## Social Control and The Principle Agent Problem

### The Chinese Example And The Dangers Of Restricting Free Speech

This interesting post reminded me of my suspicion that a lot of the censorship in China isn’t the result of Xi Jinping’s crazed desire to be repressive. Almost certainly Xi would benefit from far less censorship and may indeed benefit from reports in the media exposing misbehavior by low level party officials but the incentives of those with the power to control expression (both to show off their loyalty and hide embarrassing events) means that far more censorship gets implemented than Xi would ideally want.

I think this is an important lesson for those who want to limit our free speech (or academic freedoms) when it comes to issues of race, gender harassment and the like. Even though the speech that one intends to ban may not have much value and impose great harms one needs to keep in mind the risks posed in delegating the practical authority to determine what speech qualifies.

## Ethereum Eschatology and Bitcoin Bankruptcy

### 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.

1. 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.
2. Cryptocurrencies let you pay people who wouldn’t (or can’t be bothered) be get paypal merchant accounts or US bank accounts.
3. Relative freedom from government monitoring.
4. 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.
5. 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.

1. 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.

God I hope not but sounds plausible.

#### The Peltzman Model of Regulation and the Facebook Hearings – Marginal REVOLUTION

If you want understand the Facebook hearings it’s useful to think not about privacy or technology but about what politicians want. In the Peltzman model of regulation, politicians use regulation to tradeoff profits (wanted by firms) and lower prices (wanted by constituents) to maximize what politicians want, reelection.

## Privacy Regulation Is Likely Unworkably Hard

### Don't Count On The Government Regulating Facebook

Tyler Cowen provides a great analysis of one of the generic calls for regulating big data (and Facebook in particular). Putting this together with his previous post pointing out that it would cost us each ~\$80/year to use facebook on a paid basis1. Taken together they make a compelling case that there is no appetite in the US for serious laws protecting data privacy and that whatever laws we do get will probably do more harm than good.

To expand on Cowen’s point a little bit let’s seriously consider for a moment what a world where the law granted individuals broad rights to control how their information was kept and used. That would be a world where it would suddenly be very hard to conduct a little poll on your blog. Scott Alexander came up with some interesting hypothesizes regarding brain functioning and trans-gender individuals by asking his readers to fill out a survey. But doing that survey meant collecting personal and medical information about his readers (their gender identification, age, other mental health diagnoses) and storing it for analysis. He certainly wouldn’t have bothered to do any such think if he was required to document regulatory compliance, include a mechanism for individuals to request their data be removed or navigate complex consent and disclosure rules (now you’ve gotta store emails and passwords making things worse and risk liability if you become unable to delete info). And what about the concerned parent afraid children in her town are getting sick too frequently. Will it now be so difficult for her to post a survey that we won’t discover the presence of environmental carcinogens?

One is tempted to respond that these cases are obviously different. These aren’t people using big data to track individuals but people choosing to share non-personally identifiable data on a survey. But how can we put that into a law and make it so obvious bloggers don’t feel any need to consult attorneys before running survey?

Well maybe it should only be about passively collected data. That’s damn hard to define already (why is a click on an ajax link in a form different than a click on a link to a story) and risks making normal http server logs illegal. Besides, it’s a huge benefit to consumers that startups are able to see which design or UI visitors prefer. So checking if users find a new theme or video controls preferable (say by serving it to 50% of them and seeing if they spend more time on the site) shouldn’t require corporate counsel be looped in or we make innovation and improvement hugely expensive. Moreover, users with special needs and other niche interests are likely to particularly suffer if there is no low cost hassle free way of trying out alternate page versions and evaluating user response.

Ultimately, we don’t really want the world that we could get by regulating data ownership. It’s not the world in which facebook doesn’t have scary power. It’s the world where companies like facebook have more scary power because they have the resources to hire legal counsel and lobby for regulatory changes to ensure their practices stay technically legal while the startups and potential competitors don’t have those advantages. Not only do we not want the world we would get by passing data ownership regulations I don’t think most people even have a clear idea why that would be a good thing. People just have a vague feeling of discomfort with companies like facebook not a clear conception of a particular harm to avoid and that’s a disastrous situation for regulation.

Having said this, I do fear the power of companies like facebook (and even governmental entities) to blackmail individuals based on the information they are able to uncover with big data. However, I believe the best response to this is more openness and, ideally, an open standards based social network that doesn’t leave everything in the hands of one company. Ultimately, that will mean less privacy and less protection for our data but that’s why specifying the harm you fear really matters. If the problem is, as I fear, the unique leverage being the sole possessor of this kind of data provides facebook and/or governments then the answer is to make sure they aren’t the sole possessor of anything.

