פיגוע

•11 December 2017 • Leave a Comment

Another pigua in NYC.

I made a post to Reddit:

As a New Yorker who was real close to the explosion site, of course I’m rattled. And pissed the fuck off.

I also remember what my grandmother used to tell me: in the 1920s and 30s, every time there was a newspaper story about a criminal, her father would check if the criminal was Jewish and thank God if he wasn’t. Because they were fresh-off-the-boat Jewish immigrants and they felt like they lived on top of a big tinderbox and one little spark could set it off.

I remember that every time there’s a terrorist attack. My first thought is always, “I wonder if the terrorist was Muslim?” My second thought, right behind the first, is “I hope he wasn’t Muslim, because that’s all my Muslim friends need right now.” I really do, it’s just where my mind goes. But I always remember my grandmother’s story and I force myself to think: “Even if the murderous shithead asshole was a Muslim, that doesn’t matter for other Muslims. It doesn’t matter.” Because I’m not going to be one of the people that my grandmother grew up afraid of. I’m just fucking not.

Anyway, I think about that on days like today. Everyone stay strong, stay vigilant, and חֲזַק וֶאֱמָץ

Someone responded:

Honest question: was there a major worldwide movement of violent Jews in the 20’s and 30’s? I’m just wondering if we’re comparing apples to apples here.

I replied:

Yeah, there were quite a few Jewish terrorists at that time. They kidnapped, robbed banks, and used bombs to target civilians, both in the US and Europe. They were mostly part of a loose network of terrorist groups allied around a common ideology that wanted to destroy countries as we know them and set up a single worldwide government that imposed absolute ideological purity. They called themselves Communists, or Anarchists, or Social Revolutionaries, but in many ways they were the ISIS of their day. And lots of people at the time called them a “major worldwide movement of violent Jews.”

Calling them that wasn’t entirely incorrect, but still it wasn’t right. Radical anarchism and communism were major worldwide movements, they had violent factions or tendencies, and a lot of their members were Jews. But they weren’t Jewish movements. They had nothing at all to do with mainstream Judaism. These terrorists represented less than one percent of one percent of the millions of Jews in the world. Most of whom were just regular people, like my great-grandfather who worked in a clothing factory, or his daughter – my grandmother – who was just a little kid.

It would be like if I said the Lord’s Resistance Army, or the Posse Comitatus, or the CSA, are movements of violent Christians. They are movements, they are violent, they are Christian, and given half a shot they’d be happy to be worldwide. But they’ve got nothing to do with the vaaaast majority of Christians. It’s an important distinction – and one that lots of Christians are still forced to draw (cough China cough).

The Muslim terrorists of today are the same. There are lots of terrorists in the world. Many are Muslim – in America and Western Europe, it’s possible that most terrorists are Muslim. They are violent. They are (or aspire to be) a worldwide movement. BUT. But they are a tiny fraction of the billion Muslims in the world, most of whom are just regular people who go to work and who want their daughters to grow up to be grandmothers one day. They are as Muslim as the Bolsheviks were Jewish, or as the Falangists or Provos are Christian, or as the 969 are Buddhist, or as Les Assassins en Fauteuils Roulants are Quebecois.

I am a Jew but I don’t stand with Lehi or the Irgun. I am a white American but I don’t stand with Tom Blanton and Bobby Frank Cherry. My friend Mohammed who cleans my clock at poker every week doesn’t stand with Dzhokhar Tsarnaev. We are comparing apples to apples, and one bad apple says NOTHING about the bunch.

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Homo Ludens, Homo Solvente

•9 December 2017 • Leave a Comment

I have a little pile of essays – half-complete, or little more than topics – and since I am overburned with free time I thought I should turn my attentions to them.

One of these was a blog post from two years ago, saved in my draft folder, containing nothing more than the title: “Microtransactions in Games.” Well, as they say – there is nothing more powerful than an idea whose time has come.

For those of you blessed creatures who don’t know about this, here’s the skinny:

Some games – computer, console, tablet or smartphone – you pay for. You buy the DVD, or the cartridge, or you just pay to download them. Some games cost more, some cost less.

Some games are free. These are mostly games that you download or play in a browser. Either they were meant to be free, or they sold so poorly that they’re now being given away, or they are so old that it seems quite silly to charge for them.

Of the games that were meant to be free, some were just made by someone for fun and are released as such. Some are meant to showcase the creator’s talent, in the hopes that this will lead to other opportunities for them – one man’s free game is another’s free advertising. Some are so bad that nobody would ever ever charge for them.

And then there are some which are only mostly free. Games like World of Warcraft, which costs $0 to install but requires that you pay a monthly fee to play – the free game is like a free needle and spoon, but the smack they’re selling will still cost you. (I would draw a comparison to why Amazon’s ereaders are always on sale; even if they lose money on the sale of each Kindle, they make money on the ebooks that they are then able to sell through the Kindle Store.)

There are variations on the mostly-free model. There are games where the single player is free, but to play with strangers you have to pay a little extra, either as a one-time or as a monthly cost. Or there are games where the initial game is free, but the expansion packs cost money – which seems perfectly reasonable until you realize that there are also many games where the purchase of the base game entitles you to all future expansions and updates for free.

Then we get to the microtransactions, which I would define as “any opportunity to purchase, not a game or the ability to play it, but something within the game and the ability to play with it.”

The oldest example, I would argue, is the 900-number help line. Got stuck playing King’s Quest IV? You call a number and some kindly operator tell you how to get unstuck. You pay $.99/minute for the privilege – but only if you want to.

Supporters of the paid help line noted that it let people solve puzzles that they couldn’t solve on their own – things that would otherwise prevent them from finishing the game. Detractors noted that you were basically paying for a game, and then paying more for the privilege of not playing it. Sierra’s directors were content to note that they were making more money from the help line than from sales of the game itself.

This was, essentially, paid cheating. This concept was advanced, particularly in free-to-play browser games, with the idea of purchasing treasure chests. Sure you could play the game, all the way through, and all for free… but if you wanted a little boost, a little shortcut, you could pay for it. Say it’d take you a week to earn a thousand gold. Instead, pay a dollar, and: presto! For some people, the exchange of real money for fake saved them time, aggravation, or both. It was a rational use of their money. Not the smartest, perhaps, but rational.

Then someone somewhere came up with the bright idea of making things in the game available only if you paid for them.

The first of these microtransactions were purely cosmetic. Also called ‘aesthetic unlocks’ – or, colloquially, ‘hats.’ The idea being: hey, you’re going to spends hours (if not hundred) (if not thousands) playing a multiplayer game. People will see your avatar. They will see it every day. Is it worth it to you to spend a dollar to customize your avatar? Quite possibly. If it’s worth thousands of hours of your life, it’s worth a dollar, right? Some people spend a hundred dollars on a shirt that they won’t wear for a thousand hours. Some people spent a thousand dollars on a dress they’ll wear once. Sure this is just a pile of 0s and 1s, inherently nonscarce: but someone had to take the time to design the thing, implement the code, make sure it works in the game. And beside, this isn’t a thousand dollars. It’s just a buck. You can afford a buck. Right?

Some games let you have access to ‘hats’ from non-transaction purposes. They were like trophies for doing really well in the game. Or maybe for pre-ordering the game. Or maybe for participating at an in-game (or out-of-game!) event. But just like in the 90s, let’s say you weren’t good enough to get that trophy by yourself. But you did have an extra dollar. Or two. Suddenly you could have a big hat just like your friends.

But there are some things that are more than ‘hats.’ Some items or powers within a game make you better at the game. Ask any one who’s ever played a roleplaying game, digital or tabletop: Items Matter. Sure you could spend hours and hours camping a rare drop. Or you could spend a dollar and use all those freed hours to go outside and get fresh air and cure diseases sleep with attractive people. That’s totally what you did, right? Right?

These weren’t cosmetic ‘hats’ – these were ‘unlocks’. They actually let you play the game differently – and usually, better. They were cheating – they were cheat codes where you swiped a credit card instead of typing a phrase. “This big gun isn’t necessary to kill people, but it sure does make it easier” – as true in video games as it is real life.

And then we came to the final act: ‘unlocks’ that were necessary to advance the game. A weapon that you needed to win, and to get it you needed to pay. “To open this door you must buy the Red Key!” – this is common, right now, in games. And not just in free games, either: to add insult to insult to insult, there are ‘necessary unlocks’ incorporated into AAA games which cost $69.99 to purchase. Making the purchase price reflective of only a fraction of the necessary expenditure required to complete the game: meaning that the price you pay in the store is actually just a fraction of the real purchase price.

