Thoughts on rationalism and the rationalist community from a skeptical perspective. The author rejects rationality in the sense that he believes it isn't a logically coherent concept, that the larger rationalism community is insufficiently critical of it's beliefs and that ELIEZER YUDKOWSKY IS NOT THE TRUE CALIF.
Regulatory Arbitrage and Governmental Support For Cryptocurrency Alternatives
So I’ve been thinking a bit about cryptocurrencies lately and I don’t think the future is very promising for Bitcoin, Ethereum and other pure cryptocurrencies. I’ve always been a big fan of these currencies (though don’t get me started on the idiocy of companies using blockchain everywhere) but I think they are doomed in the not to distant future. However, this is only because I am convinced it won’t be long before we have the option to realize all (or at least most of) the major benefits of cryptocurrencies without the kludge and overhead of the blockchain, the dangerous price volatility and the unreliability/general sleaziness of many cryptocurrency exchanges.
Now lots of cryptocurrency value is currently the result of pure speculative interest. People are making a big bet that Bitcoin or Ethereum will take off and surge in value. While I highly recommend this Last Week Tonight episode mocking the HODL gang and other idiocy in cryptocurrency investing it’s not a fundamentally unreasonable bet. Just an extremely high risk bet that eventually non-speculators1 will buy out the speculators at well above (enough balance the risk) the current market price. It’s a bet that the currency will prove to be (at least) so useful/desirable that normal economic actors will see fit to hold far more value in the cryptocurrency than it’s current market capitalization of $151 billion BTC/$63 billion ETH. Given that $5 trillion is being held in physical currency and $60 trillion is held in bank accounts if you think there is a decent chance that Bitcoin or Ethereum will be adopted as the global currency then it’s valuation might not be absurd.
However, let’s ask what it is that cryptocurrencies offer the non-speculator. It seems to me there are several attributes that make them desirable.
Cryptocurrencies offer finality in payments, e.g., unlike credit cards you don’t need to worry the payment you received will be cancelled by the payor or reversed as fraudulent.
Cryptocurrencies let you pay people who wouldn’t (or can’t be bothered) be get paypal merchant accounts or US bank accounts.
Relative freedom from government monitoring.
Smart contracts. I can enter into cryptocurrency contracts that are enforced regardless of what a court thinks and even if local law enforcement is non-existent.
Cryptocurrency schemes don’t require any kind of trust in government currency or a government system.
Frankly, 5 isn’t a serious consideration. It matters to a few people who want to show off their crypto-anarchists credentials but generally having a central bank behind one’s money is an advantage (stability etc..). So much so that other cryptocurrencies are trying to build in similar systems. If your concern is a hedge against inflation or governmental collapse you are better buying gold which a desperate government can’t try and attack (a combination legal and technical attack by a motivated government would seriously threaten any cryptocurrency). Besides, you can still use it if the internet fails.
But notice that, excepting 5, really all these advantages are really just avoidance of regulation. I don’t think there would be much demand for cryptocurrencies if it was legal to make a version of paypal where payments were completely final (even if they later turned out to be fraudulent), all records of transfers were immediately deleted, no one was turned away (marijuana growers, people in countries with sanctions and even conmen all got to keep their accounts) and the government couldn’t easily monitor accounts or determine whose account was whose.
Now some of this is just about enabling illegal activity (which also has value insofar as it lets individuals replace organized crime in the drug trade) however, strange as it might seem there is really substantial value in monetary exchanges with less protections against fraud and theft. In high-trust, relatively low value transactions in countries with strong legal systems such protections are a bonus but they make it virtually impossible to do make deals in low trust situations or when the seller can’t absorb a loss. For instance, as a tourist I couldn’t buy a high value good (say a found meteorite) from a villager I encounter because even if he could accept credit card payments he doesn’t have the means to contest a claim of fraud I might later make so, without cash, we can’t reach a mutually beneficial deal.
What puts current cryptocurrencies at risk is the fact that at any point any of the hundreds of sovereign governments on Earth could choose to offer an alternative digital payment system capturing most of these benefits. At any time Montenegro could sit down with Goldman-Sachs and some IT guys and launch Montenegro digital cash. Individuals from around the world could open up numbered accounts on the MontCash website and transfer money in or out of these accounts using credit cards or bank transfers. The MontCash app (or api) would then function exactly as paypal does today except that it would have numbered accounts (instead or as well as accounts in individual names), wouldn’t allow chargebacks or canceled transactions (absent a final court judgement) or require troublesome certifications to accept money at scale. In other words MontCash would just be a trusted bookkeeper maintaining a list of account balances.
