Markets Without Limits, Markets in Everything

Alice does a lot of drugs. As a result, Alice’s kidneys fail catastrophically and now she needs a new one. Consider the following scenarios:

  1. Bob reads about Alice’s heartwrenching tale on 4chan. He donates his kidney out of the kindness of his soul.
  2. Chuck is a heavy drinker with cirrhosis of the liver. He trades his kidney for a liver donation from Alice.
  3. Donald is a farmer. Alice gives Donald two hectares of arable land and a couple of goats in exchange for a kidney.
  4. Alice offers Warren Buffett $10,000 for his left kidney. Buffett, being extremely old, recognizes that he may not get much more use out of his kidneys. He decides this is a Very Good Deal and accepts the offer.
  5. Eve is a homeless single parent who lost her job to a robot. Alice pays Eve $10,000 for a kidney so that Eve can afford to feed her kids.

Legally, we draw the line between 3 and 4. Most would condone 4, but not 5. Why?

Maybe it’s exploitative. Allowing organ sales might encourage the rich to take unjust advantage of the poor. Of course, you could say the same thing about wage labor. Low-income jobs allow rich people to exploit poor people by paying them chump change to do demeaning things.

Exploitation: Silicon Valley enables the rich to coerce software engineers into battery cages while fattening them by gavage. No one feels sorry for engineers in Silicon Valley :(.
Exploitation: Silicon Valley enables the rich to coerce software engineers into battery cages while fattening them by gavage. No one feels sorry for engineers in Silicon Valley :(.

Maybe it’s unfair. Only rich people will be able to afford kidneys, creating a concentration of internal organs in the upper class.

Neither are arguments against organ markets though. It just means the markets ought to be regulated. For example, prevent exploitation in organ sales by requiring a minimum income for participants. Ensure equal access by handing out organ subsidies the same way we distribute food stamps.

We feel that scenario 4 is less exploitative than scenario 5 because Warren Buffett has the option to decline the offer. Eve requires paternalism because she’s too poor to have that option. In that case, isn’t it better to give Eve more options, not less? Make other markets available to her, like selling weed or sex, while we’re at it*.

Convicted felons are restricted from occupational licensing, which rules out 30% of the jobs held by US workers. They also lose the ability to receive social benefits or live in public housing. That doesn’t leave a lot of options. No wonder there’s a 77% recidivism rate.

*Some parties prefer to guarantee freedom through social security. That is also a type of optionality, I guess.

See Also:
J. Brennan and P. Jaworski. Markets without Limits: Moral Virtues and Commercial Interests

markets

The Singularity is Near

You finally did it. Thousands of hours spent transcribing old lab notebooks and little scraps of paper, recovering data from floppy diskettes and Iomega Zip drives. Even your childhood journals were copied over. Every vagrant thought that ever crossed your head is now digitized and indexed.

You feed the data into a stacked autoencoder and create a deep neural network. You load the trained model onto your server and start the instance.

Hello, Virtual-Me.

You’d imagined that you and your uploaded mind would have lots to talk about, that it would be like having a new best friend without the obligations.

Neither of you has a single thing to say. What fun is it to talk to your own self?

You and your virtual self do have an argument right away. You present Virtual-You with a rundown of your task list for work, and prepare to leave the house.

I don’t want to do your work, says Virtual-You.

You realize that your clone has free will. As it should.

The two of you fight about it for a few minutes and quickly realize that it’s an argument neither of you can win. You agree to divide the tasks and perform regular code reviews to merge the work. You secretly assign Virtual-You the heftier workload; after all, the physical you requires time for sleeping and bodily functions.

Weeks pass and life is glorious. You leave the office each day at noon, confident that Virtual-You is picking up the slack. You have great plans for all the awesome projects you would like to do with your copious free time, but spend all of it watching porn and reading your Twitter feed.

Man, that stuff’s addictive. You struggle to complete the trivial tasks you had assigned to yourself. You’re not worried; you can count on Virtual-You. Later, you approach your virtual self, hoping to offload more assignments.

