Collective action problems:
We are social animals that rely heavily on cues from others in order to make decisions.
As a result we are at the mercy of a peculiar dilemma: collective action problems. Collective action problems are situations in which everyone would be better off acting in a certain way, but they do not due to incentives born by the collective.
Jonathan Haidt recently introduced me to this sociological concept when describing why children excessively engage in social media. Overindulgence is not in any individual child’s personal interest but because all of their peers are connected via these networks, stepping away is costly.
Collective action problems can arise in any group but logically, the less reasonable and wise the collective, the more prevalent they become.
A couple of current examples:
- Individuals sacrificing their health by overexposing themselves to stress — in order to keep up with an increasingly frantic economy.
- A shortage of skilled workers in a society that celebrates higher education as as status symbol and insurance policy.
- Increasingly indebted individuals due to societal pressure to maintain status through consumption
#nostr recently feels like it has reached escape velocity
Welcome! Please set up your Lightning Wallet so that you can receive zaps!
We need more non #Bitcoin, non #nostr content!
The franticness of coffee culture #coffeechain:
Ever wondered why, out of all the plants in the world, a select few play such a dominant and outsized role in our culture? The best example I can think of is coffee.
Harvard professor Michael Pollan, in his 2020 book, goes as far as saying that not only is coffee a phenomenon of our culture, but that it is responsible for creating it.
It’s an extraordinary hypothesis but one which just might be true. Anyone who drinks coffee for the first time after a while will notice all the good and ill of our society arise in the microcosm of his psyche. Productivity and concentration are amplified, but so are neuroticism and aggression.
In fact, anyone who has tried to abstain from caffeine for an extended period of time, will find that continuing to “function” at the frantic pace of our society is a non-trivial task.
So in a way, if we want to reduce our addiction to coffee, we may have to change our culture to accommodate those who are trying to live at a slower pace.
In other words FUD is going to turn from a reactive phenomenon driven by the ignorant, to a proactive tool for price suppression
nostr:note1nssn775zpee337yfkze4vtm4yguxlhmpvfhfn5w9r0770980ag7qux4z94
When #Bitcoin hits 100k, the cat is out of the bag and everyone is going to “get it”.
With that we’re going to see a phase shift in which the promotion of Bitcoin is going to become secondary and the artificial suppression of the price by all kinds of actors is going to become the dominant dynamic.
The basic hypothesis between the sovereign individual is NOT that property rights are fundamental, it’s that incentives matter. And that these incentives are about to shift due to the rise of technology. Not sure what’s flawed about this argument.
To think that Bitcoin is inevitable is Fiat hubris
The emperor has no clothes:
When it comes to financial markets, the emperor has no clothes.
We’ve grown accustomed to spectacular valuations for companies both in public and in private markets with questionable returns and long term business model.
Every time the tide of liquidity comes in due to a debt crisis or inflation, investors briefly return to sobriety and value these companies closer to what they are worth.
This is followed by an inevitable flood of liquidity from central banks to prop up markets and the hysteria is reinstated.
This cycle is going to continue and accelerate as inflation becomes a greater concern due to public and private debt.
When the bubble bursts once and for all, there will be no recompense.
So when betting on these types of companies — you know what they are — one should avoid trying to make up fantasies about their long term merit and instead consider how many more times the government can flood the market with liquidity before it will burst at the seams.
Pain is widely misunderstood or if it’s understood, the understanding is ignored.
Whenever my daughter gets vaccinated, the doctor wants to give her sugar water to distract her from the pain of the needle. Apparently, this is something that doctors now do.
This is based on a false understanding of pain. Pain is not something to be avoided, it’s a signal. A signal that something is wrong. By numbing or distracting from the pain, we’re desensitizing our children and habituating them to a disfunctional habit that we later try painstakingly to disengage adults from.
In fact our various recreational drugs, when used habitually all serve the purpose of numbing physical or psychological pain. And once such a habit has been built over years, it is very hard to drop.
Let me pre-empt two concerns with this view:
Chronic pain: If pain is chronic, there may be value in numbing it but this should not be done mindlessly and without first testing whether there is a way to truly address the root causes. The reason is that once you start numbing the pain, you may raise the bar for the identification and resolution of its causes.
Overwhelming pain: Of course I would not want to expose my daughter or anyone to pain that is so overwhelming that it causes trauma and further issues down the road. The definition here is subjective but I don’t think a needle sting belongs in this category.
Lastly, there is an inverse view of pain that I want to mention:
One meditation practice is to go into pain and to experience it fully instead of shunning it. This is a difficult but powerful practice because it allows us to realize that the pain is separate from its observer.
Loosening our identification with pain is the only way to live from a more powerful relationship with it and to avoid the pitfalls of destructive coping mechanisms.