This is not only unnecessary, and unscrupulous, but it is also underhanded. You may well not know that the game you’re buying is only half the game until you’ve already bought it, gotten home, and maybe even played dozens of hours. This is absolutely no different from buying a new car, driving it for 10,000 miles, and then learning that you’ll need to pay half the purchase price to keep driving. And then, in ten thousand miles, half the purchase price again. Until you… get bored with driving?

There is one further egregiousness that must be mentioned: loot crates. You don’t pay for the thing you want; you pay for a crate which has a (say) 1 in 3 chance of containing the ‘hat’ or ‘unlock’. Or 1 in 10. Or 1 in Whatever They Say. This is artificial scarcity three layers deep. This is gambling, pure and simple.

Personally, I would never spend one thin dime on any of these things. But I’m not a good person to ask, since I haven’t paid for a game – or any other piece of software – probably in my entire life, come to think of it. And yet, if I paid full price for a game from the store, and found that it wanted more money from me, I would be very skeptical. If it wanted more money before I could complete the game, I would consider this highway robbery. I would be angry. I would demand my money back.

Enter EA.

This matter has recently come to a head in the case of Star Wars Battlefront II, made by Electronic Arts. This game contains pretty much all the elements listed above, from the fact that you can’t play as most actual Star Wars characters until you’ve paid preposterous amounts of money, to the fact that loot crates turns the whole adventure into Las Vegas unregulated by the Gaming Commission.

When asked about this, an EA employee gave the following response:

“The intent is to provide players with a sense of pride and accomplishment[…]”

This is what games are supposed to offer – but by the playing of them, not by the pissing away of money.

It is thus not surprising that the comment quotes above is the single most downvoted comment in Reddit history; or that EA has lost (by all accounts) millions of dollars in cancelled preorders and promised boycotts; or that ‘loot crates’ are being investigated by some EU nations as a form of illegal gambling; or the fact that maybe, just maybe, people are beginning to wise up, and will voluntarily refrain from so poorly disposing of their money.

 

And yet, I could not call myself a business consultant without asking: is there such a thing as a good microtransaction?

After some skull-sweat, I have come up with the following types of microtransactions that I might consider to be worth the money:

-Undeveloped content. You pay for the game, you get the game. They make more game: you want it, you buy it. This is as it was in the age of sequels, and DLC, and episodic gameplay. This is plenty enough capitalism for anybody.

-Directional development. This is simply the Kickstarter model. Want to pay for the DLC? That’s fine. Knock yourself out. Want to determine what is in the DLC? If you want to pay for the privilege of choosing spaceship over submarine, or having a character named after your childhood iguana: go to. These changes might be more than cosmetic; the differences are that, A) nobody would have to pay for them; B) they would, in the end, give everyone the same gameplay experience – no special treatment, no cheating, nothing unfair.

-Purely aesthetic content (‘hats’). They do not affect gameplay, nor do they unlock new elements of gameplay. They are cosmetic, and nothing more.

-Nonscarce content.

This, I think, is the most interesting idea. This would give people the opportunity to pay for things which are objectively worth paying for, insofar as they are of limited quantity and require actual cost to produce.

These things are traditionally known as ‘feelies’. These are the things that come in a game box, alongside the manual and the disc. These might include a booklet, with higher production values than a simple manual; a map of the game world; a little plastic such-and-such to keep on your desk; in short, any little tchatchke which an avid gamer might wish to purchase and keep; in short, a feelie is just a hat irl.

Most of these items are crap. But some are not – and there is no need for them to be. For everyone who has spent a thousand dollars on a hand-made copy of a sword from the Lord Of The Rings, there is no reason why that could not be associated with the Lord Of The Rings video game that they also assuredly play. Or a sword from Skyrim. Or a sword from WoW. Or a sword from whatever game you’ve just made. Life imitates art… or at least, something real is modeled after something that the game developer has already modeled.

Yet these are all examples of a real-world item being based on the game developer’s choice. The true potential, here, lies in the real-world item being based on the player’s choice.

The earliest example of this that I can think of are the photo stickers from Pokemon Snap. The game was about taking pictures. You chose your favorite, went to Blockbuster, and had them printed out.

This was recently aped by Firewatch, a stunning indie video game that is one part murder mystery and one part hiking simulator. The aesthetic seeks to answer the question “What if a 1940s National Parks poster were three-dimensional and you could walk in it?” I think the game is simply beautiful. And like Pokemon Snap, the game includes a built-in camera system: you bring the camera to your eye, you focus, you take the shot, and you even then spin the little wheel to advance the film. After you beat the game, you can print out any of the pictures you want – at a high definition, and for a reasonable fee.

But this, I say, is just the tip of the iceberg. There is no reason that it need be limited to something so passive as appreciating the scenery. Let’s say there’s a game where you can customize your character’s facial appearance. No reason you couldn’t order a printout of your character’s face – or a computer-assisted oil painting – or a hand oil painting – or one of a hundred types of 3D models, to scale, full-size, from hot out of the MakerBot to chiseled from Catarra marble to… well, I’m not going to suggest ‘inflatable,’ but I expect that such an option would be as profitable as a loot crate. If not more so.

Anything that you can make within a game, could be available outside of the game. The more customization allowed by the game, the more fun it will be, and the more profit potential exists. A Lego set for your Fallout 4 settlement? A blacksmithing mini-game that yields an actual sword? The sky is the limit – and if you’re not careful, you won’t have just improved upon the microtransaction; you’ll have trained a bunch of people to use AutoCAD, and they will have had fun doing it.

Outline for the Invisible Hand (II)

•9 December 2017 • Leave a Comment

Making this for organizational purposes.

 

COMPLETED:

Arbitrage (1600 words): https://warspite.wordpress.com/2010/06/14/arbitrage/

Appraisal (2300): https://warspite.wordpress.com/2011/04/19/appraisal/

Authentic (7500): https://warspite.wordpress.com/2011/07/12/authentic/

Acquisition (6500): https://warspite.wordpress.com/2013/03/14/acquisition/

Advantage (2900): https://warspite.wordpress.com/2013/04/07/advantage/

Attain (4800): https://warspite.wordpress.com/2016/01/01/attain/

Avoidance (4500): https://warspite.wordpress.com/2016/11/20/avoidance/

SUBTOTAL: 30,000

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

arrest (2500): https://warspite.wordpress.com/2015/12/06/arrest/

arrest (2100): https://warspite.wordpress.com/2016/03/11/arraignment-in-black-and-gold/

arrest (2100): https://warspite.wordpress.com/2017/10/02/arrest-2/

arrest (1300): https://warspite.wordpress.com/2017/10/02/arrest-3/

arrest (1700): https://warspite.wordpress.com/2017/10/02/arrest-4/

arrest (1200): https://warspite.wordpress.com/2017/10/04/arrest-5/

SUBTOTAL: 11,000

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

IN PROGRESS

 

Abandon (estimated: 5000)

Appearance (estimated: 1500)

Adventures (12 in total; will probably average 1000 words each)

A short epilogue

…which will put the total collection at around 60,000

 

 

 

A Land Without OUIs

•9 December 2017 • Leave a Comment

Cars are starting to drive themselves.

Don’t believe me? Go to YouTube. See a car drive itself down the highway. See it take left turns and right turns through a small town. See it navigate a busy parking lot, find a parking space, slide itself in – then see it pull out and drive over to pick you up at the touch of a button.

Some people have said that this will only work in the cities of California, that it’s impractical for bad weather or for rough country roads. This already isn’t true. Self-driving cars don’t follow a planned route; they use multiple cameras and millimeter-wave radar to plot and replot their context and their path. In a nutshell, they use digital eyes and ears to do what your eyes and ears do. The difference is, they do it better. So if you can drive on it, or through it, then so can they –  and all while you’re having a beer in the back seat.

How long will it be before you can go to the dealership (or click a button on Amazon) and get a self-driving car? How long before you can’t get any other kind? All I know is, the next car that I buy will not need me to drive it. I’m not sure if it will even have a steering wheel – and if it does, I doubt I’ll ever use it.

