economics free market podcast technology

Life as I see it podcast #12 Bitcoin part 3


This is the third installment of podcasts about bitcoin. It’s the last one I have planned but I reserve the option to make more if things get interesting. The Bitcoin protocol is actually pretty flexible. If it proves to not be flexible enough it is easy to fork the code base and make your own Bitcoin based system. Here are some of the articles and stories I referenced in the podcast.


Twister is a peer to peer, decentralized social network based on the Bitcoin protocol. Still in alpha, download it at your own risk!

Danny Bradbury writes about Colored coins. Colored coins pain sophisticated future for bitcoin. 

Bitcoin: How its core technology will change the world by Jacob Aron. 

A video introduction to Ethereum. Also a good, quick inter to the uses of the Bitcoin protocol. That page also has lots of info graphics and explanations, recommended.

Bitcoin is not just digital currency. It’s Napster for finance by David Morris for Not a fan of the comparison to Napster but a good article.


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Life as I see it podcast episode #11 Bitcoin pt.2


This is my second podcast about Bitcoin. In it, I mention some links where you can read about some of the potential problems with bitcoins and then talk at length about some of the other potential uses of the protocol. Notice how I keep using the word potential? The links for the pitfalls are rather technical from an economics point of view, I don’t think there is any real discussion of the cryptology or network configuration. Ran across a great article in the NYT. Do read it, I found a lot to be interested in it.


How and Why Bitcoin will Plummet in Price by Tyler Cowen at Marginal Revolution

The Marginal Cost of Cryptcurrency by Robert Sams at

A list of 83 different cryptocurrencies

Why Bitcoin Matters from the New York Times by Marc Andressen


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free market

A new crowd sourcing "charity" for me

I am really getting into the crowd sourcing thing. The whole idea behind it is to get lots of people donating a little bit of money to fund something. I have been doing that with Kiva and Kickstarter.

If you don’t remember, Kiva is an organization that helps put together small (by our standards) loans to people in developing countries so that they can make improvements. It is one of the more visible forms of micro-finance out there. I have decided to stop participating in that program mostly because it isn’t clear that it makes a tremendous amount of difference. I think I am going to steer the money I had been using for Kiva to a more typical development charity. 

Kickstarter is a really popular place for people with ideas that need funding. They post their idea and ask for donations. As you go up the scale in dollar amount, they have better and better rewards to offer. It’s a novel way to attract funding for pet projects. So far I have helped make several pens and a comic. Kickstarter is un, but it’s no charity. I do it to get interesting things. The power of crowd sourcing allows some folks to do really big things. Several video game projects have gotten well over a million dollars and there is a new smart watch that is getting close to 9 million I think. Powerful stuff.

The latest crowd sourcing site I’ve stumbled across is They look for “at risk” high school kids that show some potential and fund educational experiences for them. It’s still a bit loosey-goosey for me to invest long term, but I happened across a student there that would like to go to a summer school program at my Alma Mater, Ithaca College. I can imagine a kid from a bad neighborhood in NYC getting a lot out of a summer thing like that, so I donated $25 to the cause. I need to do some more reading and see what this program actually accomplishes before I get too involved though. It isn’t as though they are sending them to college, they are sending them to summer event, or some sort of seminar series and things like that. If I am going to be doing stuff with that site, it will be with things that have a good chance of getting people out of bad situations. If they want to study computer science, mathematics, medicine, engineering, etc. I don’t mind lending a helping hand. Like I said, I’m going to do a little more research and see what it’s really all about.

culture free market freedom politics

Healthcare reform

My Facebook page is being filled up with impassioned pleas to save healthcare reform. They are of course talking about the arguments in the Supreme Court over the “Affordable Healthcare Act.” I’m not a big fan of the legislation, no surprise there. Funnily enough, I don’t need to know the minutia of the 1000+ page law to draw my conclusion either. The main sticking point to me, and I think the reason it is being argued at the Supreme Court, is the individual mandate. The law says that everyone has to purchase health insurance, in fact it relays on this in order to realize its cost savings that are supposed to come from it.

Let’s forget for a moment that this law is not about healthcare, but health insurance, and let’s also forget for a moment that popular opinion shouldn’t sway the Supreme Court. I am also going to, for the sake of argument, allow that the law actually would reduce health insurance prices and it would actually work out best for everyone. I don’t believe that for a second mind you, but I don’t want to dwell on that here.

Have you wondered why there is so much chatter about this supreme court case? I’m not talking about the political scorekeeping involved, I’m talking about the commerce clause.


