Hostile Fire Pay

Is hostile fire pay coercive?

I'm in the middle of eavesdropping on a Twitter conversation. The relevant tweets are from a non-follower, so I'm disinclined to reprint them here, but the gist is this: sex work is different from ordinary market labor because penetration is categorically different from, say, clerical work. Paying women to perform such degrading acts is exploitative due to both the sacred-violating nature of the work and the lack of decent alternative options.

Bullets penetrate. The bodily effects of combat are visible and often gruesome. The mental health effects can be devastating. Yet, Soldiers earn wage premiums for being stationed in combat theaters. Is hostile fire pay similarly exploitative? Why or why not?

Good Question

World's most expensive water. Does anyone in hotel industry really believe this profit is worth the brand damage? pic.twitter.com/RTA4Cr8XQb

— Deb Roy (@dkroy) August 9, 2015

 Is it exploitation if you can drink from the bathroom tap?

Hotel minibars are fascinating studies in price discrimination. Does the same economic analysis apply to the minibar that applies to cinema concession pricing? Why or why not? Does the same moral analysis apply to the minibar that applies to cinema concession pricing? Why or why not?

Kids Prefer Euvoluntary Cheese

So you find out that the cheese you pay dearly for at your upscale grocer is made by prison labor. What do you do? Should you be offended? Should you credibly commit to shopping elsewhere? Or should you take comfort that convicts are learning a valuable trade that they should be able to convert to productive behavior upon release?

Is there a better use of their time? If so, what?

The Solution To Exploitation Is Not Oppression

Imagine for a moment that you're a recent immigrant from, say, Laos. You speak little English, if any at all. Finding a newspaper in your native tongue, you see an advertisement for a job painting nails. Alas, it turns out that there are apprenticeship requirements, and that for the first few months of the job, you actually pay your employer for the privilege of working there.

Naturally, the New York State Department of Labor gets wind of this and magnanimously offers to raid your employer and others like it on your behalf. How thoughtful of them. The salon owners are presented with an easy-to-understand offer: pay your workers more, or face prison.

You are now out of a job.

Moreover, you remain nearly unemployable. Perhaps you can turn tricks to keep food on the table and a roof over your head, or maybe you can start slinging rock. It's pretty unlikely that this sort of ham-handed intervention will accelerate your march toward independence and property ownership though.

Being an immigrant already sucks. Compounding the difficulty with well-intentioned, paternalistic oppression adds injury to insult.

ATSRTWT

h/t ClarkHat

Comfort the Afflicted; Afflict the Comfortable

Via MM & Laura Agustin, Gay Kiwi advocacy group GayNZ promotes anti-trafficking organization SweatsHope, aimed at ending prostitution in Kolkata (nee Calcutta if you're my age). Find the EE-relevant remark in the following quote:

Sonagachi, a suburb of Kolkata, is one of the most infamous red-light/sex districts. Several hundred poorly maintained, multi-story brothels and an estimated 11,000+ sex workers line the streets daily. Poverty has left them without options; the cries of their hungry children, mothers and brothers drive them to sell their bodies. 1 in 18 Sonagachi women involved in the sex trade industry have HIV.

Poverty has left them without options, indeed.

The founders wish to open a factory there to offer sex workers alternative employment, combined with education and health care.

That sounds awfully nice. In fact, it almost sounds like the sort of thing you'd hear from someone who's never tried to open a business in India, let alone Kolkata. I hope these young gentlemen have plenty of contacts in the Raj lest they be in for a very rude awakening.

Employment under the Kafkaesque administration in immiserated areas like Kolkata is far from euvoluntary. But asking what institutional barriers exist preventing the region from developing is an important first step to solving the problem. An even more important second step is to ask what a couple of bright-minded foreign youngsters can do to eliminate or bypass the well-entrenched special interests that extract rents and erect entry barriers in one of the world's most chronically underdeveloped cities.

Best of luck though, gentlemen. If you do get your factory up and running, I sure hope you produce something of value. Do try to remember that this is the point of operating a business. If you can't produce value for your customers, you're just running a charity house. Not that there's anything wrong with that of course.