I can’t wait to try to convince my kids that we used to let pretty much anybody strap into multi-ton steel monstrosities, step on a gas pedal (a pedal!), and then hurtle down the roads and across the world at break-neck speeds. I can’t wait to show them a picture of Boston traffic and say, yeah, we used to expect each and every person to be able to negotiate through that, generally twice a day every day for their entire adult lives. I’ll tell them that there were tens of thousands of auto fatalities every year and that most of them were a person’s fault, and yet we kept giving out key after key. Then I’ll explain what a key is and they’ll fall out of their chairs laughing.

Every new technological innovation has indirect consequences. Economists call them ‘externals.’ Investors call them ‘opportunities.’ Business consultants, like myself, call them ‘a chance to be clever.’ So: what happens when cars drive themselves, safely and easily?

-There will be far accidents.

-There will be far, far fewer accidents with a person at fault.

-Auto insurance premiums will aim right for the bottom.

-There will be almost no moving violations – and hence, no traffic tickets.

-The roadside motel will become somewhat archaic when you can stretch out and sleep in a moving car.

-Likewise drive-in movies when you can watch a movie while driving on.

-The quantity of street signage could be quite reduced. Hell, traffic lights might one day become a thing of the past.

-“X while you wait for your oil change!” won’t mean much when you car goes for its oil change without you.

-There will be no more DUIs – and no more drunk driving deaths. Zero.

It’s this latter that I’m particularly interested in exploring.

Let’s be clear about what it is: aside from the glory that I will be able to drink and drive (or more accurately – and even better! – drink and be driven), the number of drunk driving fatalities in this country will got from over 10,000 to 0. The number of OUIs – many of which are accident-related – will go from over 300,000 to 0. And the number of OUI related incarcerations, fines, and license suspensions, will zero out.

The introduction of self-driving cars will be one of the greatest revolutions in public health since the fucking Polio vaccine. But this leads to one external that, while I will not bemoan it, I do think that it is important to consider: without OUIs, a lot of lawyers are going to starve.

The profession of rural attorney is often based in very large part around OUI defense. I am an attorney, and I studied at a rural-state law school. Many small-town attorneys have expressed to me that a significant amount of their income derives from OUI defense. It is, to quote one northern Maine attorney, their “bread and butter” – to quote another, it’s “how they stay afloat.”

When self-driving cars become ubiquitous, the practice of law in rural America – already struggling – will become generally untenable.

Again, even as a lawyer, the idea that something would put a bunch of lawyers out of business does not exactly make me sit and weep. But there is a problem here. People need lawyers. From criminal defense to property transfers, to helping you get divorced or write a will, there are some things where it’s really good to be able to go to a professional. Just being able to drop by your local lawyer’s office and get advice can be invaluable in small towns – not the least because that lawyer might represent some big city know-how which otherwise that town just not have.

If the OUI faucet is turned off, many rural lawyers – probably most rural lawyers – are going to have to take down their shingle and close up shop. This means that most small towns in America will go from having one lawyer to none.Self-driving cars will create a law desert.

It’s good that they’ll make it easier, and safer, to drive forty miles – because that’s how far a lot of people are going to have to go in order to meet with an attorney.

And this presupposes that people have access to a car, which isn’t always true in rural America. In this way, self-driving cars might prove a reward to those who have cars, but a further punishment to those who don’t – advancing the haves but at the expense of the have-nots – serving, in short, to widen rural inequality.

There is a possible solution to this, in the form of distance lawyering. Your small town doesn’t have an attorney? You’ve got a telephone, right? You’ve got Skype? You don’t really need to have an in-person with a lawyer to get their opinion about the law. Just pick up the phone. Problem solved.

But there are some tough externals here too. First of all, I’m not sure that FaceTime really is the same as being face-to-face. Lawyering is about words and relationships. One might as well say that classrooms don’t need teachers, or camgirls are just as good as whores – they’re not unreasonable positions, but I am unconvinced. This also presupposes an access to telecommunications that a lot of people – poor, rural, old, off-the-grid, or any of the combinations thereof that are found out in Smalltown USA – just do not have.

Right now, if you lose your license or get your power turned off, you can walk to the lawyer’s office and get it sorted out. In this world you’re much less likely to lose your license. But if they shut off your power – or your cell phone – or your internet, you might be left stranded. A small town’s access to distributed goods and services can make it better – but its reliance on those external goods and services makes it extremely vulnerable. If they are removed, the small town isn’t hurt; it ceases being a town at all, and suddenly is just a few people out in the woods.

So this model of distributed lawyers could only work if there were some significant buttresses to rural access to telecommunications. This might mean guaranteeing rural internet access as a right; or at the very least, passing laws that some modicum of connection must be guaranteed, even during periods of nonpayment, while those payments are actively sought by the service provide. Or it might mean the guaranteeing – by direct or indirect state action – of public spaces in small towns where attorney/client conversations can occur. This might mean that smalltown libraries would each have “lawyer rooms,” equipped with computers and internet on the public dime, where people can call up their attorney at her office in god-knows-where and sort out their problems best they can.

But this implies a requirement of physical space – and, most likely, staffing – in each small town. This would not provide any new services to the people of these towns; it would simply replace the physical space that is currently occupied by the lawyer’s office, and the lawyer and the lawyer’s staff which occupy it. Moreover, it would transfer the cost of owning, operating, and staffing this physical space from a private entity to the town as a whole.

This isn’t necessarily a bad thing. Requiring that the community as a whole chip in so that its least fortunate members may have access to justice is not an ethical difficulty for me. However, it asks the question: what would be more economical? To let the local attorney be driven out of town, necessitating public expenditures in order to assure continued local access to a no longer local attorney – or instead to pay that money directly to the attorney, offering them a baseline which will allow them to stay, to keep open their office, and to continue to provide their necessary service to their town?

I expect that there are a number of ways which this “rural retainer” could be structured. Perhaps it could subsidize incomes only as they are required (based on audits of monthly or yearly receipts). Perhaps it could pay for the attorney to take more pro bono work – maybe offering them a pro bono minimum, rather as Maine’s lawyers-of-the-day are currently assigned. Perhaps it could simply be a structured as a tax incentive, much as they are offered to corporations or money-making (filmmaking) activities. Or maybe the town will not bare the burden, but rather the state – in the interest of promoting rural access to justice – will have to step in and cover the cost.

Or, as with any other discussion of the problems of rural America, we could always get together and declare that we are content to watch our small towns wither and die. This is what is occurring now, and it will happen that much faster when each and every small town loses its local lawyer. Perhaps this is the right answer. Perhaps this is just the way of capitalism in the modern economy, in the modern world. But we should know the problem. We should discuss what we want to do or not do. For if we close our eyes, the problem won’t go away – rural America will. We can save it, we can help it transition to a new life somewhere else, or we can just help it die with dignitity. By ignoring the problem, oh, it will die – but it will be long, slow, and horrible, and full of crime, and drugs, and crimes against children, and children with no chance in life, and so much suffering.

 

 

 

 

Consider the (Synthetic) Lobster

•8 December 2017 • Leave a Comment

CONSIDER THE (SYNTHETIC) LOBSTER

What will it mean for the Maine lobsterman when there’s an alternative source for lobster meat?

 

“Meat grown in a lab.” It shows up in science fiction as often as the spaceship or the sarcastic computer. And like both those things, it’s fast becoming a reality.

There are restaurants today where you can get a meal made of chicken, beef, or pork that did not come from a chicken, a cow, or a pig. And you couldn’t tell the difference – because there isn’t one.

Synthetic meat – also called ‘lab-grown meat,’ ‘cultured meat,’ ‘in vitro meat,’ or ‘vat-grown meat’ (in descending order of deliciousness) – is real meat. Look under a microscope and it’s no different from chicken or steak. It’s grown in a lab, but it’s no different from what’s grown inside a pig or a cow. Or a duck. Or a tuna. Or, one day, a lobster.

When synth meat hits the shelves, it will significantly disrupt America’s meat industry. A lot of ranchers and animal farmers are going to be out of a job. The Maine lobsterman will be in the same boat. Synthetic lobster meat might be great for the consumer, but it will be devastating to the lobstering industry – and to the Maine towns that rely on it.

 

SYNTH MEAT TODAY

The synth meat industry is making incredible progress – and it’s just getting started.

In 2003, researchers grew a tiny piece of steak. It was a scientific triumph. Then they cooked it and ate it.

The first synthetic hamburger was served in 2013. It is reported to have cost one million dollars (funded in large part by Google’s Sergey Brin). Now there are multiple startups making discoveries every day, backed by billions of dollars from investors like Bill Gates, Richard Branson, and hedge funds and venture capitalists across the country.

