The psychic statesman - links 28/05/18

I’d like to first start this links post with a bit of unjustified moral posturing. (Coincidentally this is also how I started life - I've been on a perpetual high horse since birth.) After my last post about blockchain, four days later the Economist releases an extended special report about the future of digital finance. All I’ll say is - never doubt the ability of the psychic statesman. And yes, it definitely has to do with my psychic intelligence, not the fact that it’s a trend that’s gained huge amounts of traction this year. Still, I contributed to that traction….? You’re witnessing my peak people.

That said, here are a few other interesting reads from the past month - moral posturing (probably) not included:

1 The amazing psychology of Japanese train stations. Featuring mood lighting and selective sounds. Reads as a little Orwellian but I’ve experienced it firsthand and didn’t have any bad experiences - except for a man watching something R 18+ rated on his phone (maybe the mood lighting was a bad idea?)


2. A great critique by Scott Alexander on the basic jobs guarantee - the new trend du jour. Beyond your basic economic arguments there’s a great section about how it would affect disabled people. As a psychologist by trade,  he brings a very interesting perspective:

As long as you have a system whose goal is to separate the “truly” disabled people from the fakers, you’re going to run into problems like these. But refuse to gatekeep, and you have an unjust system where anyone who wants to lie can get out of work while their more honest coworkers are left slaving away all day. 

If you’re abled enough to perform a government job, you’ve got to do it. Who decides if you’re abled enough? The Kafkaesque gatekeepers. And so we get the same bureaucratic despair, the same attempts to cheat the system, and the same perverse incentives.

3. Tyler Cowen argues for progress vs quality in the healthcare debate. I see this as one of the three pertinent problems for economics, alongside food and climate management. Too many predictions, I hear you say?  I’m not the psychic statesman for nothing. (Desperate times abound.)


4. Bloomberg: e commerce costs are rising just as commercial real estate costs are falling. Honestly,  I’m doubtful of the “falling rents” effects they mention being repeated elsewhere, but interesting nonetheless:  

For the first time since the dawn of e-commerce, physical retail might find itself with some cost advantages over e-commerce firms.

For much of physical retail, there's the prospect of falling rents, making running a brick-and-mortar store more viable. For e-commerce, it's a surge in ad rates, or customer acquisition costs, plus shipping bottlenecks that will make "free shipping" more onerous to offer. And profit margins on an e-commerce sale were lower than the profit margin on an equivalent brick and mortar sale to begin with. All of this is happening when e-commerce is only around 10 percent of total retail sales. Presumably, these challenges will be even greater as that share grows.

5. And finally - this new digital economy is really forcing humans to diversify, wow. After this soccer coach had a cardiac arrest while abusing a referee for a wrong call, the referee saved his life with chest compressions. From the referee himself: “First I resurrected him, then I expelled him. I was doing my job.” As my business professor would say - this is value add skills people!

¡LE SALVO LA VIDA!
En Argentina el árbitro Darío Cid le salvó la vida al técnico Luciano Susin quien sufrió un paro cardiaco, el colegiado que estaba capacitado para hacer reanimación cardiorrespiratoria intervino oportunamente pic.twitter.com/TOXoW40QlW

— joseborda (@joseborda1) April 24, 2018

Until next time.


- The Peaking Statesman

Cryptocurrency really is going to change our world - don’t laugh

I’m sure upon reading this title you thought another soldier had fallen to the bitcoin bullet. Worry not faithful reader I haven't been caught up in the hysteria. But cryptocurrency on the other hand - I really think that’s special. That's why I'm writing this post, because I really think the progression of this idea is going to hugely transform our relationship with finance. And that’s because the internet is going to do what an emotionally reclusive adult with a bad history of relationships would never - it is going to lower those barriers baby! (Sorry.)

If only the Internet could do something for these barriers.... image from Singh , 2014. 

Who, what, when, where and how, you ask? And why the change of heart? Well, see excerpts below. Or, more specifically, see (or listen) to this “Conversations with Tyler”  podcast episode with Balaji Srinivasan; CEO of Earn.com among other ventures. This guy knows his stuff. 

(The basic podcast premise is that  renowned polymath and occasional economic professor Tyler Cowen asks him a number of questions and discussion ensues. The podcast is almost always great- I’ve linked to the transcript for ease.)

Two key things that they were talking about stuck out to me - the future of financial fees; and the future of investing.

On financial fees:

COWEN: Right now, I pay financial fees to my mutual funds, to Merrill Lynch, all over... Which of those fees will go away?...Why should we think that will go away? We’re paying for some kind of service; maybe it’s not clear what it is. What in tech is going to do that more cheaply? And what will be done more cheaply for us?

