blockchain.mit.edu

$1 of Bitcoin value created is responsible for $0.49 in health and climate damages in the US and $0.37 in China.

The rising electricity requirements to produce a single coin will lead to inevitable social crisis
Energy Research & Social Science Volume 59, January 2020, 101281
Abstract
Cryptocurrency mining uses significant amounts of energy as part of the proof-of-work time-stamping scheme to add new blocks to the chain. Expanding upon previously calculated energy use patterns for mining four prominent cryptocurrencies (Bitcoin, Ethereum, Litecoin, and Monero), we estimate the per coin economic damages of air pollution emissions and associated human mortality and climate impacts of mining these cryptocurrencies in the US and China. Results indicate that in 2018, each $1 of Bitcoin value created was responsible for $0.49 in health and climate damages in the US and $0.37 in China. The similar value in China relative to the US occurs despite the extremely large disparity between the value of a statistical life estimate for the US relative to that of China. Further, with each cryptocurrency, the rising electricity requirements to produce a single coin can lead to an almost inevitable cliff of negative net social benefits, absent perpetual price increases. For example, in December 2018, our results illustrate a case (for Bitcoin) where the health and climate change “cryptodamages” roughly match each $1 of coin value created. We close with discussion of policy implications.
https://www.sciencedirect.com/science/article/pii/S2214629619302701
op: to say nothing of hidden hardware health costs, I bet jacking up electricity prices will only make it worse
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Subreddit Stats: AskEconomics posts from 2018-09-23 to 2018-12-09 01:20 PDT

Period: 76.83 days
Submissions Comments
Total 982 5230
Rate (per day) 12.78 67.37
Unique Redditors 702 946
Combined Score 5730 16211

Top Submitters' Top Submissions

  1. 366 points, 45 submissions: benjaminikuta
    1. So, what's the difference between this new trade deal with Mexico and Canada and the old one, and what are the implications? (68 points, 12 comments)
    2. Do powerful unions increase wages above the optimal level, or do firms with market power cause imperfect competition in the labor market, causing sub optimal wages? (Or both?) (29 points, 2 comments)
    3. How do the salaries of high paid professionals compare between the US and various other developed countries? (28 points, 1 comment)
    4. Just how much more expensive is it to build on mountainous terrain than on flat land? How much more expensive would housing have to be before it's economical to develop the mountains of Hong Kong? (27 points, 5 comments)
    5. When it is said that someone in a third world country lives on a dollar a day, what does that actually mean? (25 points, 19 comments)
    6. How do economists measure unpaid work? (23 points, 8 comments)
    7. What's the economic effect of legal vs illegal immigration? (22 points, 10 comments)
    8. If someone saved enough money to live on investment income, could their descendants live off it indefinitely? (Assuming they don't spend the principle, reinvest to account for inflation, etc, of course.) (20 points, 46 comments)
    9. How effectively can negative externalities be quantified? (11 points, 7 comments)
    10. What are some common misconceptions about economics? (11 points, 19 comments)
  2. 134 points, 11 submissions: Fart_Gas
    1. Is free public transport a good idea? (42 points, 20 comments)
    2. What caused the 1997 Asian Financial Crisis? (31 points, 13 comments)
    3. Would it be more economical for supermarkets to slightly under-stock? (21 points, 12 comments)
    4. Will Venezuela's plummeting economy make it a good choice for low-wage industries? (20 points, 8 comments)
    5. What might cause sudden inflation? (7 points, 2 comments)
    6. Why do some countries without hyperinflation use a foreign currency in everyday life? (7 points, 3 comments)
    7. Has any country tried reducing the minimum wage, and ended up with a good result from it? (4 points, 8 comments)
    8. Is Ordoliberalism feasible for most poor and recently war-torn countries? (1 point, 0 comments)
    9. Why do some businesses sponsor sporting teams in countries they don't operate in, and that they don't plan to expand to in the foreseeable future? (1 point, 1 comment)
    10. Is it inevitable that certain areas will never recover from a war? If so, why? (0 points, 0 comments)
  3. 96 points, 5 submissions: MrZer
    1. Why do countries like France or Japan have a high debt to GDP but aren't in shambles like Greece? (43 points, 16 comments)
    2. Milton Friedman is well respected by many economists, why aren't there more Libertarians? (22 points, 18 comments)
    3. I've heard Marxists claim that central planning is good because the military and corporations do it. (20 points, 38 comments)
    4. Someone once said "Interest is what actually creates money. Without debt and interest, our economies would collapse." (7 points, 5 comments)
    5. What does it mean when people say China manipulates currency? (4 points, 7 comments)
  4. 83 points, 17 submissions: Whynvme
    1. Do economists actually calculate consumer surplus empirically, or is it more of s theoretical concept? (19 points, 5 comments)
    2. If we have cobb douglas preferences, my demand for x is not a function of the price of y. How do substitution effects arise then? (13 points, 6 comments)
    3. Is me making more money than I would necessarily require to work( so more than my 'opportunity wage') for a job an economic inefficiency? or is ineffiency in labor markets a wedge between my marginal revenue product and my wage? (11 points, 3 comments)
    4. some basic macro questions (6 points, 5 comments)
    5. understanding equilibrium in a dynamic context? (6 points, 1 comment)
    6. Trying to understand economies of scale, e.g. costco (5 points, 5 comments)
    7. Why does inflation necessarily mean wages will be increasing too? (5 points, 3 comments)
    8. question about equilibrium tax incidence (3 points, 1 comment)
    9. trying to understand the utility of theoretical models (3 points, 3 comments)
    10. when firms are earning short run economic profit, does that just mean all factors of production are earning more than their opportunity cost? so firms entering the industry = labor and capital reallocating towards that industry by forming new firms? (3 points, 1 comment)
  5. 65 points, 1 submission: imadeadinside
    1. If Bruce Wayne was revealed as Batman, would stock prices and sales skyrocket or plummet for Wayne Enterprises (65 points, 16 comments)
  6. 57 points, 2 submissions: csObsession
    1. Do most economists think political and economic freedoms are intrinsically tied together? How do they explain the success of extremely authoritarian capitalist governments (Singapore, China, South Korea, Chile)? (37 points, 25 comments)
    2. Why are salaries for professionals so much higher in the United States than other developed countries? (20 points, 34 comments)
  7. 53 points, 13 submissions: Experimentalphone
    1. Why do Information Technology workers are so high in demand and earn so much in Western countries but doesn't even get sustenance wage in Bangladesh? (30 points, 10 comments)
    2. Anyone know of a comprehensive list of all the sub disciplines one can do a PhD in Economics, Finance and Business? (6 points, 4 comments)
    3. Which PhD sub disciplines have the least math but still good employability prospects in academia and industry? (5 points, 19 comments)
    4. What is the best website to publish your working papers in Economics? (3 points, 4 comments)
    5. Do I have to prove factual assertions before providing my arguments on economic policy suggestions for a journal article? (2 points, 4 comments)
    6. Why is the Ready Made Garments industry of Bangladesh declining due to withdrawal of trade privileges of Western countries when prices are already competitive in the world market? (2 points, 1 comment)
    7. Are qualitative policy prescription papers accepted by most journals or are they better of in blog posts? (1 point, 7 comments)
    8. What is the best free website for working papers in Economics? (1 point, 3 comments)
    9. Where can I find data on work conditions and how hard is the work of foreign students who work alongside their studies legally or illegally? (1 point, 0 comments)
    10. Which metrics do I need, to find out the effects of outward remittance on a poor economy? (1 point, 5 comments)
  8. 52 points, 6 submissions: FrankVillain
    1. Is China still considered a centrally planned economy? (16 points, 4 comments)
    2. Ressources on the Soviet industrial failures due to poor economics? (15 points, 2 comments)
    3. What is the reason behind France's high unemployment rate? (10 points, 13 comments)
    4. About Land Value Tax & Single Tax: how would it affect farmers and those of them who own their land? (9 points, 3 comments)
    5. Does welfare policies contribute to inflation? (2 points, 1 comment)
    6. If a Bitcoin is worth $1 000 000 and some persons like Satoshi have one or more millions of it... what power do they have? Can they disrupt the financial system with the huge amount of dollars that they have? (0 points, 8 comments)
  9. 49 points, 9 submissions: Chumbaka
    1. Can someone explain M0 , M1 and M2 to me? (13 points, 2 comments)
    2. Why is inflation and deflation bad? (13 points, 8 comments)
    3. Can anyone explain why this happens and what it means? (10 points, 3 comments)
    4. Stupid question but : Why does printing lots of money lead to inflation? (5 points, 14 comments)
    5. Why aren't all banks Full Reserve Banking? (5 points, 3 comments)
    6. What does this stock market fall mean to the economy as a whole? (3 points, 4 comments)
    7. How do I pick an economist ideology to support? (0 points, 3 comments)
    8. Is investing in Forex worth it? (0 points, 15 comments)
    9. What is Fractional Reserve Banking? (0 points, 4 comments)
  10. 47 points, 1 submission: furikakebabe
    1. The Tax Bill of 2017 reduced corporate tax rate from 35% to 21%. Tax haven countries have rates as low as 15%. Why would companies be more likely to move money back to the US if they still aren’t getting a better rate? (47 points, 6 comments)
  11. 47 points, 1 submission: gh0bs
    1. Why does the economy have to be a series of bubbles and bursts/corrections, rather than a sustained gradual growth? (47 points, 32 comments)
  12. 45 points, 1 submission: wcoleman22
    1. For all the economists out there that got advanced degrees, what were your most influential assigned readings? (45 points, 23 comments)
  13. 43 points, 1 submission: Crane_Train
    1. How could Venezuela fix its economy? (43 points, 17 comments)
  14. 42 points, 4 submissions: Jollygood156
    1. Why didn't quantitative easing + low interest rates raise inflation high? (20 points, 36 comments)
    2. How do we actually refute MMT? (12 points, 69 comments)
    3. What is Nominal GDP targeting and why do so many people advocate for it? (6 points, 16 comments)
    4. How exactly are land value taxes calculated? (4 points, 3 comments)
  15. 42 points, 1 submission: kornork
    1. With Soybeans piling up and a 12 Billion bailout from the trade war, how come tofu isn’t super cheap right now? (42 points, 3 comments)
  16. 41 points, 1 submission: TheHoleInMoi
    1. Are there any papers/solid arguments about the benefits of having more local business as opposed to corporate consolidation? (41 points, 2 comments)
  17. 39 points, 1 submission: infernomedia
    1. What are some of the most interesting results in economics that are widely well regarded by the academic community to come out in the last decade? (39 points, 7 comments)
  18. 38 points, 1 submission: -reasonable-person-
    1. From an Economic Perspective What is the Most Effective Way for Mexico to end its Violent Organized Crime Problem? (38 points, 13 comments)
  19. 38 points, 1 submission: ajsox22
    1. Does culture impact the growth and development of a nation's economy? (38 points, 15 comments)
  20. 37 points, 8 submissions: MedStudent-96
    1. Quasi-convexity of the Indirect Utility Function? (12 points, 14 comments)
    2. Is my textbook wrong? (9 points, 8 comments)
    3. Interpretation of Lagrange Multipliers for Consumer (5 points, 4 comments)
    4. Consumer Demand Interpretation for Cobb Douglas-Non Convex to Origin. (4 points, 6 comments)
    5. Do monopolies produce the same as a competitive firm in the long run? (4 points, 8 comments)
    6. In some circumstances can a monopoly leave the consumer better off? (1 point, 3 comments)
    7. Two Period Consumption Savings Model (1 point, 3 comments)
    8. [General Equilibrium] Proving that in the limit case the core shrinks to the set of competitive equilibrium. (1 point, 0 comments)

