Curt Doolittle

Theme: Incentives

  • BITCOIN THREAD ON TYLER COWEN”S SITE I disagree with his premise. First, because

    http://marginalrevolution.com/marginalrevolution/2013/12/how-and-why-bitcoin-will-plummet-in-price.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2Ffeed+%28Marginal+Revolution%29INTERESTING BITCOIN THREAD ON TYLER COWEN”S SITE

    I disagree with his premise. First, because the price of cryptocurrency is neutral. It’s just a means of financing it. In the long run it’s neutral. It might be a bad investment in the long term but I kind of doubt in the medium term that it’s other than pretty fair.

    Not sure why, but economists are almost worse than technologists at understanding BTC. Or its value. That’s because, as I’ve been saying, it isn’t money, it’s a money substitute like token money sold under a stock sheme.

    All stocks like this run up, peak and then decline. But the point is, the money is made by then, and teh product is commoditized. And assuming there isn’t any interference from the state, it should work as other stocks do. (big assumption I know.)

    Source date (UTC): 2013-12-30 20:06:00 UTC

  • INSURED, FREE RIDER VS PARASITE – The Spectrum Of Free Riding. Terminology confl

    INSURED, FREE RIDER VS PARASITE – The Spectrum Of Free Riding.

    Terminology conflict: “Free Rider” vs “Parasitic”

    In dry economic language, we use the term ‘free rider’. In libertarian language, we use the term “Parasitic”.

    Free Riding refers to the in-group relation between producer and free rider – in group, in-family, free riding is a form of redistribution.

    In the North Sea Model, Parasitic is accurate since the unit of cooperation is the absolute nuclear family. And free riding even upon parents is prohibited. So parasitic is the correct out-group description of the affect free riders have on the producers.

    I had always considered ‘parasitic’ a loaded term. But it’s not. Turns out that it’s accurate.

    Although propertarianism has led me to conclude that I do not see a problem with insuring people against destitution, I so see a problem with parasitism and free riding.

    Source date (UTC): 2013-12-26 07:40:00 UTC

  • QUALITATIVE EASING : INSURING ARTIFICIAL PRICE LEVELS CAUSED BY STATE MONETARY P

    http://blogs.wsj.com/economics/2013/12/19/how-to-stop-financial-panics-say-hello-to-qualitative-easingCONTRA QUALITATIVE EASING : INSURING ARTIFICIAL PRICE LEVELS CAUSED BY STATE MONETARY POLICY

    (un-libertarian) (recession insurance) (PSST) (insuring against busts)

    This solution in the paper that is referred to in the article is weaker than simply buying down debt on real property from consumers and SMB’s that do not have access to capital markets,in sectors of the economy undergoing crashes. Further, buying down debt by fiat allows the state to penalize lenders by paying them off at a discount, by fiat. This is a better incentive than regulation of inputs. Because consumers are protected by the state and lenders are harmed in terms profits but not balance sheets.

    Reasons are multiple, but mostly, that the preservation of false price levels is distortionary, while the redistribution of discounted debt restores balance sheets. And specific sectors can be addressed quickly, which reduces downward pressure on prices.

    In effect, by this method, the state insures large asset prices against booms and busts.

    I recommended this solution in 2008, and Galbraith did as well, before he died.

    And the longer I have worked on the problem the more certain I am that it is a MUCH MORE effective policy than either government spending or lowering interest rates. Neither of which help the PSST (pattern of sustainable specialization and trade) within a given sector.

    Prices are information. We can insure the quality of information. And this method insures that bottom end of the asset price even if all profit is wiped from the transaction.

    This puts cash in people’s pockets within a collapsing sector without allowing the repricing in that sector to easily spread to the broader economy.

    Imagine if every home owner had received a formulaic payment against his or her home’s debt, and contributions to 401K’s for any balance over their debt amount. This would rapidly have put cash in everyone’s hands, while adjusting balance sheets, and would have stopped the fear of prices falling.

    I’ve written enough about this. But the point is, libertarian or not, just or not, insuring state induced prices is the most effective technique for controlling the spread of relative price changes as they percolate through the economy and cause disruptions in additional patterns of sustainable specialization and trade.

    Cheers.

    Source date (UTC): 2013-12-20 03:09:00 UTC

  • FORCIBLE REDISTRIBUTION IS MISSED OPPORTUNITY FOR EXCHANGE Forcible redistributi

    FORCIBLE REDISTRIBUTION IS MISSED OPPORTUNITY FOR EXCHANGE

    Forcible redistribution via taxation deprives us of the ability to ask for something in exchange for our earnings.

    What we would most often like in exchange are conformity to norms (predictability of signals), and social status (reward).

    If redistribution is politically necessary to prevent friction in politics, but undesired by the population, then the government needs to be broken up.

    The reason being that governments that act on the behalf of constituencies can negotiate trade policy to effectively form redistribution from those who DESIRE to trade with others, versus those that do not.

    Conformity is how we prefer to determine whether someone has access to our market. However, if they do not conform, that does not mean that they cannot extract from us something that we wish to give them in exchange for granting us access to THEIR market.

    It isnt necessarily mandatory that governments possess a monopoly over territory. Collective trade bargaining can be conducted by currency differences. But only if currency is entirely digital – so that we can make use of many of them.

    Technology makes interesting political options available to us today,t he same way that the invention of money made new political options available in the past.

    It’s fascinating.

    Source date (UTC): 2013-12-19 16:49:00 UTC

  • In our pretend world, we have a benevolent monarch. He resides in a city. The hu

    In our pretend world, we have a benevolent monarch. He resides in a city. The hub of a wheel. He administers the territory using a sales tax of 5%.