SRINIVASAN: Because you can set up a new payment rail and contract execution system in your dorm room. That’s new because it provides fundamental competition at the lowest level. Now, these new payment rails are volatile. They’ve got all kinds of issues associated with them.

But you can actually, root and branch, exit the system in a way that you couldn’t have done before, and I think that’s going to give more fundamental competition to fees. The closest analogy is, with the internet, you have a new mechanism for transmitting information which lets you route around the Postal Service and NBC and the televisions and the movies and the record companies and whatnot.

The most important thing, from my standpoint, is the level of choice you’re going to have is going to be dramatically increased because the blockchain makes it much easier to startup a competitor and raise up your own shingle as a new financial outlet.

On investing:  I think this is a 20-year thing, maybe something like a personal token, which is to say, if you have some future . . . Let’s say you’ve done well in something that shows you have some promise. Rather than, let’s say, taking out a student loan, which is one way of mortgaging your future, you might issue a personal token.

That would be something where you say, “Hey, look, I’m going to sell about 20 percent of my future earnings for token-based financing...Can you finance me and help me achieve my dreams?”

That’s something where anybody in the world can chip in. A guy from India, a guy from Japan, a guy from Kenya, Brazil can help finance that. ..it opens up financing in a way that’s never been possible before at a very small level, a very individual level.

A communication, a broadcast to millions of people is now such a low-threshold activity. If financing or the financialization of something also becomes such a low-threshold activity, it’s going to become a lot more common.

I really thought the bitcoin hysteria was nonsense until i read this. The low threshold stuff is really important - the Internet has lowered the barrier to so many things and enabled cross cultural, lingual, etc innovation. See communication, see art, see music. Imagine the impact of a true digitisation of a currency. Big things coming!

I recommend that all of you (all two of you) read it. You'll probably be the better for it. You don’t have to; but my blog is my domain so… like it or leave it. But I really think you’ll like it. Until next time!

Stuff I learnt today #1

 I accidentally queued this post for next year, but nonetheless I'm top of my game again (granted it's a very low bar to jump) and have 4-5 posts lined up. One about microfinance, the other about Alan Greenspan's biography.  You're welcome to unsubscribe in anticipation. Many things have happened since:

I got a job
I graduated
I chose my degree

Funny how much things change in 4 months - but fortunately these links posts are still here. I do distinctly remember how to copy and paste... difficult skill indeed. I'm also rebranding now - these won't be called links posts; instead I'll be calling them Stuff I Learnt Today ( it's a working title okay!)

1. This is an open google doc , started by a private consultant, for brainstorming ideas re: Cape Town running out of water. Many of the residents don't adhere to the water guidelines and Cape Town's suffering a bit of a free rider problem. I used to think that the free rider problem only existed in an economics textbook until the QLD drought a few years ago, when both my neighbours on either side had suspiciously spright looking gardens despite water restrictions. God forbid our water supply gets cut off before Deb's petunias do.

Jabs aside, much of the proposals argue the effectiveness of public information campaigns - I'm inclined to agree, because it addresses the FR problem. And the government's current method of slowly cutting off the water supply is only going to make citizens panic and hoard water. This happened in Brazil.

2. Interesting fact of the day: high infant mortality rates in remote Amazon tribes inadvertently incentivise "hands off parenting". The article says that babies are often not named until after their first birthday because parents don't want to get too attached. That's not the excuse my parents used. They said it was for personal development. (I'm joking. My mum is like the only consistent reader of my blog.)

3. Percentage of people in different countries who believe life is better vs worse. 
Russia's polarised as expected. It's nice to see Vietnam up top  (i'm Vietnamese by second generation - you're witnessing misplaced nationalism at its finest ) with 88% believing life is better vs. 4% thinking life is worse. I think it arguably gives further support to the Singapore model of governance - few civil freedoms, but a thriving economy nonetheless.

4. The birth of a baby panda in Tokyo Zoo - the first in five years - sent shares in local retailers surging. 
But given the rareness of panda births, I would advise the Japanese government against relying too heavily on them as fiscal stimulus. (This is peak comedy you're witnessing.)

5. How will people work in the future? As shaped by Silicon Valley. It is interesting to think about what will happen to the humble cubicle in the future. Everything I've read so far has suggested that a majority of remedial tasks will be automated; leadership and social collaborative skills will be more valued. And maybe dancing, too:

The big idea championed by the industry is the concept of working in various spaces around an office rather than at a fixed workstation.

....

Last year LinkedIn, a professional social network, for example, opened a new building in San Francisco that is full of space set aside for networking, and that includes a “silent disco”, where people can dance to music with headphones on.

That's it for now. Yes, these new and improved posts come with new and improved levels of wit and humour. (Because that's exactly what a post about the Cape Town drought needs...) Having peak creativity hit at 1-2am in the morning has its ups and downs.