereum or Ripple, or to a coin “managed” by votes and forks. In other words, the governance problems with coins may be larger than we had thought, and voting may deepen rather than solve those problems. The market seems to like fairly rigid constitutions. And for all the pledges made by company-run coins, is there really no way for those companies — in their post-founder futures if not now — to pursue their own interests over those of other coin holders and users? Since Benjamin Klein (1974) or earlier, we have known that is a classic problem with non-convertible private monies.
To what extent does the market prefer the “dogmatism” of classic Bitcoin to the discretion of private management? Not long ago, I had edged toward the view that Ethereum and its neat properties will displace Bitcoin, but now I suspect both kinds of coins will persist.
The brilliant Matt Levine will make your head spin.
Moral hazard from Sicilian volunteers
Fifteen volunteer firefighters have been arrested in Sicily on suspicion of starting wildfires and reporting non-existent blazes so they could earn €10 (£9) an hour for putting them out.
Police in Ragusa province, in the south of the Mediterranean island, said the fire department became suspicious when it emerged that the auxiliary brigade had responded to 120 incidents compared with just 40 tackled by other volunteer teams over the same period.
The brigade commander, a refrigeration technician identified as DDV, was deemed dangerous enough to be held under house arrest, the Ansa news agency reported, because he was suspected off continuing to start fires after others had stopped.
Most of the remaining team members, whose private phone calls were recorded as part of the investigation, have since admitted calling the 115 emergency number or getting friends or relatives to do so.
Here is the full story.
America $15 minimum wage fact of the day
In West Virginia, the median hourly wage is just $14.79; in Arkansas, it’s $14.48; and in Mississippi, it’s a depressingly low $14.22.
That is from an excellent column by Catherine Rampell, do read the whole thing.
Wednesday assorted links
2. We should let pharmacists administer flu shots.
3. Interview with Judd Apatow.
4. China, not President Trump, is suddenly helping US steel.
5. The new book burnings: “I have never seen social interaction this fucked up,” she wrote in an email. “And I’ve been in prison.”
6. Ross Douthat NYT.
Support for Redistribution is Shaped by Compassion, Envy and Self Interest not Fairness
Hayek argued that support for redistribution was driven by emotions that had been optimally evolved for small, hunter-gatherer societies but that were now at tension with the rules necessary to create an extended social order such as under capitalism.
Support for Hayek’s hypothesis is given in a new paper by Sznycer et al. (et al. including Cosmides and Tooby). The authors use surveys to measure an individual’s disposition to compassion and envy. For example, for compassion there are 11 items such as “I suffer from others sorrows,” or (negative) “I tend to dislike soft-hearted people,” and for envy there are questions like “It is so frustrating to see some people succeed so easily”. In each case there is a scale from strongly disagree to strongly agree. The authors also ask whether the respondents think a tax on the wealthy would benefit them (measured on a 1 to 5 scale).
What makes these three items–compassion, envy and self-interest– interesting is that each of these can be understood as having evolved for functional reasons in the ancestral environment (see the paper for cites and arguments.)
In contrast, “fairness” is a much more abstract and difficult to define concept and because it is based on groups rather than on interpersonal relations it is not clear how it would have evolved in the ancestral environment. The authors measure the demand for distributional fairness by asking a variety of questions about hypothetical distributions and they use survey questions such as “the law of the land should apply to everyone in the same way” to measure support for procedural fairness.
The main things to be explained are support for redistribution (again measured via a questionnaire) and private giving to charity. The authors have just over six thousand participants over four countries (the U.S., India, the UK and Israel).
A key finding:
Compassion, envy, and self-interest independently predict support for redistribution in four countries with different economic histories and distributional policies. This is consistent with an evolutionary-psychological approach…the effects of fairness as a group-wide concern is unreliable and of far smaller magnitude than the effect of the emotion/motivational triplet.
A scary/sad finding:
Respondents were given two scenarios, a 10% tax on the rich that led to X dollars for the poor or a 50% tax on the rich that because it reduced incentives led to X/2 dollars for the poor. This experiment was run in America, India and the UK.
