Stultitia Delenda Est

I got linked to an essay by Jon Callas in which he talks about something that he claims is an amazing property of BitCoins:

Did you know that if a Bitcoin is destroyed, then the value of all the other Bitcoins goes up slightly? That’s incredible.

Now there are many properties of BitCoins that actually are incredible. The distributed generation and book-keeping system is awesome, as is the cryptographic trickery underpinning the coins themselves. On a more abstract notion, the whole idea of a pure-virtual currency is itself pretty incredible, seeing as how it seems at first intuitively impossible to satisfy the requirements of finitude and transferrability required for a medium to actually be a currency.¹

But this deflationary property that Callas calls out isn’t one of BitCoin’s incredible properties. In fact it isn’t incredible at all. It’s a simple and obvious result of the fact that BitCoins are a currency. The fact that destroying a unit of currency causes deflation holds true no matter what currency you’re talking about. If I were to melt down the change in my change jar here in my desk, the value of all other American currency would rise slightly. Very very slightly. Imperceptibly so, in fact, but it would rise.²

There are a few questions around the destruction of physical currency versus BitCoins³, but Callas doesn’t actually address any of them. Rather he inducts from his observation that destroying a BitCoin causes a very small amount of deflation and proposes that there’s are a few dominant strategies to maximize the value of your BitCoins (a pursuit he gives the excellent title of “the BitCoin Game”.)

His three dominant strategies:

(1) Create more Bitcoins.
(2) Buy up more Bitcoins, with the end state of that strategy being that you’ve cornered the market.
(3) Destroy other people’s Bitcoins. The end state of that is also that you’ve cornered the market.

I submit that none of these will actually accomplish the state goal of the BitCoin game of “maximizing the value of your BitCoins”.

Wither regards to point 1, if you create more BitCoins, this will have the opposite effect that Callas (rightly) identified with destroying them. To whit, each coin you create will very slightly decrease the value of all the other BitCoins in existence, including your own. Now if you were the only person creating BitCoins, then there’s a chance that your total value of coins would increase fast enough to outpace BitCoin inflation, but since BitCoins are a distributed currency which anyone can work at creating, this seems unlikely. The much more likely scenario (and the one baked into the design of the currency) is that many people will create more BitCoins, thus distributing the effects of inflation fairly evenly. The sinking ship of BitCoin value will sink with an even keel and everyone will lose out in balanced measure.

As for 2 and 3, I’ll lump these together, both because Callas did and because Callas correctly understood that they have the same end result. Whether you buy up all the BitCoins or destroy everyone else’s BitCoins, you end up with all of them and they end up with none. Callas identifies this state with “winning the BitCoin game” and asserts that this would turn a distributed currency into a centralized currency. He’s incorrect on both counts.

First of all, if one person monopolized all BitCoins leaving everyone else with none while also destroying or buying at very low prices the coins produced by other people, then the value of BitCoins would very quickly drop to zero. The deflationary effect of destroying currency is not monotonic, and hoarding a currency that no one else values doesn’t make you rich.

You see, the fatal mistake that Callas his made is that he’s treating value as objective, when in fact all value is subjective. If I were to destroy all other US Dollars in the world except for the contents of my change jar, I wouldn’t have maximized the value of my currency. There’s probably $100 worth of coinage in there now, but if all other US currency was destroyed, then when I went to spend it, I’d have a hard time getting anyone to accept it. I’d probably find that people had stopped using dollars in favor of something more available (read: usable) and hence, more valuable. I wouldn’t have maximized the value of my currency, I would have destroyed it.

This is also why Callas’ second conclusion is incorrect. If BitCoins got “centralized” in the sense that one person horded all of them, then BitCoins wouldn’t become a centralized currency, rather they’d stop being a currency altogether. Currency, after all, is nothing but a token for deferred barter. In order for a medium to fill that role, it needs to have several properties including the ability to be transferred (circulate) and it needs to be trusted. A world in which one person destroyed any BitCoin they didn’t control would be one in which no one would trust BitCoins and so no one would use them. BitCoins would cease to be a currency altogether. Similarly, if that person just horded all the BitCoins and never used them for anything, BitCoins would be permanently unavailable and so people would abandon it in favor of other currencies that actually, you know, worked as currencies.

