Here is a puzzle for you: what is the theoretical link between bitcoins, Australian coal exports to China, and the US becoming a New Switzerland? It’s a bit of a convoluted link, so see at what stage in the story below you spot the answer.
Bitcoins are all the rage at the moment. With 11 million of them on the internet, each worth a 1000$ today (maybe more tomorrow!), it is a market of 11 billion dollars. This is peanuts in terms of world trade or even Internet trade, which measures volumes in the trillions of dollars rather than paltry billions, but still worth a chat.
Bitcoins have unusual properties as a currency: they are essentially a long string of numbers and characters that uniquely identify a ‘bitcoin wallet’. If you like, your possession of bitcoins stands and falls with a complicated password. Bitcoins can be sent to your wallet by anyone from their own wallets, but only the holder of your password can send from your wallet. So your password, your wallet and your bitcoins are one. For most purposes, there is a finite amount of bitcoins, but at the margin one can create a few more by doing lots of calculations that require a lot of electricity. (I hope you begin to see where coal might come in! )
Now, as a future internet currency, bitcoins are doomed. There are three reasons for that: their limited supply, the ‘greater fool’ principle, and governments.
The finite supply of them (there are 11 million of them now, and there will never be more than 21 million of them as they have been designed to get harder and harder to create) means that, if they are truly used as currency on a large scale in the presence of continuous growth in trade, that their value will continuously grow. This in turn would be its undoing because people would then hold onto them rather than spend them, anticipating that future value increase, meaning they are no longer used as means of exchange and their market collapses. It is a classic hoarding collapse of currencies seen before in money history.
The ‘greater fool principle’ will also kill off bitcoins: Continue reading
It is natural to think of our political leaders as either superhumanly clever and benevolent when we agree with them, or else dumb as dishwater and evil when we don’t agree with them. Yet, if one takes our own group-loyalty out of the picture, we can ask the simple question what kind of mental qualities are likely to thrive in our Western political environment.
The political environment we have is highly competitive and combative, with constant media scrutiny and constantly shifting political factions. This gives rise to particular psychological demands and pressures: anyone who can’t keep their story straight or buckles under the relentless psychological pressure put on by the opponents from both within their own political parties and outside, is dead on arrival in politics. Hence the minimum requirement is to be very tough mentally and to have a pretty good memory and ability to keep a straight story. This is of course why so many politicians are lawyers, for the legal profession trains people to be careful with words and to keep a line of argument, irrespective of whether they agree with it or not. So successful politicians certainly need to be in, say, the top 5% of their population in terms of smartness. This tallies well with the estimates of Simonton for the IQ of US president who assigned scores by analysing the intellectual content of their written and spoken works. He puts the average US president at an IQ of 142, with Clinton close to the top, easily 20 points ahead of Bush Junior. This indeed puts even the dumber US presidents in the top 5% of their population.
A completely different pressure that operates in our political environment is that a good politician must sound sincere towards the population, even though the story told changes constantly due to the changes in the political winds. Preferably, he must inspire. Politicians must thus constantly flatter the population, say they will quickly sort out problems they have no actual power to influence, and sell compromises. To be able to sell such dubious stories with a straight face requires a special mental adaptation: either the politician must be a superlative actor who can feign sincerity with ease, or he must truly be sincere even though the story he has to sell makes no real sense and shifts constantly. In the latter case, there is a benefit to being a bit dumb. Continue reading
In his introduction to his translation of the Analects of Confucius, Pierre Ryckmans likened that ‘literary classic’ to a coat hook that has over the centuries acquired so many layers of coats that it can no longer be seen-has become so big that it completely obscures the corridor it was hung in. And that is not a bad metaphor for ‘copyright’ itself. Something that started, in 1709 as a fairly simple statute “An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors .. for “.. the Term of One and twenty Years” has by now become such a huge multilayer, intertwined, spaghetti cake that it is virtually impossible to sanely approach it as a totality. Not going to try. Continue reading
Dear President Yudhoyono
Or can I call you Susilo? We like to use first names here in Australia. It’s a sign of informality. It indicates that you’re not wanting to be stand-offish. If you like we can go with middle names so that’d be Bang Bang right? You can call me Tone, or even John If we’re doing middle names
Anyway I gather from reading the papers that you’re a little bit cheezed off. Well let me tell you I am too. It was the previous government that may or may not have done the things that I refuse to confirm nor deny. It’s their fault. It’s also the fault of exceptionally highly paid journalists on the taxpayer teat who seem to think that having a free media means that they are allowed to freely publish whatever they feel is newsworthy. You’ve asked for a promise that it’ll never happen again, and let me say that my people are working on it as we speak. These journalists will regret ever humiliating you, and I for one will make them pay. Continue reading
Have a look at the beautiful graph below, which depicts the main trends in Australian emissions and its promised emission reduction targets.
