Links and Notes for February 18th, 2021

Below are links to articles, highlighted passages[1], and occasional annotations[2] for the week ending on the date in the title, enriching the raw data from Instapaper Likes and Twitter. They are intentionally succinct, else they’d be articles and probably end up in the gigantic backlog of unpublished drafts. YMMV.

Table of Contents

• Economy & Finance
• Public Policy & Politics
• Journalism & Media
• Art & Literature
• Philosophy & Sociology
• Technology

Economy & Finance

Bribery Won’t Make You a Hero by Matt Levine (Bloomberg)

“You will not be celebrated for avoiding bribery in the way you will be for winning business, and you will get the impression that your bosses care more about winning business than about avoiding bribes.”

“Sometimes in financial markets you will own a thing and want to hedge one of the risks in that thing. For instance, you will own a bunch of bonds in a foreign currency, because you like the credits and the interest rates, but you will want to hedge the currency risk. So you will do a derivative, a swap or forward on the foreign currency to get rid of your currency risk. That way if the foreign currency goes up or down it doesn’t matter to you, you’re flat either way. Except that derivatives like this tend to require mark-to-market collateral, while the underlying thing often doesn’t.”

People Are Worried About Block Trades by Matt Levine (Bloomberg)

“But what is the SEC for? Somewhere on its list of priorities, arguably there should be one like “markets should be set up in such a way that prices are likely to reflect fundamental values.” This is hard to do and hard to evaluate, and you do not want the SEC dictating fundamental value. And yet. If you look at an event where that manifestly did not happen, where everyone gleefully went around buying stock at prices they did not think reflected fundamental value, that probably does call for some sort of regulatory nervousness at least.”

You Get the Crypto Rules You Pay For by Matt Levine (Bloomberg)

““Fines are a cost of doing business,” people complain about financial regulation, but perhaps sometimes it is more like “fines are a cost of figuring out what the rules are.” The regulators will tell you what the rules are, but one at a time, and for $10 million per rule.”

“When you call the bank asking it to buy $500 million of Stock X, the goal is for the bank’s Stock X trader to be so knowledgeable about the market for Stock X, to have so much insight into who is looking to add to or subtract from their Stock X positions and what the drivers of demand are, that she can instantly put a price on it that is competitive (high enough that you will sell to her) and yet profitable (low enough that she’ll be able to resell quickly at a profit).”

Shareholders Like Any Old Merger by Matt Levine (Bloomberg)

“[…] if you own all of the companies, you might favor mergers that reduce competition. If the acquirer buys the target and reduces competition in the industry, you will benefit as (1) a shareholder of the target (you get cashed out at a premium), (2) a shareholder of the acquirer (you now own a bigger company in a less competitive industry which can charge higher prices), and (3) a shareholder of the other companies in the industry, who also now face less competition.”

“[…] because the upside in stocks is unlimited but the downside is floored at zero, a very dumb decision by one company might be good for common shareholders. (If a $10 billion company does something dumb that (1) costs it $50 billion and (2) makes its public competitors $30 billion richer, common shareholders get all $30 billion of the benefit but only $10 billion of the loss: The company goes bankrupt, the stock goes to zero, and the other $40 billion of losses are someone else’s problem.”

“Making a vaccine widely available would be hugely positive-sum for corporate profits, and thus corporate shareholders, as a whole, even if it was costly for the particular company making the vaccine. And since that company’s shareholders — who, at least in some sense, own the company — also own all the other companies, and understand all this, they might pressure the company to sacrifice its own interest for the common good.”

Communism by the backdoor.

“A Company strategy that increases its own financial returns but threatens global GDP is counter to the best interests of most of its shareholders: the potential drag on GDP created by hoarding vaccine technology will directly reduce diversified portfolio returns over the long term.”

“[…] this stuff is part of the conversation now. The model of financial capitalism for many decades was that a company’s shareholders were interested exclusively in the financial performance of the company. Now new models are available.”