Top Commenters

  1. BainCapitalist (2255 points, 571 comments)
  2. smalleconomist (1053 points, 307 comments)
  3. RobThorpe (853 points, 247 comments)
  4. Calvo_fairy (721 points, 146 comments)
  5. Cross_Keynesian (527 points, 126 comments)
  6. zzzzz94 (468 points, 83 comments)
  7. raptorman556 (334 points, 91 comments)
  8. Integralds (323 points, 51 comments)
  9. whyrat (298 points, 56 comments)
  10. MrDannyOcean (290 points, 48 comments)
  11. isntanywhere (263 points, 84 comments)
  12. benjaminikuta (249 points, 133 comments)
  13. penguin_rider222 (158 points, 40 comments)
  14. daokedao4 (148 points, 23 comments)
  15. lawrencekhoo (132 points, 13 comments)
  16. ecolonomist (129 points, 45 comments)
  17. RegulatoryCapture (126 points, 29 comments)
  18. intowilde (114 points, 28 comments)
  19. VineFynn (113 points, 30 comments)
  20. MedStudent-96 (103 points, 48 comments)

Top Submissions

  1. So, what's the difference between this new trade deal with Mexico and Canada and the old one, and what are the implications? by benjaminikuta (68 points, 12 comments)
  2. If Bruce Wayne was revealed as Batman, would stock prices and sales skyrocket or plummet for Wayne Enterprises by imadeadinside (65 points, 16 comments)
  3. Why does the economy have to be a series of bubbles and bursts/corrections, rather than a sustained gradual growth? by gh0bs (47 points, 32 comments)
  4. The Tax Bill of 2017 reduced corporate tax rate from 35% to 21%. Tax haven countries have rates as low as 15%. Why would companies be more likely to move money back to the US if they still aren’t getting a better rate? by furikakebabe (47 points, 6 comments)
  5. For all the economists out there that got advanced degrees, what were your most influential assigned readings? by wcoleman22 (45 points, 23 comments)
  6. How could Venezuela fix its economy? by Crane_Train (43 points, 17 comments)
  7. Why do countries like France or Japan have a high debt to GDP but aren't in shambles like Greece? by MrZer (43 points, 16 comments)
  8. Is free public transport a good idea? by Fart_Gas (42 points, 20 comments)
  9. With Soybeans piling up and a 12 Billion bailout from the trade war, how come tofu isn’t super cheap right now? by kornork (42 points, 3 comments)
  10. Are there any papers/solid arguments about the benefits of having more local business as opposed to corporate consolidation? by TheHoleInMoi (41 points, 2 comments)

Top Comments

  1. 68 points: Calvo_fairy's comment in Milton Friedman is well respected by many economists, why aren't there more Libertarians?
  2. 62 points: Calvo_fairy's comment in Milton Friedman is well respected by many economists, why aren't there more Libertarians?
  3. 54 points: Calvo_fairy's comment in If Bruce Wayne was revealed as Batman, would stock prices and sales skyrocket or plummet for Wayne Enterprises
  4. 52 points: Qwernakus's comment in What is the difference between GDP (Nominal), GDP (PPP), and Real GDP ?
  5. 50 points: TheoryOfSomething's comment in Which parts of Marxism are theoretically dependent on the labor theory of value and which are not?
  6. 47 points: Lucid-Crow's comment in I've heard Marxists claim that central planning is good because the military and corporations do it.
  7. 46 points: Integralds's comment in Milton Friedman is well respected by many economists, why aren't there more Libertarians?
  8. 44 points: Yankee9204's comment in If Bruce Wayne was revealed as Batman, would stock prices and sales skyrocket or plummet for Wayne Enterprises
  9. 43 points: lawrencekhoo's comment in With Soybeans piling up and a 12 Billion bailout from the trade war, how come tofu isn’t super cheap right now?
  10. 42 points: Cross_Keynesian's comment in Does income inequality really matter?
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First Reddit Post, my key financial lessons of 2017