Do reconsider your anti-whore rhetoric though. Selling sex might strike you as icky, but it's probably better than starving in a gutter.

Better Than The Onion, But Also Serious

For starters, any headline that has both President Clinton and "breast" is likely to be a hoax, something from the Onion or what Hillary called "the vast right wing conspiracy."

But it turns out to be a serious question.

Viz., is it morally allowable for wealthy mothers with inadequate breast milk to buy breast milk from poor women?  It's true that both parties to the exchange are made "better off," given their disparate bargaining positions.  One might claim that the exchange is plausibly voluntary, but certainly not euvoluntary.

If the poor women are selling breast milk that otherwise might nourish their own babies, and are selling more of it than would be prudent because they--being poor--need the money more than most people would....well, is that okay?  How would one decide?  Is this an over-reaction?

Never Reason from a Price Change: Zach Weiner Edition

SMBC author ZW:

Econ question: Sudden drop in cost of oil. Does that mean lower GDP in the short term, assuming gas is semi-inelastic?
— Zach Weinersmith (@ZachWeiner) December 2, 2014

Every economist who has ever walked the earth:

Never reason from a price change.

Why? Well, in a picture:

 Oh man. I drew that awful thing (yes, in MS Paint) and even I'm going googly-eyed looking at it.

Okay. Start with the Supply and Demand curves (in black). Where they meet (I labeled it 'C') is what we call the equilibrium. Buyers and sellers of petroleum are pretty much matched, and since this is for the whole enchilada, so to speak, this includes spot prices for injection mold pellets as well as the guzzlerough low-octane gasoline futures traded in Chicago.

Economists say "never reason from a price change" because that means that the evidence you have is price went from point 'A' to point 'H', and there's not enough information there to tell you if there was a shift in the demand schedule (in red) or a shift in production (in blue). And as you can see on the Quantity axis, points 'F' and 'G' depict very different volumes of exchange. Zach is curious about measured GDP, and since oil is an input product to a kaleidoscopic array of products and services, a move from 'B' to 'G' means more vigorous economic activity overall (higher real GDP), while a move from 'B' to 'F' means a reduction in economic activity (lower real GDP).

All else equal, of course.

Zach's rider about elasticity is not something I pressed him on. I think he meant the price elasticity of demand, which is consistent with the common usage, but as you can see, we care about that only for the blue-shift of a supply adjustment, in which we move along a relatively steep demand curve. But since it ain't clear what exactly is adjusting in the market (particularly when there's a thick, well-developed futures exchange), we could just as well be shifting the demand curve along a relatively steep supply curve, in which case we ought to worry about the price elasticity of supply.

Put another way, it's clear from that one tweet that Zach Weiner is pretty gung-ho about the Keystone pipeline, and I don't think there's much you can do to dissuade him. He has hardened his heart against visions of oil-soaked caribou and Kevin Costner shedding a single tear in the desolate, despoiled Montana wilderness. The risk of uncompensated environmental devastation is immaterial to his maniacal fixation on an aggregate economic statistic. Obviously.

Skeeball: Euvoluntary?

Zach W. notes an oddity with carnival games (link).

Mom could buy a stuffed animal for a fraction of the price of the minimum number of carnival tickets you'd need to win the thing. And that's the best case scenario. Many (most?) carnival games are flat-out rigged.

But people still buy their tickets. Why? Wouldn't it be more efficient to just buy the crappy t-shirt with plain old cash?

Or is there more to the transaction? What else is the carny offering? The chance for a loved one to signal prowess? The chance for a kid to have some fun overcoming a contrived challenge? Fun?

Judging by dollars and cents, there's no way a carnival game could be euvoluntary. Thank goodness that's not how people actually reckon the value of their time and attention.

Res Ipsa Loquitur: The Virgin Auctions, Round Deux

A website (here) allows folks to place a bid on obtaining the virginity of a 27 year old medical student going by the pseudonym "Elizabeth Raine."

According to the site, the max bid as of press datetime is US$550k. I wonder if folks are running sealed-bid scripts against this value like you can do on Ebay. Hm. Whoever wrote the terms and conditions seems to be familiar with elementary auction theory (there's a $100 buy-in).