“I just feel like one of the advantages of pivoting to crypto is that instead of charging people money for a useful product that is expensive to produce, you can charge them money for a product that does not exist? “You pay $10 a month and instead of movie tickets we will give you non-fungible tokens of movie tickets, which are like movie tickets except that (1) they are on the blockchain, (2) they are a tradable speculative asset and (3) you can’t use them to see movies.””

“I do love the economics of this pitch: “You should buy Zorblocks, because if you hold a Zorblock for a week it will become two Zorblocks, and within a month you’ll have sixteen Zorblocks, which makes your original Zorblock a good investment.” Much of crypto economics consists of some version of “if you assume this thing is valuable, then it is valuable.” That is true in some loose sense of lots of other investments, too, but crypto has really managed it at scale.”

Public Policy & Politics

VIP | Roger Waters with Lee Camp on Assange, Human Rights, & More by Redacted Tonight (YouTube)

If you can’t see the awesome interview above, then you’re in a country that’s fighting Russia with their own censorship and authoritarianism. No-one sees the irony of this. The interview was spectacular. You can watch it on RT’s site here. If that doesn’t work because maybe RT will get blocked next, try PortableTV instead.

Cheese Caves and Food Surpluses: Why the U.S. Government currently stores 1.4 billion lbs of cheese by Callie DiModica (Farm Link Project)

“Though demand is declining, production is not. It has risen 13% since 2010. In 2016, the American dairy industry dumped a whopping 43 million gallons of milk into fields, animal feed, and anaerobic lagoons. Though this waste is staggering, it is also not representative of the size of the surpluses being run by dairy farms. The dairy industry received 43 billion and 36.3 billion dollars in 2016 and 2017, respectively, from the federal government. In 2018, 42% of revenue for U.S. dairy producers came from some kind of government support. It is important to note that the dairy lobby is largely responsible for influencing politics to dedicate this money for the industry, and the money mostly goes to the big dairy companies that fund the lobby, leaving smaller operations to fend for themselves in the increasingly competitive market.”

Democrats, the More Effective Evil by Chris Hedges (Scheer Post)

“You must manufacture an existential threat. Terrorists at home. Russians and Chinese abroad. Expand state power in the name of national security. Beat the drums of war. War is the antidote to divert public attention from government corruption and incompetence. No one plays the game better than the Democratic Party. The Democrats, as journalist and co-founder of Black Agenda Report Glen Ford said, are not the lesser evil, they are the more effective evil.”

This applies for Russia as well as America.

“Russian President Vladimir Putin and Chinese President Xi Jinping, after meeting recently in Beijing, issued a 5,300-word statement that condemned NATO expansion in eastern Europe, denounced the formation of security blocs in the Asia Pacific region, and criticized the AUKUS trilateral security pact between the US, Great Britain and Australia. They also vowed to thwart “color revolutions” and strengthen “back-to-back” strategic coordination.”

Justin Trudeau’s Ceauşescu Moment by Matt Taibbi (TK News)

“Ceaușescu’s balcony will forever be a symbol of elite cluelessness. Even in the face of the gravest danger, a certain kind of ruler will never be able to see the last salvo coming, if doing so requires any self-examination. The neoliberal political establishment in most of the Western world, the subject of repeat populist revolts of rising intensity in recent years, seems to suffer from the same disability.”

“Truckers last month began protesting a January 22nd rule that required the production of vaccine passports before crossing the U.S.-Canadian border. Canadian truckers are reportedly 90% vaccinated, above the country’s 78% total, a key detail that’s been brazenly ignored by media in both countries determined to depict these more as “anti-vax” than “anti-mandate” protests.”

“[…] “Not everyone can earn a living on a MacBook at a cottage.” This has been a theme in the States, too, where the people most dickishly insistent on the necessity of lockdowns or mandates have tended to be Zoomer professionals spending the pandemic in pajamas.”