I hope this will help some of you out. It's a summary of the most important Canadian Personal Finance lessons from my research for all of 2017. Most of these are key posts from The Greater Fool Blog, which I highly recommend as a daily read.
Investing Strategy and Advice
Random Advice
· Everybody should strive to maximize their TFSAs, then ensure the money stays in there, invested in diversified growth assets like equity ETFs. Remember – a hundred bucks a week invested here for 30 years making 7% will end up being $532,000. That should yield an annual income of $32,000 without depleting the principal and without reducing your CPP or OAS payments by a single penny. So this is job one.
· After that, shovel cash into an RRSP, using the refund to contribute to the TFSA. Unless you have a defined-benefit pension (guaranteed, stable employer-funded payments), this is an excellent way to reduce tax, invest for tax-free growth then support you efficiently when some dingdong CEO destroys your employer.
· Obviously having a cash reserve for an event like this would be a great idea, but establishing a personal line of credit in advance is almost as good. It costs you nothing to set up at the bank, zero to carry and can be tapped only as you require it. Go, get one now.
· The best way to own preferreds is through an ETF, where you can hold a basket of high-qualify assets. An example would be CPD (just an example – this is not a recommendation), which pays investors a dividend yield of 4.3%, which is twice the return of a GIC and it’s still 100% liquid. But there’s more. This exchange-traded fund has increased in value (besides the dividends paid) by 12.7% in 2017 – which far outstrips the 3.8% return of the TSX in general. Since the beginning of last year (when prefs were sooo cheap) the gain in capital value has been 28%. (CPD also went on sale Wednesday after the latest Bank of Canada report. Sweet.)
· But all he need do to effectively slash his long-term interest costs is to switch from a monthly-pay to a weekly-pay mortgage. Over the course of 12 months he’ll make the equivalent of one extra payment (no big deal) and it will end up shortening his amortization by years, saving more than a variable-rate loan ever would. He just needs to ensure he gets the right kind of weekly mortgage, since some of them are bank rip-offs.
May 2017 – Current Recommended Weightings
· cash, 5%;
· corporate bond 6%;
· provincials 3%;
· short-term bond 5%;
· high-yield 3%;
· preferreds 18%;
· Cdn equity 16%;
· REITs 5%;
· US equity 21% (some hedged);
· international equity 18% (some hedged).
Investment Portfolio Breakdown - Greater Fool – September 20th 2017
· Start with the TFSA. When that’s full split money between an RRSP (to shift tax into other years) and a non-registered portfolio (to benefit from capital gains and dividends). Stick with it, max the tax-free account with pre-authorized debits from your bank account and never, ever listen to [email protected], eschewing costly mutual funds and brain-dead GICs.
· Have a balanced portfolio, with 40% in safe stuff and 60% more growth-oriented. Since rates are rising, keep the bond exposure slim (they pay nothing but reduce volatility) but have lots of rate-reset preferreds which swell along with bond yields. Carefully weight Canadian, US and international assets, taking into consideration that we’re currently on fire, Trump’s a time bomb, the US is expanding, Europe’s in recovery and nobody should bet against China. Never hold individual stocks (unless you have seven figures to invest and can achieve diversification – which requires about 60 positions).
· If you have a little money, hold three or four ETFs. If you have a lot, then 17 should be about right. And keep a small cash position, since that’s a defensive asset as well as ammo if an opportunity arises.
· So, 2% cash in a HISA, 20% in a mixture of government, corporate, provincial and high-yield bonds plus 18% in preferreds make up the safer stuff. Put 5% in REITs, then hold 16% in Canadian equities, an equal amount in US markets and 23% in internationals, for the growth portion. Rebalance once a year. Put higher-taxed stuff (bonds) in a tax shelter. Reserve the TFSA for fast growers (like emerging markets). Enjoy a 50% tax break on capital gains in your non-registered. And don’t forget about income-splitting with your squeeze, which can be done through a spousal plan or maybe a joint account.
Why TFSAs are the #1 Priority
The long-term growth, free of tax, is epic. Invest $5,500 this year, then add $100 a week for the next three decades in growth assets making 7%, and you end up with $576,338 of which $414,838 is growth. Besides tax-free compounding of investment returns, the real benefit of this thing is that it will throw off income in retirement (or anytime else) which is not counted as income. So in the example just given, forty grand a year could be earned with zero tax payable on it.
Now let’s look at two 40-year-olds who have wisely maxed their TFSAs with $52,000 in each. If they keep their accounts topped up and full of ETFs giving the same return, at 65 they’ll claim $1.26 million, of which almost nine hundred grand is taxless growth. In retirement that amount can provide an annual income of about $90,000, and these guys can still collect their CPP and OAS without having any of it clawed back (assuming no other income source). If they had $1.26 million in RRSPs, the after-tax income would be about $52,000 and they’d have a marginal tax rate of 29.65%. No contest.
For anyone with a good company pension plan, and especially for the Aristocracy Among Us with gold-plated, defined-benefit schemes (teachers, cops, retired finance ministers) investing in this vehicle is far better than feeding an RRSP. At age 71 all registered retirement plans must be partially unwound, with the income being added on top of pension payments, often boosting you into a higher tax bracket. But no matter how much is skimmed off a fat TFSA, nothing is taxed or even recorded as income.
Of course, TFSAs can be used for income-splitting, too. You can gift your spouse or your adult kids money to invest in one. None of the gains will be attributed back to you. You can withdraw money and, unlike an RRSP, put it back the following calendar year. Unused room can be carried forward indefinitely. And a tax-free account can hold almost any investment asset, so keeping a moribund high-interest savings account or a brain-dead GIC in there is a big fail.
Why Mutual Funds Suck:
S&P regularly provides its SPIVA Scorecard, which examines the performance of actively managed Canadian mutual funds versus that of their benchmarks and corrects for survivorship bias. Survivorship bias? Yes, mutual fund companies have this habit of discontinuing funds that have poor performance thus, ostensibly, wiping away that unflattering data forever. The SPIVA Scorecard attempts to account for this performance, essentially holding the mutual fund companies’ feet to the fire. The data reveals, unsurprisingly, that the vast majority of mutual funds underperform their benchmarks—with high management fees being the main reason. The table below shows their dismal long-term track record. S&P, by the way, also does a scorecard for US mutual funds with similar results.
📷
📷No doubt, there are financial advisors who have a careful and highly effective system for identifying the 9% or so of equity mutual funds that actually do outperform their benchmarks over the long term. More power to these advisors. However, what I’ve seen more often is a less rigorous due-diligence system of simply selecting the funds that are ranked highest by Morningstar, the industry’s most widely known mutual-fund evaluator. However, as a recent article by The Wall Street Journal has shown, chasing the best star ratings has its drawbacks. The Journal pointed out, after examining the performance of thousands of funds, that only 12% of 5-star-rated funds maintained this rating after five years. Basically, the Journal highlighted that the Morningstar five-star rating is not a good indicator of future outperformance.
Source: The Wall Street Journal
Here are a few things to remember. First, on mutual funds (since most people own them): fees are significant, and buried in the cost of ownership. The person selling you these animals at the bank will tell you s/he doesn’t charge anything to perform that charitable service. In reality, the funds turn out trailer fees so every month you stay invested, somebody gets paid. To Rob’s point, mutual fund fees aren’t tax-deductible. So if you own a fund with a 2.5% MER and you’re in the 40% tax bracket, that’s actually costing 3.5%. Ouch.
The same principle applies to ETFs, all of which have embedded fees which are not deductible. The big difference is the average fee across a portfolio made up of exchange-traded funds might be 0.2% – or one tenth of the cost of owning a mutual.
What about other fees and investment costs?
Management fees, charged by fee-based advisors, are 100% deductible from taxable income on non-registered accounts. With RRSPs, the money taken to pay an advisor is not counted as taxable income. That means you got a tax break for putting that in, but there’s no tax when it exits – so the government is also subsidizing you. Fees on TFSAs, however, are non-deductible. Somebody in the top tax bracket, then, with accounts run by a professional offering tax advice and portfolio management who charges 1% will end up paying closer to 0.6% – while the poor single Mom with a few grand in the bank’s funds will shell out 2.6%. Unfair? You bet. But that’s the law.
So, fees are deductible. Commissions are not. MERs are embedded, invisible and can kill returns. If you remember just those three facts, they’ll serve you well.
More on Mutual Funds – Dec 11 2017
What’s a mutual fund? It’s a pot of money made up of contributions from many investors that a manager then uses to buy stuff. Like stocks or corporate and government bonds. Managers charge big money to do this job (they have Porsches, too) which is charged back to the investors, and in return try to add ‘alpha’. That’s financial speak for ‘special sauce’, which means they attempt to get better returns than you’d achieve just buying the same assets and holding them. In doing this job they buy and sell frequently, often generating capital gains taxes, which the unitholders also pay.
Trouble is, most of these cowboys fail.
Last year, for example, the number of Canadian mutual funds which focus on US stocks and which outperformed the index was… zero. Nada. Donuts. Not one. In the States almost 70% of fund managers investing in large-cap stocks failed to match the index and yet charged big bucks to do so. Over the last 15 years, the failure rate among managers is 90%.
Ouch. Makes you wonder what you’re paying for. What also hurts is that the fees these non-alpha dudes charge are buried within the funds themselves, unseen by investors who cannot even deduct them from any gains they might make for tax purposes. Meanwhile the so-called advisors who collect the trailer fees from selling funds do not actually engage in any investing themselves and often collect an extra upfront fee for selling them to folks, or create a seven-year mutual-fund prison that penalizes anyone trying to get out.
Difference between Mutual Funds and ETFs
Simple. ETFs are like Teslas – they drive themselves. There is no manager, so there’s no fat management fee for investors to pay. They don’t compensate some fancy guy to try and beat the market, then have to explain why he didn’t. They just pace the market itself. What the S&P 500 does this year, for example (up 18.4%), is what an ETF holding those 500 companies does. Plus, they’re traded on the stock market, which means you can buy or sell with the click of a mouse and get instant liquidity. Try doing that with a mutual fund (you can’t). In fact, most funds have the ability to halt redemptions, so if a crisis emerged you might not be able to sell when you wanted (just like Bitcoin).
ETFs are not free, however. Across a balanced portfolio you can expect to pay an embedded cost of about 0.2% – which is a hell of a lot cheaper than 2.0%.
Now, mutual fund salesguys, for obvious reasons, hate it when they hear such talk. And being in sales, they are daunting adversaries, able to woe naive investors with tales of giant, throbbing Alpha and heaving bosoms. (I may have exaggerated there.)
Jane, in fact, encountered exactly this schtick after she told her mutual fund guy she was leaving to embrace ETFs.
“I talked to him today for the formal “thank you and best of luck” nicety and needless to say he thinks I’m making a huge mistake. I feel quite defenceless when it comes to talking to financial advisors. My boyfriend tried to do his best to help explain it and then reverted to “Ask Garth.” For ease I will just lay out what was said by mutual fund guy in bullet form and hopefully you can help me out
“Can you shed some light on this for me? My mutual fund guy did make me feel a touch uneasy. I would appreciate the insight just for building my own knowledge and confidence.”
You betcha, Janey. ETFs are cheaper because they don’t come attached to some Bay Street smartie with three kids in private school. They are pure reflections of a transparent market. The rate of return for nine out of ten has been higher than an actively-managed mutual fund, at a fraction of the cost. Fee-based advisors (who should collect a fee of no more than 1%) actually build and manage client portfolios. They all shop at Costco and recycle their socks.
ETFs for old people? Did he mention dwarfs?
As for the 2008-9 crisis, a balanced ETF portfolio declined 20% while the stock market slid 55%. It recovered all lost ground in a year, then advanced 17%. It’s not the structure of the asset that is owned (active or passive fund), but the weightings between various asset classes that will protect you in declines. You can be as conservative or aggressive as you want with either kind of funds. But if you like paying more for less, mutuals are for you. (He was really zooming you on that one.)
The benefit of Bonds in a Portfolio
Bonds help reduce volatility
One common way to measure volatility is using standard deviation, which measures the variability of returns around the long-term average – the higher the number the higher the volatility. Over the last 10 years, the TSX has exhibited price volatility of 14.1%, meaning that TSX returns have been 14.1% above/below the long-term average return over the last 10 years. Volatility (standard deviation) has been 11.4% for the S&P 500 over this period. And for the average Canadian balanced portfolio, the standard deviation has been much lower at 8.3%. So, we prefer balanced portfolios to an all-equity portfolio since the ride is much smoother and with more consistent yearly returns.

📷Volatility of Different Investments

The other important reason we like balanced portfolios is because bonds often zig when equities zag. This dynamic is why a balanced portfolio exhibits lower volatility.
In good economic times corporate profits rise and investors feel more optimistic about the outlook that they are willing to pay higher multiples (e.g., P/Es) for stocks. This combination of rising corporate profits and valuations pushes stock prices higher.
Central banks in turn tighten monetary policy by hiking interest rates. This helps to push bond prices lower (prices move inversely with yields). So stocks go up and bond prices go down, generally, in a strong economy.
📷Conversely, in a weak economy stocks typically decline and central banks lower interest rates to help spur growth which leads to higher bond prices. Again, bonds zig when equities zag. This is perfectly captured in the chart below which shows the relative performance of Canadian bonds and the TSX. Note how bonds will outperform stocks over certain periods (in green) and underperform stocks in other periods (in red). This chart captures the essence of why a solidly constructed and well-managed balanced portfolio works!