The problem isn’t edibility. It isn’t even flavor. It’s cost. Synth meat is here, it’s just expensive. Right now synth-meat startup Memphis Meats estimates the cost of production for synthetic steak at $2,000 a pound – which is ludicrous of course, but so is a new product whose production cost goes from $1,000,000 to $2,000 in just four years. It is only a matter of time before synth meat is as cheap as traditional meat – and most experts agree it will get cheaper. Much cheaper.

Lower prices at the meat (or seafood) counter is only one of the benefits. For example: vegetarians can eat it. This is meat – real meat – that is as cruelty-free as a veggie burger. When synth meat becomes widely available, there might be a whole lot fewer vegans – and a whole lot fewer slaughterhouses too.

Environmentalists note that this could dramatically reduce the carbon footprint of American farming. Cows produce unbelievable amounts of greenhouse gases – unbelievable unless you’ve ever smelled a cattle yard. And where there’s cowpats there’s cattle feed, and you can’t grow millions of tons of silage without millions of tons of oil. It then takes yet more oil to transport the cattle from ranches and slaughterhouses to the population centers where it will be consumed. Whereas synth meat can be grown in a lab on the same block as the supermarket that will sell it. It gives a whole new meaning to local meat.

Dietitians note that lab-grown meat could be free of the antibiotics and other chemicals that are such a turn-off to many would-be carnivores. They also note that lab-grown meat would more closely resemble grass-fed beef, which is generally thought to be lower in harmful fats and cholesterol. Public health experts note that this would pretty much eliminate the threat of mad cow disease, while dramatically reducing the threat of animal-born illnesses – even those illnesses which don’t affect people. That means that the animals on small farms, even backyard chickens or pet pot-bellied pigs, would be both safer to live and safer to eat.

Synth meat won’t replace traditional meat. But it could offer it stiff competition. ‘Animal-grown’ steak might become a luxury item, similar to the way prime aged or grass-fed beef commands a premium over the shrink-wrapped stuff in the market cooler. And in doing so it will disrupt the American economy.

It’s hard to predict how disruptive it will be. But think of it this way. There’s a new product that will be hitting shelves soon that is almost identical to the old product, except it’s cheaper, fresher, more ethical, and better for you. That product is going to be pretty disruptive. In the same way that the car was disruptive to the horse and buggy.

Right now there are around one million cattle operations in the United States. And most of those employ more than one person. And there are lots of adjuncts who make their living from this business, from the farmers who grow cattle feed, to the railways that bring cows to the slaughterhouses, to the other people in cattle country whose livelihoods depend on the money that beef brings into their towns. How many of these people will lose their jobs? It’s hard to say? Half of them? Most of them? All of them? A lot of people think the answer is closer to the latter.

Synthetic meat will make food cheaper to the American consumer, but those profits will be going to Silicon Valley startups, not farmers, and not anyone else who currently profits from the animal meat supply chain. The money won’t be going to China, but it won’t be going to China, Maine either. It will create jobs, but they’ll be for people in cities wearing white lab coats – and it will certainly destroy the jobs of farmers and ranchers across the country. It will remove one of the primary sources of rural employment – one of the last remaining economic reasons for there to be a rural America. And it seems likely that the value of farmhouses and ranch land, so tied to the economic viability of raising animals, will disappear all but overnight.

This will affect Mainers. It will affect Maine ranchers, pig farmers, and poultry farmers, and beyond – earlier this year Memphis Meats made a duck breast, and venison and even moose-meat is just a matter of time. But as inevitably as the tide, one day some bright scientist is going to turn her attentions to synthetic seafood. Soon we’ll have lab-grown shellfish. Soon we will be able to buy synthetic lobster, and that will have profound effects on Maine.

 

THE TRAP

The lobster industry is unusual in the modern world. There are very few industries left which are based on the harvesting of wild animals. One by one, creatures and crops have been domesticated. Farmed salmon is only the most recent subjugation of nature. A lobsterman less resembles a rancher or a farmer than he does a hunter or a whaler. To harvest lobsters on the scale we do, as sustainably as we do, is a truly incredible accomplishment; is based on deep understanding, anticipation, and respect, one part science and one part art – and ten parts tradition – and a hundred parts hard work.

As with so many other industries in American and human history, this leaves the industry extremely vulnerable – to changing circumstances, to changing tastes and needs, and to competition from domestication, alternatives, or other sources of production. Synthetic lobster meat will provide all three of those forms of competition.

It’s hard to say how much this competition will affect the lobstering industry. But the answer is probably “enough” – to undercut the market for lobster, to make the profession of lobsterman unprofitable, and to devastate the small towns of Downeast Maine.

It all comes down to prices. If a pound of ground beef costs four dollars, to compete with that you’re gonna have to charge three. If a pound of lobster meat costs twenty dollars, you’ve only got to charge nineteen. The lobster market has a lower barrier of entry for competition.

But when synth lobster is introduced, that difference will disappear. The lobster supply will go from limited to limitless. Lobster prices will no longer be inflated due to scarcity. Synth meat will create an efficient, scalable market, where supply will completely meet demand at any time. Lobster will become just like hamburger. A pound of lobster meat won’t cost nineteen dollars – it will cost three.

That price won’t be seasonal, or subject to the quality of the harvest or any other external factors. It will be permanent. The price of synth lobster meat will become the price ceiling. Losbtermen will not be able to get more for their catch.

That price could easily be too low for lobstermen to compete. In that case they won’t just be hurt – they will be driven completely out of business.

Even worse, it’s not an even playing field. The synth meat industry, by its very nature, cuts out middlemen. They grow the meat, wrap it up, and deliver it to the restaurant or grocery store (if not right to your front door) – and they do so from much closer to their customers than Thomaston or Machias or Castine. With synth lobster, the price paid by the consumer will be close to the price realized by the producer.

Whereas any lobsterman will tell you that the price they get for their catch is a mere fraction of what the consumer pays – a difference which widens the farther one gets from the source. A person in Boston – Los Angeles – or Paris or Cape Town or Beijing – will pay triple or more for a lobster what a person will pay on the docks in Harpswell or Camden or Beals Island.

To be competitive, the producer of synth lobster doesn’t have to match prices with the producer of lobsters – lobstermen. They only have to match prices with the retailers. As a result, the price of synth lobster could be four times the dock price of live lobster, and this would still significantly impact the Maine lobstering industry. Well before the synth price gets down to the dock price, the lobstermen of Maine will be unable to make a living. So will the other people whose jobs and livelihoods rely on them. So will all the Maine towns that were built on lobstering.

 

THE COST

Everyone knows that Maine is synonymous with lobster. But a lot of Mainers don’t appreciate how big a part they play in our economy. There are six thousand licensed lobstermen and women in Maine. That’s almost one percent of the entire Maine labor force. Last year they produced three hundred and eighty-two million dollars in gross exports, accounting for over thirteen percent of Maine’s entire export market – to say nothing of millions of dollars in domestic sales, licensure fees, and sales and income taxes. And that’s not counting sales by those further down the distribution chain – such as restaurants, markets, lobster pounds, and the lobster roll food truck at Portland Head Light.

And the people licensed as lobstermen represent only a part of the lobstering industry. Those six thousand people don’t include those who repair traps, who repair boats, who sell boats, who make boats, who sell diesel fuel, who drive delivery trucks large and small, people involved in fisheries science, state inspectors and regulators.

And while some lobstering towns are economically diversified, many are not – and the farther Downeast one goes, the more the towns become as single-industry as any mill town. That means that the livelihood of everyone in that town is closely tied to the success of the lobstering industry. A bad year on the boats means a bad year on the docks, a bad year in the stores, and, most likely, a rough year for school budgets and town expenditures. But we’re not talking about a bad year. We’re talking about catastrophe.

Of those six thousand lobstermen, how many will be able to keep working? Fewer than six thousand. Fewer than six hundred? For each lobstermen, each boat, each set of traps, how many other Mainers derive some or all of their livelihood from the needs of the lobstering industry and the profits that it generates? How many of them will be able to keep their jobs or their businesses? How many of them will want to remain in their towns – how many will be able to?

We can imagine what this will look like for our Downeast towns. They will follow the archetype of the single-industry town when that single industry disappears. Jonesport will look like Dexter when it stopped making shoes. Machias will look like Millinockett when it stopped making paper. Downeast Maine, already suffering from unacceptable poverty, will follow the path of Detroit when it stopped making cars and West Virginia as it stops mining coal. It will be devastating. Maine will be devastated.