Anyway, is this euvoluntary? According to the site, she doesn't really need the money. She's a well-to-do white American girl who's lived abroad, and she's studying medicine. She's got a pretty good BATNA. I see no evidence of exploitation, at least in the direction you'd expect. If anything, she might be the one doing the exploiting.

How about unconscionablity? This isn't the first time someone's tried a trick like this. Repetition is what morphs the bizarre into the mundane. How many more high denomination virgin auctions need to happen before the price drops sharply and it's just a dreary routine?

If this story is legit (and I have some reservations), I'm curious if it's a leading indicator of... something. I'm not sure what. I agree with Maggie McNeill that the way prostitutes are treated in the US is egregious, but most of the worst is focused on the discount end of the market. Do high-cash-value transactions help alter public moral intuitions towards the sex workers who would most directly benefit from decriminalization?

Gold Farming

In order to provide a richer gaming experience, many online games that have people from around the world playing in the same persistent world (commonly known as MMO, or massively multiplayer online games) feature crafting systems, where players can harvest raw in-game materials and transform them into useful in-game items. In many (not all) MMOs, there is a direct opportunity cost for resource gathering: time spent collecting and crafting is time not spent fighting the game's foes. 

And where there are opportunity costs, there are often bargaining arrangements to be made to reduce these costs. Enter the gold farmer. 

A gold farmer will spend hours and hours and hours monotonously doing the same interminable task over and over and over again (like killing low-level mobs to collect leather) for conversion and sale to more traditional players in exchange for real-world currency. 

The typical reaction to gold farming (from ordinary players) is a mixture of pity, contempt, and dismissive indifference. The margins on gold farming are razor-thin, which should be unsurprising given rumors of conscripted prison labor. 

Is gold farming euvoluntary? One way to look at it is that (relatively) well-heeled players are exploiting poor "players" (you'll find that most non-casual players will adamantly refuse to consider gold farmers to be actual game players) to obtain game items without the toil expended by honest players. It's almost a double offense: not only do the dilettantes get gear they didn't have to grind for, but they did it by taking advantage of poor Chinese (or so goes the stereotype) workers clicking away in 18-hour shifts in rooms full of computer banks and notably devoid of air conditioning. Again, so the stereotype goes. BATNA disparity. What's more, people buying gear from gold farmers fail to develop the skills needed to play the game properly in some of the more challenging areas. In another context, they'd be called "poseurs."

But the same economic analysis that applies to sweatshops should apply to gold farming as well. People turn to gold farming because it's the best option among the competing alternatives. Even in the prison situation, it's probably better to click a mouse button than to spend that time turning big rocks into little pebbles. And for the faux gear-hungry secondary market shoppers? A n00b is a n00b, even with +5 devout greaves or whatever. If you find yourself galled by someone who simply paid cash for the best gear in the game, consider carefully exactly what aspect of that makes your gameplay less enjoyable. If you find that your answer lands somewhere near "envy," you might be faced with an opportunity to work on your ethical development. 

The same goes for developers. There might be some legitimate reasons to regulate (or even eliminate) secondary markets, like PvP balance or whatever, but if high moral dudgeon starts to creep in, please consider carefully what alternatives you might be subjecting suddenly-unemployed gold farmers to. 

Oh Lord, Stuck in Conyers Again

Reports here and there of folks stuck in and around the Atlanta area thanks to inclement weather. In the first case, people end up spending the night in grocery stores. In the second, kids enjoy a sleepover at school.

I might be peering through rose-colored glasses, but neighbors helping neighbors is the finest expression of human cooperation we've got. A night spent snoozing on a Piggly Wiggly tile floor or in the gymnasium is better than freezing to death in the cold, but it's probably not as good as a warm bed in someone's house.

Even if you'd have to spend a couple of c-notes for the privilege.

One of the things that struck me about traveling in Europe was the proliferation of pensions: homeowners who (usually after retirement) would let out a room for travelers for the night. For those of you who've not done much backpacking abroad, they're a step lateral from a bed and breakfast—cozier than dedicated lodging, but typically cheaper and with higher quality variance. Also, they tend to be marginally (marginally!) unregulated, ceteris paribus.