“Canadian authorities did everything but the obvious move, meeting protesters head-on and negotiating with them in realistic terms. You don’t have to agree with them, but you do have to deal with them, which in this case means giving up the fantasy that your opposition is “small” or “fringe.””

“The incredible thing about politicians like Trudeau is that they genuinely seem sure their opposition is limited to small extremist pockets. They simply don’t believe how many people hate them and are continually flabbergasted to discover that insults and authoritarian tactics don’t improve their situations.”

“There’s a Narcissistic Personality Disorder element to this, where some pols seem unable to imagine that any sane person would feel anything but admiration and respect toward them. This in turn means their detractors can’t be merely wrong, but must be abnormal or literally defective people somehow, seduced by foreign spies or driven by criminal or politically illegitimate impulses.”

“For a while I thought this issue was specific to this candidate, that maybe Clinton reacted poorly to bad news and aides just came up with this Spinal Tap “our appeal is just becoming more selective” deal in order to chill her out. As time went on, though, it became clear that both Clinton aides and my colleagues in the press actually believed it.”

“I know that Donald Trump has spent over a year now crisscrossing the country denying his 2020 electoral defeat, but that’s the point: supposedly smart people mock him for that when they spent years doing the same thing, and somehow don’t think that’s weird at all.”

“[…] the real issue was usually a simple two-step progression, in which people all over the planet first just disliked their leaders, then reacted badly to being called racist traitors for saying so.”

“Their relentless propaganda campaigns have given most of the world an out-group identity by now, even a growing segment of the intellectual class, and like the Ceaușescus, their leaders still act like there’s a cellar somewhere in which all their detractors can be stuffed, instead of just treating them like legitimate political actors whose complaints need to be dealt with. They will need to reach that second conclusion eventually, but keep delaying, unable to get themselves to a place where they can see the “unacceptables” as members of their same species.”

And their propaganda against the deplorables is indistinguishable from Soviet-era thought-criminal subversive/dissident accusations.

“[…] it seems like the only thing our thinking classes can think to do in response is mass-produce news stories denouncing everyone involved as neo-Nazi QAnon loons, basically a repeat of Trudeau’s “fringe” approach. Those stories may be comforting to the Georgetown set, but it’s not going to help when 70 miles of trucks or whatever show up at the edge of the capital.”

Fresh Hell by Jason Arias (The Baffler)

“[…] let’s raise a glass to Lockheed Martin, Raytheon, and Northrop Gruman: their stock prices have been on a delightful upward swing since Russia started launching missiles by the bushel. If you’re looking for other investment opportunities as the “rules-based international order” is revealed as the sham it’s always been, here are ten oil stocks and seven defense stocks Yahoo thinks you should buy.”

Journalism & Media

Web3 Is A Mid-Life Crisis by Ryan Broderick (Garbage Day)

“In many ways, Kickstarter’s weird crypto project — and the blockchain aspirations other aging web 2.0 companies are pushing on us right now — are kind of like watching a middle-aged man buy a boat. He doesn’t need to buy a boat. His life will be significantly more complicated, and likely worse, after he buys the boat. But he has somehow convinced himself that he needs to buy this boat because he has done the math and realized he is going to die soon and he thinks the boat will fix this. Even though there are plenty of other easy and normal things he could do to feel better about this, he’s going to buy the boat. And we’re all going to have to watch and feel awkward about it.”

Art & Literature

Book Review: Sadly, Porn by Scott Alexander (Astral Codex Ten)

“You may think you have very valid personal reasons for not wanting to assume responsibility, like apathy or minimum wages, but the overwhelming motivator for devotion by choice is the rewarding reward of giving gifts of oneself, seemingly selflessly, because these publicly “count” more than discharging duty. The retort to this is that often times the selfless acts are done out of everyone else’s sight, so what possible reward could there be? But one doesn’t need to be seen by individual people, it’s enough to imagine being seen by a hypothetical audience.”