 

THE FUTURE

Perhaps scientists will never be able to synthesize lobster meat. I wouldn’t bet on it. I would bet that they will be able to do it within half a decade, and that it will have driven traditional lobster meat off the shelves within ten years’ time. Just about the same time that cars start driving themselves and packages get delivered by drone – two things that, as we speak, have already begun.

Perhaps scientists will never be able to synthesize lobster meat efficiently enough to get the price down, thus that it will never be able to compete with live lobsters brought in from the sea. Again, all I can say is: I wouldn’t bet on it. Not my money. Not the future of my state and of thousands and thousands of my fellow Mainers.

Perhaps people will prefer live lobsters, even to the point where they are willing to pay considerably more for them. Perhaps they’ll do it out of charity to Maine. Perhaps people will pay three times the price for the joy of dealing with that red lobster shell. But this won’t be like people paying a premium for local grass-fed dry-aged steak instead of Wal-Mart beef. Synth lobster and off-the-dock lobster will be identical. This will be like people paying more for wild venison instead of farmed venison: most people won’t, and the premium they’ll be willing to pay will be small. It will not be enough to support lobster prices at their current levels. I would not wager on it being enough to support more than a handful of full-time lobstermen, let alone the industry as we know it.

Perhaps there will be jobs in the ‘new lobstering industry’ for those currently working as lobstermen. I do not think that this is likely. The skills necessary to captain a boat or set a trap are not skills that translate well into the modern workplace. There will be other people, with science backgrounds and lab experience, waiting to take these jobs. Nor do I expect that most lobstermen, as they stand on their boats or on the docks that their great-great-grandfathers built, dream with longing about doing 9 to 5 at a workbench in a laboratory – no more than a fourth-generation auto worker dreams about becoming an Uber driver.

And even if they were willing to go from the life of a lobsterman to the life of a lab tech – from owner to employee – from captain to cog – it’s unlikely they’d be able to stay in Downeast Maine to do it. When synth lobster hits the shelves, the ‘new lobstermen’ of Maine won’t be in Lincolnville; they’ll be in Lewiston. And there won’t be nearly as many lobstermen in Maine as there will be in other places. The new ‘lobster industry’ will be situated based solely on its proximity to consumer populations. Maine will no longer be a place people come for lobster, it will just be another small regional market for a widely-available, locally-produced commodity. There will be more ‘lobstermen’ in Chicago than in Cutler.

The port towns of Downeast Maine will have to fight hard not to become ghost towns. They will either have to develop telecommuting industries, or center their economies around seasonal tourism. In the former case they will be in the same position that vast majority of small American towns are already in. In the latter case they will have to be like Venice – and worse, they will be competing with it. They will be like Millinockett, forced to balance their pride with their desire to survive. I don’t envy them the decision – not the least because they won’t have Katahdin, and the beaches of southern Maine are closer to the summer folk.

I don’t know how long it will be before synthetic lobster-meat arrives, and begins to displace harvested Maine lobster in the market. But it’s coming. All I can say is, I hope that this article prepares the lobstermen and women of Maine – and the people and the communities which rely on them – for what is to come, that they can begin to prepare for the coming disruption.

 

David Axel Kurtz is a lawyer and management consultant with a background in economics and biology. A native of Kennebunkport, he now lives in NYC.

Post-Cyberpunk

•7 December 2017 • Leave a Comment

Rip and edit of something I wrote in 2011, when I first got a smartphone. -daK

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I once heard someone define science fiction as ‘the transposition of the problems of today into tomorrow.’ Plenty of scifi falls into that category. Plenty does not. I can think of some great scifi that tries to honestly and accurately confront the problems of tomorrow, and even provide solutions… and even look at the problems created by those solutions. Such writers don’t follow in the footsteps of Isaac Asimov: they follow in the footsteps of Hari Seldon.

Speculative fiction, I submit, is the genre of change: speculative fantasy suggests changes that are not likely to occur (vampires, little green men, “Blimey Harry! You’re a wizard!”), whereas speculative scifi is just a bit more probable (longer life, lives less lived, the creation of a post-scarcity world, fights over commodities that do not yet exist to be scarce). Neither are inherently less practicable to the world: the former simply in metaphor, the latter without passing darkly through a scanner.

Some of the earliest science fiction flowed from the pen of Mary Shelley (exalted is She!). She wrote of medical science, our war on our own mortality, the terrors of isolation. These were upper-class fears. The average Londoner didn’t have time for existentialism; it took all their time just to try to exist another day. The main reason that Frankenstein and The Last Man resonate so well with modern audiences is that the average person in America is closer to the aristocracy of Mary Shelley’s day than they are to the peasantry. We have more to fear, and we have the time to fear it.

With every step of progress, there are more people who have the time, the education, and the reason to consider the future. Harnessing the atom brought untold wealth and power, and the possibility of unimaginable destruction. The end of the world went from the pages of the Bible to the pages of a newspaper. Radiation – fallout – was a new Black Death for a new world. People had every right to be anxious about the future. There was a need to identify the threats, the challenges, the possibilities, and to work through their implications. Speculation was strategically and psychologically necessary; speculative fiction was the natural result.

Much of the scifi of the Golden Age does, alas, not hold up very well. Everything is Good or Evil, everything is to the scale of the Titans, and every male lead has a chin strong enough to chisel titanium. In large part this is just a reflection of the culture of the times. But I think it goes deeper than that. After WWII, the average person went, not only from isolation to being part of a global community, but from daily safety to the imminent threat of thermonuclear apocalypse. What Stephenson called “the radical pre-hokiness era” did not have time for subtlety; it was too busy being scared out of its mind.

As people became used to living under constant threat of fiery extinction, and technological advances became more and more assimilated into the life both of the nation and the individual, science fiction became less apocalyptic to suit. Big anxieties faded; little anxities came to the fore. The science fiction of the 1960s began to deal with Sexuality, Gender, Race, Politics, Religion, Freedom of Speech, Revisionism in History, Ethics of Science… and that’s just in Book II of Stranger in a Strange Land.

As technology expanded and refined, so too did the speculation. Books were written out of a fear of Mind Control (The Manchurian Candidate), Anti-Intellectualism (Farenheit 451), The Enforced Carnival (Logan’s Run), and really just Everything (Philip K. Dick). And science was joined by the sociocultural: the depression of the inner cities, the first of the post-war economic downturns, drugs and addiction, violence that the white middle classes did not understand. By the early 1980s the stories which grew out of these fears came to share enough between them for them to be thought of as a single genre: cyberpunk.

These stories reflected the fears of their time. This was a time when new things were, not large, but small. This was the time of the computer cable, of the mainframe computer, of tape and terror, of just lots of metal stuff. These pieces of technology began to seem like one great mass, coating the world like a biofilm, ever expanding, taking over. There was a sense that progress implied drowning: in our own waste, in each other, and in wires. The cyber aspect was the new things in the world; the punks were the individuals trying to remain individuals as they moved within it all.

Then, again, things changed. By the beginning of the glorious 90s, the computer had gone from a giant mainframe to a box that you kept by your bed. People had less and less to be afraid of. And that was before Steve Jobs came back to Apple and suddenly your computer looked like an anime cat.

You rarely fear what you understand and you never fear what you can control. The simplified, user-friendly interfaces gave people the illusion of control. The people said: technology scares us! So a company produced technology that was as comforting as strawberry shortcake. Demand was satisfied. And people were happy.

This change was directly reflected in the contemporary science fiction. Things became, for lack of a better phrase, less scary. Urban hellscapes became almost suburban. Dirt and grime were replaced by port and polish. Evil megalithic corporations became publicly-traded corporations. A bundle of thick cables became a single ethernet cord. Anxiety ebbed. Confidence flowed. Thus was Post-Cyberpunk.

We are seeing a similar pattern in various other forms of science fiction. Biopunk is a particular example. The primary works of the genre are at best Dickensian (The Windup Girl, BioShock) and at worst as apocalyptic as Shelley (Oryx & Crake). They are many of them works of extremes to the point of abstraction, whereby Science is more of a frame for philosophical exploration than it is the result of the study of textbooks. Either genetic modification has run amok, leaving everyone with super-tuberculosis working in a super-workhouse… or else everybody’s dead of a nanovirus, and it’s up for The Last Man to… well, something. Usually involving a whole lot of whining.