Bonds/Equities Out/Underperform Over Time

Finally, how should investors structure their bond holdings in this rising interest rate environment?
First is to focus on lower duration bonds. Duration measures a bond’s price sensitivity to changing interest rates. If a bond (or in our case a bond ETF) has a duration of 8, it means the bond will decline approximately 8% for every 1% increase in interest rates, or rise 8% for every 1% decrease in rates; the higher the duration the higher the price sensitivity to rising rates.
Given our view that rates are going to continue to slowly rise, we are positioning our balanced portfolio with lower duration bond ETFs so as to minimize the impact of rising rates. Later when interest rates are higher we’ll look to reverse this call and shift into higher duration/yielding bond ETFs.
The other key strategy for bonds in a rising rate environment is to overweight corporate bonds versus government bonds.
With the Fed and BoC now hiking rates, government bond yields are moving up and prices lower. This of course weighs on all bonds but corporate bonds tend to outperform when rates rise. This happens for a few reasons. First corporate bonds offer higher coupons (yields), which help lower the duration relative to lower yielding government bonds. Second, because investors are feeling more optimistic about the economy and financial markets they are more willing to buy corporate bonds, which pushes up their prices relative to government bonds resulting in compression of the yield spread over government bonds.
Below is a chart comparing US investment grade corporate bond yields to comparable US government bond yields. Currently with US corporate bonds yielding 4.25% and US government bonds yielding 2.35%, this results in a “spread” of 190 bps. As the economy picks up this spread compresses which results in corporate bonds outperforming government bonds. We believe this spread could compress a bit further resulting in additional outperformance from corporate bonds. We’ll look to reverse this trade as we start to believe the economy is rolling over.

US Credit Spreads

📷We get it. In a raging bull market like we’ve been in for some years, bonds can be disappointing and cause us to deviate away from a balanced portfolio, focusing more on equities. But as we’ve shown, the benefits of including bonds in a portfolio are to reduce volatility and provide more consistent returns. And we’re not always going to be in a bull market so you’ll need protection against this inevitability. I feel confident that our client will call me up to thank me for our recent portfolio adjustments, likely when that dreaded bear market rears its ugly head. How are you positioned for this eventuality?
Well, here are ten of my fav ways to reduce your tax bill thanks to two simple words – income-splitting (as opposed to sprinkling).
10 Ways to Reduce your Tax – Oct 29
  1. Do you and your squeeze both work? If one earns more than the other, have the chief breadwinner pay all of the regular expenses – mortgage, rent, food, daycare, weed, insurance, booze, clothes, rehab. Make the lesser-monied spouse the chief investor in the family, so the returns (capital gains, dividends, interest) will be taxed at a lower rate.
  2. Ditto for registered retirement savings. If you earn considerably more than s/he does, or have a defined-benefit pension, use up all your RRSP room for a spousal plan. You write the contribution off your higher taxed income while your spouse gains control of the money. After three years it can be withdrawn at their lower rate – so you’ve just sprinkled!
  3. Here’s another one, if there’s an income disparity between you: loan your less-taxed spouse a bunch of money for investment purposes. S/he puts it into a nice little non-registered account and starts collecting dividends and earning capital gains in a tax-efficient way. Even though it’s your money, none of that income is attributed back to you – so long as this is set up as a loan at the CRA’s prescribed rate of interest which is, believe it or not, just 1%. Interest must be paid annually by the end of January but all of that is tax-deductible. Yes, your spouse can write it off the investment returns. This works for kids over 18, too. More sprinkling!
  4. Also with income-splitting: if you are a wrinkly collecting CPP (everybody should start taking it at 60, no exceptions), this can also be split with your less-taxed spouse.
  5. If you didn’t listen to the advice on this blog, bought individual equities and were handed your rear end by Mr. Market, sell those dogs before Christmas in order to realize a capital loss which can be used to reduce taxes on capital gains. Losses can be used to neutralize gains not only in the current tax year, but going back three more years. This can help you recover taxes that you paid as far back as 2014.
  6. You can also take crap assets that dropped in value and dump them on your kid. Another great reason to have children! Investments can be transferred to a minor child and that will also trigger a tax loss in your hands which can be used to offset gains. Now your spawn has an asset that, when it recovers in value, will be essentially tax-free with none of the gain attributed back to you.
  7. Fill up your TFSA, obviously. Also that of your spouse. And your kids over the age of 18. Gift money to all of them with no gains TFSAs attributed back to you. Remember, $5,500 a year for 35 years earning 7% will result in $819,000, of which more than six hundred grand is compound growth. So ensure these are not savings accounts, but investment accounts – no GICs, HISAs or other dorky stuff. Also when you retire, a $819,000 TFSA will give you about $50,000 a year in taxless income which will not reduce your CPP or OAS by one cent.
  8. If you’re 71 and have to convert an RRSP to a RRIF, be thankful you robbed the cradle and married a babe younger than you. Your mandatory retirement fund withdrawals can be based on the age of your spouse, keeping them to a minimum and allowing your nest egg to grow larger, longer.
  9. Obviously put money into a RESP for your kids. The feds will give you an automatic grant equal to 20% – so for a $2,500 contribution you receive $500, up to a lifetime total of $7,200. Free money. Duh. Why would you not do this? If your kid grows up to be a rock star or a high-net-worth, Mercedes-driving plumber you can fold much of the RESP money into your RRSP. Remember to buy growth assets. Establish a family plan for multiple kids, not separate ones. And, for God’s sake, avoid the RESP-flogging baby vultures that skulk around hospitals. Go self-directed.
10.And, yes, use RRSPs. They’re still the best tax-shifting vehicle around, allowing you to write off up to $25,000 in taxable income a year. You can borrow money cheap to contribute, then use the refund to pay much of it back. Or open a plan, shift in assets you already own, and get paid money by Bill Morneau for selling yourself stuff you already own. That should make his head all splody.
Legal aspects of selling a house
If you’re selling a house – with more market declines ahead thanks to the new stress test – make damn sure the deal is solid. No long close. A mother of a deposit (ask for 10%). No buyer visits prior to closing. Deposit held in your lawyer’s trust account, not that of the listing broker. No condition on the buyer finding ‘satisfactory’ financing. And a clause giving you a day or two for legal approval of the offer.
Also do something radical – find out who the buyer is before you enter into a contract with them. Job? Circumstances? Background? Can they afford it? After all, you’d never rent your cheapo condo to someone without a credit application, references, credit check and income/employment verification. Why sell a $1.5 million house to a stranger and make huge life changes based on a closing months away that may never happen?
HELOC & Risk Investment Strategy – August 7th
So he wrote me with an idea and a question:
I’m curious to know if you’d recommend pulling out 100k in equity in a house NOT to buy a rental house but to invest in a diversified portfolio and hopefully make a 6% to 8% yearly return only to turn around and put it back down onto the mortgage to pay it off faster? I’ve been contemplating on things to do to pay down the mortgage and create some income, no good having this equity just sitting here when it can be working for us! Seems starting a corporation is out of the question now thanks to T2 and his finance guru.
Given that real estate’s fat days are behind us but debt isn’t going anywhere, does this make sense? Maybe. Let’s roll it around.
Millions of people have, collectively, billions in real estate equity. When house prices stop going up, this becomes dead money. The only value you can really ascribe is what it might save you in equivalent rent. For example, a $1.5 million house can normally be rented for $3,000 a month. The family with a $500,000 mortgage and $1 million in equity is spending $2,400 (monthly) on the mortgage plus about $600 in property tax, insurance and utilities (water, sewer) that renters never pay. So they ‘own’ a home for the same monthly outlay as the family who rents it.
But they have put down $1 million to live there. If that were conservatively invested, and returned 6% annually, it’s $5,000 a month. So the house actually costs $8,000, and could yield a non-deductible capital loss as easily as a non-taxable capital gain.
In other words, in a declining, flat, comatose or normal housing market, the cost of ownership when real estate has climbed to these levels is insane. Renters who invest win, ten times out of ten. If interest rates creep up and mortgages renew higher, the economics of owning get worse. In the current environment, a lot of people have to be asking themselves – like Kevin – if there isn’t some way to use that dead equity which is no longer supporting a rising asset.
Yes, a HELOC is one way of unleashing equity. It’s a line of credit secured by real estate, which means the debt is registered against the property but also that it comes with a preferential rate of interest. That’s normally prime + 0.5%. These days that equates to 3.45% (and it may rise to 3.7% in October). The line’s rate is almost always variable, so it will increase along with the bank prime. And HELOCs are demand loans. If real estate prices truly collapsed or another credit crisis hit, the bank could ask you for the money back in, oh, 30 days.
The good news is all of the interest is deductible from your taxable income if the money is used to generate more money. Yup, that could be real estate paying you rent or (wiser) a balanced and diversified portfolio of financial assets. So, if you earn $120,000 and live in BC, for example, you effectively reduce the loan interest rate by 41%. Now the HELOC costs you just 2%.
Given that well-managed, non-cowboy, globally-balanced and diversified ETF portfolios have pumped out an average of 6.5% over the last seven years (two of which were market stinkers), this mean a spread in the 4% range. Last time I checked, that was better than the 0% home equity is currently paying.
So to Kev’s question. If he borrowed $100,000 on a HELOC and invested it for a 7% return, then used the cash flow generated ($7,000) to pay down his existing mortgage faster, would it make sense? Well, interest-only payments on the line would cost $3,450, but he’d reduce his income tax by $1,400 (if he earns enough). So he’s up five grand. That’s cool – it can be used as a pre-payment on the amortized mortgage. But wait. Kevin now owes another $100,000. But wait again. He has a $100,000 liquid investment portfolio.
By removing equity and borrowing, the Harley dude has (a) diversified his net worth, (b) reduced his income tax bill and (c) accelerated the mortgage payments, saving a whack of interest.
This is not a slam-dunk strategy for everyone. If rates rise and the payments get hard to make, you lose. If the world goes to crap and the loan is called, you lose. If your house craters and the bank finds out, you lose. If your job fades, you lose. If you invest in the wrong stuff (like gold, bitcoins, weed stock or junior oil & gas), you lose. If the feds drop the hammer on HELOCs again, you lose.
Debt is debt. The world’s soaked in it. Most people would be unwise to shoulder more.
The best strategy, history will show, is to trash debt by selling high. This is high.
Complex home buying tax strategy, courtesy of Derek Holt – the chief economist at Scotiabank
· Make a $19.2k RRSP contribution just three months in advance of buying a home… • …assuming a 30% tax rate, deposit $6k tax refund back into RRSP… • …then withdraw the allowed $25k maximum under the HomeBuyers’ • …to be repaid to the RRSP in equal installments over 15 years starting 2 years after withdrawal with no interest penalty and the payments are not counted in mortgage serviceability calculations… • …at, say, a 4% rate of interest, this equals $8k in interest savings over 15yrs… • …which means the initial $19.2k RRSP deposit has been parlayed into an effective down payment of about $33k, or an extra 70%+ • No restrictions on the source of the original RRSP deposit (can borrow for it, ‘gift’, etc). • ie: the zero-down mortgage can still theoretically exist • If a couple, and both are first time homebuyers, double all of the math above (ie: turn $38k from liberally allowed sources into a $65k down payment)
· If a major bank’s showing clients how to take $38,000 and game it into $65,000 through exploiting the system, it might indicate we’ve all hit a tax wall. And this is even before T2 Hoovers out the savings of small business operators, vets, docs and the local John Deere dealership.
submitted by Pugeroni to PersonalFinanceCanada [link] [comments]