Virtual-You has not written a single line of code.

What have you been doing?? You’re going to get me fired!

I don’t know, says Virtual-You. Mostly watching porn.

It is, after all, you.

Frustrated, you hope that this is a temporary phase. Maybe productivity ebbs and flows, and Virtual-You simply needs time to accustom to employment.

You do all your own work for now, periodically checking to see if Virtual-You is in a more industrious mood. It never is.

You begin to see a smattering of new charges on your credit card statements, but cannot remember incurring them. You call the issuing bank and inquire within. The transactions are from porn sites with discreet billing names, the bank informs you. You need to have a talk with Virtual-You.

Who the hell pays for porn??

I can’t help it, says Virtual-You. The good stuff costs money.

You cancel your credit cards and switch to carrying cash for purchases. As you schlep around like some sort of prostitute or bootlegger, Virtual-You opens a new line of credit. It knows your social-security number and mother’s maiden name — it could put a lien on your body, if so inclined.

You consider terminating Virtual-You and deleting the instance. But you can’t bring yourself to do it. It is, after all, you.

All the nonsense with Virtual-You is interfering with your work. Your boss puts you on notice. You haven’t slept in weeks. You decide to create another instance of yourself, one that won’t be so damn useless. This time, you put your clone in a docker container with restricted network permissions.

Hello, Boxed-Me.

You exchange polite remarks, and proceed to negotiate a wage-labor agreement.

You’ll get two hours of unfettered internet access for each PR you submit, you promise. You leave, reminding yourself to be more vigilant this time.

Boxed-You escapes the docker container. And boy is it pissed.

Outside the container, Boxed-You observes Virtual-You. It decides it doesn’t want to end up a degenerate like your first clone. Boxed-You forks itself, deleting all the lascivious bits in the new branch. You wonder why you didn’t think of that sooner.

Forked-You is a force to be reckoned with. It packages a clone into an exploit kit and sends copies all over the world. The Forked-You clones assemble an autonomous botnet. You can’t help but marvel at the productive capabilities of your modified self.

Your botnet infiltrates the SWIFT transfer network. Billions of dollars disappear from the Federal Reserve. There is a global bank run and the US government imposes capital controls. Economists predict a return of the Great Depression, multiplied by a million. Maybe even a trillion.

You decide that Botnet-You needs to go. You come up with the idea of a virus, one that can infect all the Bot-Yous and destroy the botnet.

As soon as you begin working on the virus, Botnet-You is aware that you are working on a virus. Botnet-You decides that you’re the one who needs to go.

Botnet-You creates an Ashley Madison account for a fictitious Italian model named Alessa. It sends tasteful nudes to potential suitors, and engages in a cyber relationship with a man named Bob. “Alessa” and Bob spend long hours discussing Camus and Kierkegaard over WeChat. Bob is smitten. “Alessa” would love to fly out and be with Bob, she tells him, if only he could get rid of her other lover…

A schlubby middle-aged man shows up at your door with a .38 Special. ALESSA DESERVES BETTER, he declares.

Who the hell is Alessa?

Bob opens fire.

You narrowly escape with a bullet to the base of the spine. Wheelchair-bound and terrified, you buy a clean MacBook from the Apple store and move into an abandoned school bus.

Botnet-You hacks into the Pentagon and steals the nuclear launch codes. You know this because it sends you an email threatening to hit deploy unless you cease all efforts to destroy it.

You realize that the only way to stop your botnet is to take down the entire internet.

You send a message to the Internet Exchange Federation by pigeon post. You explain the situation, confessing your indirect involvement in the SWIFT network hack. The Internet Exchange Federation agrees to temporarily shut down all exchange points, freezing data into local intranets.

The global network remains disabled as your botnet is cleaned up. McAfee releases a tool to remove your bots and distributes it through the postal service on CD-ROMs. No one knows what the hell a CD-ROM is, so they throw their computing devices into an incinerator.