#### Zeynep Tufekci’s Facebook solution – can it work? – Marginal REVOLUTION

Here is her NYT piece, I’ll go through her four main solutions, breaking up, paragraph by paragraph, what is one unified discussion: What would a genuine legislative remedy look like? First, personalized data collection would be allowed only through opt-in mechanisms that were clear, concise and transparent.

1. Now, while a subscription funded facebook would surely be much much cheaper I think Cowen is completely correct when he points out that any fee based system would hugely reduce the user base and therefore the value of using facebook. Indeed, almost all of the benefit facebook provides over any random blogging platform is simply that everyone is on it. Personally, I favor an open social graph but this is even less protective of personal information.
2. Even that is pretty limiting. For instance, it prevents running any survey that wants to be able to do a follow up or simply email people their individual results

## Ambiguity, Silence and Complicity

### How Good People Make It Impossible To Discuss Race, Gender and Religion

Listening to the Klein-Harris discussion about the Charles Murray controversy affected me pretty intensely. I was struck by how charitable, compassionate and reasonable Klein was in his interaction with Harris. Klein honestly didn’t think Harris was a bad guy or anything just someone who was incorrect on a factual issue and, because of the same kind of everyday biases we all have, insufficiently responsive to the broader context. Indeed, it seemed that Klein even saw Murray himself as merely misguided and perhaps inappropriately fixated not fundamentally evil. How then to square this with the fact that Klein’s articles (both the ones he wrote and served as editor for) unquestionably played a huge role in many people concluding that Harris was beyond the pale and the kind of racist scum that right thinking people shouldn’t even listen to?

Unlike Harris I don’t think Klein was being two-faced or deliberately malicious in what he wrote about Harris. Indeed, what Klein did is unfortunately all too common among well-intentioned individuals on the left and academics in particular (and something I myself have been guilty of). Klein spoke up to voice his view about a view he felt was wrong or mistaken about race but then simply choose to keep silent rather than explicitly standing up to disclaim the views of those who would moralize the discussion. This can seem harmless because in other contexts one can simply demure from voicing an opinion about controversial points which might get one in trouble but key ambiguities in how we understand notions like racist/sexist/etc and accusations of bias or insufficient awareness of/concern for the plight of underprivileged groups has the effect of turning silence into complicity.

The danger is that someone in Klein’s position faces strong pressure from certain factions on the left not to defend Murray’s views and those of his supporters as being within the realm of appropriate discussion and debate. Indeed, as Klein thinks that not only is Murray wrong but wrong in a dangerous and potentially harmful way it’s understandable that he would see no reason to throw himself in front of the extremists who don’t merely want to say Harris is mistaken but believe he should be subject to the same ostracism that we apply to members of the KKK. So Klein simply presents his criticisms of Harris and Murray and calls attention to the ways in which he thinks their views are not only wrong but actively harmful in a way that resonates with past racial injustices but doesn’t feel the need to step forward and affirmatively state his belief that Harris is probably just making a mistake for understandable human reasons not engaging in some kind of thought crime.

In other contexts one could probably just stand aside and not engage this issue but when it comes to race and racism there is a strong underlying ambiguity as to whether one is saying a claim is racist in the sense of being harmful to racial minorities or in the sense that believing it deserves moral condemnation. Similarly, there is a strong ambiguity between claiming that someone is biased in the sense of having the universal human failing of being more sympathetic to situations they can relate to or is biased in the sense of disliking minorities. These tend to run together since once everyone agrees something is racist, e.g., our punitive drug laws, then only those who don’t mind being labeled racists tend to support them even though there are plenty of well-intentioned reasons to have those beliefs, e.g., many black pastors were initially supportive of the harsh drug laws.

Unfortunately, the resulting effect is that failing to stand up and actively deny that one is calling for moral condemnation for having the wrong views on questions of race (or gender or…) one ends up implicitly encouraging such condemnation.

## Harris and Klein

### Double Charity Failure

I’m generally a defender of Harris and I believe Vox (under Klein) was uncharitable to Murray and Harris. Even in this interview I think he (probably unintentionally) suggests that we should take Murray’s arguments less seriously because of his political aims and implied motivations.

However, Klein is dead on the nose when he accuses Harris of not being willing to extend the same charity to others he wants extended to him. Disagreements are hard and understanding other people is very difficult and Harris (like all of us) does have trouble extending charity when it feels near something that’s a personal attack on him or understanding how other people’s errors may be motivated by similar emotional response to prior unfairness.

My sense is the Klein’s real position is a reasonable view that Murray is very wrong on the science in a way that is harmful and that Harris gets it wrong because of the issue above. However, I think Harris is absolutely right in criticizing Klein for speaking in ways he should know are likely to lead to extreme moral condemnation.