1 – For more on this, cf. this post.

2 – In a bizarre paradox of inefficiencies, it’s also possible that, if my change jar were to contain enough pennies and nickels, I might be able to also increase my own net worth, since the resulting plug of slag might be worth more than the face value of the coins that when into it. For more on this, cf. this video of author John Green getting hilariously worked up.

3 – E.g. the metaphysical question of what it means to “destroy” a BitCoin, since such coins are actually numerical constructs and, hence, numinal and indestructible. Of course a practical form of destruction would just be that BitCoin and all traces of it being deleted from all the computational media in the world.

Robert Kunzig, writing for National Geographic, has an excellent essay about the rise and role of cities in the late 20th century. It’s a great overview of many of the reasons why urbanization is a fantastic trend and one that we should all hope continues as our global population increases. He also tells several interesting anecdotes about global Alpha cities like Seoul and London.

He notes in passing, however, an unfortunate anti-urbanism strain taking hold. He notes that the South Korean government is trying to intentionally break up Seoul, one of the major engines of their prosperity, in order to “spread the wealth around” and, I get the sense, to return to a more “authentic” culture and lifestyle. This is a truly unfortunate trend since, as Kunzig points out, cities are economically and environmentally superior to a more sprawling agrarian or rural lifestyle.

Being of a philosophical bent, though, I’d also argue against the idea that a rural life is a more authentic one. I believe that human nature naturally inclines us as a species towards life in the Polis. Aristotle said that the city was the natural habitat of the human being. The city is to a human being as the bamboo forest is to a panda. This is an attractive notion to me personally, seeing as how I love cities to an almost unseemly extent, but I think it provides a nice complement to the more practical arguments. Forcing people who want to live in cities, who freely gravitate towards a more densely populated urban environment, to move elsewhere isn’t just a bad idea, it runs contrary to human nature. People tend to react poorly to attempted violations or alterations of their nature and that can lead to any number of social ills. This is articulated very well in Thomas Sowell’s excellent book A Conflict of Visions and especially his discussion of the unconstrained vision.

To try and “encourage” people to abandon the cities to which they’ve freely chosen to migrate is a perfect example of the Unconstrained Vision, as it basically asserts that, despite people’s free personal choices to the contrary, a rural way of life is inherently superior. People may want to live in the city, but what they want is less important than what the government asserts they should want.

Of course Sowell’s point is that conscious quests to reform human nature are doomed to failure. Cities are an emergent expression of human nature and the only way to truly reverse urbanization is to act against that nature. One can’t reform it, it shows no signs of changing on its own, so the only way to counteract it is to do so coercively.

All the evidence that we have seen, from cultures all over the world shows that human beings will choose to live in cities when the option is available to them. As of a few years ago, more people live in cities than in rural areas for the first time in human history. This tipping point zipped by without too much fanfare, but I think it’s a remarkable milestone and one that should be celebrated. It means that, for the first time ever, more than half of our brothers and sisters finally live in their natural environment. More than half the human species is finally able to enjoy the fruits of one of mankind’s greatest developments: the city. This is truly a momentous milestone and we should be happy for that fact and looking forward to the time when three fourths, or nine tenths of people have that same opportunity.

That some people, mostly in the meddling class, see this tidal wave of people choosing to live in the polis as a problem is worrying, since their attempts to reverse the trend can only come to ill one way or another. At best they may waste (our) time and resources fighting the useless fight. At worst, they use coercive force to try and change the calculus. China, in fact, is already well on the path to this second option, having implemented an execrable system of internal passports, meaning that millions of people who want desperately to enjoy the benefits of the city cannot do so without risking imprisonment or death.