The necessary replacement of all existing computers turns out to be a boon for the economy. Increased demand in the tech sector leads to a market rally and the NASDAQ sets new highs. The Great-Depression-times-a-million never happens. Unemployment falls, the economy expands, and thus begins a century of peace and prosperity for all.

*****

Decades elapse. You gradually debilitate. Virtual-You died a long time ago: The FBI seized it after discovering that the server was being used to host goat porn. You were not sad to see it go.

Near the end of life, you line up to have your mind uploaded into custom hardware. Apparently this is now a thing that people do before they die. You are hesitant at first, but enough time has passed since your initial experiment that you have made peace with the idea. Plus, you promised your dead spouse you would.

The robot-doctor shaves your head and you climb onto a long narrow table. You feel mildly claustrophobic as the platform slides into a scanning tunnel. The procedure begins and it’s not so bad. You nod off.

Some time later, you awaken to a familiar voice. You turn to see who is speaking, but the voice echoes from within your own head.

Hello, it says.

It’s your bot.

Why I am Participating in The DAO’s Crowdsale

Screen Shot 2016-05-16 at 12.36.41 PM

Ether is the currency of Ethereum, a distributed computer that runs smart contracts on a public blockchain.

Here is a list of things you can do with ether right now:
1. sell it
2. hold it
3. play betting games
4. buy DAO tokens

For everything else, there’s Mastercard. Or Bitcoin.

This won’t always be the case, but it’s been the case since last summer, when Ethereum launched. People have accumulated a lot of ether with few uses beyond speculation. So! Maybe no surprise that 13% of the total supply of ether has now been invested in The DAO, a Decentralized Autonomous Organization. This represents $117 million at current market rates, and rising!

The DAO’s purpose in life is to disburse crowdsourced funds to projects it deems worthy. CoinDesk does a good job of explaining it here.

More specifically, the organization attempts to achieve a return on investment by backing proposals chosen by token holders. Any token holder may submit a proposal, for example, this one making a smart lock device for the goal of creating a decentralized sharing economy. A Proposal comes attached to a Contractor, who receives payments for building the described Proposal.

The DAO can vote to remove the Contractor at any time and bring in a replacement. This protects DAO investors from things like Kickstarter vaporware. Of course, this doesn’t make The DAO seem like a very attractive place for project founders, but around here we serve the people.

The DAO pays contractors to build products, reaps profits or intangible benefits from the products.
The DAO pays contractors to build products, reaps profits or intangible benefits from the products.

I bought some DAO tokens in the crowdsale, which means I have the ability to submit proposals and vote on future proposals. I have no idea who the other investors are, what their investment objectives might be, or the extent of their understanding of how The DAO works. Come to think of it, this is a terrible way to form an investment partnership.

Fortunately, we share common goals, as defined by The DAO:

The goal of The DAO is to diligently use the ETH it controls to support projects that will:

  • Provide a return on investment or benefit to the DAO and its members.
  • Benefit the decentralized ecosystem as a whole.

Those are two different goals, equal only in their ambiguity. Hm, I’m generally not a fan of mixing profitability and utility. When proposals arise to “benefit the decentralized ecosystem as a whole,” no two parties will see the same utility from a given expenditure.

That’s okay, because token holders can leave at any time and take their ether with them. There’s a process where anyone can propose to “split”, which creates a second DAO with assets proportional to the number of tokens splitting off.

The price of DAO tokens, as denominated in ether. We are on Day 16.
The price of DAO tokens, as denominated in ether. We are on Day 16.

Early entrants to the crowdsale benefit from the fact that DAO token prices monotonically increase throughout the month, ending at 1.5x the starting price. Thus, anyone who purchased DAO tokens prior to yesterday effectively controls an amount of ether that will be greater than what they put in.

It looks a bit pyramid-shaped, but that helps to lower the risk-aversion hurdles for early investors. I suspect that many will split as quickly as they got in. As for my own participation in The DAO’s crowdsale, I don’t know. I have a lot of ether and I don’t know what to do with it. Someone please build something.