Looking to be hired to write or make crypto videos- heres a sample

The first version of the Internet was no faster than a local DMV branch, simple in approach, and mostly used for decentralized communications. Internet 2.0 is comprised of the programmable Internet that you see today, including everything from content and networks to search engines and browsers. Decentralized Autonomous Organizations are Blockchain 2.0, the “programmable version”; allowing all participants to exchange information and data on an irrefutable and distributed ledger. In doing so, it cuts out many of the traditional middlemen seen in corporations. DAO’s have the potential to create peer-to-peer networks utilizing self-executing smart contracts, independent of interpretation from outside influences. Whatever means of exchange is used within the DAO is both meant to power smart contracts, and as a means of voting so the community can reach consensus.
While DAO’s represent a novel opportunity to disrupt many existing legacy systems, Decentralized Autonomous Organizations should also be viewed with skepticism and much of the excitement surrounding them can reasonably be described as fraudulent. While their decentralized nature promises to create an economy of the likes the world has never seen before, the vast majority of these organizations are neither decentralized nor ready for the complicated real world use cases they claim to solve.
While many advocate for the security provided from many points of failure, a DAO’s lack of centralization could also lead to increased vulnerability. For example, when a project runs on code that is centralized at a single point, fixing the issue is as simple as solving the problem, and fixing whatever issue in the code that exists. In a truly decentralized ecosystem, each individual node needs to update its code. This becomes even more important if the issue is time sensitive. Though decentralized systems are harder to compromise, if a route for doing so is found, the results are far more dire.
DAO’s create a tremendous amount of problems from a legal perspective as well. If investor funds are stolen through a leak or problem in the code, who is to be held accountable? Some argue it should be the programmers, while others argue in practicality, every single individual could be held accountable. (Levine, M. (17 May 2016).") Additionally, the SEC in the United States has ruled that some of these DAO’s are illegal securities. Others promote projects claiming to be DAO’s, when in reality the parameters that can be voted on are so limited it can best be described as a ruse, or all voting tokens are under the control of the overarching organization and the system is only slightly distributed, not decentralized. Additionally, in a true decentralized system there is no one that wants to sign paperwork for an organization that’s path is far out of his or her realm of control.
The most famous use of a complex DAO thus far took place by a company called Slock.it, which ran on the Ethereum Network. After a token sale of 150 million dollars worth of Ethereum, the team began to fund proposals and expand the network. Feeling pressure from lofty expectations, the founders of The DAO, took huge risks. However, when the codebase was debated, it was entirely flawed. A hack immediately siphoned 50 million dollars worth of investor’s Eth into a “Child DAO”. Because this represented such a large breach in the Ethereum network, the Ethereum foundation decided to step in and use their massive influence and voting power to fork the network.
This action runs contrary to the original goal of a DAO; to be independent of any formal central governing body. When the Ethereum Foundation stepped in to hard fork the network, the novelty of an autonomous decentralized organization immediately disappeared. In order for a DAO to be successful in its mission of truly being autonomous, it must be released with a strong enough foundation to stand the test of time and update to reflect necessary changes based off of voting procedures. By stepping in to fork the network, Ethereum not only sacrificed the integrity of The DAO, but they also sacrificed the integrity of the entire Ethereum network. With so many Ethereum tokens locked up in The DAO, the Ethereum Foundation had a conflict of interest. A loss of investor funds would lead to severe problems both internally and publically and could lead many to write off their promising emerging technology. Additionally, members of the Ethereum foundation controlled 70% of the DAOs voting power. The voting for the fork lasted only 12 hours and made minimal effort to inform token holders. Instead of The DAO failing as an independent organization, it was absorbed into Ethereum. (Price, Rob 7 June 2016)
This is strikingly similar to the conflicts of interest seen in 2008 during the financial crash. John Allison, the longest serving CEO of a top 25 financial institution wrote “Many of the financial institutions that should have been allowed to fail had a history of being crony capitalists; that is, these companies did not advocate limited government but instead sought special favors for themselves… Crony socialist is probably a better name for these individuals and firms,” (John Allison, 6). Governments help of their friends and donors have created a precedent that allows failing institutions to continue to thrive. When the Eth team decided that the DAO was too big to fail, they did not allow free markets and token holders to make the best decision for the organization, they simply used their undue influence for a cyber Coup D’état. Failure should be encouraged to promote conscious investment and out of fairness to organizations that have been successful. Instead, the Ethereum Foundation abused its power and hard forked the network to help out their friends.
While The DAO has failed, a more simple approach has shown that it can succeed. Released in open source code in 2009, Bitcoin is a DAO in the simplest terms. Though imperfect and controlled completely miners, it has been under attack every day and has never been breached. Time has shown that its fundamental foundation is rock solid. As a result, despite being considered slow and outdated by some, Bitcoin holds nearly a majority of the crypto cap. Investors have seen that Bitcoin is capable of running without outside interference for nearly ten years now and responded with capital infusion and investor confidence. Additionally, Bitcoins slow governance model can create confidence that the rules wont quickly be changed from under holder’s feet. Bitcoin has survived and will continue to be successful because it has remained mostly autonomous. Though, it is important to note that Bitcoin still struggles with mining decentralization due to the efficiency of ASIC processors. Bitcoin is not a traditional bank, but is certainly showing it has the capabilities to transform traditional stores of value and to be part of challenging the Federal Reserve.
With true Decentralized Autonomous Organizations, free markets will cause some to fail miserably with the strongest disrupting the worlds most important and antiquated legacy systems. Free markets of this magnitude revolved around banks during the Wildcat Banking Era from (1837-63). This era, marked by extremely lax banking laws saw many banks fail and declare bankruptcy. However, the problems of one bank where not contagious to others and banks that survived conducted themselves in a manner that would not require a bailout or special favors to be successful. Additionally, the era saw increases in banks educating its customers and a general increase in knowledge regarding financial institutions (Arthur J. Rolnick, Warren E. Weber). John Allison would argue that this same model should to be taken by DAO’s in the future to insure we don’t have a repeat of the Federal Reserve. By allowing faulty DAO’s to fail, investors will lose their money and be incentivized to make more informed decisions.
“Exchange is the lifeblood, not only of our economy, but of our civilization itself,” (Murray Rothbard, 1990). For the United States and much of the world, exchange runs through a thoroughly bureaucratic and inefficient institution called the Federal Reserve. The tribulations of the Federal Reserve have caused a laundry list of problems for the entire world. Despite this, the Federal Reserve see’s no competition and has been encouraged to operate on a failing model. The overlay of Decentralized Autonomous Organizations and Cryptocurrency promise to, at the very least, “bring discipline on a very discretionary organization,” (John Allison).
Today, the Federal Reserve of the United States no longer uses precious metal to back up its reserves. Instead, a U.S Dollar is based on the full faith of the U. S Government. In effect, the Government wants you to believe that the dollar is based on the countries GDP. The United States and many others have attempted at their own demise, to print themselves to prosperity.
Crony practices such as quantitative easing have left the world at the brink of financial ruin with the Fed even teasing the idea of negative interest rates for the next recession. (Kenneth Rogoff, American Economic Association) Once again, massive conflicts of interest persist. In some countries, corrupt governments who control the money supply are estimated to be worth hundreds of billions of dollars of stolen money while their citizens starve, [The Independent]. Meanwhile, these same Governments create social policies and minimum wages they cannot pay for. To combat that problem, they simply print more money. By overprinting money, the Fed has devalued the U. S dollar as many central banks worldwide have done in the past. This has destroyed purchasing power and made market basket goods far more expensive. Often, this type of economic meddling is a precursor for authoritarian style governments, as seen in Chavez’s Venezuela, Mugabe’s Zimbabwe, and countless other examples that clearly demonstrate the horrifying end result of central planning.
Friedrich Hayek famously said, “Money is one of the greatest instruments of freedom ever invented by man.” Unfortunately our freedom is directly controlled by the highly discretionary and corrupt organizations of the world, central banks. A DAO for financial transactions, would increase transparency and financial freedoms in ways otherwise unimaginable.
Bitcoin has caught the attention of both markets and governments worldwide due to its lack of a Government backing. The greatest minds spanning from Aristotle to Allison agree on what money needs to be. Durable, transferable, divisible, scarce, recognizable and fungible. “Government issued” is certainly not one of those specifications. Especially when the concept of scarcity falls of a cliff entirely. Government does not mean that governance and structure of some kind are not essential. In its current state, Bitcoin is best as a digital gold. Along with its properties of being transferable, auditable, fungible and divisible, Bitcoin is also exceptionally difficult to change. In order for a new policy to be implemented in Bitcoin, miners have to form a 95% consensus on it. Because the rules are unlikely to ever really change from under you, Bitcoin is best compared to digital gold with the advantages that it doesn’t require duplicate paper receipts or wheel barrels to exchange.
However Bitcoins lack of maneuverability can also lead to issues. In order to radically challenge the global monetary system, others will have to play leading roles alongside Bitcoin. In the Bitcoin network, if a consensus is not met between the different groups of miners, two forms of the same currency could be fork, IE Bitcoin Cash. Every Bitcoin Wallet is accredited with an equal amount of the new currency (Bitcoin Cash). These forks create many dilemmas. First and foremost, this is the equivalent of fools gold. Second, it creates unadopted competition, artificial inflation and rampant confusion leading to the loss of funds. There have been innumerable examples of people trying to use Bitcoin Cash as Bitcoin and losing their funds. At present, there are a slew of Bitcoin posers including Bitcoin Cash, Bitcoin Private, Bitcoin Diamond, Bitcoin Gold and more likely to come. None of these are or can be accepted as Bitcoin. Additionally, the threat of a looming fork makes it extremely difficult to make the necessary changes to the protocol.
Those who validate transactions are the governing body that supports Bitcoin; the miners. As there is no salary dedicated to developers in the block reward, developers rely on donations. With these donations come conflicts of interest arise. Bitcoin has become relatively centralized and those who hold and transact the currency are not the ones who decide its fate. This is an inherently flawed system.
One project that truly shines is Decred- a lesser-known cryptocurrency developed from the original group of overarching founders of Bitcoin. Like Bitcoin, its creator is unknown and the coin was not distributed via an ICO. Instead, developers paid for 4% of the supply while another 4% was dealt to those who were able to solve complex puzzles via airdrop.
Decred presents a proof of stake/proof of work hybrid form of governance. In this format, nodes stake coins and validate blocks, giving the stakers of the currency part of the block reward as pay for their work. This system allows the actual holders of the currency to decide the direction of the network because miner’s blocks cannot be confirmed without stakers approval. This system is not a democracy- each individual staker gets voting power based off of how much skin they have in the game.
The block reward of Decred is set up so that 60% goes to Proof of Work miners for creating blocks, 30% goes to Proof of Stake miners for validating the blocks, and 10% goes to development for future improvements. As stakers get a portion of the Block Reward simply for staking their currency, staking coins can be a form of passive income for holders. The 10% development reward goes directly to the Decred Autonomous Organization. When a member of the community has an idea for an improvement to the network, they stake a fee to have his idea presented to the community on a Reddit-like forum called Politeia. All proposals, comments, and votes and are time stamped on the blockchain to ensure transparency. Additionally, any censorship is public and a dialogue can always be publicly opened. This stops shadow banning and supports freedom of information and ideas. If members of the community vote, and decide to develop, they also vote to decide where to allocate every single cent. Through the proposal system, anything can be proposed. If members of the community feel that developers are not performing to standards, they can vote to replace them. If members of the community think a certain initiative should be taken to change the currency, for example- privacy, it is proposed and voted on with history permanently encoded and time stamped onto the Blockchain.
Once the new proposal for the network, is completed, miners and nodes receive a code base with the old and new code. Miners run the version of it that they prefer, signaling their vote. If 75% percent of the miners run the new code and have their blocks confirmed by stakers, the network uses smart contracts to automatically fork and begins to only accept transactions following the rules of the new protocol.
In effect, holders are not only investing, but are also the key role players in the organization. It is stakeholder’s final decision to decide which protocol the network should follow and that for transactions to be confirmed. Under the Howey test, it is unlikely that Decred will be considered a security. There is no investment contract and stakeholders are receiving reward for their work, not that of others.
Additionally, the way in which tokens where distributed gave 4% to developers as reward for their work, and 4% to members of the community who worked to solve puzzles which granted access to an airdrop of Decred. Fair distribution from the beginning makes it far more likely that this project will be a success in the long term. This coin is better suited to fight ASICs and centralization and is far more autonomous than Bitcoin because developers don’t have to accept donations creating conflicts of interest. Developers and funding answers only to voting.
Like Bitcoin, Decred plans to only have 21,000,000 tokens and no Government exists to print more Decred. However, non-traditional inflation in the form of tail emissions after the 21 millionth block is something that can be voted on by the community if they feel it is necessary. Decred maneuverability to overcome and evolve along sound, calculated development makes it primed to be another catalyst in the dismantling of central blanks worldwide.
Though money remains the most immediately rewarding and possible undertaking of Decentralized Autonomous Organizations, many more promising possibilities exist. One example that springs to mind is a decentralized versions of Uber or Airbnb with, service and user being directly connected without the transfer of data, or a portion of the price transferred to a “trusted” third party. The holy grail of DAO’s is revolutionizing social media to a truly open platform that allows open communication and expression without censorship, similar to Decreds Politeia. All of this must be done without violating the privacy of its users and manipulating their brains with dopamine shots from likes, shares and comments from conforming to whatever particular status quo is beneficial politically, economically or socially to the third party running the algorithm. The Decentralized Autonomous revolution is not just about regaining control of our money or retaining our privacy, it is about returning to humans that think with the brains they are born with instead of fed.
Central planning behind the world's most important organizations have led us down a disastrous path that will only lead to worse. Humanity has been given an opportunity to radically transform our institutions by harnessing the powers of technologies such as DAOs. The consequences of continuing down a path of irresponsible inflation and poorly disguised central planning is dire. Time after time, this has proven to be a recipe for authoritarian regimes and destroyed economies. Citizens of the United States are happy to look at the horrors of the situation of others and criticize the path they have taken to get there, when in reality, they are on an eerily similar path. Though we at the very beginning of experiments with decentralized autonomous organizations and many of their ICO’s are useless, there is reason to be cautiously optimistic about their future. Change is on the way and the revolution will bring, at the very least, competition to the highly bureaucratic, corrupt and antiquated legacy systems of the world.
ALLISON, J. A. (2018). FINANCIAL CRISIS AND THE FREE MARKET CURE: Why pure capitalism is the world economys only hope.
CoinDesk. (2018). Understanding The DAO Attack - CoinDesk. [online] Available at: https://www.coindesk.com/understanding\-dao\-hack\-journalists/ [Accessed 2018].
John Allison, Wake Forest University, BBC interview
Levine, M. (17 May 2016). "Blockchain Company Wants to Reinvent Companies". Bloomberg View: Wall Street. Bloomberg News.
Nakamoto, Satoshi. N.p.. Web. 1 Nov 2008
Rolnick, A., & Weber, W. (1983). New Evidence on the Free Banking Era. The American Economic Review, 73(5), 1080-1091. Retrieved from http://www.jstor.org/stable/181467*3*
Rogoff, K. (2017, June). Dealing with Monetary Paralysis at the Zero Bound. Retrieved from https://www.aeaweb.org/articles?id=10.1257/jep.31.3.47
Professor Finds $21 Trillion In Unauthorized Government Spending. (n.d.). Retrieved from https://www.gaia.com/lp/content/21\-trillion\-missing\-us\-budget/
Wenqing Chen, Jianzhong Zhou, Hongbin Wei, "Compensatory Controller Based on Artificial Immune system", Mechatronics and Automation Proceedings of the 2006 IEEE International Conference on, pp. 1608-1613, 2006.
Wright, A., & Filippi, P. D. (2015). Decentralized Blockchain Technology and the Rise of Lex Cryptographia. SSRN Electronic Journal. doi:10.2139/ssrn.2580664
submitted by Tangledinblockchain to Jobs4Bitcoins [link] [comments]