The Atlanta snow.. what to call it... event probably qualifies as non-ergodic. Whether you pin it strictly on the weather or a concatenation of snowfall and a poor municipal response, Atlanta residents were caught with the pants further down than they usually are.

Here, our troublesome counterfactual problem once again rears its slovenly visage. What's actually blocking folks from selling rooms to stranded travelers? Price gouging statutes are popular when put to a vote, suggesting to me that an entrepreneurial effort that would enjoin folks to renting out a spare bedroom to a waylaid wayfarer would be far from peachy under the harsh light of day. Another way, it's not the scribbled-down statute law that keeps people from opening their doors to strangers in return for a modest profit, but rather the underlying moral intuition that supports both price-gouging legislation and the urge to cheer when the cops dump the yahoos' ice on the ground in Raleigh.

Tender sentiment against taking advantage of folks' situation can easily strand those unfortunates to hardscrapple attempts at sleeping on hard tile floors (or worse).

Cleanup on aisle 3.

Carpet Conflation: Slavery, Debt Bonds, and Child Labor

Harvard's FXB Center for Health and Human Rights releases a report on carpet manufacturing in India.

ATSRTWT.

TL;DR: making carpets is a rough affair. The work itself is dusty and dangerous. Workers spend hellaciously long shifts hunched over looms at dimly-lit stations, surrounded by sharp tools, litter, and rusty machinery. Pay is low, and even when workers agree ex ante to a particular wage, they often find ex post that actual wages are on the closed interval between zero and the agreed-upon wage, more than just a token epsilon from the right bound. Overtime pay is not a thing that exists there.

Please direct your attention to pages 22-23 of the report. There, we have a discussion of relevant legislation. The author takes the reader on a tour of the statutes defining forced labor, bonded labor, child labor, and human trafficking. Let me quote the latter verbatim so you can see for yourself how many of the EE conditions are engaged (statute in italics, EE-relevant passage also in bold):

Human trafficking is defined in numerous international conventions and domestic laws. The first international definition for human trafficking was provided by the 2000 United Nations “Palermo Protocol.” India ratified the Protocol in May 2011. Article 3 of the Protocol defines human trafficking as:

“Trafficking in persons” shall mean the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs.

All there, black and white, clear as crystal. The investigation found just shy of 300 cases of human trafficking that fit this particular bill. And to their credit, they did heap much of the blame for these abhorrent working conditions on the institutions that support them, particularly the caste system, but mostly acknowledging that what's going on is coercion by circumstance (p. 29, Table 3). For the bonded-labor cases, parents valued cash advances more than they valued their kids not going off to make carpets. Rightly or wrongly, that shocks the sensibilities of well-to-do readers, particularly when 80% of the bond debenture was for "consumption." Why, just imagine sending your own child off to work with dangerous industrial equipment so you could pick up a PS4.

Smithian sympathy is hard. Framing matters. Context matters.

Everything in this report is good shoe-leather investigation up until the Recommendations section (p. 53). There, the author settles back into predictable feel-good Western, affluent-style nostrums that do precisely zero to address the underlying problems that generate heritable poverty. #9 is particularly risible: "Support and empower vulnerable communities." That's a fine idea, one quite consistent with good institutional analysis, but it's expressly not something that can be fixed with a wave of a magic wand. I daresay that my neoliberal dudebros AG and NS would agree that the Lindy Effect is not that bad a way to describe the durability of India's caste system: a British occupation ended suttee, but did little to eradicate untold generations of dominion-by-birthright. Reformers with no skin in the game are going to do better? Pollyanna please.

Look, the way to root out corrupt business practices like this must provide better alternatives for all parties. Bonded labor is a problem, so why not push for immigration reform so that poor villages can send folks to earn wages in highly productive enterprises and send home remittance payments? Prosecutions and investigations (#8) do quite literally nothing for the workers other than force them to accept a definitionally poor BATNA.

A soft heart is an asset. Please let's not couple it with a soft head.

The Headline Meme Persisteth: Paid in Beer

Amsterdam alcoholics paid in beer for collecting litter.

Moral intuitions engaged: BATNA desperation, ex post regret, conventional capacity to exchange (funded as this is by the public coffers).