Klein should know that the way his articles (and the articles in Vox while he was editor) will be interpreted by the public as going far beyond a mild criticism that Harris makes the same kind of unremarkable mistake we all do talking about tough political issues. I don’t think Klein is being malicious here and Harris is uncharitable in assuming this but I think he should be faulted for not being much more clear to his readers that he isn’t suggesting Harris is beyond the realm of reasonable disagreement…merely that he thinks he is well-intentioned, but wrong, in a way that happens to be harmful.

In short Harris and Klein both fall short of the ideal of charity and they both could do a great deal more to communicate that well-intentioned good people can disagree intensely and even think another person’s views are harmful without having to think they are a bad person.

#### Waking Up Podcast #123 – Identity & Honesty | Sam Harris

In this episode of the Waking Up podcast, Sam Harris speaks with Ezra Klein, Editor-at-Large for Vox Media, about racism, identity politics, intellectual honesty, and the controversy over his podcast with Charles Murray (Waking Up #73).

## More Confusion About Gender Equality

### It's Never Been About Numerical Equality

So apparently the Swedish government is going to pay women to edit Wikipedia out of concern that wikipedia contribution is heavily biased in favor of men. This misunderstands what’s desirable about gender equality in a serious way. While this may be nothing more than harmless idiocy it provides an important warning about the importance of taking a hard look at programs designed to increase gender equity.

There is no intrinsic good to having the same number of women editing Wikipedia (or engaged in any particular career or activity) as men. Rather, there is a harm when people are denied the ability to pursue their passion or interest on account of bias or stereotypes about their gender.

Now, if one believes that some activity discriminates against interested women one might think that artificially inducing women to participate (affirmative action, or even payment) is an effective long term strategy to change attitudes, e.g., working with women will change the attitudes of men in the field and place women in positions of power so future women won’t face the same discrimination. However, wikipedia actively encourages using unidentifiable user names, doesn’t require gender identification and there is no evidence of a toxic bro-culture among frequent editors. Thus, there is no reason to think injecting more female editors into wikipedia will reduce the amount of discrimination face by women in the future. Indeed, even if you believe that women are underrepresented on wikipedia because of discrimination or stereotyping, e.g., women aren’t techie or women aren’t experts, then paying women to edit wikipedia is wasting money that could have been used to combat this actual harm.

Moreover, there is no particular evidence that the edits made by frequent editors to wikipedia are particularly likely to be somehow slanted against women or otherwise convey a bias that this kind of program would be expected to rectify. Indeed, paying members of particular groups to edit wikipedia is an assault on wikipedia’s reliability. While I’m not particularly concerned about Swedish women the underlying principle that no one should be able to pay to ensure wikipedia is more reflective of the views of a certain identity group is important. I mean what happens to information about the Armenian genocide if Turkey decides that it should pay Turks to increase their representation on Wikipedia?

But why care about this at all? I mean so what if the Swedes blow some money stupidly? It’s not like men are suffering and need to be protected from the injustice of it all.

The reason we should care is that it’s shows in a clear and uncontrovertible fashion how easily well intentioned concern about gender equity can go off the rails. Given the potential blowback and murkiness of the issues there is a tendency to just take for granted the fact that programs which claim to be about improving gender equity are at least plausibly targeted at that end. However, this proves that even in the most public circumstances its dangerously easy for people to conflate ensuring numerical equality with increasing gender equality. Given that in many circumstances the risk isn’t merely wasting money but, as in affirmative action and quota programs, actively making things worse (e.g. by making people suspect female colleagues didn’t really earn their positions) we need to be far more careful that such programs are doing some worth those costs.

#### Not Enough Women at Wikipedia? | EconLog | Library of Economics and Liberty

by Pierre Lemieux …women need state encouragement to do some of the one million edits that are made on Wikipedia every day. Presumably, this will promote the liberation of women. The Swedish government, or at least its foreign minister, wants…

## A Norm Against Partisan Smearing?

Reading Reich’s book (Who We Are And How We Got Here) really drives home to me just how tempting it is to collapse into tribal based cheering (e.g. cheering on your genes/genetic history/etc as the best) and how important our norms against racism are in limiting this.

It makes me wonder if we couldn’t develop similarly strong norms about not cheering on your political/social tribe in the same manner. It’s a more delicate situation since we need to preserve the ability to disagree and offer useful criticism. However, it still seems to me that we might be able to cultivate a norm which strongly disapproved of trying to make the other side look bad or implying they are improperly motivated/biased.

I mean, of course, we won’t actually get rid of hypocrisy or self-serving beliefs but if it required the same kind of extreme caution to allege bad faith to the other ideologies that we require to make claims about racial differences it might make a big difference.