This is reflective of changing attitudes towards genetics, and particularly the human manipulation and control thereof. As with computers, such things are now outside of the life and grasp of the average person; they are Big and Unknown; they are occult; the average person does not understand them; does not feel in control of them; does not feel in control of those who are; feels under the control of those who are; is anticipating the worst, which is persistent cough followed by Armageddon. As with computers, I expect that these fears will be assuaged: increased education, increased exposure to the fruits of genetic experiment in a person’s daily life, and more opportunities for individual people to practice genetic manipulation, will cause these anxieties to disappear.

Will there be a bio-chicken in every pot? Most likely. I could argue there already is. Will there one day be in every home a terminal for selecting the traits that you desire from your houseplants? Baby’s First Gene Gun? An iPharm, in either 4 or 8 petabyte (and six different pastel colors?) I expect there will be. I speculate that it is so. And is this happens, biopunk will become post-biopunk just as surely as did its digital partner-in-genre.

One might go so far as to say that, in the world of computers at least, we have entered the realm of post-post-cyberpunk. Mainframes were scary; laptops less so; the iPhone is many things but it is not an object of apprehension. This is the progression of every technology: from immature and frightening, to clunky and disseminate, to mature and user-friendly. Cyperpunk was a genre of coax cable, postcyberpunk of ethernet cord. We are the wireless generation. There is nothing to fear but fear itself.

It is up to the speculative fiction writers of the world to return to their roots: identify the problems of the world; think of how they could be solved; and wonder at the implications of these solutions. Is the safety of the iPhone an illusion? Bring that to the fore! Are there threats that people have not considered? Bring ’em on, that we may deal with them sooner rather than later.

Surely we have not yet reached utopia. Surely there are obstacles which stand in our way, many that we have yet even to see. But surely too we have the tools and the talent to reach them, and overcome them. This is not a post-scarcity society, but it is nearer than Mary Shelley or even HG Wells could have envisioned. Perhaps it is the next great challenge of humanity, to discover what it shall do when no other challenges present themselves. But – Lord knows – we ain’t there yet.

BTC

•7 December 2017 • Leave a Comment

My mother just asked me for my opinion on Bitcoin. My initial reaction is that, as with any other trend in recent memory: by the time my mom has heard of it, it is doomed.

However, after some thought, I would like to propose two scenarios:

Scenario one: Bitcoin is just an asset like any other. It should be considered – valued – like any other asset. Under this mode of consideration, it is without much inherent value, and is due for an almost complete price correction – tending towards zero.

Scenario two: Bitcoin is not just an asset like any other. It should be treated as a true alternative currency. It has no inherent value, and this doesn’t matter. In which case it should be treated, not as an asset with a brighter future, but as a backdoor to wealth redistribution of a profoundly unequal nature. It should, most probably, be outlawed.

Here are my thoughts. I’m not declaring them God’s Honest Truth; this is just the view from the cheap seat that I happen to occupy. Also, this is just a rough draft; the price of BTC has moved about a thousand USD since I started this blog post, so forgive me for being eager to click “publish” while I can.

First: Bitcoin as asset.

Let’s just look at its price, and how that price has moved of recent.

I have two general standards for skepticism. Bitcoin meets both – by wide margins.

-I am skeptical of any asset which substantively increases in price over the medium term. In terms of my own risk parameters, I would define ‘substantive increase’ as a price increase of 20%, and ‘medium term’ as the course of a calendar year.

From Pearl Harbor Day 2016 to this infamous day 2017, Bitcoin has increased in price from $400 to $16,000. Note the comma. That is a single-year increase of over 4000%. That is a two hundred fold increase over what it would take for me to arch a skeptical brow.

For purposes of illustration: picture the comparative “20,000%.” If that number doesn’t seem large to you: stop doing things that involve numbers.

-I am skeptical of any asset which substantively outperforms the S&P 500 over the medium term. In this case, I’ll define ‘substantive outperformance’ as a gain of 100% over the same-term gain of the S&P.

Over the last year, the S&P 500 has skyrocketed from ~2200 to 2700 points. That’s a single-year increase of 22%. Which you’ll note puts the S&P 500 itself within eyebrow-arching territory for Yours Truly.

Bitcoin, again, has increased in value by 4000%. That means BTC is trading at a price which is around eighty times my risk threshold.

As a result:  Bitcoin is currently trading at rates that are in excess of my personal threshold for skepticism, both absolutely (as a single asset) and relatively (to the market as a whole)… not just fully, but stupendously.

Think that ‘stupendous’ is a good adjective in a financial context? What? Sorry. I was distracted by that unicorn Beanie Baby prancing in the tulip fields. Man, that guy is everywhere these days.

In conclusion: treating Bitcoin as any other asset yields the almost unbelievably strong conclusion that it is the bubble of bubbles, primed and ready to pop.*

But let’s turn to more substantive analysis.

Does Bitcoin have any inherent value? And, if so, what is a fair valuation?

I can conjure up three different ways in which Bitcoin – or any novel alternative currency – could have value.

A) As an improvement over extant currencies;

B) As a reflection of new wealth otherwise unrecognized;

C) As a result of old wealth – which means, in essence, it’s a Ponzi scheme.

Let’s take these each in turn.

A) Is a Bitcoin better than a dollar?

A lesson in history may be profoundly useful here. Much of the basis for cryptocurrency in the modern mind is the actions of Epiphyte(2) Corp. in Neal Stephenson’s novel Cryptonomicon. Their goal was to create a currency that was digital; secure; and (perhaps) untraceable. Their business plan served as the blueprint for Bitcoin.

The problem is that, by the time Bitcoin came out, traditional currencies had already achieved pretty much the exact requirements of Epiphyte’s digital currency. The dollar – and all other modern currencies – may be digitally held and and digitally transacted, with a very high level of security and privacy. How high? The highest that can be accomplished by for-profit corporations which have direct profit incentives to maximize the levels of privacy and security offered to their corporations – with the only limits being the requirements imposed by governments, thus to prevent… well, the sort of transactions that Bitcoins are often used for.

Let’s break down the arguments, for and against.

Proponents will argue that it makes exchanges (i.e. cash transactions, i.e. purchases) verifiable, through an excellent mix of the public (all exchanges being recorded in a public ledger) and the private (the parties to each exchange are known only by pseudonyms).

Detractors will note that it takes a preposterous amount of electricity and computing power to continue this method of currency (right now Bitcoin mining uses about as much electricity as does the entire nation of Germany), and that the length of time it takes to process and confirm a transaction is increasing geometrically (as much as two hours, whether you are buying a superjacht or a stick of gum).

Neutral economists will note that, as with any alternative currency, it is not backed by the full faith and credit of any government, sovereign entity, or (in the case of Bitcoin) by anything at all; that it is by design not a fiat currency system, preventing it from ever being subject to open market operations by a central bank; which that while every currency derives its value by means of its scarcity, Bitcoin’s great increases in price are entirely synonymous with hyperdeflation – and so while its trading value smacks of 1929, its illiquidity is already more at home in 1933.

Finally, neutral financial analysts might note that the supposed benefits of Bitcoin – a digital currency, secured by encryption, traceable to a single public ledger – are not substantively different from those benefits enjoyed by any modern currency. 

There is almost nothing in this world that a person cannot buy with digital dollars. These transactions – from sticking your Amex in a card reader or Square terminal, to taking out a mortgage to buy real property, to instantly shifting billion dollars blocs of corporate equity or national debt – are facilitated by the world financial system. That is to say, they are facilitated by a series of banks and adjunct industries. These transactions are nigh-on instantaneous, efficient, and secure. And they have reached this point as a result of 1) marginal profit potential on each transaction, spurring 2) huge investment in technology and infrastructure, 3) guided by governmental regulation and public oversight, and 4) strongly limited by competition in what is perhaps the world’s most efficient marketplace.

Bitcoin offers very little improvement upon this system. At best it utilizes some cryptographic and adjunct transaction protocols which can be profitably incorporated by extant financial networks. In this regard Bitcoin is like a small tech startup – it should be valued based upon the potential saleability of its novel technological innovations. And at worst, Bitcoin has to be valued as a currency which, while enjoying not a single iota of legitimate foundation (sovereign or otherwise), offers to consumers no opportunities not offered by a greenback. The new boss is the same as the old.

“But David,” you say, “Bitcoins let me purchase things that I couldn’t currently buy with dollars. Like drugs! And all while evading taxes!” Please boot up Tor, go to Silk Road, drop some Ethereum on a brand-new shovel, and dig yourself deeper into your hole.