Ludwig van Mises and the UFC:
The times they are a-changin’.
In 2020, Russel Okung, Super Bowl Champion and then NFL offensive tackle of the Carolina Panthers, made some headlines by deciding to receive half of his salary in Bitcoin. At the time he started the trend #paymeinbitcoin which lost momentum in the wake of the FTX scandal and the ensuing crypto winter.
This week something more extraordinary happened: After winning his fight in the lightweight division of the UFC, Brazilian MMA fighter Renato Moicano announced: “I love America, I love the constitution […]. And let me tell you something: If you love your country, read Ludwig van Mises’ 6 lessons of Austrian Economics… Motherfuckers!”
https://www.youtube.com/shorts/sEln2ehGEEg?si=SNjK0N1gZTVI_lki
The last word rounds off a perfectly legitimate philosophical call-to-action from an unlikely source.
Ludwig van Mises was one of the most prominent proponents of the Austrian School of Economics and mentor of nobel laureate Friedrich Hayek. The Austrian School emphasizes the spontaneous organizing power of the price mechanism, the importance of individual preferences and choices, and the limitations of government intervention.
For all of these reasons it remains relevant today. However, I would argue the reason it is now finding its way into the mainstream in as extraordinary a way as the post-fight incantations of an MMA fighter, is for its view on inflation.
Inflation is and will continue to be a defining problem of our time.
And unlike our politicians, Austrian economists subscribe to the strict view that inflation is not a magical and baffling phenomenon but that it is always a result of monetary expansion.
Or in Friedrich Hayek’s more blunt words:
"I do not think it is an exaggeration to say history is largely a history of inflation, usually inflation engineered by governments for the gain of governments"
For these reasons, Bitcoin proponents have found a natural home in the theory of Austrian economics. In fact they argue that Hayek prophesied the rise and importance of Bitcoin as early as 1984.
Self defeating assumptions:
It’s a habit of our culture to assume that when an aspect of our health has deteriorated, this must be a result of genetics or irreversible damage.
This is lazy and self-defeating. Of course, genetics are an important component of our physical health. But WHEN our genes may trigger a physical affliction is typically a function of choices we are making in our day-to-day life.
Of course some of the damage may be irreversible. But some of it may be reversed by taking responsibility and changing one’s lifestyle.
This dynamic is particularly notable where a large fraction of the population suffers from a disease and is reaching for quick fixes.
1 in 10 Americans now have Type 2 Diabetes. Even with this condition, you still commonly read that it is strongly tied to family history and genetics. Yet we all stem from about 300,000 generations of humans before us and I find it hard to believe that many of them dealt with Type 2 Diabetes as early in their lives as we do. We know that this condition is largely reversible and yet drugs seem to be the treatment of choice.
Nearly 30% of Americans are myopic. Did our ancestors really run around and constantly bump into trees? Or is there something about our choices that is contributing to this huge percentage? We may not be able to change our lifestyle completely but what can we change?
About 10% of the US population have a food allergy. This number has tripled since 1997. And yet, everyone I meet that has a food allergy seems to just take it for granted and show little interest in its underlying causes and potential reversibility.
There are many more examples. Every time I run into one of them my initial reaction is bewilderment followed by deep curiosity in what is actually. going. on.
Thank you for the likes and resposts!
If you'd like to test and train my humility, find me on chess.com:
https://www.chess.com/member/arcticbonobo
nostr:note10kv0dt5q2wc2tw89wwlgy55yhqt5cxk95u3g0x8tehu92u9lz92stve4np
nostr:npub10vlhsqm4qar0g42p8g3plqyktmktd8hnprew45w638xzezgja95qapsp42 ‘s newsletter is one of the best in the space
nostr:note1wxyr4ma99tgp8jg6n4n2azcwuqra6gqnp0skt824tvcq0rvzms6q6226uq
Chess and humility:
There are few games to train in humility like chess.
With most other games you can blame luck or a plethora of other external factors on your inadequacy.
With chess, there is just you and complete information. There is no component of luck and there are no unknowns. In other words, there is little room for excuses.
Blundered a piece? Clearly not your best decision. Gave up a winning position? Hubris was your downfall. Ran out of time? You'll need to speed up your decision making.
As a result, those with a fixed mindset hate chess. If you don’t truly believe you can improve, you certainly don’t want to be shown the evidence of your ignorance on a regular basis.
However, if you have a growth mindset, there is no greater teacher because there is no game that exhibits your opportunities for growth as clearly and frankly as chess.
Great thanks for pointing this out! didn’t even know Rick Rubin has a podcast
Agree with your pragmatic view. But I disagree with the premise of the original post: The Cantillon effect is not based on wealth inequality, it’s based on unequal access to newly printed money.