[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;


That little clause has been twisted to the point where it is unrecognizable. It’s meaning seems rather straightforward, but congress, with the Supreme Court’s blessing, has used it in all manner of strange ways. In Ashcroft vs. Raich, the Supreme Court ruled that the Federal Government could outlaw marijuana because of the commerce clause even though in this case the defendant never sold it at all, let alone between states. It was ruled that the defendant could have sold it, therefore the federal government had jurisdiction over it. Judge Clarence Thomas said this in his dissenting opinion:


“If the Federal Government can regulate growing a half-dozen cannabis plants for personal consumption (not because it is interstate commerce, but because it is inextricably bound up with interstate commerce), then Congress’ Article I powers — as expanded by the Necessary and Proper Clause — have no meaningful limits. Whether Congress aims at the possession of drugs, guns, or any number of other items, it may continue to “appropria[te] state police powers under the guise of regulating commerce.”


So who could blame congress when it passed a law saying that it could force every American to do something? When pressed on what gives them that power, they respond that the commerce clause gives it to them.

This really is the drug war’s chickens coming home to roost. Once the Supreme Court ruled that congress can essentially legislate anything at all because of the commerce clause, all bets were off. If this law gets struck down, they will have established that the Federal Government cannot force you to buy something. That’s hardly a shocking idea and it shows just how nuts the law is as determined by the Supreme Court.

There was a time when lawmakers assumed that prohibiting a substance was unconstitutional. Banning alcohol was a popular cause at one point, but they knew they couldn’t pass laws banning it until they amended the constitution. How quaint. It is now assumed that the federal government can legislate any damn thing it wants to. This law getting struck down will carve out a very narrow limitation on the feds, one that I’m really terrified that we have to spell out so clearly.

Much has been made about the hypothetical broccoli law. The thought experiment goes like this, broccoli is good for you, so can the federal government force people to buy it if not eat it? It’s a silly thing, no one really thinks that, but there are legions of people that think in the abstract that the government should legislate “good” things. You, know, for our own good.

this goes right back to my “Everything is fine as long as the right people are in power” model of politics. Why does no one think about the damage that will ensue as soon as the “wrong” people are in charge? Limiting government power is to protect us from whatever politician you think is evil incarnate. Dick Cheney or Nancy Polesi, it doesn’t matter. No one should be afraid of the changing of the political winds.

This is the real reason why this case is so important. If we can get some sort of semblance of sanity with regards to the commerce clause, it will be a victory. With any luck, it will also force the court to reconsider previous contortions over the clause as well. Remember, the law being “good for us” is not a sufficient reason for the government to employ its force.

economics free market freedom

The problem with democrats and republicans

Ludwig von Mises summed up the entirety of political “solutions when he penned:


Scarcely anyone interests himself in social problems without being led to do so by the desire to see reforms enacted. In almost all cases, before anyone begins to study the science, he has already decided on definite reforms that he wants to put through. Only a few have the strength to accept the knowledge that these reforms are impracticable and to draw all the inferences from it. Most men endure the sacrifice of the intellect more easily than the sacrifice of their daydreams. They cannot bear that their utopias should run aground on the unalterable necessities of human existence. What they yearn for is another reality different from the one given in this world. They long for the “leap of humanity out of the realm of necessity and into the realm of freedom.” They wish to be free of a universe of whose order they do not approve.


I got that from the Mises Institute blog talking about how the OWS crowd is attempting to shut down west coast ports. So many people have definite ideas of what should be accomplished and how to accomplish it, they don’t take any time to try to understand what might happen if they actually do what they intend. Their daydreams of sticking it to the 1% are going to cost a lot of regular folks paychecks. If they had their way, they would punish the 1% by making it much more difficult for everyone else to get stuff from Japan, Thailand, Vietnam, and yes, China. Even a basic understanding of economics would allow them to understand that it is impossible to “hurt” one group in isolation without affecting everyone else. also quotes Rothbard in that same post:


It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.


You can do what you want with yourself. Because it is impossible to know but the largest first order effects of any overall economic activity, acting on everyone else’s behalf should be the first warning sign that you’re out of your depth.

economics financial free market

Investment grade debt

Most actual investment (as opposed to places to park your money) involves buying debt. Or to put it another way, you loan money with the hope of making more later on. Bonds are the most common way to do direct investment, you have a time frame and a specific rate of interest. Stock IPO’s are another way of investing in a company. 