“But David,” you say, “Bitcoins are not tulips!” That’s true. You could plant tulips. They had some value apart from their scarcity. (This is why gold – though it lacks many of the benefits of fiat currency, provides no advantages over it, and as such is inferior to it in every way… is still superior to Bitcoin as an alternative currency. As are the Malagasy ariary, Skud Malti, debt issued by a private corporation, or unsecured loans from a guy named Tony).

As a result, I must state that I believe Bitcoin is not generally better than the dollar, and therefore that, in terms of inherent value, it should not be trading at a premium to it.

To be more specific, I would answer the question “Is Bitcoin an improvement over existing currencies?” with a range. That range, unfortunately, goes from “not by much” to “no.”

An aside of a black-board-y nature.

Here. Imagine a Cartesian plane.

The X axis represents different types of transactions – that is to say, of uses of currency.** For purposes of simplicity, let’s say that to the left we find small transactions (retail purchases – a stick of gum), and on the right we have large transactions (wholesale purchases, t-bills, and national holdings of foreign sovereign debt). Let’s say X=0 represents the ‘average’ transaction in cash.

The Y axis represents utility. Let’s have y=0 be the marginal utility of using physical specie – a fistful of dollars, a few dollars more.

Let’s graph dollars. Modern dollars. Digital dollars as they are exchanged. There’s plenty of room to argue over the fine-tuning of this, no doubt, but I’m going to postulate with extremely high confidence that the chart would be pretty close to ‘uniform,’ with every size of transaction reaching up there towards y=1 – that is to say, perfect utility.

No transaction is perfect, of course. Whether it’s Visa taking a percentage of your order, or the unseen overhead on digital exchanges (electricity, upkeep on undersea fiber-optic cables, veritable legions of bespectacled KYC/AML lawyers pouring out of the Exchange Place PATH station every weekday morn), Y never equals 1. Sometimes it might even dip below 0 – which is why I carry cash for making small purchases, or why some merchants impose minimums on credit card transactions. But again, by and large, we are looking at a pretty damned uniform distribution – and with increases in technology and improvements to regulation, getting more uniform every day.

Now let’s map Bitcoin. Again, there’s plenty of argument about each individual data-point. But I expect that at no point would I assign Bitcoin a higher Y score – a higher utility – than a traditional currency. And at many points, I would assign it a lower score – at best a uniform distribution with a peak well below the average of the uniform distribution enjoyed by the dollar. At considering the preposterous electricity costs for Bitcoin mining, the huge time-lag for each transaction, and the unnecessary ‘protections’ of public ledger recording for small transactions, I would expect that Bitcoin’s maximum utility would be for discreet large transactions – so the distribution would be skewed wildly to the right of x=o, while still not straying very high above y=o.

The average utility of Bitcoin per transaction is lower than the average utility of a dollar per transaction. And, the variance of Bitcoin’s utility per transaction is much greater. As a result: I do not think that Bitcoin is inherently more valuable than traditional currency. I think it is inherently less valuable. On its own merits – outside perhaps of some special sorts of transactions (like, e.g., large purchases of drugs) – Bitcoin should be trading at below the cost of traditional currency.

Put it another way: a fair inherent value of Bitcoin is less than $1 USD.

Now let’s turn to the second way that Bitcoin might have value:

B) Does Bitcoin represent new wealth?

I’ve shown why I believe that Coins are inferior to dollars. But this still leaves open the question of whether Coins, as they currently circulate, represent wealth – wealth that could, and should, be represented in dollars, but at the moment is only represented in Coins.

I expect that the answer is “possibly yes” – with the caveat that the answer “yes” may be even worse than the answer “no.”

Can the creation of new currency also create new wealth? 

It is a truism of financial economics that wealth can be created. Money can also be created. But when you create money, you do not create wealth.

I’ll walk you through it. Right now there are… well, there are many different ways to answer the question “how many dollars are there?” but let’s go with M1. Right now, M1 is equal to about four trillion dollars. Each of those dollars, of course, can buy such-and-such an amount of stuff. If you doubled the number of dollars – from four trillion to eight trillion – and distributed the new dollars equally (a 2:1 split), then suddenly every person would have twice as much money. BUT they wouldn’t have any more wealth. There’d be the same amount of stuff to buy, and since everyone had twice as much to spend, suddenly everything would cost… twice as much. If you increase the money supply, you create inflation. More dollars equals less value per dollar… equals no new wealth.

And the opposite is true. A reverse currency split – exchanging every dollar for fifty cents – would halve the amount of money in your bank account. But it would double its value. The result would be deflation. Goods and services would suddenly cost half as much. Net change: nothing. Fewer dollars equals more value per dollar… equals no new wealth.

So again, when you create money, you do not create wealth.

Bitcoin, originally, operated on the idea that a new and superior form of money could, inherently, create wealth. It’s a not entirely unreasonable assertion. As I said, I don’t think Bitcoin accomplishes this superiority, and I think that there are externals to how Bitcoin sought to implement this creation which has turned it from wealth creation to wealth transfer – the implications of which are insane, horrifying, and suggest that if Satoshi Nakamoto is not the creation of the FSB, then brother, they just ain’t tryin’ hard enough. 

However, the assertion “Bitcoin is superior to the USD” can be made with a straight face. I disagree, but it’s not entirely unreasonable.

However, even if this is true, the questions then become: if Bitcoins are in fact superior to dollars, 1) how do we as a people determine this, and 2) isn’t the proper thing to implement a direct and equal exchange of Bitcoins to dollars at a rate of 1:1?

There are two possible answers to the first question: politically, or naturally.

The first method is certainly the safest. The only way for a nation to demonitize its entire currency, and then monitize an entirely new currency, is to do so by consensus. We democracies tend to express consensus through the political process. It’s kind of our thing. Bitcoin has not attempted this. (Nor, as things stand, would it – I will discuss shortly.)

The other way is to do it ‘naturally’. This is by providing Bitcoins as an alternative to dollars and letting nature take its course. If a Bitcoin is equal in face value to a dollar, but there is some inherent superiority to using Bitcoins – if they were (ahem) pound-for-pound superior – then without any political or regulatory interference, the good money would drive out the bad. People would naturally switch to Bitcoins, and pretty soon, dollars would be a thing of the past.

As a result, if Bitcoins were really superior to regular currencies, their value should have been pegged to that of regular currencies. Most likely this would mean 1 BTC = 1 USD. This would mean that there would have to be 4 trillion Bitcoins – either from the inception, or created constantly to maintain the target exchange rate. The latter would almost certainly be preferable, but either would work.

Bitcoin is not a fair replacement for the dollar. Nothing trading more than infinitesimally distant from a ratio of 1:1 could fairly replace the dollar; when speaking of media of exchange, that’s just what ‘fairness’ means. However: Bitcoins do not work like that. They are limited in number. Which is why 1 Bitcoin is not worth 1 dollar – as of today, it is worth SIXTEEN THOUSAND.

What would happen if Bitcoins were to replace dollars?

If suddenly everyone were to switch to Bitcoins, then the price of each coin would be driven up astronomically. You think it’s high now? Right now money, as a medium of exchange, is only fairly scarce – a great accomplishment for our central bank and our financial system. And there are four trillion dollars in the money supply. Suddenly there would be, not four trillion Bitcoins, but 16.4 million.

That would be deflation by orders of magnitude. For every dollar you have, you would suddenly possess approximately 1/243,000 BTC.

As we discussed before, this would not create or destroy any wealth. Something which costs one dollar in the store would just suddenly cost 0.0000411522 BTC instead. Outside of the, ah, computational cumbersomeness of this… there are people right now who own whole Bitcoins. As, what, ‘early adopters,’ their coins would become worth… more. 243,000 times more.

That’s right: each Bitcoin would be worth $243,000.

The largest Bitcoin investors hold, individually, between ten thousand and two hundred thousand coins. The Winkelvoss Twins (of Facebook – or rather, The Social Network, fame) hold approximately one hundred thousand bitcoins. Their investment of $11 million would become worth 100,000 x 243,000… dollars. Their investment of $11 million would earn them over 24 billion. Many other billionaires would be created.

Now, as a capitalist, I am hardly against the creation of new billionaires. But as we discussed above: the creation of new money – or the transition to it – does not create new wealth. So if a person makes 24 billion out of a currency exchange, 24 billion dollars of wealth has not been created. Zero dollars of wealth has been created. Which means that if they suddenly have new money, it means that someone else, suddenly, does not.

Who doesn’t have that money?