Fourteen percent to 18% of the…participants indicated a preference for the scenario featuring a higher tax rate for the rich even though it produced less money for the poor.
It’s easy to be skeptical of survey answers (I prefer measured actions) but answers on questions like this have been shown to be predictive for a variety of behaviors and there is an internal logic among the answers that suggests real motivations and behaviors are being measured. Most notably, compassion and envy both predict support for redistribution but only compassion predicts private giving to charity.
Addendum: It is a scandal that so few of Hayek’s works are available online. I believe this is a serious detriment to Hayek research.
What happens when you buy a San Francisco street (incognito) what would Henry George say?
Thanks to a little-noticed auction sale, a South Bay couple are the proud owners of one of the most exclusive streets in San Francisco — and they’re looking for ways to make their purchase pay.
My favorite things Austria — Gustav Mahler
Let’s cut to the chase:
1. Symphonies #1, 5, and 7 are dominated assets, the latter two being too sprawling. #8 is meant to be seen live, and #10 isn’t Mahler’s finished version. #4 is attractive, but somewhat lightweight.
2. #2 requires a very good recording, my favorite is Stokowski with the London Symphony Orchestra, even though he changes the score. If you can’t find that, try Abbado or Levine, both of those two being good default choices for Mahler. Those two conductors are also good choices for #3, another symphony in the Mahler pantheon.
3. #6 is the most nerve-wracking and insane and requiring of full volume. I’m still looking for the perfect recording of that one, sometimes I like Barbirolli.
4. #9 is the best music, I recommend von Karajan.
5. Pierre Boulez offers an alternative perspective on any of these symphonies, plus he has one of the very best Das Lied von der Erde recordings, that song cycle being part of the canon of essential Mahler works.
6. The quality of your listening conditions is especially important for Mahler. And during any listen a) try to spot the Austrian folk tunes, and b) think of Mahler as one of the greatest opera conductors, including for Mozart, of his time.
7. A short piano piece by Mozart, as a palate cleaner, sounds especially good after a Mahler symphony.
That’s what you need to know.
Who’s complacent?, stress reduction edition lower the value of signaling
A University of Georgia professor has adopted a “stress reduction policy” that will allow students to select their own grades if they “feel unduly stressed” by the ones they earned.
According to online course syllabi for two of Dr. Richard Watson’s fall business courses, he has introduced the policy because “emotional reactions to stressful situations can have profound consequences for all involved.”
Here is a bit more, but you get the idea. On RateMyProfessor, some considered him tough.
Tuesday assorted links
1. I don’t think I would buy oysters from a vending machine.
2. Buy Buchanan’s house for $239k. No vending machine.
3. How barbed wire changed America.
4. Why do rich people love endurance sports? (speculative)
5. Katherine Boo offers some rules for creative non-fiction.
6. A murder committed by a game theorist. He was caught.
I discuss *Stubborn Attachments* with Russ Roberts
Here is the podcast and partial transcript. Russ describes it as follows:
Tyler Cowen of George Mason University and the co-host of the blog Marginal Revolution talks with EconTalk host Russ Roberts about Stubborn Attachments, his book-length treatment of how to think about public policy. Cowen argues that economic growth–properly defined–is the moral key to maintaining civilization and promoting human well-being. Along the way, the conversation also deals with inequality, environmental issues, and education.
Self-recommending!
Consumption inequality just hasn’t gone up that much
The new NBER paper is “Consumption and Income Inequality in the U.S. Since the 1960s,” by Bruce D. Meyer and James X. Sullivan. Here is the abstract:
Official income inequality statistics indicate a sharp rise in inequality over the past five decades. These statistics do not accurately reflect inequality because income is poorly measured, particularly in the tails of the distribution, and current income differs from permanent income, failing to capture the consumption paid for through borrowing and dissaving and the consumption of durables such as houses and cars. We examine income inequality between 1963 and 2014 using the Current Population Survey and consumption inequality between 1960 and 2014 using the Consumer Expenditure Survey. We construct improved measures of consumption, focusing on its well-measured components that are reported at a high and stable rate relative to national accounts. While overall income inequality (as measured by the 90/10 ratio) rose over the past five decades, the rise in overall consumption inequality was small. The patterns for the two measures differ by decade, and they moved in opposite directions after 2006. Income inequality rose in both the top and bottom halves of the distribution, but increases in consumption inequality are only evident in the top half. The differences are also concentrated in single parent families and single individuals. Although changing demographics can account for some of the changes in consumption inequality, they account for little of the changes in income inequality. Consumption smoothing cannot explain the differences between income and consumption at the very bottom, but the declining quality of income data can. Asset price changes likely account for some of the differences between the measures in recent years for the top half of the distribution.
