Translated to EE, "exchange with foreigners is more euvoluntary than you think."
Enjoy #4 in this LL series from my cherished friend and excellent professor, Bryan Caplan.
Showing posts with label foreign trade. Show all posts
Showing posts with label foreign trade. Show all posts
Friday, May 23, 2014
Saturday, August 24, 2013
Remittance Payments and Directional Euvoluntarity: Buttercoin and Brito
Jerry Brito (along with our pal Andrea Castillo) is busy doing the heavy lifting when it comes to the economics (and political economy) of Bitcoin, and since his work already addresses EE points, I have ruled it prudent and polite to keep from sailing upwind of his research. If you'll forgive a note of conceit, I'd like to cross tack just this once.
Buttercoin is a nascent startup aimed at slashing the tendon of Western Union's business model using Bitcoins as the medium of exchange* in lieu of the staple currency: US dollars. Their praedicatum is that the extant firms are circumstantially coercive. Expats have little recourse but to submit to being "gouged" to the tune of 10% per transaction. These guys call shenanigans and say that they can operate for less.
I for one hope they're right. Now, I don't claim to know what the "correct" price is here by any stretch, but I do know the following:
1) Overseas postal workers are far far more likely to steal from parcels and letters than US workers.
2) Setting up an international account with a bank is a hassle the likes of which most Americans have no idea.
3) Even if you do manage to safely and securely get your cash from point A to country B, you're still not out of the woods, since as cash shifts hands, you're not entirely unlikely to end up with a wad of counterfeit Russian bills lining your palms.
Given all that, 10% is often a lot better than the alternatives. Voluntary, as it were, though not euvoluntary. Buttercoin promises to sidestep all that. Bitcoin can't be counterfeited, can't be seized by unscrupulous agents of the state, and can be quickly and painlessly converted into the local currency. If it turns out that the prices charged are thanks chiefly to these technical hurdles, then the Buttercoin folks might well be able to successfully undercut them. If, as I fear might be the case, it's a matter of regime uncertainty (grease the right palms or your business license won't get through), it could well be that the 10% is there as a normal cost of doing business.
Fingers crossed, guys. Godspeed.
*this is sort of an interesting point of semantics here. In this application, is Bitcoin more a medium of exchange or a unit of account? It's a wonky question, and I'm not sure it really matters apart from some technical legal questions across regimes. After all, what really counts as "money" is a matter to be hashed out in arbitration, yes?
Buttercoin is a nascent startup aimed at slashing the tendon of Western Union's business model using Bitcoins as the medium of exchange* in lieu of the staple currency: US dollars. Their praedicatum is that the extant firms are circumstantially coercive. Expats have little recourse but to submit to being "gouged" to the tune of 10% per transaction. These guys call shenanigans and say that they can operate for less.
I for one hope they're right. Now, I don't claim to know what the "correct" price is here by any stretch, but I do know the following:
1) Overseas postal workers are far far more likely to steal from parcels and letters than US workers.
2) Setting up an international account with a bank is a hassle the likes of which most Americans have no idea.
3) Even if you do manage to safely and securely get your cash from point A to country B, you're still not out of the woods, since as cash shifts hands, you're not entirely unlikely to end up with a wad of counterfeit Russian bills lining your palms.
Given all that, 10% is often a lot better than the alternatives. Voluntary, as it were, though not euvoluntary. Buttercoin promises to sidestep all that. Bitcoin can't be counterfeited, can't be seized by unscrupulous agents of the state, and can be quickly and painlessly converted into the local currency. If it turns out that the prices charged are thanks chiefly to these technical hurdles, then the Buttercoin folks might well be able to successfully undercut them. If, as I fear might be the case, it's a matter of regime uncertainty (grease the right palms or your business license won't get through), it could well be that the 10% is there as a normal cost of doing business.
Fingers crossed, guys. Godspeed.
*this is sort of an interesting point of semantics here. In this application, is Bitcoin more a medium of exchange or a unit of account? It's a wonky question, and I'm not sure it really matters apart from some technical legal questions across regimes. After all, what really counts as "money" is a matter to be hashed out in arbitration, yes?
Friday, July 13, 2012
Furr'n Earl
One of the reasons I haven't posted much in the last couple weeks is because I'm buried with my day job. I'm in the middle of working on some environmental stuff including air quality and crime. Yesterday, as I was tracking down sales data on leaded gasoline*, I stumbled across a report on the US Energy Administration's (part of the DoE) website on "dependence on foreign oil". What a curious claim. It got me thinking... in what sense could US citizens be considered "dependent" on any good or service?
