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!