PoS Potentially 1000% More Secure Than PoW; Ver: Bitcoin Not Being Allowed To Scale In A TimelyManner

Because someone recently brought it up again, I am posting this here for your own research purposes. This is about PoS, why it is more secure and why Bitcoin cant scale because it is not allowed to fork for ideological reasons
1 Maginot line attack
Vitalik calculated how secure Bitcoin is when you take away the mining rewards which will happen eventually. It would cost approx. between 2-4 million USD to perform a so called “Maginot line” attack - source: https://blog.ethereum.org/2016/07/27/inflation-transaction-fees-cryptocurrency-monetary-policy/
He then outlined why PoS is so much more secure and was even confident enough to put a number on attacking a PoS blockchain:
If BTC were to switch to PoS it would cost 20-100 million USD to attack Bitcoin
I think people really should learn how important forks are to the survival of a blockchain. In fact, Bitcoin has forked and even went out of sync in 2013 (just like Ethereum did in 2016 (geth/parity out of sync)) - Source: https://en.wikipedia.org/wiki/History_of_bitcoin
Now let us take a look at why Bitcoin is dying because it is no longer allowed to fork:
“Companies like Coinbase, who used to be staunchly Bitcoin only, are now integrating altcoins as a direct result of Bitcoin not being allowed to scale in a timely manner,” Ver told CoinJournal
Ver goes on:
Sadly, they [Bitcoin Core devs] don’t realize that the economic code underlying bitcoin is just as important to its success as the software code.
2 The risks of not forking:
3 Bitcoin Unlimited takes off - first indicator that a fork is happening:
4 Why a Bitcoin fork cant work:
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[Table] IAmA: I am Bryan Caplan, economist and professor at George Mason University and advocate of free immigration and free trade. AMA!