When you buy a bond from a company, you look at how likely it is that you’ll be repaid based on the business involved. If its a good company with good products, they will create profits and be able to pay you your interest. But what about municipal and sovereign debt? There are no profits to be had, just ongoing tax collection. On the face of it, that seems pretty safe, that’s what governments do after all. But all isn’t well in tax land. Europe continues to crumble, their very currency may go away. When that happens, there is an excellent chance that the folks that loaned them those Euros will be left holding the bag. We’re also hearing about more and more municipalities declaring bankruptcy. A casual glance at states like California make you wonder how safe those bonds are as well. 
My (perhaps not so humble) suggestion is to invest in productive, profitable businesses instead relying on tax collection for your investment. It’s common sense really, invest in things that have upside! Or think of it this way, how much do you trust politicians? How much do you trust that they’ll do the smart thing with your money? More and more we’re seeing what that trust will get you, a lot less money.
free market politics

The 99%

Reading last Sunday’s Doonsbury really got me pissed off. Once again, Trudeau is hung up on what the top 1% income bracket is making. When BD finds out that the top 10 hedge fund managers were paid 18.8 billion, his reaction is, “It’s game over – The Rich Won!”


Funny, I didn’t realize we were competing, or playing a game or whatever. What, exactly have they won? And how are we less better off because of it?

BD keeps ranting, “Might as well just send them the rest of our money now, They’re going to get it all eventually anyway!” Umm, right, because those evil hedge fund managers were raiding your checking account, right? They were hoarding all that money so that you couldn’t get a sot at it, is that it? How is BD, or the rest of us for that matter, involved with hedge funds? How have they impoverished us? Why the assumption of guilt, why the feeling of being personally attacked?


I would be very sympathetic if Trudeau were to detail how much money people made off the bailouts by the US tax payers. Through the government;s largesse, a few politically connected groups had their fortunes protected with our tax money. As unfashionable as it may be, I don’t mind people making vast sums of money through voluntary transactions. If it is voluntary, it doesn’t affect me. If my masters DC decide to protect cronies with my money, that is theft. Why isn’t Trudeau angry about that? Why isn’t BD making his check out to the Treasury? The hedge funds are leaving him alone, the feds aren’t…


The OWS crowd have been using the 99% rhetoric to great effect, but once again, I think they are misguided. When Steve Jobs died, several reporters asked some OWS folks what they thought of him. The reactions were overwhelmingly positive despite the fact that Jobs was certainly in that 1%. I like to think that if pushed on the matter, most of those folks would admit that Jobs did it right. He made stuff that everyone wanted and became rich doing it (and pulled lots of people out of poverty along the way). He never went to the government for help, even when Apple was on the verge of bankruptcy. Jobs wasn’t alone, there are plenty of entrepreneurs in the 1% that have provided services and goods for us. So why rail against the 1% when there are clearly great people in there? Why not protest against the people that get money from us without our permission? Why not protest against the ones giving away our money without permission?


Why indeed. People that make money by providing us things are great, people that essentially steal are not. Why are the two so often confused with one another? When will most people see that the dirtiest money flows out of DC? Why don’t people protest that? Oh right, they did, and got called racists for their trouble…



economics free market freedom

Thinking in aggregates (corporations aren’t people)

Mit Romney has been getting some press for his “Corporations are people” blurb. Lots of people are mocking him, pointing out the obvious, that corporations are not people. The irony is that the people mocking him are missing the point. Not only that, they are assuming that corporations are people after a fashion. Let me explain…

What Romney was trying to say was that corporations are made up of people and anything that is done to a corporation eventually ends up affecting the people that make up that corporation. The people mocking him are essentially assuming that a corporation is a stand alone entity. They think they can tax it and regulate its speech without affecting actual people. To my mind it is yet another example of being sucked into the fallacy of aggregates being tangible things. And like all of the other examples of that fallacy, acting against that fiction causes problems for actual people.

Paul Krugman is another great example. Whenever he claims that an alien invasion, or 9/11 would be good for us, he is thinking of GDP. GDP is an aggregate of production in a country. It is a loose proxy for economic activity. What he overlooks, and we should never forget, is that GDP is an aggregate measure that doesn’t tell us the first thing about prosperity. Trying to boost GDP can in fact have effects, and it might even make that measurement go up, but what does it really mean for all of us? If GDP gets a boost from rebuilding from a disaster, will anyone care?

I myself am guilty of talking about aggregates. How often do I rail against “the government” as if it were a single, monolithic thing? I should be more precise and bemoan the laws passed by congress, the unilateral action of the executive team in the White House, or the actions of the board of the Federal Reserve. It’s important to remember just how few people are actually moving things around for the rest of us. All of those groups try to co-opt us by saying that they are doing what they do for “the American people.” As if there were a simple group mind that is happy with the same things. They do what they do for the benefit of what they think the American people are, but how often do you or I agree with them?