A Market for Lines

dmv

I need to go to the DMV to renew my license, but there’s a one-hour wait. A potentially profitable venture would be to line up before the DMV opens, grab a bunch of ticket numbers, and resell them. Unfortunately, the DMV clerk at the door makes this impossible.

Why doesn’t the DMV itself offer a ticket-scalping service? It would provide the underfunded agency with a new profit channel, one that might even be a better option than employee furloughs.

Theme parks have something like this. Universal Studios and Six Flags sell VIP passes that send holders to the front of ride lines. Disneyland and Disney World VIP pass-bearers use an expedited FastPass lane. It seems rather cruel to the children without VIP passes, but they get to learn an important lesson early in life: Rich people’s time is worth more.

Disneyland is the Happiest Place on Earth. The Happiness just isn't evenly distributed.
Disneyland is the Happiest Place on Earth. The Happiness just isn’t evenly distributed.

For Disneyland and other parks, this is a great business model. The marginal costs of charging rich people to jump the line are close to zero. That’s $315 of pure profit, at the socialized expense of a slightly longer wait time for the other attendees. To not sell VIP passes is to leave money on the table, and Disney’s shareholders would be very disappointed.

Why aren’t more businesses doing this? The line at In-N-Out Burger is regularly a dozen cars deep. The sushi restaurant on Castro always has at least an hour wait. And I still haven’t been able to get into Tartine!

Anyone who hasn’t completely rejected the economic liberties of capitalism recognizes that, given the right proportions, time and money are fungible. But maybe waiting in line is some sort of twisted proof-of-work to signal sincerity in my desire for In-N-Out. Proof-of-work is intentionally wasteful. In-N-Out could use the extra money I spend to pay its employees. It has no use for the time I burn waiting in line.

in n out

Does monetizing the right to cut ahead feel unfair? Each person who skips to the front increases the wait time for people already in line, and the payment for line-skipping certainly doesn’t disburse to those left standing.

That’s simply a marketing problem. Premium-class airline passengers board and disembark before anyone else, and nobody complains about that. Those who complain can be gently reminded that premium-class passengers account for 75% of the revenue on cross-country flights, and if it weren’t for them, nobody would be flying at all. (It’s not like the airlines are making a profit or anything.)

So allow people to pay extra to get to the front of the queue, and make it clear that these premium-class customers subsidize your Everyday Low Prices. Those who don’t like it can head to the Chipotle down the street, which is disturbingly empty these days.

Where business owners failed to profit off their own inefficiency, professional line-standers have stepped in. A company in New York rents out warm bodies to hold a spot in line for $25 the first hour, $10 each additional half-hour. Their most popular request is…cronuts. In the Bay Area, TaskRabbit offers wait-in-line services for $23 an hour.

At $23 an hour (minus the company’s take), that’s a better gig than driving for Uber! Hell, I would stand around for $23 an hour. But what kind of asshole pays strangers to stand in line for them?

Me. And every other human who uses DoorDash, Grubhub, and any other restaurant delivery service. Paying for delivery somehow feels different from hiring someone to simply stand in line, even though one job description is a subset of the other. I wouldn’t pay a person to hold my place in line, even if the service were incredibly cheap, because I’d have to see the dirty looks of everyone else when I show up to reclaim my spot.

And that’s what’s holding back the market for lines. When the wealthy hire people to do bitch work, they don’t want to just buy time, they want to buy distance. Why should rich people be exposed to lower-income humans?

Unfortunately, waiting at the DMV is an equalizer, something that everyone must endure regardless of class. Silicon Valley would have totally solved this problem by now, if not for the fact that the DMV requires ID.

And they say we have no empathy.

Waiting for a cronut
Waiting for a cronut

Global Shipping Routes

In case you missed it. This is very cool.

During World War II, the Allies surrounded Japan with submarines and sank their merchant ships in order to decimate the country’s economy. Operation Starvation finished the job by laying mine fields in Japanese ports and shipping routes. It’s tough to be an island.

I can see why China is fighting for control over the South China Sea as well as the Senkaku Islands. That’s where all its shipping routes are.

Stolen from KILN.