Ultimately, though, no government can truly stop the course of humanity. This, indeed, is one of the main points of Sowell’s book. The force of human nature, aggregated over the billions-strong population of the planet, is stronger than any attempt to hold it back. Cities are here to stay and urbanization will continue so long as people continue to strive to fulfill their own goals and desires. No government can stop that, but they can definitely make the process more painful than it needs to be.

“The truth resists simplicity.” – John Green

The economist Tyler Cowen gave a TED talk earlier this year about the dangers of thinking in “Stories”. He makes some excellent points regarding the fact that, though stories are a deeply ingrained part of human nature, they almost always conceal as much as they reveal. The world isn’t carved up into stories by default and in doing the carving ourselves important details get lost, facts get twisted, and emphasis gets assigned where it doesn’t belong.

I think that you’ll find his talk worth the 17 minutes you spend on it. If you’re so inclined, you can do that now:

In talking about stories, Cowen touches one of the most dangerous memes of modern thought: the Narrative. Now narratives are wonderful things in novels or other fiction, but narrative technique is increasingly being applied the factual world around us as a way to shape or distort our understanding of it. In Aristotle’s time this would have been called Sophistry. Today it’s called “Social Sciences”.

But the point remains the same. Narratives are used to take the facts and make them fit a particular worldview rather than the other way around. They are a way to take a common stock of facts and, through omission, emphasis, and distortion, use them to tell a just-so story about the world we find ourselves in.

These stories, of course, tend to grow up mycologically around significant events. The recent global financial crisis has spawned a profusion of narratives, as have the wars in Iraq and Afghanistan, as has the Arab Spring.

Of course no event of recent American history has spawned more narratives than 9/11. Some tell us that it was the first blow in a war of good versus evil. Some tell us that this was the evil empire getting its comeuppance. Some tell us this was our sack of Rome or, at the very least, our Lost Legions. But of course it wasn’t any of those things. It was far more complex and, to use Cowen’s word, messy. It was an event born from incomprehensible chain of choice and motivation. No story could possibly encompass the truth of what happened, and by trying to reduce thousands of lives into a simple narrative we delude ourselves about what really happened.

This is one of the reasons why Simon Schama’s piece for BBC News on 9/11 was so refreshing. The only stories he tells are memories. He uses them to highlight, powerfully, that this event matters and still ought to matter. But he does so without presuming to tell us a story about what it means. He demands that we pay attention, but doesn’t tell us where this is all going.

Human beings are story tellers by nature and so it’s probably no surprise that we try to understand the world in the form of narrative arcs. But while narrative arcs work well for the constrained world of fiction, they are inherently insufficient to help us navigate the real world. Even more troubling is the fact that narratives are inherently skewed. Not all are biased (though, per H. L. Mencken, Americans can’t resist a morality tale and so ours almost invariably are) but all of them make errors of emphasis or value. So at the best of times narratives are incomplete and at the worst of times they lead us actively astray.

And so I think Cowen’s call to resist the temptation towards stories and narratives is important, as is Schama’s call to attend to an event like 9/11 and to not write it off into the past so quickly. Stories may help us understand our myths, our culture, ourselves, or even our past, but they’re an extremely poor way to try and understand our present or to guide us as we build our future. Because the truth resists simplicity, and we do ourselves no favors by trying to force simplicity upon it.

I’ve been thinking a lot the past few days about the Dunning–Kruger effect and the constellation of related psychological anti-patterns. I’m particularly interested by Impostor Syndrome. This is the condition of being convinced that one is incompetent, despite all evidence to the contrary. Basically, no amount of positive feedback, professional success, or peer respect can convince the person that they’re worthy of the success they’ve achieved.

The more I read about such effects, and the more I meet people who suffer from them, the more I realize a universal heuristic that underlies a lot of these sorts of misjudgments:

In matters of importance, don’t trust your own self-assessment.