“[…] like a high end escort or high priced psychoanalyst. She has no idea what the guy lying beneath her wants; the only thing she knows about him is that he thinks escorts and psychoanalysts would know. So she doesn’t guess what he wants: she simply stays in character as the one who is supposed to know, and waits for the man to act.”

““Well you see,” Roshi replied, “for most people, and especially for most educated people like you and I, what we perceive and experience is heavily mediated, through language and concepts that are deeply ingrained in our ways of thinking and feeling. Our objective here is to induce in ourselves and in each other a psychological state that involves the unmediated experience of the world, because we believe that that state has certain desirable properties. It’s impossible in general to reach that state through any particular form or method, since forms and methods are themselves examples of the mediators that we are trying to avoid. So we employ a variety of ad hoc means, some linguistic like koans and some non-linguistic like zazen, in hopes that for any given student one or more of our methods will, in whatever way, engender the condition of non-mediated experience that is our goal. And since even thinking in terms of mediators and goals tends to reinforce our undesirable dependency on concepts, we actively discourage exactly this kind of analytical discourse.””

“Teach thinks porn is the defense against noticing you don’t have an interest in real sex. You don’t actually want things, you can’t actually fantasize (because fantasy is a step between desire and action, neither of which you’re capable of), so you download mass-produced fantasies from our corporate overlords in order to, essentially, fantasize about fantasizing. “Human beings,” he says “have abdicated moral, social, and political power to the technologies, much as you’ve done with your sexuality.””

“[…] if your map has a hole in it, don’t say that the people who like those novels are dumb, or they’re only pretending to like them, or they’re only signaling that they like them, or the whole topic is stupid − take the hole seriously and get intrigued when you hear a theory that fills it […]”

“The companies did some kind of judo move where they told us “well, darn, you’re just too individual and unique a person to fall for a mass advertising campaign − and incidentally the surest way to make everyone understand that is to drink Coca-Cola, The Drink For Individual Unique People”. And everyone lapped it up. This isn’t even subtle, the highest market value company in the world uses the motto “Think Different”. Or Burger King: “Have It Your Way”. Literal actual Coke printed the 150 most popular names onto their bottles in the hopes you would see your name and think you had a special relationship with them.”

“Harry isn’t the smartest or hardest-working person in the school − that’s Hermione. He’s not the most ambitious/decisive/strategic/active person − that’s Lord Voldemort, which automatically codes him as a villain. So why is Harry the main character and the hero?”

Because he saves and empowers people instead of murdering and enslaving them. It’s not that hard, Scott. Don’t overthink it.

Philosophy & Sociology

After Literacy by Justin E.H. Smith (Hinternet)

“I believe the prevailing assumption of the evil of rote learning, as it develops from Rousseau through Dewey and into the managerial truisms of education schools today, is based on the tragically misguided idea that the principal business of education is to draw out the singular voice of each individual, rather than drawing individuals into a community of shared knowledge, otherwise known as a tradition.”

“This is all the more the case when the actual expectation that a text be read before it is spoken of seems further and further from the realities of the college classroom, so that what is turned in as a “reading response” is often something more like an improvised bluff, an imitation of the outer forms of a lost art that the student has never really studied, much like what I would do if I were commanded at gunpoint to mount a stage and to start dancing ballet.”

“[…] education should involve the rote internalization of texts. Make kids memorize epic poetry, or the Bible, or King Lear, or the Upanishads, through recitation, adding a few lines each day over the course of several years.”

“It is an advantage of rote memorization that you don’t have to comprehend anything about what you’re learning. Just get it in there, as early as possible, and then you’ll have a whole lifetime to unfold the meanings you are already carrying around inside you without knowing it.”