A euvoluntary feast, no?

Interlude: Non-Scientific Pregnancy Froo-Froo

I wonder how many complications per year happen due to the overwhelming volume of non-scientific pregnancy-related froo froo bullshit.
— Zach Wintersmith (@ZachWeiner) December 18, 2013

Our delightful march of progress has, in a few scant thousand years, delivered humanity from the sort of abject, state-of-nature poverty that thankfully most of my readers will only ever vaguely grasp in the most abstract terms into the warm, comfortable hands you're enjoying right now. You aren't at risk for polio, or smallpox, and if you come down with dysentery or even the Black Plague itself, all you'll need is a quick dose of antibiotics and you'll be right as rain. Unless I have a very peculiar readership, you're at virtually no risk of being conscripted, and even if you were, your chances of dying in combat are a small fraction of what they were even during the heyday of mechanized warfare, let alone something as horrific as Napoleon's foray into Russia.

And to what do we owe this—I do not use the word flippantly—miraculous transformation? Well, to use a sort of weaselly word, signals. Signals that tell us that peaceful, cooperative trade is more dignified than conquest through force of arms; signals that tell us that scientific inquiry fell not from the bosom of an heresiarch, but by His Grace; signals that sing panegyrics to Courage, Love, Justice, Faith, Temperance, Hope, and Prudence.

And like with any signal, there is noise.

Most of the time, we're pretty good about ignoring noise. Most of us (I hope) can tell when someone's pulling our leg by age of majority. Or, barring that, we know where to turn for solid advice. But think about Zach's worry up there. Particularly under conditions of rapid social change, legacy noise filters may break down and when you couple that with pregnancy hormones and run-of-the-mill anxiety, it's entirely plausible that expectant mothers could be guzzling snake oil by the bbl. Not very euvoluntary. True-blue exploitative even.

So what's the answer? Well, you can start with Emily Oster's book. And you can seek unbiased medical advice from multiple sources (hello Bayes!). But how about something more punitive? How about banning sketchy advertising for suspect products?

I hesitate advocating this solution for the reason that it doesn't do Jack F. Squat to remedy the underlying problem of prenatal ignorance. Papering over balderdash (weakly) gives an incentive for women to be less engaged in the fine details of pregnancy and early term care, on the margin. Even if the effect isn't particularly strong, muting noise rather than strengthening signal serves to stifle innovation. If an honest person of modest means has an idea that can actually, genuinely help people, it's best to keep barriers to the marketplace nice and low and let the discovery process work its magic. Fight fraud valiantly with the saber of truth (it's got a +3 enchantment).

A First-Person Perspective on Life in a Brothel

There's a Cato Unbound series on prostitution here. Folks have been sending me links to some of the pieces, particularly the ones that make exploitation arguments. I've been putting off commenting on it partly because the conversation has yet to conclude and partly because Maggie McNeill has already done a smashing job responding to many of the curious a priori claims of exploitation in the upstream pieces. Mostly though it's because I don't really have any practical knowledge of sex work whatsoever. I'm not all that shabby with the econometric analysis of survey data, but I've never opened up a .dta file that had "Prostitute_YN" as one of the dummy variables. Making solid empirical claims is not something I'm prepared to do.

So imagine my surprise to find today's lead Cracked article was on the very subject, and written by an actual former prostitute.

ATSRTWT

Or if you can't, here's the EE-relevant quote:

Anyone who thinks legal prostitution is a clear case of men exploiting women hasn't watched a 60-year-old investment banker offer $40,000 for a weekend of back-rubs and cuddling. And anyone who thinks what I just described is easy hasn't ever faked a romantic weekend with someone they barely know. Exploitation is a two-way street.

How about that?

How about that, indeed?

Death before Dishonor

I've posted before on how we might parse regret aversion to get at a finer understanding of the intersection between information asymmetry and systematically biased beliefs. It occurs to me that purely instrumental ex post estimates of the outcomes of a market exchange are insufficient to judge its ex ante wisdom.

