I gave a talk yesterday at a Colloquium organized by a group called Sort, on The Wasteful Economics in Resource Recovery, and I was asked to talk a bit about blockchain technology. That reminded me that I needed to take another look at the issue, and what has changed since 2015 when I wrote that

at most of the market value of a Bitcoin reflects the electricity wasted in the calculations needed to “mine” it, with the obvious disastrous implications for the global climate.

and concluded that the sooner this collective delusion comes to an end, the better.

As far as I can determine, the only thing that has changed is that the Bitcoin bubble has got massively bigger and that the associated waste of energy is now much more widely recognised than when I first wrote about it.

Despite the huge increase in the market value of bitcoins, they seem further than ever from becoming an actual currency. Unsurprisingly, there’s no sign that governments are willing to accept bitcoins as legal tender. Nor is there any sign that they are displacing standard forms of money. On the contrary, bitcoins now seem to be seen as a financial asset, with no real suggestion that they will ever be a general medium of exchange.

As a check on this, here’s a list of firms that accept bitcoin as payment, which fits easily on to a single page. Sydney readers who would like to buy a beer with bitcoin are in luck, or were back in 2014 when the Old Fitzroy got a bit of coverage for saying it would accept bitcoins. There’s another pub listed in London, and that’s about it as far as drinks are concerned. After nearly a decade, Bitcoin acceptance remains the stuff of publicity stunts, not a serious commercial option.

At least by repute, bitcoins are used more extensively in covert transactions such as those involving drug trading, tax evasion and money laundering. But that’s scarcely a good reason to bet on them being around for a long while. If the scale of the problem gets large enough to cause real problems, governments will act to shut the whole system down or regulate it to the point where the compliance costs make the whole idea unattractive.

At any rate, the durability and magnitude of the Bitcoin phenomenon, running for nearly 10 years and with a putative value of nearly $US 100 billion, provides us with a very sharp test of the Efficient (financial) Markets Hypothesis. If Bitcoin eventually becomes a currency, the EMH and its supporters will be vindicated, and I (along with quite a few other economists) will have a lot of egg on my face. If the bubble bursts, the roles will be reversed.

Finally, I should give a plug to Gridcoin. This is a project that aims to avoid the massive waste involved in Bitcoin by making calculations that are actually useful to science. This is a worthwhile idea. But with a current market capitalization of $21 million, it’s obviously got a long way to go.

There are also alternatives to the “proof of work” method of validating changes to the blockchain, such as “proof of importance”, which is analogous to Google’s page ranking systems. I’m still trying to find out more about these.

If you’re looking for a passive-aggressive Christmas gift for your upper middle class friends, whatever their politics, you could do worse than Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It. I have to admit that, despite the fact that my poverty-researcher friends have been recommending Richard Reeves to me for a long while, I read it sooner than I might have otherwise because of this Observer piece, drawn from the book, which discusses one of the arguments in my and Swift’s book Family Values. I’ll be giving it to my recalcitrant (and definitely not liberal) father-in-law, along with The Color of Law.

Reeves isn’t interested in the 1%, but in the 20%. The starting point is Obama’s aborted plan in January 2015 to abolish 529 plans. For those of you who don’t use them, 529s are tax sheltered college funds. The funds grow tax free. They are a complicated enough instrument that (almost) no one outside the top 20% uses them and, like all tax-shelters and deductions, are more valuable the higher your tax rate. Ted Cruz inserted a provision to the Senate bill which expands 529s so that rich people can pay for elite private k-12 schools with tax-exempt savings. A particularly wicked feature is that anyone – grandparents, uncles and aunts, family friends, etc – can contribute. So the more relatives with large amounts of disposable income you have, the more your college fund will grow, and the greater the cost to the taxpayer. In 2009 23% of households in the top quartile of the income distribution hold 529s, with an average balance of $32,000; just 2% of households in the bottom quartile had 529s, with an average balance of less than $1k. 529s are estimated to cost the federal government only about 5.8 billion in the next 5 years, but almost all of that will benefit families in the top quartile of the distribution (and those estimates do not account for the possibility that 529s will be useable for private k-12). And its not just that 529s effectively reduce the cost of college for affluent families but not for lower-income families: by increasing the higher education spending power of the affluent they, presumably, raise the price at the more selective end of higher education; thus rendering it less accessible to less affluent families.