This is one big reason why you can believe income inequality is high and/or rising, and not see it as the most significant normative issue.
Intimacy directors: those new service sector jobs
…the theater and film industry are beginning to recognize the need for “intimacy directors,” people who specialize in choreographing onstage intimacy.
They are practitioners who use concrete guidelines and techniques, such as the “four pillars” of intimacy direction, according to Alicia Rodis, a member of Intimacy Directors International.
Consent: Get the performers’ permission — including concrete boundaries and out of bounds body parts, and do it before you start.
Communication: Keep talking throughout the process. What’s working, what’s not, who’s touching who and how and do they feel safe.
Choreography: Performers wouldn’t spontaneously add an extra pirouette to a dance number or an extra kick to a fight scene. Don’t add an ass grab or extra kissing.
Context: Just because you kiss someone in one scene doesn’t mean you can kiss them in another scene without communicating about adjusting the choreography and seeking consent to do so. Just because someone is topless with you on stage, it doesn’t mean they won’t mind being topless around you offstage, or in another scene onstage.
To explore the ideas of intimacy and safety on stage in a variety of situations, LEO spoke with Rodis, as well as Tony Prince, a local director; and Sarah Flanagan, a Louisville-based fight director.
And:
Rodis, the New York intimacy director, started as a fight director, and that led to her new focus. She shared one experience from that evolution.
“There was one show I was working on where there was a woman who slapped the man and then kissed him. So I was brought in for the slap.”
She ended up working on the slap and the kiss. For that kiss, she used her stage combat skills. That included asking standard questions like where do the actors touch each other, and new questions like how long does the kiss last?
Here is the full story, via Catherine Rampell.
Is Cuba putting the brakes on private business?
On Tuesday, Cuba’s government said it would suspend the issuance of permits for a range of occupations and ventures, including restaurants and renting out rooms in private homes.
The suspension included the growing field of private teachers, as well as street vendors of agricultural products, dressmakers and the relatively recent profession of real-estate broker.
The announcement did not say when the issuing of permits would resume and said that enterprises already in operation could continue.
Cuban President Raul Castro expanded an opening of the economy to private-sector employment in 200 categories of business in 2010. It later also legalized nonagricultural cooperatives.
The government has said nearly 570,000 people are employed in the enterprises, which include hundreds of restaurants and guest houses.
The latest moves have created fears that Cuba is putting the brakes on plans to reform its centrally planned economy, though officials said the country is not going back on its economic opening.
Here is more, via the excellent Mark Thorson. Here are related stories, and here is my earlier bearish Bloomberg column on Cuba.
Disaggregating the Flynn Effect?
Overall, the results support co-occurrence theories that predict simultaneous secular gains in specialized abilities and declines in g.
NB: this is for memory tests alone. Here is the paper, via Rolf Degen.
Monday assorted links
1. The costs of sports segregation are higher than you think (NYT): “Dr. Eric Vilain, a medical geneticist, helped create the International Olympic Committee’s hyperandrogenism policy, which requires a competitor with the condition to undergo treatment that lowers her testosterone levels.”
2. Why people think Germans aren’t funny.
3. The Price for Lighting (per million lumen-hours) in the UK in British Pound,1300-2006.
4. The effects of common ownership on bank behavior, properly measured, seem quite small. And newer version of the paper here.
6. Redux: a 2014 NYT column of mine on women in the workplace.