You.

The result of a transition from dollars to Bitcoins – either by political means, or by creeping natural switch-over – will result in a huge windfall for Bitcoin investors. That is why they refer to themselves as ‘investors’. They want to make it sound like they are earning money in exactly the same was a person who buy a stock low and sells it high. But they aren’t. Unlike with a stock, there is no wealth being created here. Bitcoin ‘investors’ are hoping that when the majority of the populace accepts the inevitable Bitcoin exchange rate of 243,000:1, they will simply accept that these ‘investors’ are entitled to possession of 243,000 times their fair share of the money supply.

“But David,” they shall say, “we were early investors. We are entitled to profits?” But that is the salient difference: there are no profits. This is a currency exchange. One medium is being exchanged for another. The idea that this generated ‘profits’ for some people is without a single difference from the idea that the total amount of money should be unevenly divided, with literally trillions of dollars being awarded to people based solely on the fact that they started using it a few years earlier than others.

This has absolutely nothing to do with capitalism. This does not reward investment; it simply rewards early adoption. This would be like if Apple Computers suddenly redistributed all its stock based upon who was the first person in line to buy an iPhone. There is a causal relationship between early investing – the allocation of capital that can then be used to create wealth – and later reward. There is no causal relationship between early adoption and later reward. Bitcoin investors just hope that people don’t notice that – whether they themselves understand it is irrelevant – while wealth is taken from the world and transferred to them.

As a result, the idea that Bitcoins are a ‘speculative bubble’ is in fact not the scariest scenario. The idea that they are not is a far scarier scenario. Because in that case, the people of the United States – and of the world – would suddenly be expected to accept a massive transfer of wealth from the majority of the populace to a slim minority, based upon the essentially arbitrary Ponzi-logic of I-was-here-first. It would be no different in scale or zeal than the wealth redistribution of the Bolsheviks – the difference being that they at least paid lip-service to equality while hoarding wealth and power, while in this instance, the unequal redistribution of wealth would be the GOAL.

The only way around this would be for the number of Bitcoins to be increased by means of a split. This would return Bitcoins to a 1:1 ratio with the dollar, and then exchange those new bitcoins for dollars as a 1:1 exchange. The problem here is that it would completely and utterly destroy any value held by Bitcoin ‘investors’. They would go from having $16,000 Coins to $1 coins, same as everybody else. This is clearly anathema to Bitcoin, all Coins, and all who support them. Which proves that Coins are not replacement currencies – they are investment vehicles, pure and simple.

C) Even if Bitcoins do not represent *new* wealth, do they represent *old wealth*?

Quite possibly. And, as I said, this is not necessarily a good thing.

Over the years since Coins have been introduced, this world has created a great deal of wealth. Increasing population, increasing production, the slowly-accreting benefits of the digital revolution: wealth has been created. It is distinctly possible that some or all of the current value of coins is representative of this wealth.

The problem is, here, that if there were no coins, this wealth would be represented in traditional economic instruments: e.g., dollars.

At time of writing, the total value of all Coins is 450 billion dollars. If coins did not exist, that $450 billion… would. It would still be there. It would just reside in the extant media of exchange.

If Bitcoins did not exist, every piece of specie currently in circulation would be worth more. It would have more buying power. Again, follow my logic. Right now people with Bitcoins have a buying power of $450 billion. That means that, since the creation of Bitcoin, there has been the creation of $450 billion in wealth – $450 billion in goods and services that can be bought. Were it not for Bitcoins, that creation of wealth would be reflected in the increased purchasing power of extant dollars. Because of Bitcoins, that increase has not bee reflected. Which means that, at best, Bitcoin owners are skimming the cream that should properly be distributed pro rata to all users of currency – everyone with a savings or an income. Every uptick in the value of Bitcoin is, at best, an uptick which should properly belong to the value of world currencies. AS THEY EXIST NOW, Bitcoins are an unconscionable transfer of wealth away from the people of the world.

Five Hopes:

One: Those who have invested in Bitcoins would otherwise have invested in other things. As a result, their returns are not substantively higher than they would have been otherwise – and those who will be injured by any coming crash will not be injured any more than they would by a general economic downturn affecting traditional markets.

Two: The fact that Bitcoins are skimming the cream of the world economy means that the value of coins is directly tied to the overall health of the world economy. In fact it is probably elastic to an order of magnitude, such that very small corrections in the world economy would lead to massive corrections in the market for Coins. As no bull market lasts forever, this will certainly occur, and probably will do so soon.

Three: The possibility that much of the value of Coins – as expressed through their market price – is illusory. That any attempt to take out a small percentage of the market’s value would collapse the market; that small decreases in value would trigger panic selling that would collapse the value; that the bourses are so artificially manipulated as to be little more than the prelude to a cash-grab, which will occur any day. And, compared to some of the implications I discuss above, I consider these scenarios to be all but rosy.

Four: The possibility that much of the value of Coins results from the purchase of Coins using traditional currencies. IE, their $450 billion value of Coins could result from, say, $449 billion dollars having been invested therein. The exact amount of this is very hard to determine. However, the implication would be that much of the market cap of Coins does not reflect the creation of new wealth, but rather the ‘investment’ of old wealth – and therefore the worst that will happen is that it will be taken from ‘investors’ by thieves-in-the-night, in a form of wealth redistribution that shall not affect anyone but those who lambs who lined up for the slaughter.

Five: It is quite possible that the limitations inherent in Coins would prevent their greater adoption, simply because, as I have said, they are inferior to traditional currencies as media of exchange. This will result in, at best, a natural threshold for the encroachment of coins – and, more likely, a natural bursting of the bubble, even some active force – MSS, or just a humble heir of Ponzi – does not supply the pin-prick first.

One final thought:

I will reiterate that, if someone were to create a perfectly-veiled weapon for striking at the global financial system & the extant distribution of wealth, they could not have done much better than Bitcoin. An alternative currency is itself a profound challenge to the world order; an alternative currency masquerading as an investment is a tool for unequal wealth redistribution that would make a Ferdinand Marcos look like Tomas Piketty in comparison.

While some Coin enthusiasts are the sort of cryptoanarchists who use one-time pads to encrypt their postcards and hand-roll their own tinfoil, this humble narrators does not grant them any more legitimacy in consideration of monetary policy than he does in consideration of any other policy – for the clear reason that desire to live off the grid, and I desire to live on it.

However, the vast majority of Coin users are not of the ranks of the Secret Admirers. They are not trying to create an off-the-grid currency. They are trying to demonitize extant currencies and remonitize them as the Coin. And unlike those nations that have engaged in remonitization, they are doing so, not from economic need, but for simple greed; not so ensure equal transfer of wealth as between all persons, but specifically facilitate the transfer of wealth unequally to themselves, based upon some farcical chimera of cartoon capitalism and secret-society seniority.

At best the Coin-enthusiasts do not realize this. Those that do, don’t care.

As a result, this humble narrator suggests strong legislative action be taken to limit the creation and exchange of alternative currencies as threats both to the established world order and to the holders and users of traditional currencies – which is to say, a threat to everybody.

*

A time traveler recently visited me, and sang me a mournful song. I’m not sure if he was from 2018, 2019, 2020 – or Christmas 2017, come to that. But he says it’s very popular in his time.

They came and told me I could join in the dream
Make money hand over fist
It wasn’t gold but it did glitter and gleam
A chance not to be missed

They used to tell me I was building a dream
And so I followed the mob
I joined the cryptocurrency team
Better than having a job

Once I built a currency. I was first.
I needed something to join
Once I built a bubble. Now it’s burst.
Brother, can you spare a coin?

Once there on Reddit, ah, watching the swell
Posting dankest of memes
A million subscribers. Then it fell.
Watched them leak out the seams.

Say, don’t you remember, I was hodling with you
I’m still hodling, my friend
I thought we had diamonds. You did too.
But we were just hodling sand

Made something from nothing, put food on our plate
Drank Champagne, ate tenderloin
Now we’re hungry. Now it’s late
Brother, can you spare a coin?

**

(In a perfect world, each type of transaction in which a person or entity could engage would be broken down into different variables, such as size; speed; security requirements; etc. – and so the X axis would go from a transaction with a composite of 0,0,0,0, to 0,0,0,1, all the way to 9,9,9,9, or what have you. However, this kind of at-the-intersection-of-the-quantitative-and-the-qualitative is a bit too dissertation-y for a blog post being made at 10AM on a Thursday.)

 

 
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