Australia’s emissions trends, 1990 to 2020
Note: trajectories to the 2020 target range are illustrative
The dotted orange line shows the amount of greenhouse gas that Australia’s economy produces. It depicts a steadily increasing line from 420 million tonnes in 1990 to 560 million tonnes today, projected to rise to 650 million tonnes in 2020 under a ‘business as usual scenario’. The blue line shows total emissions, which thus adds emissions from deforestation to the ‘economic emissions’.
The three straight lines at the end of the graph show Australia’s promises, and then in particular the -5% line that both parties have committed to. Its a beautifully informative graph, which I have used in lectures the last few years. It is of course meant to shock the audience into rising to the challenge, but it is also very useful as a guide to discussing the politics of greenhouse emissions:
- Actual economic emissions have more or less followed the ‘business as usual scenario’ in the last 20 years, despite several governments tinkering with wind-mills and ‘energy efficiency’.
- The only reason that Australia now only emits slightly more than in 1990 is because forestry activities are included in the headline numbers (the blue line): there happened to be a lot of deforestation in the early 1990s! It would be much more proper, of course, to exclude this source: you won’t see this source in the reports of the International Energy Agency which calculates world emissions. Hence, a mere ‘accounting trick’, probably cooked up by some clever civil servant years ago, is keeping Australia in the ballpark of its promised reduction. And of course, another accounting trick is needed to exclude bush fires from ‘deforestation’! If you really want to pretend our ‘efforts’ look good, you can just look at the blue line without seeing the orange line and crow about the years with reduced emissions (such as is done here), but if one would look at economic emissions alone, then keeping the 5% reduction target would entail reducing the economic emissions between now and 2020 by about 40% relative to the ‘business as usual scenario’.
- Even with the ‘forest tricks’ in place one can see that Australia is not going to reach its targets without dramatic action, which its population and industry have time and again rejected.
Look at this graph hence and suppose you are the minister who is supposed to make the promised reductions happen. What can you do? Continue reading
The Australian stock market opened lower this morning on the back of Rupert Murdoch’s speech to the Lowy Institute last night. A senior analyst, interviewed by this correspondent attributed the fall in the Australian share price to the “transparent and misguided attempt at national flattery” when Mr. Murdoch predicted that Australia could be better than Singapore, Hong Kong and Taiwan. “ We already are”, said the analyst, “and markets don’t like to hear of things going backward”.
The apparent sycophancy of Treasurer Joe Hockey was noted, with questions also being asked about whether Mr. Murdoch had the necessary subtlety in his old age to continue to force the Australian government to bend to his will without making his interventions embarrassingly obvious, and hence undermine his controlling stake.
Mr. Murdoch’s revelation that he wears an electronic bracelet that monitors his lunch and his lunchbox was described as “just plain weird” by the analyst, and wondered only half-jokingly “if it was time to send the doddery old bugger off to a home”.
What should Australia do about a slowly warming world? Join a small group of European countries who have more permits to sell than their own industry can manage to use? Join hands with a coalition of the desperate in enacting one of the front-runner geo-engineering solutions, such as emitting tiny reflective particles high in the atmosphere in the hope of reflecting enough sunlight? Or just do nothing for the time being, perhaps researching this or that option and simply slowly adapting to the changes as they happen?
A world-wide Emission Trading Scheme that truly measures all the relevant forms of emissions and enforces a price high enough to truly bring back the stock of CO2 in the atmosphere to pre-industrial revolution levels is not on the cards. It would require a political commitment that lasts for decades, if not hundreds of years. It by necessity should involve all major countries, lest one would start to free-ride on the others and attract all the industry that is emission-intensive. It should stand firm globally, election after election in each of the countries. Within countries, the political will would have to be strong enough to overcome the temptation of provinces and councils to free-ride. To get the kind of reduction of carbon usage one would need, all things involving fossil fuels or equivalents in terms of emissions and uses (such as cooking oil!) would have to become prohibitively expensive: easily 100 to even 1000 dollars per litre at present estimates of demand elasticity. Imagine policing that in every home everywhere in the world!
In short, there would have to be a world-wide consensus on a level of emissions, a universal monitoring agency, and an international enforcement mechanism with enormous coercive powers. And don’t underestimate the needed coercive powers: if one is to keep 200 countries in line for thousands of election cycles, one really needs to be able to threaten with nothing less than a take-over. Whoever polices this scheme would thus need the power to invade large countries and to sanction all politicians at any level who might subvert the process for local gain.