Again, this isn’t a hard-and-fast rule, but I think that it’s a valuable heuristic because it encourages us to rely on trustworthy outside sources. If your self-assessment is, in fact, wrong (which Dunning-Kruger and Impostor Syndrome seem to indicate is the case more often that most people suspect) then you get more accurate information and helpful feedback. If your self-assessment is correct, then you get confirmation and haven’t expended too much energy.

Some concrete examples seem to bear this out. Good writers often write socially (e.g. the Algonquin Round Table, your neighborhood writers group, the poetry club I was in in college). Musicians in bands tend to develop more quickly than those that aren’t (cf. Pat Metheny’s old saw about always trying to be the worst guy in every band he’s in). Even skateboarders congregate in skate parks, though I have no first hand experience as to whether this provides an environment for mutual feedback.

Ultimately, I think this means that anything you do that you want to get good at, you should do at least partially in a social setting. This may seem like advanced common sense to some of you (I can think of at least one person I greatly admire who is making her “duh” face right now), and I’m sort of inclined to agree, save for two points:

1.) Linking this to the Dunning-Kruger Effect and related phenomena is itself a useful connection. Knowing that part of the function of working in social groups is to avoid or mitigate self-assessment biases can, I think, make one more receptive to the range of ideas you encounter and encourage people who may be avoiding joining work groups to do so.

2.) Many people are, like me, both introverts and independently-natured. Whether it be boon or bane, I have a very hard time caring what most people think of me, and being around people, especially people I’m not fond of, is incredibly draining to me. So I’m not the kind of person to actively seek out groups to join. I didn’t participate in many activities in college, save for the aforementioned poetry group, and I’m not the kind of person to seek social activities for the sake of being social. This means that in cases where I am passionate about something and want to improve (e.g. my writing), I’m often very disinclined to seek feedback. My heuristic would seem to indicate that this disinclination hurts me as a writer and makes getting better much more difficult. The correct course of action would be to work to find the right group of people, people I like and whose feedback I trust, and ask them for feedback to help me correct my own blind spots and errors in self-assessment.

From the Inquisition to the political use of Soviet psychiatry, history has taught us to recoil morally from the violation of the ultimate refuges of self-consciousness, conscience, and private beliefs. The song of the “peat bog soldiers,” sent by the Nazis to work until they died, was “Die Gedanken sind frei,” “Thoughts Are Free,” for that truly is the final atom of human liberty. No decent society or person should pursue another human being there.

– Alan Charles Kors, “Thought Reform 101“

Writing on Reason.com, A. Barton Hinkle provides a very well-written, succinct overview of the philosophical side of the animal rights debate. This has long struck me as one of the most interesting and least debated ethical issues in philosophy. It’s one of those strange cases in which people’s natural moral intuitions tend to be extremely strong, but also widely distributed.

Hinkle’s article does an excellent job of laying out the major arguments in the debate. Personally, my intuitions tend to run heavily along lines of cognition, heavily informed by Tibor Machan’s categorical arguments. I am in principle opposed to research on great apes, precisely because they are obviously intelligent creatures that still lack the context in order to give their consent for research.

To me, there’s an interesting contrapositive to arguments about animal rights and experimentation and that is human rights and our right to opt-in to potentially dangerous experiments. I firmly believe that human informed consent should be extended to any variety of experimentation whatsoever. If people which submit themselves to experimentation using a completely novel, potentially dangerous medical compound, they shouldn’t need the permission of government to do so. (All the usual caveats re: full disclosure on the part of the medical researchers applies.)

Or, to use an example from history, the United States was morally errant in sending chimpanzees into space using untested vehicles and technologies. There would no doubt have been no shortage of human beings willing to take that risk who would have had the necessary cognitive context to understand the risks involved and to give their informed consent.

In summation, I firmly believe that we should end experimentation on great apes and replace with a robust system for experimentation on fully informed, fully consenting human beings.

