Friday, October 24, 2014

Lifehacker on Euvoluntary Exchange.

They don't use the word "euvoluntary," but the moral intuitions are all there.


Pay attention to the links at the bottom. Just because a business can fleece distracted or desperate customers doesn't mean help isn't available. A chronic market asymmetry is also an entrepreneurial opportunity for more virtuous merchants.

Exegesis in the Springtime

 There's good discussion appended, so I encourage you to click through for more.

For my readers unfamiliar with Leo Strauss, his main claims were that philosophers, poets, scribes, translators, and playwrights encode hidden messages and secret knowledge in their writing. Naive readers can enjoy the surface meaning of books, plays, poems, whatever and walk away content. But for the initiated, the hidden wisdom is what matters. Finding the hidden meaning of coded text is called "exegesis." The discipline of finding the hidden meaning in any work, written or otherwise is called "hermeneutics." As you might imagine, it's a tough claim to test empirically, though there are good game theoretical reasons to believe that writers with little direct political clout might wish to hide heretical ideas inside coded text.

The question then is: why should anyone bother to look for Straussian encoding in more modern works? There is no longer an Inquisition interested in strapping heretics to a dunking stool. Anyone in the secular west can write as they wish, without fear of state reprisal.

Answer (1): Straussian writing is a skill, and like any skill, it needs to be practiced lest it atrophy. Sure, there's little political suppression of disfavored speech these days, but forward induction urges risk-averse writers to keep their nibs sharp in case a totalitarian regime takes over, burns the books, and marches the heretics up the gallows scaffolding.

Answer (2): Straussian writing is a defense against the soft coercion of tribal exclusion. Are you a Team Blue partisan wishing to criticize the Chief Executive ca. 2009? Are you a Team Red partisan wishing to criticize the Chief Executive ca. 2002? Maybe you'll be gently dis-invited to write for DailyKos/NRO if you make your criticism plain. Even if the BATNA is not dire, it still remains unattractive.

Answer (3): Straussian writing is fun. Contrast a Straussian message with outright satire. Satire is an outrageous caricature of a position, with a very obvious exegesis; no special training is required to understand the "hidden" message. You simply have to be not-stupid. Straussian exegesis, to the contrary (when done properly) needs a key to unlock the mysteries held within. For example, if I'm guilty of Strausianism from time to time, the key is a passing familiarity with public choice economics. For the Tao Te Ching, the key is obtained after solving a series of koans. For Seussian Straussians, you need merely eat it in a box with a fox.

Answer (4): Straussian writing is accidental. Exegesis is prone to Type I errors, especially if the reader is actively on the hunt. Joe McCarthy was a hermeneutical Communist hunter. If you have the stomach for it, perform a search for "Illuminati" and browse what you find.

Answer (5): Straussian writing keeps out the riff-raff. If you want to go Full Nietzsche (never go Full Nietzsche), hidden knowledge should be reserved only for the eyes of those courageous few who have the fortitude to pass through the crucible of enlightenment. This is perhaps reasonable for some select religious texts. Recall that much of the Gospels are parables.

Get lost, Richard O'Brien
The risk of censure, be it political, religious, or secular, means that writing that could be salient to elites is not euvoluntary: writing plainly could result in outcomes unfavorable to the author. Straussian encoding is a partial defense against that. Hermeneutics makes writing more euvoluntary.


Thursday, October 23, 2014

Big Bad Heteroskedasticity: Bezos vs Krugman vs Andreessen Edition.

Paul Krugman accuses Amazon of asserting monopsony power by pressuring publishers to reduce prices, likening Jeff Bezos to J.D. Rockefeller.
Does Amazon really have robber-baron-type market power? When it comes to books, definitely. Amazon overwhelmingly dominates online book sales, with a market share comparable to Standard Oil’s share of the refined oil market when it was broken up in 1911. Even if you look at total book sales, Amazon is by far the largest player.
The econ 101 explanation is in the following graf:
So far Amazon has not tried to exploit consumers. In fact, it has systematically kept prices low, to reinforce its dominance [that's one hypothesis, anyway -SLW]. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books — hence the fight with Hachette. In economics jargon, Amazon is not, at least so far, acting like a monopolist, a dominant seller with the power to raise prices. Instead, it is acting as a monopsonist, a dominant buyer with the power to push prices down.
Amazon is a mancgere, a merchant that neither improves nor alters its wares, but rather offers the conveniences of transporting goods from seller to buyer with as little fuss as possible for buyers. By being the largest middleman, Amazon is (ostensibly) able to extract monopoly/monopsony rents on multiple margins. If you're a publisher, your BATNA is to try to get books out in tottering brick-n-mortar joints. If you're a reader, maybe you can look around for a pirated .pdf or something (hands up if there's a Barnes & Noble in a 20 minute drive of where you are right now, let alone the good ol' mom and pop book store).