Most routine exchanges are purely instrumental. I get no special symbolic pleasure from buying lunch (though since Whole Foods is the nearest grocer's from my workplace, I often see folks who probably do), nor do I see my automobile as anything but a practical machine to sweep my meat and bones along the shimmering highways of this fair land.

Something yesterday encouraged me to rethink my approach to the automobile question. Mrs. W and I were walking our not quite two year old daughter out to the park when we overheard a teenage boy informing, in no uncertain terms, his teenage friend about how he was going to (I beg your indulgence if this isn't an exact quote), "put a fucking nitro kit all up in this bitch, son." It occurred to me that perhaps this young man had yet to adopt a more placid, reflective relationship with his motorcar.

Apart from a very brief moment of intemperate pique at the boy's juvenile ineloquence, I wondered at what instrumental purpose a nitrous kit in a cheap secondhand commuter vehicle could possibly serve. Yes yes, I know de gustibus non est disputandum, but drenched as I am by a stroll off the end of the EE pier, it seemed to me that perhaps that the young man in question was under the sway of a flavor of regret aversion bound in a courage sentiment. For those of us who have been young men ourselves at one time or another, we understand the urge to avoid being perceived as callow or cowardly. If that means having your wallet on a chain or a bunch of tattoos or a bit of a drinking problem, or in this case, a preposterous after-market modification to a Camry, does this count as the same sort of regret aversion or flaccid "coercion" that we're trying to get at in the sidebar conditions?

If there is some sort of social compulsion to conduct trades to support signaling, whether it's to look tough to a crew of teenage boys or to fit in with the neighborhood sewing circle (do those still exist?), should we consider that euvoluntary?

My first-blush reaction is to say yes. Here's why. Social signals must be costly to be effective. The very costliness is part of the value of the signal. Bronze age tribes didn't sacrifice oxen willy-nilly; oxen were wealth. Similarly, if you want to show that you're a prudent captain of industry, the expense of a tailored suit is part of its value. If finely tailored suits ran for the same price as a gas station hot dog, I predict that business folk would signal conscientiousness on other margins.

You can't earn honor by playing Call of Duty. IRL combat has no respawn.

And multiple margins of substitution mean that vendors can't really sustain true exploitation. If suits became as expensive as aircraft carriers, I'd expect corporate dress codes to change. So are social aversion something to fret over? Could be. And there are other interesting bits in there. Is smoking partly signaling? Marijuana use? What other margins do bans (or Pigovian taxes or nudges) push people towards?

Anjie Brings the Heat (Again!)

Via The Ümlaut, a smashing Castillo piece on the directional euvoluntarity of female sexuality.

EE quote:

Female porn stars provide one case study. These women enjoy Bergner’s vision of uninhibited female sexuality and make money doing it. They preform sexually diverse acts, à la Bailey, and reside at Meanda’s commanding heights of male desire. While many are drawn to the sex industry under less than euvoluntary conditions, we can compare their preferences and outcomes to those of other women of similar socio-economic status. If the first order preference of sexual satisfaction is stronger for these women than the second order preference for a traditional family, we should expect porn stars to be happier and less desiring of monogamy on average than similarly-situated women outside of the porn industry.

While the male porn stars harbored few regrets from their time in “the biz,” many of the women were rattled or reeling. Their fame, power, and sexual satisfaction came at the extreme price of a diminished shot at a normal, “oppressive,” marriage and children. Undoubtedly, social stigma against sex workers is largely to blame for their plight. For better or for worse, the sexual cartel is a harsh mistress. Still, it is worth noting that some women who unwittingly live la vida Bergner jealously eye their sisters’ “shackles.”

People, the sexual menu is expanding. With heterogeneous preferences, Ozzie and Harriet are still on the table, but now so is Caligula. More choices, less stigma? That's the EE way.

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?

EE Goes to the Movies Ep. 1: Empire of the Sun

One of the legendary classic papers in economics is R.A. Radford's 1945 Economica piece "The Economic Organisation of a P.O.W. Camp" available here. As an object lesson in the value generated simply by trading an initial endowment, this piece is at once brilliant in its simplicity and delightful in its replicability. Some of the more engaging Principles of Economics professors out there should cop to a simple little classroom experiment where you randomly distribute randomly selected tchotchkes (double the randomness, double the fun!) to a classroom full of students. Have them subjectively rate their endowment on a scale of 1-10, tally the scores, then give them 15 minutes to trade (there are little flourishes you can do to this depending on what you want to emphasize) and repeat the assessment phase. In almost every attempt, the post-trading pseudo-GCP (gross classroom product) will be higher after the trading session.