Of course, diplomatic pressure would ensure that no government offered a completely untraceable totally anonymous system like this but for 99% of users it would be just as good (indeed better in some respects than Bitcoin’s publicly trackable transactions) if MontCash only released the accounts linked to certain payments, deposits etc.. only in response to a subpeona/warrant or for use in terrorism cases. While many governments might not particularly like the fact that accounts are simply numbered and can be used by whoever has the right credentials if it appears that real cryptocurrencies are gaining serious adoption (as necessary to vindicate their current valuation) then a system like MontCash would start to seem like an appealing alternative. After all, unlike Bitcoin, MontCash would still allow accounts to be seized with valid court orders, be more convenient to subpoena for transfers to/from given credit cards/bank accounts than the fluctuating legion of cryptocurrency exchanges and, most importantly, offer the carrot of secret counterterrorism access. After all, 99% of users wouldn’t care that much if the NSA/GCHQ etc.. got some degree of secret access to the financial data feed provided it wasn’t shared with tax collectors or drug dealers while the counterterrorism/intel benefits of having not only all transactions and accounts used to purchase or sell MontCash but also log details of where the app/api was used on what kind of device etc.. would be invaluable.
Even though it might not be universally loved the potential for massive profit by whichever country decides to give this a go is a very strong incentive. Not only could they collect a tiny percent of each transaction but they would earn huge amounts of interest on their total deposits. Also, they would have a compelling reason to allow numbered accounts not associated with any individual since they would get to keep all funds in such accounts when the owner losses their password (or cryptographic key or whatever). It’s hard to imagine that no country would take up this opportunity if they already see a true cryptocurrency gaining legitimacy. A system like MontCash would be far more attractive to most normal users as it could offer accounts denominated in various stable currencies (dollars, Euros etc..), greater user friendliness and more flexibility (you could potentially set daily transaction limits for your account, give up some degree of anonymity for password recovery options etc..) not to mention solving the long transaction times and high overhead costs (paid for in fees rewarded to miners) in cryptocurrencies.
In short, it’s hard to imagine that cryptocurrencies will win the day when for everyone but the hardcore technoanarchist their needs can be better met by a system that governments would see as less bad and can bring into being at any time.
It’s not possible to maintain a rate of return substantially outpacing global economic growth indefinitely and eventually even the most irrational speculators will realize the good times are over and either liquidate their investments to speculate elsewhere or store their value in a safe asset. If, at this point, there isn’t sufficient non-speculative investment in the cryptocurrency to support it’s price the price will crash as speculators race to sell. ↩
Do We Really Respect A Nation's Soverignty When We Decide How Their Laws Should Be Understood And Enforced?
I’m rarely one to agree with Trump and disagree with Tyler Cowen but I’m inclined to think we should eliminate the Foreign Corrupt Practices Act rather than merely implement the minor changes he suggests. At a gut level I find the idea that we are imposing our norms about how law, public office etc.. should work on other countries unpalatable and at a more cerebral level feel that we shouldn’t put people in prison or even fine companies without a compelling reason to think it serves some important social good. My mind could be changed by substantial evidence this law improves the welfare in other countries but there is no apriori reason to think it will reduce, rather than increase, corruption overseas (e.g. the game theoretic aspects to providing insurance to the bribe taker that the bribe giver can’t turn them in).
If the question was whether we should help overwhelmed countries who find their anti-corruption efforts foiled by American companies wealth and global nature that would be a different matter and I support assigning DOJ resources to assist worthy local corruption prosecutions. I’d even favor a law which allowed the foreign government to request prosecution by a US court for bribery actions taken by US companies when they felt their own courts weren’t capable of doing the job. However, this law doesn’t leave the question of prosecution and appropriate sanctions to the jurisdiction where the crime took place but substitutes our American sensibilities about the badness of bribery and even the role of laws regarding bribery for local understanding.