What's more, their very size allows them the luxury of discriminating on multiple margins. Krugman identifies an editorial margin related to partisan politics and delivery times:
Last month the Times’s Bits blog documented the case of two Hachette books receiving very different treatment. One is Daniel Schulman’s “Sons of Wichita,” a profile of the Koch brothers; the other is “The Way Forward,” by Paul Ryan, who was Mitt Romney’s running mate and is chairman of the House Budget Committee. Both are listed as eligible for Amazon Prime, and for Mr. Ryan’s book Amazon offers the usual free two-day delivery. What about “Sons of Wichita”? As of Sunday, it “usually ships in 2 to 3 weeks.”
I'd add that you don't even have to reach that far. One of the unintended upshots of the fragmented local book markets is that micro-markets could thrive. As other-Sam notes, the content curation issue is extremely important. Book store owners anticipate customers' purchases, and stock the shelves accordingly. This sends production signals back to publishers to tell them the sort of talent they should be scouting. These days, the signals are chiefly coming from a single retailer. If this retailer is non-neutral, future content could be skewed. If this retailer rejects tail risks, future content could be leptokurtotic. Either one of these is unjust, especially for our descendants.

Krugman recommends swift government intervention. I do not. A wise and benevolent sovereign might remedy the content curation problem, but wise and benevolent sovereigns are sadly in short supply. An agency chartered with the sort of authority required to monitor the business operations of a bookseller of all things is, in other regimes, called a "censor." The question the careful analyst (and entrepreneur!) should ask is: "is there an alternate institutional arrangement that would solve the problems of content curation, monopsony coercion, & al without creating greater systematic risks?"

I think the answer is "yes." At the risk of being glib, consider an Uber of books; a bitcoin of books. Or of any non-durable consumer goods. Amazon provides a centralized service. They're so large because they're able to cheaply solve the very difficult problem of how to match buyers and sellers. This problem can be solved in an algorithm, perhaps on the blockchain. Warehousing and delivery are entirely separable from the core competency of Amazon.

Is Amazon euvoluntary? I guess the answer depends on what you want to compare it to.

See Marc Andreessen's commentary here.

h/t the ST Gang

Wednesday, October 22, 2014

Pixellated Peace

At Popehat, Clark takes an orbital view of the recent dust-up over ethics and morality in the video game industry. His point: the scuffle is just the latest battleground between the two factions that have been duking it out since time immemorial. Call it blue vs red, freedom vs authority, or forager vs farmer if you want, but it's just more of the same. Meet the new boss, same as the old boss.

Curiously omitted is some pretty good news; as far as deep cultural conflicts go, this tempest-in-a-teakettle is remarkable for being so peaceful. Yes, there's a lot of hot rhetoric going around, and some threats of violence serious enough to inconvenience some people, but there is a pointed lack of the taking up of arms or indeed, much of anything that could rouse partisans to do much else besides lose a little sleep as they incessantly tweet he-said/she-said vitriol at each other.

Has the great increase in public luxury shifted the battlefield of deep social conflicts to Mountain Dew and Chee-to stained keyboards? Is this explosion of peace a happy result of the great bounty brought by a massive boost to the volume of trade available to the common man? If so, is it not in the interest of global peace to trade felicitously with members of all tribes on earth so that they might beat their swords into oculus rifts?

What could be more euvoluntary than to distract rowdy, otherwise murderous crowds of angry young men with 1080p boobs at 60 fps? Drop trade barriers, spread peace through commerce. We may not be able to quash discontent, but if GamerGate has shown us anything, it's shown us that discontent can be effectively neutered. Let that put a spring in your step, and a smile on your lips.