“Textuality, in short, can still have a place in humanistic education, but the potentials of the art of composition should be expanded, or perhaps reversed, to include imitation that pushes up to the limit of the forgery. Working in this vein, one discovers that imitation is not necessarily stifling and limiting, but indeed can be a significant conduit to both understanding and creativity, to both artisanal skill and intellectual mastery: in sum, it is work that exercises the whole of the mind.”

Technology

EE380 Talk by David Rosenthal

“Discussing “blockchains” and their externalities without specifying permissionless or permissioned is meaningless, they are completely different technologies. One is 30 years old, the other is 13 years old.”

“Because there is no central authority controlling who can participate, decentralized consensus systems must defend against Sybil attacks, in which the attacker creates a majority of seemingly independent participants which are secretly under his control. The defense is to ensure that the reward for a successful Sybil attack is less than the cost of mounting it.”

“There is no central authority capable of collecting funds from users and distributing them to the miners in proportion to these efforts. Thus miners’ reimbursement must be generated organically by the blockchain itself; a permissionless blockchain needs a cryptocurrency to be secure.”

“Because miners’ opex and capex costs cannot be paid in the blockchain’s cryptocurrency, exchanges are required to enable the rewards for mining to be converted into fiat currency to pay these costs. Someone needs to be on the other side of these sell orders. The only reason to be on the buy side of these orders is the belief that “number go up”. Thus the exchanges need to attract speculators in order to perform their function.”

“That’s an average of one whole MacBook Air of e-waste per “economically meaningful” transaction.”

“The reason for this extraordinary waste is that the profitability of mining depends on the energy consumed per hash, and the rapid development of mining ASICs means that they rapidly become uncompetitive. de Vries and Stoll estimate that the average service life is less than 16 months.”

“Cryptocurrencies assume that society is committed to this waste of energy and hardware forever.”

“[…] even if it were true that cryptocurrencies ran on renewable power, the idea that it is OK for speculation to waste vast amounts of renewable power assumes that doing so doesn’t compete with more socially valuable uses for renewables, or indeed for power in general.”

“Deploying renewables consumes energy, which is paid back during their initial operation. Thus the current transition to renewable power consumes energy, reducing that available for other uses. The world cannot afford to waste a Netherlands’ worth of energy on speculation that could instead be deploying renewables.”

“Because the rewards for mining new blocks, and the fees for including transactions in blocks, flow to the HODL-ers in proportion to their HODL-ings, whatever Gini coefficient the systems starts out with will always increase. Proof-of-Stake isn’t effective at decentralization.”

“[…] the entire cryptocurrency ecosystem depends upon a trusted third party, Tether, which acts as a central bank issuing the “stablecoins” that cryptocurrencies are priced against and traded in. This is despite the fact that Tether is known to be untrustworthy, having consistently lied about its reserves.”

“In other words, 90% of Bitcoin’s carbon footprint is used in a partially successful attempt to compensate for its deficient anonymity.”

“Low margin businesses don’t attract venture capital. VCs are pouring money into cryptocurrency and “web3” companies. This money is not going to build systems with low barriers to entry and thus low margins. Thus the systems that will result from this flood of money will not be decentralized, no matter what the sales pitch says.”

“Nicholas Weaver points out that the “Ethereum computer” is 1/5000 as powerful as a Raspbery Pi. and that for the cost of 1 second of its use you can buy nearly 60 Raspberry Pis.”

“But the only significant social benefit of cryptocurrencies is rampant speculation, mostly in an enormous Bitcoin futures market using up to 125x leverage, based on a Bitcoin-Tether market about one-tenth the size, based on a Bitcoin-USD market about one-tenth the size again. The Bitcoin-Tether market is highly concentrated, easily manipulated and rife with pump-and-dump schemes.”

“Whales can’t get the face value of their HODL-ings. Last Friday the price crashed 20% in minutes. David Gerard writes: Someone sold 1,500 BTC, and that triggered a cascade of sales of burnt margin-traders’ collateral of another 4,000 BTC. The Tether peg broke too. That is 0.03% of the stock of BTC.”