And of course the most common aggregate fallacy of them all is all of the talk about “the economy.” There is no such thing. We are the economy. Each one of us, each action we take, every transaction we do, every act of cooperation with someone else, that’s what the economy is. There is no way we can sum all of that up with a single concept let alone a word. When you look at it like that, phrases like “The economy is depressed,” or, “The economy needs to be boosted” stop making sense. We need to respect the enormity of what we are summing up in that aggregate. The idea that a single action can improve all of the things that make up the economy is pure hubris.

Things are complicated. We like to sum things up for the sake of being concise, but we quickly lose what is actually being discussed. Language has a funny way of shaping our thoughts, we need to be careful about lumping too much into neat, orderly concepts because that rarely exists in the real world.

economics free market

NPR funding

My facebook feed is full of my friends gnashing their teeth over attempts to defund NPR. The general theme seems to be , “Those damn Republicans! How stupid are they? We need NPR, the government should keep funding it!” For the record, I have enjoyed some public radio from time to time. Having said that, I’m puzzled by the attitude that is implied. Surely, if NPR was super important, people would go ahead and support it directly. I’m not trying to be snarky, I’m really trying to understand why people feel that it is important that the US government has to be a middleman for this seemingly important thing. I am really looking for a reason other than “Everyone else should pay for things that I think are important.” That’s not it, is it?


Whether they realize it or not, the angst seems to boil down to being unhappy at not being able to force other people to pay for those things. I’m willing to give the benefit of the doubt to most people and say that they have bought into the “government funded” trap. There is a lot of confusion as to where the money comes from. The government doesn’t fund anything, tax payers do. The dream of a free market guy is that people that value something would actually be the people that pay for it.

It doesn’t matter that the percentage of our tax bill going to NPR is tiny isn’t important. Shaking you down for fifty cents or fifty dollars is bullying all the same. Granted, I am paying a lot less for NPR than the various wars we’ve been fighting. I don’t like those either and I’m under no illusion what is the more pressing concern. I wish both Democrats and Republicans would keep their eye on what’s more important. Nevertheless, I can’t help but think that “listener supported radio” would be best, you know, supported by listeners. If there aren’t enough people willing to pay for it, that should tell you something…. I say that NPR should beat congress and cut ties to the taxpayers money. Rely on your listeners, it’s the honest thing to do.

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The limits of Logic and world views

I know that I think differently than a lot of people do when it comes to things like economics, politics, and religion. What strikes me is the reactions I get from people. There is a common belief that if someone has deduced things logically, they must be right, and therefore I must be wrong. They confuse making sense for reality.

Imagine if told someone that parallel* lines can intersect and in some cases must intersect. If that person were in an argumentative mood, they might point out that the very definition of parallel lines forbids them from crossing. If this were a political, economic, or a religious point, more times than not I would be dismissed as an idiot. I’ve gotten that reaction fairly frequently. What I almost never get asked is why I might think that way. It turns out there’s a whole bunch of other types of geometries out there, as soon as you put lines on curved surfaces, basic rules of geometry get changed.

The point is that both I and my mysterious debater can logically defend why my view is right or wrong. The efficacy of logic is limited by the initial conditions or beliefs you start with. If you think you live in a Euclidian world and I think I live in an elliptic world, we are never going to come to any agreement or understanding if we rely on logic to stake out our claims.The same thing goes for any other world view you can think of. Once you believe you know the basic underpinning of your world, everything else follows logically.

Most people do what “males sense” to them based on their beliefs. If you try to point out that any given view they have is incorrect or, too often these days, tell them that they are stupid, you won’t get anywhere because they are a long ways down the causality chain. If you want to convince them to change their mind about something, you need to go to much deeper. When I talk to people about religion, economics, and even politics, I am usually pointing out that we don’t live in a Euclidian world despite appearances and how much sense it seems to make. It takes time, but ultimately you have to convince people you live in a better world than they do if you want them to come around to your way of thinking. It may not be a great way of scoring quick points, but it does give them some things to think about. That can lead to real conversations as opposed to slogans and name calling.

Of course, it’s a lot easier to not do any of this. Gotta keep telling myself that it’s worth doing. I think it pays off long term, if only for my mental health…


* I am using Euclid’s definition of parallel. Loosely, that is that if there is a line and a point off that line, there is only one line that can be drawn through that point that does not intersect that line. That’s Euclid’s 5th postulate, we call it parallelism. In elliptic space, there can be no parallel lines as Euclid postulated.