If you reflect on this minimum package an ETS needs to have to ‘do the job’, you quickly realise it is a fantasy. An ETS on this scale only makes sense in an imaginary world where measurement and enforcement are easy, and political will indeed can be kept up at a worldwide level for generations. It is the sort of fantasy that underlay the communist project and, once again, reality will prove economists like Von Mises right: there are limits to what can be monitored and enforced. Indeed, I find it a little sad that so many economists and scientists allow themselves to be seduced by such command-and-control fantasies. I am yet to meet a senior politician who is naive enough to believe he could organise such a thing. Of course politicians play along -‘we, the population’ demand that they play along – but meanwhile they are simply building more coal-fired power stations, signing more coal export permits, and putting up import barriers against cheap Chinese solar panels.
What about geo-engineering, then? Continue reading
I remember the great bushfire in Canberra of 2003. I had only arrived with the family a week before and had just rented a nice house near the top of Mt Cook, right in the path of an enormous bushfire that ended up destroying hundreds of homes.
The heat of that day was immense: 40 degrees and strong winds. Activity was similarly frantic. Warnings on the radio of how the seemingly impossible was truly happening: fires that broke all containment lines were converging on the capital. Barbecues got cancelled as everyone returned home to prepare: people feverishly cleaning out the gutters of their house to remove anything that would easily combust; people filling up their bathtubs to be able to quickly immerse themselves if needed; the ban on using hose-pipes suddenly being lifted as the importance of water conservation gave way to survival. Our neighbour, whom we never talked to before, or afterwards, was suddenly very chummy in the face of this imminent joint danger. Indeed, there was a palpable buzz about Canberra as people went through a shared emergency.
Well do I remember standing on top of Mt Cook, seeing the fires break more containment lines on their way to our neighbourhood. In the distance, we could see huge fire-arcs of hundreds of meters, via which whole trees, full of igniting oils, were whirled into the Southern suburbs, causing immense damage to people and property. One had to be in awe of that kind of destructive force, which simply seemed too great for humans to meaningfully oppose. One suddenly felt a bit silly, holding two hosepipes in one’s hand waiting for these huge fires to come! Luckily for my neighbourhood, the wind shifted just as the fires were about to hit us, with the cooler air streaming from the opposite direction effectively ending the tragedy. For months afterwards, family back in the Netherlands and the UK would ask whether there were any houses left in Canberra and whether we had been lucky. We had been.
Yesterday and today, there are more large bushfires running wild in Australia and fears of a repeat of the 2003 fires abound. Let us hope things don’t get that bad.
Putting on my social scientist hat, I can offer the following perspectives on these bushfires: Continue reading
Eugenics got a bad name after the second world war. It got associated with pseudo-scientific theories under which people at the bottom of the societal ladder were branded as hopelessly deficient for supposedly inalterable biological reasons. Societies’ less successful were, quite literally, seen as ‘untermensch’ (under-people) and the ‘science’ of heritable poverty, height, and intelligence was used in the public campaigns of the nazis and others to stigmatise gypsies, jews, homosexuals, vagabonds, and others as being biologically deficient and hence a kind of ‘disease’ for which the only ‘cure’ was annihilation or selective breeding.
Modern behavioural geneticists of course are not like the old eugenicists. They are ‘merely’ looking at the relation between genetic proximity between people and how much their height, their intelligence, their mental disorders, their criminal behaviour, and their body size resemble each other. They talk of alleles, single nucleotide polymorphisms, linkage disequilibrium, heritability, phenotypes and CNVs, not the inherent inferiority of this recognisable group of people over that group. They do not advocate selective breeding, unless it is of mice or plants of course. One cannot find a single paper by behavioural geneticists in Nature or Science, where they appear often, that calls for genetic tests to be used for potential migrants or selective baby-bonuses.
And yet, I find this field somewhat creepy in its treatment of social processes. The same techniques and language is used to ‘track genetic diseases’ in plants as is used to track ‘genetic causes of behaviour’. The same techniques of breeding ‘mice with particular traits’ is advocated to ‘find’ the biological basis of what are essentially social outcomes . The same old penchant of looking for supposedly inalienable biological causes of what are changing social constructs is on display.
The literature I am talking about is vast, and the interested reader is invited to look at some reviews of it here (written by insiders of this literature), or else by psychologists here. There is little point in regurgitating those reviews, which are both very informative and open-minded. What I will do below is say why I think you don’t actually have to worry about this crowd: yes, these geneticists are indeed looking for the genetic recipe of the successful human, but their quest is, at the moment, going nowhere. Continue reading