Tuesday, October 21, 2014

Mai Waifu

Great headlines write themselves.
Middlesbrough man creates legal history after being convicted of possessing illegal images of cartoon children
We happy few who take residence in Anglophone nations are fortunate enough to be heir to a proud legal tradition ground in common-sense jurisprudence. The common law with its juries and its precedents and its peer system strive for Aristotelean excellence by drawing on the wisdom of crowds at their most placid and reflective. It is true that law-by-tort can still err, but it does possess the distinctive feature of being able to correct errors through deliberation.

Dragging a dude before the court for the possession of hentai is a perversion of the common law. This is the substitution of matters of personal taste for matters of public interest. There is quite literally no victim, no crime being committed here apart from raising the bile of men with the authority to wield the truncheon of the state. I cannot press myself to identify the EE condition under violation apart from the shadow #7 I suggested some time back: "the transaction is not aesthetically offensive."

No other explanation can warrant this wanton disregard for the great tradition of English common law.

Monday, October 20, 2014

You Can Pop a Lot of Trouble with the Pop-o-Matic Bubble

In case you find yourself wondering why I find Munger's euvoluntary exchange project so compelling, I invite you to read this. It is an indictment of the growing higher education bubble, written almost entirely using the language of exploitation. Even small asides like "the notorious for-profit Everest College" [emphasis added] are underpinned by the very common justice-as-fairness heuristic. Wealthy residual claimants of university endowments reap unjust material gains while students are mired in decades-long debt obligations. It's not fair—it's not just.

If I were a conservative (I'm not), I'd make an argument appeal a little like this:

The student loan crisis is weakening the moral and economic character of America. Recent graduates with tens of thousands of dollars due in outstanding loans (whose interest rates are set by Washington bureaucrats) effectively put the nation's young people in indentured servitude to government organizations. The non-market price of education is so high that it threatens civil unrest, mass disobedience, and tax revolt. America's enemies are keeping a close eye on the sentiments of the young people, hoping for the Yankee version of Red October or the Storming of the Bastille. The last thing America needs with the many foreign threats it faces is domestic insurrection. The time to reform the university system based on the traditional model of separating state and education has come. &c &c.

If I were a libertarian (I'm not), I'd make an argument appeal a little like this:

Students and universities are not free to exchange with each other. Intermediaries like Sally Mae distort legitimate market signals. New students who typically learn very little in the way of practical economics in state-run primary schools are marginally more likely to enroll in marginally imprudent programs with little useful feedback to correct errors after graduation. Private lenders have a strong incentive to issue actuarially fair interest rates based on all available information (default rates associated with majors, & al), thereby better reflecting a truer measure of risk and providing honest prices to the student at matriculation. The time has come to reform the university system based on the free market principles of personal sovereignty and the freedom of contract &c &c.

"But Sam," you cry, "you arrive at the same conclusions no matter what your rhetoric! Your priors are showing."

Well, yes. But that's not the point. The point isn't that I think that collective decision-making has far-reaching unintended consequences for the student loan fiasco. The point is that whenever there's an instance of an exchange that isn't perfectly euvoluntary, the language we use, the rhetoric we deploy matters to our audience. You can take either of those two passages above, mess with them a little, and come to completely different conclusions. You want a stronger America? Well, let's only subsidize STEM fields. You want less exploitation? Remove the tax-exempt status from corporate or foundational grants. You want less coercion? Revoke the public charters of state schools (it's not like students are attending classes anyway).

The problems in higher ed are caused by a confusing mix of issues, ranging from Baumol's cost disease to the unfortunate lock-in of student athletics (incl. Title IX) to insufficient price discrimination of tuition to the outsized influence of teacher unions, and on and on and on. If you're interested in isolating one cause, you're faced with the choice of feeding red meat to your ideological friends or attempting to win converts from your enemies. Write accordingly.

h/t The Peej

Friday, October 17, 2014

Breaking Stupid

Robust political institutions protect constituents from venal, stupid, craven, or amoral elites. Constitutional constraints on the limits of political authority achieve this, as long as the constraints bind effectively. When loosening these shackles for transient gains, I urge you to remember that constitutional constraints exist to guard against mayhem wrought by men like these.

Political speech is more akin to the kayfabe of professional wrestling than to anything else I can imagine. When politicians break kayfabe, as in this instance, the corruption that suffuses the entire system is laid bare.

Politics is exchange, but it is almost never euvoluntary exchange. Use precautions.

h/t Double D