### The Idiotic Idea Of Apple Competing With Intel

There is a rumor going around that apple may try and replace Intel chips in it’s computers with their own in-house chip. Now, it’s certainly conceivable that apple will offer a cheap low-end laptop based on the chips it uses for the iPhone and iPad. Indeed, that’s probably a great opportunity. However, the idea that apple might switch completely to their own in-house Silicon is such a bad business idea that I have to assume they won’t try.

I mean suppose for a moment that apple thought they could outdo Intel and AMD in designing high end processors. What should apple do? Well they could design processors in-house just for their own computers limiting their potential profits and assuming substantial risk if they turn out to be wrong. Alternatively, they could spin off a new processor design company (perhaps with some kind of cooperation agreement) which could sell their processors to all interested parties while limiting their risk exposure. Now, I think the later option is clearly preferable and as it seems pretty implausible to think Intel and AMD are so badly run as to make such a venture attractive so it would be even less attractive to try and compete with Intel in house.

Now why doesn’t this same argument apply to apple’s choice to design it’s own ARM chips for the iPhone? First, apple was able to buy state of the art IP to start from which wouldn’t be available in they were designing a high performance desktop/laptop CPU. Secondly, because of the high degree of integration in mobile devices there were real synergies apple could realize by designing the chip and phone in combination, e.g., implementing custom hardware to support various iphone functions. Considering desktops and highend laptops there are no such pressures. There is plenty of space to put any dedicated hardware in another chip and no special apple specific features that would be particularly valuable to implement in the CPU.

On the other hand a cheap(er) laptop that could run iPad apps could be a great deal. Just don’t expect them to replace Intel chips on the high end systems.

#### Apple is actively working on Macs that replace Intel CPUs

A new Bloomberg report claims Apple is working on its own CPUs for the Mac, with the intent to ultimately replace the Intel chips in its computers with those it designs in-house. According to Bloomberg’s sources, the project (which is internally called Kalamata) is in the very early planning stages, but it has been approved by executives at the company.

## Team Rittenhouse

### Or Why The Heros In Timeless Are Idiots

I just finished the first season of Timeless and I can’t help but feel the characters, and especially Lucy, are being irrational. (Some spoilers but only serious spoiler is in bullet 3 at the very end).

What they know about Rittenhouse is that every generation is initially totally horrified and appalled at the thought of it, wishes it was destroyed and eventually comes to see it as important and necessary once they have sufficient time to think and evaluate the evidence yet this gives them no pause as to whether they themselves might be in the wrong.

Indeed, the only defensible reason to be an ardent support of a democratic system is that the evidence of the past few centuries makes a super strong case that democracies are good places to live and produce far more utilities than dictatorships but if you found out that US had secretly been an oligarchy the whole time the evidence would actually point the other way and suggest skepticism of non-oligarchical rule (or well influence).

The show writers try hard to make sure we see Rittenhous as evil by making hereditary and talking about good strong bloodlines but once you’ve decided on a dictatorial system (or I guess technically a very small oligarchy) hereditary rule is probably not merely desirable but a necessity as otherwise the subsequent set of rulers will conflict with the children of the last. By having 50+ members they can smooth out the ups and downs of monarchical hereditary rule and even work expel the less able members creating positive selection pressure. As far as being from ‘good families’ well every government needs a mythos to legitimize themselves and inspire its members even if its small.

As far as the supposed bad acts that Rittenhouse is supposed to have committed in the show I have three comments.

1. Those bad acts actually pale beside the genuine injustices and horrors the legitimate democratic government of our country committed at the same times. I mean WWI was basically a pointless slaughter of 400k US soldiers or more then there are thinks like Tuskeege, Japanese detentions etc.. etc..

Even the recent ‘bad acts’ like killing Flynn’s family in the name of some kind of national necessity (or was it just impunity by some elements) doesn’t seem out of line compared to the (IMO often justified) use of drone strikes even given the occasional civilian casualties to protect our national interest. If that’s the price we have to pay to get the kind of America we have then it doesn’t seem particularly large.

Especially when you compare that to the acts taken by the supposedly misguided but ultimately forgivable/noble Flynn in his campaign against them including attempts to assist nazis, commit massive terrorism with huge death tolls etc…

2. Rittenhouse is (as I understand the extent of its power) is essentially analogous to the UK house of lords before the reforms which made almost all the positions non-hereditary and let commons pass laws without approval from lords after a 2 then 1 year wait. That always seemed like a pretty good system to me…focus and primary power reflects the people but you essentially (modulo a bit of self-interest) also have to convince a bunch of rando professional legislators who don’t have to please constituents.

3. But even if Rittenhouse isn’t great at the moment at the end of the season Lucy has cleaned out all the old power structure and is basically being offered the keys to the kingdom. It’s totally irrational for her not just to accept and try and use that power to make the world a better place and turn Rittenhouse into a force for good.