Obama’s plan to abolish 529s, and replace them with a stronger and broader version of the American Opportunity Tax Credit, a credit for educational spending which is unavailable to families earning over $180k, was defeated not by Republicans, but by Democrats.
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Around November, I declare a ban on any new/borrowed books and try and finish all the books I’ve started that year. Slow-going, this year, as I was for some reason unable to read for much of October and November, and lots of the unread pile is non-fiction. Anyway, some highlights of the year, below. Another post to follow on what’s on the Christmas list.

A book that lingered in mind long after I’d finished it was Laline Paull’s fascinating The Ice (The Bees is still one of my favourite books of the last decade, and I pressed copies of it into two more people’s hands this year.) The Ice is set in the very near future, about the friendship between two men who each want to save the last bit of the Arctic. The chapters begin with excerpts from the memoirs and letters of others who have been obsessed with Arctic exploration, drawing out the historic roots of our drive both to explore and exploit.

Recently I listened to a LRB Cafe event podcast with China Mieville from about 2014. He mentioned something about “…extruded-literary fiction product which is about the calm, chapter by chapter decoding of a never very mysterious metaphor to clarify what life is a bit like, and the book ends with a ‘yes, that’s so true’, that is very wise’.” We all pretty much know what that is, when we see it. I can’t be the only one hungry for novels about politics, money, the environment, the movement of people and surveillance capitalism. Laline Paull’s The Ice grapples with several of these, and the world of work, which is quite rarely found in fiction, and the deals individuals make with themselves and the world they find themselves in, and whether we have any business holding onto hope. [click to continue…]

Max Sawicky has a piece in _Jacobin_, giving grief to Brink Lindsey and Steve Teles’ new book on rent seeking, _The Captured Economy_, and arguing that Dean Baker’s work presents a “left-facing” response to rent-seeking, while Lindsey and Teles’ book, instead, is “right facing.” It’s a little awkward to wade into this fight, since I’ve been around long enough that I’m friendly with Max, Brink and Steve (and, for that matter, Dean), but I think that Max is basically wrong. What Lindsey and Teles are doing, as Max says, is to set out their pitch for liberaltarianism, a fusion of liberalism and libertarianism that John Q. has written about here in the past. But even if liberaltarianism isn’t, and shouldn’t be mistaken for e.g. social democracy, it’s much more congenial to useful argument with the left than Max allows, or than old-style libertarianism ever was. [click to continue…]

Benjamin Black has one thing in common with Sharon Bolton.

Black (the second of the ‘only counts as British because all Irish people who accomplish impressive things get claimed as British unless, of course, those impressive things involve some sort of successful military or political action against the British’ crime writers) is, in fact, John Banville. He seems to have shifted more or less whole hog from literary fiction to crime-writing under his pseudonym. The main series is about Quirke, a pathologist with a labyrinthine family life, and who seems to be a magnet for murder (Now I think about it I suppose pathologist is a job to avoid if you want to avoid all contact with murder). Christine Falls starts us off in mid-fifties Dublin, which is exactly the way that Henry and Maria sometimes suggest in their posts, and proceed chronologically. They are noir-ish in the extreme – it always seems to be grey and drizzling, and Quirke is depressive and not particularly likeable (his daughter is, but it is hard to see her growing toward a happy fulfilled middle-age, much as he would like that for her). They’re well-plotted, but that’s not the reason to read them – the characters and the mood, and the outlook on the world are what make them so compelling. Black actually has a wry sense of humour, but he chose the pseudonym for a reason: they are dark books. (I haven’t yet read the more recent — books).
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At the APA blog Steven Cahn says:

The term “hidden curriculum” refers to the unstated attitudes that are often communicated to students as a by-product of school life…. [At graduate school]

[One] message is that faculty members are entitled to put their own interests ahead of those of their students. Consider how departments decide graduate course offerings. The procedure is for individual professors to announce the topics of their choice; then that conglomeration becomes the curriculum. The list may be unbalanced or of little use to those preparing for their careers, but such concerns are apt to be viewed as irrelevant. The focus is not on meeting students’ needs but on satisfying faculty desires.