Because European kingdoms and duchies and city-states competed with each other, [historian William ] McNeill argues, ‘European rulers and state officials [even][sic] in the nineteenth century did not begin to sop up all of the new forms of wealth,’ as elsewhere and earlier such governments had been so skillful at doing. [Historical anthropologist Alan] Macfarlane quotes the historical sociologist Ernest Gellner on the ‘thug states’: ‘in a multi-state system, it was possible to throttle Civil Society in some places, but not in all of them.’

Even big states in Europe have until recently been incompetent at taxing and repressing their subjects. Charles V and Philip II sent marauding armies into the Low Countries for eighty years but in the end got only half a loaf. The much-maligned tsarist state was unable in the nineteenth century to run even a secret service with ruthlessness. Stalin, after all, was sent to Siberia twice. One wishes the police had in his case done a better job.

– McCloskey, Deirdre N. The Bourgeois Virtues: Ethics for an Age of Commerce. Kindle Edition. Page 37 (Loc. 633-38)

I’ve been reading a lot of Jeron Lanier’s stuff the past few days. He’s a VR researcher from way back (one of the first people to ever do work in the field). He’s also one of those rare, wonderful people whose view of the world is entirely orthogonal to mine, to the point where our agreements and disagreements are almost accidental. We’re asking and pursuing entirely different questions, and when we land on the same topic, it’s 50/50 whether we agree or not.

I love encountering these people because seeing such radically different world views has always helped me to cast new and interesting light on my own thoughts and my own model of reality.

Here’s Lanier talking last year at a TEDx event in San Francisco:

“The combination of longer and richer lives is historically unique. It is one reason that liberalism has spread. There are by now many more adults living long enough lives sufficiently free from desperation to have some political interests. The theory that desperation leads to good revolution is of course mistaken, or else our freedoms would have emerged from the serfs of Russia or the peasants of China, not from the bourgeoisie of northwestern Europe, as they in fact did. Material wealth can yield political or artistic wealth. It doesn’t have to; but it can. And it often has. What emerged from Russia and China, remember were the antibourgeois nightmares of Stalin and Mao.”

- McCloskey, Deirdre N, The Bourgeois Virtues: Ethics for an Age of Commerce, Kindle Edition, pg. 19 (Loc. 379-383)

One of the aspects of my libertarianism that most people seem put off by is my strong belief in open borders. Not just “more open borders”, not just an end to the execrable visa quotas that America currently enforces, but radically open borders that permit nearly everyone to enter America to work at will. (The only reasonable restriction I’ve yet found is a domestic background check. But anyone who hasn’t committed a felony in the United States should be permitted entry and allowed to work.)

My reasons for this stance are both principled and practical, and both humanitarian and self-interested.

First of all, I object on principle to the current massive restrictions on human free movement that closed national borders imposes. I am fortunate that, on my American passport, I can travel almost anywhere in the world. Coming, as I do, from a prosperous Western nation, I would have little trouble getting a work visa in any nation on the planet. When I moved to the UK as a student in 2005, a work visa application was came included with my acceptance letter from the study abroad program.

Of course the situation would have been much different had I been traveling from, say, Bangladesh. Or Rwanda. Or Honduras. That a person’s choices regarding where they live and work is determined almost entirely the geography of their birth should shock and horrify any egalitarian.

Equally as shocking, though, should be the crushing effects of global poverty that are directly aided by closed borders. I’m struggling to find my original citation for this (I believe it comes from Bryan Caplan’s excellent work on the subject), but working as a guest worker for just six months in a prosperous economy with strong markets and strong property rights does more for a worker’s standard of living than many years worth of foreign national aid. Labor-related immigration allows workers from poor economies, crippled by dysfunctional institutions and corrupt governments, to move to societies with better social and political institutions that value their work and respect their rights. In doing so, people are lifted out of poverty far more effectively than they ever could be through direct investment.

What’s even more important, though, is that these workers who leave impoverished, dysfunctional economies for wealthier, liberal economies make things better for the nations they leave, too. This occurs both through direct remittances sent back home, but also through the much-ignored effects of competitive governance. (The fact that competitive governance is a largely ignored topic in the modern debate shows just how twisted our views of sovereignty and nationalism have gotten.)