In the case of petroleum, the American city (with one or two exceptions, perhaps) is a decades-long project in exurbanization. Zoning laws, tax incentives, urban renewal, housing restrictions, rent controls, public housing initiatives (I recently watched a not-too-shabby documentary on the Pruitt-Igoe disaster in St. Louis) all contributed to an average workday that includes close to an hour behind the wheel every single day (US Census, 2009). Given this state of affairs, the BATNA for most Americans is unappealing. It's low-status to live in most urban centers (though this general rule has quite a few exceptions) and almost unheard-of to cluster co-workers into a single community. The US is a nation of single-owner automobiles, but does this necessarily imply that its citizens are dependent on foreign oil? Why not apportion some of the credit to the elite interests that shaped the American suburb?
In the short term, the extant physical capital of the US has to be taken as fixed: we have the houses, the churches, the schools, the fire stations, the roads, the streetlights, and the sundry other bits and bobs of daily life that are already here. We are "dependent" in the sense of extremely high short-run opportunity costs. However, as we all know from Econ 101 (or 301 if you're not using the Cowen-Tabarrok text like you should be), time makes prices relatively more elastic. People can search and substitute. Instead of living 20 miles outside the city center, developers can build attractive multi-family units in downtowns, cities and counties can ease zoning restrictions, allowing more and closer Wal-Mart type stores near (projected) population centers.
To the extent that this stuff is or isn't happening, I suggest to you that America is considerably more dependent on suburban living than on foreign-produced oil. Given that the US dealt with the oil embargo in the Carter administration and that we've had more than three decades to move back into the cities, I think it's not unreasonable to claim that OPEC is a paper tiger that we don't really care about except to bubble, froth and spit at from the political stump or the academic lectern. In the long run, we're no more "dependent" on foreign oil than on foreign shoe leather.
America is dependent on foreign cashews. Alert the press.
*For those readers too young to remember, from about 1925 to the rise of the catalytic converter in 1975, cars ran on fuel containing lead. This lead entered the atmosphere as part of the exhaust. There appears to be reasonable evidence that this lead contamination contributed to some of the crime wave that prompted the screenplay to Robocop.
In the case of petroleum, the American city (with one or two exceptions, perhaps) is a decades-long project in exurbanization. Zoning laws, tax incentives, urban renewal, housing restrictions, rent controls, public housing initiatives (I recently watched a not-too-shabby documentary on the Pruitt-Igoe disaster in St. Louis) all contributed to an average workday that includes close to an hour behind the wheel every single day (US Census, 2009). Given this state of affairs, the BATNA for most Americans is unappealing. It's low-status to live in most urban centers (though this general rule has quite a few exceptions) and almost unheard-of to cluster co-workers into a single community. The US is a nation of single-owner automobiles, but does this necessarily imply that its citizens are dependent on foreign oil? Why not apportion some of the credit to the elite interests that shaped the American suburb?
In the short term, the extant physical capital of the US has to be taken as fixed: we have the houses, the churches, the schools, the fire stations, the roads, the streetlights, and the sundry other bits and bobs of daily life that are already here. We are "dependent" in the sense of extremely high short-run opportunity costs. However, as we all know from Econ 101 (or 301 if you're not using the Cowen-Tabarrok text like you should be), time makes prices relatively more elastic. People can search and substitute. Instead of living 20 miles outside the city center, developers can build attractive multi-family units in downtowns, cities and counties can ease zoning restrictions, allowing more and closer Wal-Mart type stores near (projected) population centers.
To the extent that this stuff is or isn't happening, I suggest to you that America is considerably more dependent on suburban living than on foreign-produced oil. Given that the US dealt with the oil embargo in the Carter administration and that we've had more than three decades to move back into the cities, I think it's not unreasonable to claim that OPEC is a paper tiger that we don't really care about except to bubble, froth and spit at from the political stump or the academic lectern. In the long run, we're no more "dependent" on foreign oil than on foreign shoe leather.
America is dependent on foreign cashews. Alert the press.
*For those readers too young to remember, from about 1925 to the rise of the catalytic converter in 1975, cars ran on fuel containing lead. This lead entered the atmosphere as part of the exhaust. There appears to be reasonable evidence that this lead contamination contributed to some of the crime wave that prompted the screenplay to Robocop.
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