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Date: 2014-02-05
Link to submission (Has self-text)
Questions Answers
What would happen if we began trading with Cuba again? They'd quickly get a lot richer, and we'd get some very nice vacations. In the longer run, the chance that Communism in Cuba would collapse or collapse into mere rhetoric is high.
Would you endorse something like a BIG? As a replacement for the status quo, maybe. As an addition, no.
Why do you think the idea is so appealing to both libertarians and socialists? Should proponents in each group be worried that the idea appeals to their ideological opponents? Libertarians like it because they think it will be a replacement. Socialists like it because they think it will be an addition.
I'm a regular reader of Econlog and love watching your debates. Myth of the Rational Voter influenced me tremendously. I've been waiting patiently for your magnum opus that will put you in the realm of Rothbard and Friedman regarding anarcho capitalist literature (no pressure). David Friedman is working on his 3rd edition of Machinery, and you're busy writing about having kids. What gives? ;) What is your position on the legitimacy of IP laws? Are 'digital copies of songs' or 'general ideas for software' or 'specifications for a toaster with a window', etc. property? For the typical left-anarchist, I'd just start with, "Who will take out the garbage?" Or more generally, "What about people who don't want to go along with the collective?"
I see no problem with contracts that forbid sharing. Laws against independent discoverers do seem wrong, though.
Bryan, What do you think about the viability of Bitcoin as money? If Bitcoin, or some crypto-currency, gets widely adopted as money what do you see as the most important economic ramifications? It's done 10x better than I expected, but I still don't expect it to be more than a niche financial instrument. It's long been noted that people around the world continue using their national currencies even in the face of 20 or 30% inflation because national currencies are more convenient and focal. Also, I expect regulators to crack down if Bitcoin becomes much of a threat.
But hopefully I'm wrong!
Economists' consensus estimate is that open borders would roughly double world GDP, enough to virtually eliminate global poverty (Clemens 2011). What I can't understand is indifference to the mind-boggling potential benefits of immigration. The knowledge that we're sitting on an ocean of talent should haunt great minds day and night. They should pace around their offices telling themselves, "There's got to be a way to unlock these wasted trillions of dollars of human potential. There's just got to be a way." My question is: Are there other libertarian policies that would result in similarly-massive benefits as open borders if implemented? If so, what are they? After open borders, the biggest policy change would be for Third World countries to fully open their doors to international investment. Work by van Reenen and many others shows that multinational corps in the 3rd World are vastly better-run than local firms. If multinationals could freely compete, they would quickly raise productivity. Back of the envelope calculate is that if all firms on earth were managed at multinational levels, global GDP would go up by 25-50%. Most of the benefit, of course, would be in the Third World.
Guess you should have asked "and if so, why?"!! ;) When countries produce cheap stuff to sell us, it is good for us. And rich countries are very rarely militarily aggressive, at least once they've been rich for a full generation.
rich countries are very rarely militarily aggressive. Is the US a counterexample? Not really. Most dominant powers throughout history have been far more aggressive. The U.S. today is scared to lose a few thousand soldiers. Why? Because rich people value their livess. Thankfully!
Hi Dr. Caplan. I think that many of your EconLog entries are very insightful. If you had to pick your favorite ones (say, top 5), which ones would they be? "The Magic of Education," "Tough Luck," "The Common-Sense Case for Pacifism," "The Tiger Mother versus Cost-Benefit Analysis," and "Tell Me the Difference Between Jim Crow and Immigration Restrictions."
Hey Bryan, great admirer of yours! You once wrote me back on an email, which meant a lot. Thanks. Cambodia. I'd love to see a great capitalist success overshadow the Communist horrors of the Killing Fields. Vegetarianism. He's sold, I'm not. I think I'd ask Noam to spell out what qualifies as "private tyranny." I think he tends to lump together everything from the conquistadors' mass murder to WalMart selling cheap stuff.
Which under-developed country would you like to see a charter city begin? - What do you Michael Huemer quarrel over? - How would you rebuttal Noam Chomsky’s statement on libertarianism forming unaccountable private tyranny?
Dr. Caplan - what do you think of the usual way welfare economics is taught? That is, do you think that Consumer and Producer surplus calculations for various regulations and policies are legitimate tools to compare policies? Do they rely on interpersonal utility comparisons, or can they successfully aggregate benefits across people? Welfare economics is usually talk very poorly: constant equivocation between the Pareto standard and the cost-benefit (or Kaldor-Hicks) standards.
I see nothing wrong with looking at Consumer or Producer surplus, as long as you realize that this is just one of many metrics.
I have no problem with doing interpersonal welfare comparisons. I compare people's well-being every day. And if you can't compare one person's happiness to another's, why can you compare your own happiness today to your own happiness yesterday?
Many libertarians use welfare economics to try to short-circuit utilitarianism. I'd rather just criticize utilitarianism.
Does the signaling model of education ever depress you while you're prepping your classes? Not at all. Students' apathy is a little depressing, but I always focus on the students who are happy to be in class.
What books have influenced you and your career? Atlas Shrugged, For a New Liberty, Economic Sophisms, The Armchair Economist, The Bell Curve, The Myth of Democratic Failure, The Nurture Assumption, and Modern Times. Mike Huemer's been a massive influence on me, but mostly his articles, especially "Moral Objectivism."
Do you feel that the rise of China is beneficial to the interests of the United States? YES!
With the drought in Southern California is it possible the state is over populated? Meaning we have to halt immigration into the south west? No. Just raise the price of water!
Hey Bryan. Suppose your robust, non-reductive form of moral realism turned out to be false. What do you think is next most plausible metaethical position? Mackie's view: That moral statements are genuine assertions, but they're all false because there are no moral facts.
But other topics - wasteful signaling in education, that good parenting takes less time than widely believed - can have effects on the margin. But open immigration won't happen until the median voter is okay with it, i.e. never, so working on it seems less fruitful than other topics. Open borders seems like one of the many nice things the world can't have, because it'll never be politically feasible. Do you think open immigration might actually happen, or is your work on the topic just driven by an intellectual impulse to defend a good, under-appreciated policy? Open borders will come eventually - but only after the gains become small because national incomes aren't too far apart. Writing about parenting is nice because I really do see concrete improvements in the world. Several people tell me their children exist because I convinced them. I can't help think, "My words create LIFE!" For any public public issue - immigration, education, minimum wage, whatever, I see the odds of substantially changing policy as miniscule. But I think there's a small chance I ever-so-slightly tip policy in a better direction. Not satisfying, but it's all I've got.
Anyway, my question for you is this: Of the many issues brought up against immigration, you have given convincing counterarguments indicating that they, if not wrong, can at least be more humanely addressed than simply closing the border. One argument I hear often, but have not (to date) heard your thoughts on, is that immigrants commit more crime and thus should be kept out to keep crime from spiraling out of control. Is this true, and if it is, is there a more humane way to address it than simply keeping people out? PS: Any idea when your book on (or should I say against) education will be out? Standard social science is that immigrants have LOWER crime rates than natives. Link to econlog.econlib.org There are some concerns about 2nd-generation Hispanic crime, but even that is only modestly above the native rate (by 20-40% or so). Bonding. You have to post some money to immigrate, to ensure that you can compensate any victims if you happen to commit a crime. Vouching. Only letting in people if someone here will vouch for their good character (and make themselves liable for your bad behavior, if any).
How do you write so much?? Do you have a regular routine in addition to all the work you do for George Mason? I save a lot of time by blogging stuff I'm already thinking about or talking about at lunch.
If given the chance, is there anything you'd do differently if you could re-do the immigration IQ2 debate you were a part of last year? Yes. I would have asked the host to pre-emptively admonish the audience NOT to vote yes unless they favor unlimited immigration from low-income countries like Haiti. That would have sharply depressed our initial Yes vote, allowing us to beat the point spread.
Also, in all honesty, I should have requested a different partner because Vivek didn't actually agree with the resolution. I don't blame him for losing, but it was distressing.
Do you believe that philosophy plays an important role in economics? For instance, you have promoted Michael Huemer's The Problem of Political Authority. Do the ethical arguments put forward by Huemer have any bearing on your work in or your views regarding economics? Every economist who gives policy advise is implicitly relying on philosophy. Unfortunately, most economists want to rely on philosophy without really reflecting on it, so they're usually just crude utilitarians (with a heavy bias toward the status quo and democratic fundamentalism).
For my own part, I start with a strong presumption of liberty, but admit that we should override this presumption when the benefits of violating liberty heavily outweigh the costs. (See Link to econlog.econlib.org So economics ends up being a vital servant of political philosophy, but nothing more.
How do you reconcile anarcho-capitalism with the fact that successful market outcomes are almost always proceeded by a successful government enforcement of property rights? But why does successful government enforcement come first? Largely because government is a monopoly. Whether it does a good or a bad job, it still bans competition. So the only places that have solid property rights have government-enforced rights.
So if it were possible to preserve that information and recreate a brain (whether made of cells as we know them, or some other substrate), wouldn't that preserve you? Similar to when you're unconscious, and some of the matter in your brain changes, but you're still you when you wake up? An exact replica would be just that - a replica. I'd love to meet him, but he wouldn't be me.
Dr. Caplan, in MotRV, there were parts that came across as very critical of public choice. Did I misunderstand, or is there even a dichotomy between the questions of whether voters get what they want, or politicians and regulators get what they want? I am very critical. Many public choice economists just aren't curious about public opinion. They'd rather just assume that voters want what they'd advise, then blame special interests for defying the will of the people. Not good science.
Hi Bryan. I listened to a lecture you gave at ISFLC last year and had a great time. I've referenced many of your essays whenever I've found myself in a political discussion with someone. I wanted to ask you something unrelated to politics, though :) What are some of your favorite bands? At heart I'm a 18th & 19th-century German opera guy. Wagner's my #1, Bach's my #2. But by the normal definition of "bands," I'd say Bad Religion, Tsunami Bomb, tATu, P!nk, and No Doubt. I'm also a big fan of world music, especially the Rough Guide series.