Similarly, in a course ostensibly devoted to a survey of a major field of philosophy, the instructor may decide to distribute chapters of the instructor’s own forthcoming book and ask students to help edit the manuscript. Whether this procedure is the best way to promote understanding of the fundamentals of the announced field is not even an issue.

I think he exaggerates a little: certainly in my department more thought than that is given than he describes to graduate course offerings. But I don’t think he exaggerates a great deal. A piece of evidence: I was struck, in my several years on my university’s curriculum committee (which vets all new course proposals and all proposed course deletions in the university — at least several hundred a year of the former, and a handful of the latter) how often the rationale for proposed undergraduate courses in the humanities and (to a lesser extent) social sciences was something like this:
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Following a “related stories” link, I found a 2014 piece from Dana Milbank which combines my favorite pet peeve, the Generation Game, with everyone’s favorite fallacy, No True Scotsman. I’m a bit late to the party, but I can’t resist such a tempting target.

Milbank wants to make the case that, unlike the great conciliators of the past and the cool, detached Generation X of which he is a member, Baby Boomers are given to a “scorched earth” conflict-driven style of politics. There’s just one problem. Most of Milbank’s villains (Pelosi, McConnell, Reid) were born before the baby boom, while the hero of his piece, Obama, is, sad to say, a Boomer. No problem, says Milbank, “generational boundaries are inexact”. Applying the No True Boomer test, Pelosi, McConnell, Reid are turned into Boomers, while Obama is promoted into Generation X. In these cases, the shift is only a year or so, but a moment’s thought would have provided Milbank with plenty of examples of scorched-earthers born five years or more outside the Baby Boom (Roger Ailes and Rupert Murdoch at one end, Ted Cruz and Paul Ryan at the other) and compromisers born in the middle of the Boom (Tim Kaine and the leading members of the DLC)

More to the point, the style of politics he’s talking about got its start with the Nixon-Buchanan Southern strategy “tear the country in half, and take the bigger half“. The fact that many of its most prominent practitioners are (mostly male) Boomers follows from the fact that they are currently the right age (roughly 55 to 70 depending on details) to occupy senior leadership in US politics.

Normally I steer clear of Black Friday sordidity, but I’ve been on an art kick here on CT; and, it happens, I need new colored pencils. And the best are Prismacolor. And – lo and behold! – the big box [aw man you missed the sale] is half-price for the next five hours. That’s a good deal if you want to box with shadows in a practical sense. (They aren’t all grey. Just ask Monet.)

After finishing Shadow Of A Mouse, I turned to the next title on the pile: E. H. Gombrich, The Depiction of Cast Shadows In Western Art [amazon].

It comes with its own mouse that comes with a shadow! [click to continue…]

Just doing a bit of research.

If you are like me, you have Abebooks ‘wants’ out there – hopeful lines dragging through the stream of books. Here’s one that nibbled, but it’s still too rich for my blood. It’s As nature shows them : moths and butterflies of the United States, east of the Rocky Mountains : with over 400 photographic illustrations in the text and many transfers of species from life, by Sherman F. Denton (1900). Only $400. (Anyone wants to buy it for me?)

It’s an amazing curiosity in the history of color printing. I would love to see it in person. But for now the Internet Archive will have to do. What makes it so remarkable, you ask?

From the Preface:

The color plates, or Nature Prints, used in the work, are direct transfers from the insects themselves: that is to say, the scales of the wings of the insects are transferred to the paper while the bodies are printed from engravings and afterward colored by hand. The making of such transfers is not original with me, but it took a good deal of experimenting to so perfect the process as to make the transfers, on account of their fidelity to detail and their durability, fit for use as illustrations in such a work. And what magnificent illustrations they are, embodying all the beauty and perfection of the specimens themselves!

As I have had to make over fifty thousand of these transfers for the entire edition, not being able to get any one to help me who would do the world as I desired it done, and as more than half the specimens from which they were made were collected by myself, I having made many trips to different parts of the country for their capture, some idea of the labor in connection with preparing the material for the publication may be obtained.

I’m sure someone can make use of this peculiar mode of auto-iconographic representation for some weird Wittgenstein philosophy of language example.