One might object that this law is only triggered when the practice at hand is illegal under local law. That’s true, but all laws don’t mean the same thing. Imagine the UK had a law which imposed massive fines or a 10 year penalty for any UK citizen living in the states who intentionally ‘evaded’ local tax laws. Now it’s true that in the States we too regard many types of tax fraud as a bid deal….but there is a societal acceptance (perhaps a bad one) that evading state sales tax by ordering products from out of state isn’t a big deal the way cheating on income tax might be and any US enforcement of such laws will reflect that understanding but UK enforcement of a hypothetical foreign tax evasion law would not. Similar points could be made about laws with harsh penalties for consuming illegal drugs in a foreign country….often, as with decriminalization, what the laws on a country’s books say and how the society there understands the system to work don’t always agree.
In short, respecting the sovereignty1 of other states requires letting them decide on the relation between their explicitly codified law and actual enforcement/social understanding and the framework for this law seems to coopt that understanding.
Also, it’s not even clear if the net effect of this law will be to reduce bribery and corruption abroad. If, as might be expected, in corrupt countries foreign companies tend to be less corrupt than the locals the net effect of such a law might be to favor local companies that face no deterrence from the US government. As the structure of the law punishes bribes paid by US companies or the corporations they control or hire but not bribes paid by customers or local companies engaged in arms length transactions it creates an incentive for the most corrupt locals to start businesses they wouldn’t have otherwise2. Indeed, the very fact that a socially accepted system of bribery imposes a barrier that keeps US firms out of the market may even make public corruption reforms unpopular for protectionist reasons.
Finally, one needs to ask what the game theoretic effect is of a law. A really effective way to clamp down on bribery is to turn people who have given bribes into witnesses against the official (e.g. by offering them immunity in this or another case or even a reward) and often the bribe taker will be in far more jeopardy than the bribe giver potentially putting them at jeopardy of blackmail. However, add the potential for charges by the US government which the local prosecutor can’t bargain away but are unlikely to be brought at all as long as no one local rats and you have a very nice game theoretic mechanism of ensuring that your bribe giver doesn’t rat you out (threaten to report any company that bribed you to the US DOJ if you get convicted…might even be a good way of ensuring someone pays for your defense).
Whether or not any of these actually work out in the real world is anyone’s guess but that fact alone should be enough justification not to be (even potentially) handing out 20 year prison sentences. That is in addition to all the other problems of the law that Cowen notes.
Are you worried there may be corruption in the American executive branch today, yet also fearful that the tools for rooting out such malfeasance may be abused? If so, welcome to the dilemmas surrounding the Foreign Corrupt Practices Act.
Now ultimately, of course, I only believe in respect for the sovereignty of countries (or the right of self-determination) because it’s a good heuristic for positive results but it’s a pretty damn good one. Not only do attempts to intervene in foreign cultures rarely work they tend to create a good deal or resentment against whoever does the intervention. This is true whether the intervention is a direct political one or merely a cultural one such as refusing to do business in the customary way in that place and the FCPA certainly raises that possibility. Even disregarding resentment when it comes to legal regimes there is a much stronger reason to respect sovereignty: penalties imposed by a foreign potentate rarely provoke compliance or respect so drag along all the harms of law enforcement plus without the social benefits that make those costs worth paying. ↩
For instance, maybe a certain degree of bribery is expected to win contracts to supply the government with services and all local companies bidding simply pay the expected bribes. If US suppliers simply entered the market and complied with these necessary rules for doing business locally there would be little effect on corruption. On the other hand if they refuse but offer superior products at better prices there is a strong incentive for those locals who are best at greasing palms to set up a company which simply subcontracts the work to the Americans after bribing the government (without telling the Americans about the bribe) and since such a company is literally in the business of bribing and faces competitors in that buisness it is more likely to increase local corruption than if the US company had simply played along. ↩
So I frequently run into articles like this one which aim to criticize Israel’s behavior with respect to the occupied territories but, rather than laying out a clear policy argument (or direct moral considerations) instead fall back to invoking the supposed fact that Israel’s behavior with respect to the settlements and/or occupied territory is in violation of international law. While there are any number of grounds on which to criticize Israel’s polices invoking claims of international law short circuits important discussions while misleading readers.