    The city has 10,000 people living in it, or 1/2 of the total population.

    The city is 100 acres x 100 acres in size, or roughly 4x4miles, and so the edge of the city is 2M from the center, and 30m walk. And 1hr total time to walk across.

    Our geography is mapped out as a set of villages of no more than 1500 people.

    Each building in the village occupies no more than 10K square feet of land, or, roughly 100 buildings, and therefore covers about 25 acres, roughly 5×5 acres, or roughly 2x2miles.

    Each village 30 minutes walk apart (2 miles)

    The closest village is 2m from the center, or 30 minutes walk.

    The circumference the city then is roughly 12miles.

    There are six villages, totaling 6×1500, or 9-10,000 people.

    How much land for food production?

    How much land for “wilderness”, on which one can either enjoy nature, or ‘hunt’ for consumption but not sale?

    (It takes an absurd amount of land to feed hunter gatherers btw)

    Source date (UTC): 2013-12-18 07:34:00 UTC

  • WHY DID ICELAND DO IT RIGHT? A CRITIQUE OF CORPORATISM VS CAPITALISM Because cap

    WHY DID ICELAND DO IT RIGHT? A CRITIQUE OF CORPORATISM VS CAPITALISM

    Because capitalism requires, and is defined by, the fact that risk takers both win and lose, and they bear the burdens of both their wins and losses.

    There is nothing in capitalism that supports the privatizing of social gains, or the socialization of private losses. That isn’t CAPITALISM. That’s state CORPORATISM. The alliance between the state and the capitalists, AGAINST the general population.

    Without the counter-incentive of risk, only totalitarianism of rules and regulations can attempt to control natural human behavior to socialize risk and privatize reward. That is what free riding and rent seeking do.

    The purpose of competition in the market is to reward consumers by way of a competition between lenders, producers, distributors, and vendors. Whenever a competition exists, at least one party loses, but that is never the consumer – who always benefits. This is the most elegant form of redistribution ever created by man. It is a virtuous cycle.

    But if the state INSURES COMPETITORS, it breaks the virtuous cycle, and provides incentives for competitors to privatize gains, and to socialize losses.

    When you create debt of any kind, you are not in the clear with the profits until the debt is paid off. That is, you have earned only the right to USE the income from that debt, but it is not YOURS until the debt is paid off.

    This is counter to human loss aversion instincts. In our emotional machinery between our ears, we own what we have. But that is not true, and cannot be. A debt and corresponding credit function as a production cycle. The good is not MADE until it is paid off.

    Our legal system does not recognize this liability and that is why we fail to correctly adjudicate credit and debt, and why we fail to correctly implement policy to protect consumers and hold lenders accountable.

    The reason is quite simple: the state is trying to put credit out there all the time in every way possible so that it creates employment and taxes from employment.

    But the production cycles are lost in a sea of confusion and this immeasurable distortion in information is inconceivably complex, and impossible for economists to tease from the data.

    The left’s proposition is that ‘it will all work out’. The right’s proposition is that we are undermining the entire SCIENTIFIC nature of the anglo model of economy we call capitalism.

    Source date (UTC): 2013-12-15 07:55:00 UTC

  • DID IT RIGHT. And they keep doing it right. Fry bankers. Socialize the mortgages

    http://rt.com/op-edge/iceland-bank-sentence-model-246/ICELAND DID IT RIGHT.

    And they keep doing it right. Fry bankers. Socialize the mortgages. Burn the investors. I”m a capitalist. These guys are corrupt.

    Source date (UTC): 2013-12-14 19:17:00 UTC

  • THE STATE CAUSES INSIDER TRADING “In an economy like ours, with a central bank t

    THE STATE CAUSES INSIDER TRADING

    “In an economy like ours, with a central bank that can instigate disruptions at will, the only people who can make money on a consistent basis through investment are insiders. The people who get prosecuted for insider trading are being punished not really for insider trading but for being renegades, i.e., for exploiting insider trading without first getting the tacit permission of the state.”

    — Kenneth Allen Hopf

    Source date (UTC): 2013-12-12 10:41:00 UTC

  • MORAL CAPITAL, ECONOMICS, CONSUMPTION (a table)(insight) The Long Term – The Med

    MORAL CAPITAL, ECONOMICS, CONSUMPTION

    (a table)(insight)

    The Long Term – The Medium Term – The Short Term

    Conservatives…- Libertarians ……….- Progressives

    Moral Capital….- Productive Capital.- Consumption

    The Tribe……….- The Family…………- The Offspring

    Militia……………- Industry…………….- Services

    Law……………… – Trade……………….- Religion

    Force…………… – Remuneration……- Words (shame)

    Male……………..- Neutral……………..- Female

    Order……………- Wealth……………..- Care-taking

    Warrior………….- Merchant…………..- Mother

    THE INTER-TEMPORAL DIVISION OF LABOR

    We aren’t engaged in a dialectic, but a tri-alectic, between the production cycles of the tribe, the family, and the child.

    WE ARE A LOT CLOSER TO ANTS AND BEES THAN WE ADMIT.

    Source date (UTC): 2013-12-10 06:12:00 UTC

  • MORAL CAPITAL, ECONOMICS, CONSUMPTION You know the problem is that conservatives

    MORAL CAPITAL, ECONOMICS, CONSUMPTION

    You know the problem is that conservatives are economically illiterate so that you can’t really use libertarian reasoning when talking to them. They focus on moral capital, we focus on economics, and the left focuses on consumption.

    Source date (UTC): 2013-12-10 04:55:00 UTC