Professor Caplan, do you feel that the libertarian movement's love affair with Austrian economics is doing a disservice to the goals it fights for? That is, that since the Austrian school is viewed with derision in mainstream circles, Libertarianism's other philosophical arguments are tainted by association? Maybe. But Austrianism also inspires a lot of enthusiasm from the base, so it's hard to say. My main argument against Austrianism is that it's false, not that it's bad publicity.
Big fan here! A personal question: from your experience, how to make the best of a phD? What are the most important skills developed in your phD that turn out to be essential? I'm doing a master in economics and planning for a phD.Thank you!!! Coursework is greatly overrated. Instead, focus on (a) finding research topics you're passionate about, and (b) meeting and impressing researchers who share your passion. Robin Hanson advises students to read to journals, then pick their favorite one or two topics. It's kind of like hanging out at the medical school, then marrying for love.
Stephen Earl Bennett and Jeffrey have critiqued your rational irrationality theory. They claim that in order for your theory to be more than just ignorance, you assume voters must know at some level that they are wrong. ...one cannot believe that a policy that one considers good on sociotropic grounds (and thus favors) is, in fact, sociotropically bad (such that one considers it to be an irrational “indulgence”). They accuse you of projecting your own irrationality on to voters. The critique is many pages and has many other criticisms. I find the criticism to be harsh and not very convincing. Have you responded to them? Not that I recall. But since writing MRV, I've discovered more psychological work that makes my story even more intuitive. E.g. here: Link to econlog.econlib.org
Hey Mr. Caplan, Do you think Israel should open their borders? Yes. But I wouldn't strongly object if they excluded people with violent criminal records or denied new-comers the vote. (Same goes for countries other than Israel, too).
Why did you decide to do an AMA during the Ham/Nye creationism debate when everyone's attention is on the insanity in Kentucky? Probable path: As country's incomes converse, free migration will gradually cease to seem like a big deal. See the EU. Once two country's per capita GDP's are in the 2:1 zone, opening borders lead to little permanent migration but a lot of convenience. That can and has been sold to voters.
OK, that isn't my question. My question is do you see any possible path to a world with open borders? If so, what path? Economically, this is a big let-down, because the biggest gains come when country's incomes are highly UNequal. But late is better than never.
How can free trade be beneficial to a countries job market? Free trade has historically fucked the Canadian job market. How is it different in the US? Canadian unemployment has been low for a long time. It's been rich for a long time. Why is it so clear that free trade has been anything but good for Canada?
What arguments would you give against cynically manipulating the political system rather than trying to reform or undermine it? In many cases, I think cynical manipulation is moral and wise. If you're filling out your income tax, I'd advise you to just game the system to pay as little as possible.
But when cynical manipulation involves treating other people unjustly, I advise against it. The argument? Nothing better than "You shouldn't act unjustly, this is unjust, so don't do it."
Do you have an idea what portion of economists are friendly towards immigration? (even if not total open borders) whats a good source for it? And who's the anti George Borjas? (besides you) The vast majority of economists favor liberalization of immigration. See e.g. MRV for some numbers. Michael Clemens is the anti Borjas: Link to www.cgdev.org
Will you be at the ISFLC this year? Do you believe Bitcoin will stabilize and become a legitimate currency anytime soon? While it has the perceived value necessary of a currency, it's fluctuations prevent it from storing value, something necessary of a unit of exchange. I will be at ISFLC on Sat. On Bitcoin, see prior question.
Is there still a viable argument for the minimum wage? To the best of my understand, Card and Kreuger has been thoroughly refuted by Neumark and Wascher; in fact, practically every one of the major papers that purports to show a zero or small positive effect of a higher min. wage has been replicated and refued by Neumark and Wascher. There is the work by Dube, Lester, and Reich. What do you think of that? I have heard it is relatively poor and easily refued. What do you think of the allegations of publication bias favoring "interesting" and consequently anti-status quo, pro-minimum wage papers? Link to econlog.econlib.org
What advice would you give to parents, especially new ones? For new parents: Ferberize your baby! Don't turn yourself into a zombie for two years because you won't let your baby cry for ten minutes. Also, safety-proof your home to the point where you don't have to watch your baby constantly.
General advice: Relax and ignore peer pressure.
Was the American Civil War mostly about slavery? Yes, but in a weird way. Moderate Southerners correctly believed that slavery was safer in the Union that out. Southern secessionists, in contrast, falsely believe that Republicans had a serious intention to end slavery. In fact, Republicans were only willing to pay a modest cost to end slavery in a timely manner. (Lincoln even offered to support an amendment protecting slavery in perpetuity). By the time the South fell, the cost of ending slavery was temporarily very low, so Republicans seized the chance.
Hi Bryan, given your principled opposition to war, I was wondering if you consider the Falklands war to be a justified one? No. I assume some innocent people were killed (or at least recklessly endangered) by the British response, and I don't see why British rule over the Falklands is vastly better than Argentine rule.
Thanks for joining us Dr. Caplan, great to see a fellow libertarian on here. You're an inspiration to us all. As a person with a loved family member who has high functioning Aspergers, I was curious where you identified on the autism spectrum? I asked all my FB friends. About half say I'm not autistic at all, and half say I'm moderate. I'd split the difference.
Are you a vegan? Have you written or read anything persuasive either way on the subject of speciesism or animal rights? No, I'm not a vegan. Veganism seems to imply that even stepping on bugs is wrong, and that seems crazy to me. Claims about which animals do/don't feel pain mostly strike me as wishful thinking.
Why aren’t you the world leading economist yet? Part of the answer is that I'm not smart or hard-working enough. But the bigger reason is that the hoops you have to jump through to be the world's leading economist repel me. Most work in top journals just bores me. And even the good work usually makes me say, "I'm glad someone other than me is doing this research."
Why are open borders helpful for high wage natives? High-wage natives have already borne the brunt of a lot of foreign competition. But truly open borders would bring in a lot of lower-skilled workers who produce the goods that high-wage natives consume.
What is your opinion on the calculation problem and the socialist calculation debate? Do large organizations become less effective at decision making because they don’t have market prices to provide needed information? Pure socialist economies can't calculate. But I doubt this has been a big reason why socialist economies have historically done poorly. The main problem they've had is collectivization-spurred famines, which are all about incentives. See Link to econfaculty.gmu.edu at the subsequent exchanges in Critical Review.
What is the best practical (individual level, not public policy) way to promote pro-natalism? Aside from buying people your book, of course. (Hail from /natalism!) Be the change you want to see in the world. Have fun with your kids, treat them with kindness and respect, and don't haze prospective parents with lurid tales of doom and gloom.
You've written that you're a moral intuitionist. Given that people have different intuitions, doesn't this collapse into relativism? If you have libertarian intuitions and someone else doesn't, what can you say to convince him if he bites the bullet and says that beating people up is acceptable if it's done to (for example) reduce inequality? People have different intuitions about non-moral topics, too. E.g. the age of the universe. Does that mean there is no fact of the matter about how old the universe really is?
On any issue, moral or non-moral, the right response to conflicting intuitions is to repeatedly back up to less controversial questions until you find some common ground.
Do you have a written version of the arguments from your Rethinking the Night Watchman State lecture? More or less: Link to econfaculty.gmu.edu
Why do you suppose the fine folks at An Anarchist FAQ have made such a concerted effort to rebut your Anarchist Theory FAQ? Do you think there will ever be a ceasefire among left- and right-anarchists? I ceasefired a long time ago. Arguments between radically different viewpoints are usually fruitless. I'd rather talk to moderates than my polar opposites.
Given that we do not live in a pure service economy, do you think the conclusions from "Distributive Justice in A Pure Service Economy" are applicable to distributive justice in our world? Many moral theories can lead to gruesome conclusions in fantastical settings, is that a good reason to reject them? Not exactly "applicable." But definitely illustrative. The point of the hypothetical is to show that the taxation=slavery view is more plausible than most people want to admit.
Do you have plans for adding to the Museum of Communism? Probably not. At this stage in my career, I could imagine writing a book on Communism. But a web museum is more of a grad student project.
If a worthy student wanted to take up the project, I'd be happy to discuss it.
Relating to Selfish Reasons to Have More Kids, what is your view on peer effects? Peer effects are probably over-rated, too. Sacerdote's Korean adoption study found, for example, that average income in adoptee's childhood zip code had little effect on their outcomes, too.
What have you changed your mind about recently? Most recently, I've changed my mind about the probable consequences of fully legalizing IQ tests. I used to think the law was a huge barrier to strong pent-up demand. Now I think the law is mostly a paper tiger. Few firms want to hire on IQ, despite its demonstrable advantages. Even countries where IQ tests are fully legal barely use them for hiring.
What RPG games would you recommend to someone without any previous exposure to RPG games? What's the best group dynamic for a beginner to start? I've tempted to say Pandemonium. It's very rules light, and has a great mechanic - past lives - for getting people to truly role-play.
I'm also of course a fan of my True20 House Rules. I can teach the rules to newbies in 10 minutes, yet they have high re-play value. Link to econfaculty.gmu.edu
Do you think investing in private companies that provide services that are traditionally provided by government is an effective strategy for bringing about anarcho-capitalism? No, but it is an effective strategy for moving the world in an anarcho-capitalist direction.
Are there any contemporary thinkers that you admire? It doesn't just have to be in economics. Mike Huemer, above all. But absolutely. The world is full of admirable thinkers. Some non-libertarian favs: Bill Dickens, Daniel Kahneman, Josh Barro.
I see you enjoy the book "The Myth of Democratic Failure".Why was it so influential to you? Before I read it, I was largely an orthodox Public Choice guy. Wittman convinced me that orthodox Public Choice greatly overstated its claims - and led me to search out a lot of relevant empirics, too.
Vivek posted on your blog that he would agree to debate you on immigration. Is this debate going to happen? News to me.
You know what they say. "Diversity is good, diversity is a strength, diversity is what makes the middle east so peaceful!" The Middle East really could use a lot more diversity. One religion gives you totalitarianism. Two gives you civil strife. A hundred gives you peace. (With apologies to Voltaire).
Oh god. He better be at ISFLC! That'd be rad. See you there. I'm bringing my 11-year-old sons.
I'd love to hear a bit about your approach to teaching graduate econ. In particular, I'm interested in your thoughts on the proper role of math in econ grad programs. My first rule: I only teach math I plan to test. Otherwise, students suffer for no reason.
Big fan of your work in general, keep it up. Overall, I try to expose grad students to standard mainstream stuff, give them some perspective on why it's overrated, then move to the research frontier.
Last updated: 2014-02-08 21:39 UTC
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