One might wonder why people even bother to invoke international law regarding Israel’s occupied territories. The treaties most credibly cited as outlawing Israel’s behavior aren’t ones that Israel is a signatory to (though some arguments are based in such treaties) and the ICJ lacks any jurisdiction in Israel1. Thus, whatever the status of the occupied territories and settlements they don’t raise any practical issues of treaty compliance.
Rather, I think its fair to say that in most cases people raise international law regarding Israel’s settlements and occupied territories to either somehow suggest that international law reflects the settled opinion of the global community or leverage the reader’s presumption that illegal behavior is immoral/unacceptable. However, both cases invite the reader to inappropriately transfer assumptions we make about the internal laws of nation-states to the context of treaties and the international community. While we are used to the idea that laws are non-negotiable rules whose meaning is discerned by an independent judiciary and subject to enforcement by any one of many government agents virtually all these assumptions fail when we consider treaties.
Usually treaties do not specify any authoritative interpretive body leaving the interpretation ultimately in the hands of the signatories (some modern treaties do assign such power to the ICJ but I don’t believe any are at issue here). Moreover, international law is frequently openly violated without consequence (most famously during the NATO bombing of Yugoslavia2). The fact that inconvenient international laws can simply be ignored, or at least bent, combined with the lack of any enforcement mechanism undermines one of the principle aspects of the law which justifies the moral significance we assign it: the assumption that, good or bad, it binds everyone equally. Moreover, in the absence of independent enforcement (and the ICJ is not independent) there is no pressure to ensure that international law truly reflects global norms (without any risk the rule will be enforced against you the incentives are to declare Israel’s actions legal/illegal based on whose favor you wish to curry). In short, it is misleading to use international law either as a proxy for global consensus or to imply is has the default moral warrant we give to standard laws. While many writers obviously fervently wish it were otherwise, if you want to hold forth on the issue of Israeli-Palestinian relations there simply isn’t any way to avoid diving into the contentious issue of the moral status of Israel’s actions regarding the occupied territories
Still, despite appearances to the contrary, maybe there is some genuine reason to raise the issue of international law in this context. Perhaps one sees Israel as a first step toward a more legalistic and predictable world order (though picking such a controversial and vexed issue as a kicking off point is dubious) or has some other reason to consider international law. However, to the extent one is genuinely concerned about the legal status of settlements and the occupied territories one has to treat the issues as serious legal questions. That means its not enough to observe that the 4th Geneva convention bans the occupying power from transferring parts of its population into occupied territory and claim case closed. One has to verify that, as a legal matter, the land Israel controls in the west bank is technically ‘occupied territory’ (some suggest that occupied territory refers to occupied land legitimately belonging to another country) and that ‘transfer’ encompasses merely enabling voluntary movement rather than merely forced migration. Indeed, at least one scholar (Eugene Kontorovich) has made extensive arguments claiming that most of the clauses which are purported to ban Israel’s activities in the occupied territories inapplicable and that this interpretation is supported by a variety of recent precedents.
Of course, Eugene Kontorovich is not only pretty obviously driven by ideological affinity3 and represents an extreme viewpoint in the international law community. Many of the arguments he presents as decisive have been considered and rejected by other scholars. Ultimately, I simply don’t know enough about international law to reach a conclusion on the matter. Is Kontorovich ignoring independently established interpretive norms when he makes his arguments? Is the very liberal makeup of legal academia in general and international law in particular biasing the mainstream position against Israel? Does this disagreement mask a fundamental divide over the appropriate level of precision and detail in international law? Or, as I tend to suspect, does it reveal that international law is still sufficiently subjective that supplementing a plausible argument about international law with the support of both most UN member states and the legal elites renders it valid.
In any case, I won’t try and adjudicate this controversy merely note that the issue is complex enough to warrant multiple books and that facially plausible concerns have been raised by both sides. As such, anyone genuinely considering the legality of Israeli occupation and settlements (rather than merely using this as a proxy for moral condemnation) owes readers at the very least a summary of how they take such arguments to play out. The fact that 99% of the places which raise the issue of international law with respect to Israel have absolutely no interest whatsoever in doing this is all the more reason to treat their use of international law as suspect.