Competitive Governance is, at root, the idea that governments can be driven to improvement through competition for labor and capital. In this, they are just like corporations. Governments, however, are each functional local monopolies, which makes competition very difficult. What’s more, they each exercise a special kind of monopoly: monopoly of force. This permits them to create extremely large barriers to exit and entry in order to form cartels to stabilize their market share. (Think the Berlin Wall and the USSR’s attempts to keep in a population that desperately wanted to leave. Think also of America’s visa quotas and its increasing attempts to tax US citizens abroad and foreign nationals investing stateside.)

By increasing competition amongst governments, we give governments incentive to reform for the better. Unfortunately, governments, like all monopolies, detest competition and so attempt to raise barriers to prevent it. As such, nation-states begin to work like any other global cartel, united against the customers who might abandon them given the chance.

So what does all this have to do with closed borders? Well, closed borders (both restrictions on exit and on entry) reduce competition and remove incentives for government reform. If strong western economies were to open our borders, this would increase the levels of emigration from foreign nations with dysfunctional governments and increase the pressure on them to reform their institutions to respect rights and foster prosperous, liberal economies. (For more on this, see the great work of Arnold Kling, especially his interesting comments on exit, voice, and freedom. For the future of competitive governance see Patri Friedman’s work, especially his wonderfully extropian Seasteading Institute.)

So the principled part of my argument for open borders is basically that it raises standards of living for immigrants, that it does this better than direct humanitarian aid to the country, and that it improves conditions not only for immigrants but also for the families and fellow citizens they leave behind, both through remittance and competitive governance.

But what about the effects to the US economy? It turns out that it provides a huge boost economic prosperity in general, while actually increasing wages for the majority of workers.

The most common objection to open borders is that immigrants “take our jobs“. But it turns out this isn’t the case. Waves of immigration tend to cause no change in the unemployment of native citizens. Not only are these unemployment fears unfounded, but more broadly there’s good evidence that high levels of immigration are correlated with high levels of economy production and a strong economy. (The Gilded Age, despite some predjudicial policies, was a time of high immigration and comparatively open borders in the US and GDP, GDP per Capita, and real wages all skyrocketed.)

The slightly more refined argument is that, well, immigration may be economically beneficial in aggregate, but it depresses wages. This also turns out not to be the case for most people, as Bryan Caplan (citing George Borjas) abley demonstrates. As usual, the truth resists simplicity and it looks like in the long term, wages shrink slightly for those involved in menial labor (high school dropouts) and by a vanishingly small about (0.5%) for those with college degrees. For the majority of workers, immigration has a long term net benefit, raising wages by as much as 1.2%. (For more on possible explanations of this, see Caplan’s excellent Socratic Dialogue on the subject.)

So in addition to philosophical and humanitarian arguments for open borders, there is good evidence that open borders are good for self-interested reasons as well. They improve the overall health of the economy and, at very worst, depress wages only modestly for some, and actually increase them slightly for the majority of workers.

In closing, I want to leave you with some images that I think convey the cost of closed borders. These are images of African imigrants that were found trying to make the dangerous crossing from Morocco to Spain. They risked their lives for the chance to live in a place where their rights would be respected, their labor valued, and where they had the necessary resources to build a life for themselves. They knew at the outset that they may not make it, but it was still worth it for them to make the attempt. Many of them arrived in pretty bad shape.

Not all of them made it alive.

Immigration reform is not an abstract issue. It has very real impacts on all of us, but most of all on the least fortunate members of the human race. Open borders can make the difference between poverty and starvation and a good life for those unfortunate enough to have been born into the most impoverished nations on our planet. We have the power in our hands to prevent the needless suffering and death of millions of people. And all we in the West need to do is put pressure on our government to relax restrictions on immigration.

Please support open borders.

For a much more complete treatment of immigration issues and a libertarian view on immigration policy, please see this excellent video by Bryan Caplan, as well as this interview that he did with EconTalk’s Russ Roberts.