Now, I don't know how many econ courses Spielberg slogged through at California State, but it seems at least a little bit unlikely that he's sat down with Radford for a cozy evening of comparative economic history.

Then again, the paper was based on what Raford himself actually witnessed in a prisoner camp, and spontaneous market formation is hardly rare. Be it marbles, Pogs, Pokemon, Barbie accessories, CIA terrorist playing cards, or thermal exhaust schematics for the Death Star, people require little prompting to begin trading when it's to their advantage.

Regrettably, I can't find a quickly available clip, but this tendency was nicely presented in Spielberg's 1987 film Empire of the Sun. A young Batman, before he even donned a Gatsby (yes, that's the proper term for a Newsboy Cap) and began prancing around the Disney lot singing about the exploitation of child labor, found himself a young ward in the custody of Japanese jailers in wartime China. While there, he busied himself as a gofer for the camp's mancgere, shuttling a little of this, a little of that, buying cheap and selling dear.

Here's the question (and I again apologize for not having a clip to share): do you get the sense from watching the film that the business of POW camp trader is euvoluntary? It's not that easy a question, is it? In an absolute sense, everyone in the camp (perhaps even the guards) has a lousy BATNA, but since the prisoners all more or less share the same grim fate, there's not a lot of disparity there. That is, until the gains from trade start to accrue to the entrepreneur.

Even if everyone is better off in the camp as a result of a functioning market, is it still okay to begrudge the modest wealth accumulated by the shopkeep? What's your opinion? How does Spielberg want you to think about it? Does the silver screen depiction mirror commonplace moral intuitions? Does it attempt to insert its own interpretations into the minds of the audience? How successful do you think it is?

Under what conditions do POW camp black markets stop providing net benefit and begin being truly predatory?

Hume Had Many Leather-Bound Books and His Apartment Smelled of Rich Mahogony

From Essays, Part II, Essay I: Of Commerce:

May not the sovereign lay claim to [superfluous (unemployed) labor], and employ them in fleets and armies, to encrease the dominions of the state abroad, and spread its fame over distant nations? It is certain that the fewer desires and wants are found in the proprietors and labourers of land, the fewer hands do they employ; and consequently the superfluities of the land, instead of maintaining tradesmen and manufacturers, may support fleets and armies to a much greater extent, than were a great many arts are required to minister to the luxury of particular persons. Here therefore seems to be a kind of opposition between the greatness of the state and the happiness of the subject [emphasis SLW]. A state is never greater than when all its superfluous hands are employed in the service of the public. The ease and convenience of private persons require, that these hands should be employed in their service. The one can never be satisfied, but at the expense of the other. As the ambition of the sovereign must entrench on the luxury of individuals; so the luxury of individuals must diminish the force, and check the ambition of the sovereign.

Knowing this, if you were a sovereign, and you wanted to "encrease the dominions of the state abroad", you might be tempted to underwrite those policies that best produced superfluous labor among the classes most suited to service in the fleets and armies. To sell these policies to the median voter, found doubtless among the tradesmen and manufacturers, you might pivot your claim in the soil of non-euvoluntary exchange. Labor isn't euvoluntary; employers exploit workers by BATNA disparity ergo minimum wage legislation ergo low-skilled labor is unemployable in the private sector ergo we can boast an end strength of 1.3 million heads ergo political elites can wage endless wars around the world.

Before you punch me through your computer screen, I'm not saying that this is actually necessarily the story of political economy, but I am asking my readers to consider that there might be more to a story than just the simple cry of "exploitation" and a hastily scribbled statute aimed as a remedy. Mungo is part of an upcoming series on Bastiat that I heartily recommend for these very reasons. Earlier in the Essay I quote above, Hume makes a distinction between shallow and abstruse thinkers. When it comes to matters of commerce, it pays well to dive straight into the deep end.