The Moral Particulars
This post is not the place for a detailed analysis of the moral issues regarding the occupied territories. However, I would like to make some general remarks about the unfortunate failure modes of moral analysis regarding this issue. In particular, I think 50% of the vitriol on this issue could be avoided (or at least diminished) by giving explicit answers to the following three questions.
Whose actions are being morally evaluated (or compared to alternatives)? Why them? What, if anything, do your claims imply about the morality of actors on the other side?
What standard are you using when you condemn/praise Israeli/Palestinian actions? Are you calling people out merely for deviation from perfect saint-like willingness to turn the other check or suggesting they fall short of normal standards in western countries?
Are you merely engaged in an intellectual/social exercise or are your criticisms intended to motivate actions.
For instance, with respect to 1 a great many people in the US (and possibly Europe) seem to simply tacitly assume that Israel is within the sphere of rational actors and subject to moral suasion based on shared moral norms but make no such assumption about the Palestinians. As such, and often without making a conscious judgement, many people behave in a way that suggests an anti-Israeli bias when, in fact, they are actually exhibiting anti-Palestinian bias by unconsciously viewing them as foreign and beyond the pale of our shared moral norms. By explicitly answering this question one can recognize such implicit biases and avoid creating the unintended impression that you are drawing a moral distinction. Note that a converse effect is also common in which people go out of their way to sympathize with individual (imagined/idealized) Palestinians (who, by stipulation, do not support violence against Israelis) but make no analogous effort to empathize with individual Israelis. This has the unfortunate effect of hiding the fact that individuals on both sides are powerless to make the major changes needed and, recognizing these limitations, act rationally and relatively morally within them. Again, explicitly considering the implications for actors on the other side resolves the potential confusion.
Point 3 is simply a variant of point 1 except it guards against falsely implicating differences as a result of policy oriented criticism/encouragement, e.g., criticism aimed at one party to encourage a change in behavior must be distinguished from criticism for the purpose of attributing relative moral blameworthiness. However, I think pure ascriptions of blame are probably best avoided in any event.
Point 2 is probably the most important. It is very common to hear strident criticism of Israel based on their treatment of Palestinians. While such criticisms often acknowledge the real threat of terrorism they hold Israel to task for taking measures that affect Palestinian’s collectively, e.g., the wall and extensive security checks required to move to and from Gaza and the West Bank. While I think we all acknowledge that ideally we would treat each and every person as an individual it’s absurd to suggest that any western democracy would behave differently in the same situation. Indeed, comparing Israel’s relative restraint in dealing with terrorism to Guantanamo Bay and our extreme and unjust indefinite detention of sex offenders is instructive. This doesn’t change the fact that many Palestinians face very unpleasant conditions, often through no fault of their own, but it is important to distinguish considerations of moral luck (if Americans found themselves in Israel’s position they would probably behave even worse) from questions of moral blameworthiness.
Ultimately, the one substantive position I will take here is to condemn the way the rest of the world shoves this problem off on the Israeli’s and Palestinians and then scolds them for not doing a better job. We should recognize that the Israelis (and probably the Palestinians as well) face an insoluble collective action problem (normal political differences make strong actions to resolve the problem very difficult to initiate much less maintain). The mere fact that we don’t live there and they do doesn’t make the rest of us any less responsible for the welfare of our fellow citizens so, rather than continuing to lay into Israel for not doing more to solve the problem, those of us in the west would be better served by convincing our own governments to help. Frankly, until we have at least managed the tiny step of passing a law which authorizes substantial payments to Palestinians in exchange for giving up various regions, e.g., certain parts of Jerusalem, it is a bit rich to criticize Israel for not taking much more drastic steps that could put its citizens at risk. While the situation between Israel and Palestine may be deadlocked I honestly believe that if the rest of the world (or even just NATO possibly with an assist from China) was sufficiently dedicate to solving the problem headway would be made.
If one wants to get technical the issue is somewhat complicated but from a practical point of view Israel isn’t bound by any ICJ decision. ↩
Of course there are arguments that this wasn’t a violation of international law. However, this merely serves to illustrate the flexible nature of `international law’ and the way in which international sentiment alters, if not the fact, at least the application of international law. ↩
This isn’t grounds for dismissing his arguments but it justifies treating his work as pure advocacy and taking care to avoid assuming that neither the factual backdrop he presents nor the interpretive process he uses present the complete picture. ↩