Bubbleicity

Moldbug calls money the bubble which doesn't pop. It is a bubble because nobody values it for its own sake, people only purchase it because they intend to sell it to someone else. (Unlike a retailer, who purchases things he doesn't intend to use, but sells them to people who do intend to use them.) Or some people do value it for its own sake, but the market price is far above what it would be if only those people were purchasing it. (For example, gold, which does have uses in electronics and medicine. It is useful as jewellery, but historically it is desired as jewellery because it is money.)

Money bubbles can pop. Sometimes a particular currency will "de-monetise". But they don't have to. There is no reason why a bubble can't keep going indefinitely, with the price levelling off well above the use-value.

The art bubble has been going for hundreds of years with no expectation of popping. The Mona Lisa is a scarce collectible. Its market value is well above that of identical copies, even though identical copies have identical use-value.

I call this "bubbleicity". Money has bubbleicity. Famous artworks have bubbleicity.

The cost of producing the artwork sets the floor price (which could be zero). The scarcity of its provenance can push the price above that. Or to look at it the other way around, the scarcity of gold sets the floor price of jewellery, and then there is a small premium for the design and workmanship (which could be zero).

People sometimes argue whether money is valued because it is a medium of exchange, or because it is a store of value. But you can't have one without the other. You can't have a medium of exchange unless it can store value across time. And you can't have a store of value unless you can exchange it at a future date.

In practice, people may use several commodities as money. They might keep gold in their vaults, for big transactions, and copper in their purse, for small transactions. But that doesn't mean one is the store of value and one is the medium of exchange. They are both stores of value and both media of exchange.

Fewtril

It is not the case that all leftists favour equality because they believe that everything is zero-sum. Some are against the positive-sum because they favour equality.

"Is having a loving family an unfair advantage?"

Quote of the day

I don’t believe in the “is-ought fallacy”. Objective shouldness simply doesn’t exist, whether derived from an “is” or not.

http://james-g.com/2012/07/salterism-refuted-removing-wheels-from-racial-idealist-heads/

Incidental improvements caused by Land Value Tax

(The distinction between Direct and Indirect improvements is dubious.)

Direct improvements caused by Land Value Tax (or Location Value Tax, or LVT):

• No taxes on income (which discourage production/work)
• No taxes on transactions (which discourage transactions)
• No taxes on capital (which discourage the building up of capital, and prevent people escaping inflation)
• No taxes on companies (which increase prices, decrease wages, and discourage entrepreneurship and the building up of capital)

Indirect improvements caused by LVT:

• No need for tax accountants
• No self-assessments or tax returns
• No need for pension funds or a distinct pensions industry
• You could invest your pension anywhere tax free (e.g. in wine, houses, loans...)

Please add suggestions in the comments.

Maurice Glasman is an idiot

I listened to "Start The Week" on Radio 4, on Monday 16th January 2012.

http://www.bbc.co.uk/programmes/b019f8b5

I listened to hear Detlev Schlichter, who is excellent. But Lord Maurice Glasman also featured.

Rob Fisher struggled to comprehend Glasman, and so wisely decided to ignore him.

http://www.samizdata.net/blog/archives/2012/01/schlichter_on_s.html

I decided not to ignore Glasman, and found that he was talking nonsense.

He says at one point something like "the Labour Theory of Value is true; that's why I support the Labour Movement". What an idiot. The two things are not related, despite them sharing a word. The LTV is the theory that the value in a thing is a function of the amount of labour it took to create it. The Labour Movement is to do with workers' rights etc.

Later on, he elaborates. It turns out that he thinks the alternative to the Labour Theory of Value is the Capital Theory of Value: that the value of a thing is a function of the amount of capital it took to create it. This is why he thinks that it is relevant to the Labour Movement: if you think Labour is more important than Capital, you will want workers to be paid more. (In a free market, labour and capital will be remunerated according to the value they add.)

He apparently has not heard of the Subjective Theory of Value, despite the fact that it has been known to be correct, and the LTV and the CTV to be wrong, for well over a hundred years.

He later advocates banning foreign investment, saying that people should only be allowed to invest within their county. He doesn't notice the conflict between this and his bemoaning his claim that profits aren't as high as they used to be.

What an idiot. Why the hell is he in the House of Lords?

Leftist philosophers

Why do left-wing philosophers feel it acceptable to jettison their philosophical skills as soon as they start talking about politics? Philosophers who are normally very good start making "not-even-minimally-respectable" arguments. They stop considering every possibility, they make assumptions which are clearly false, and they make invalid moves.

Here are two examples:

Stephen Law posts these two articles about traders losing money relative to the market.

Some commenters point him to the Efficient Market Hypothesis.

Law is ignorant of the fact that even in markets where the market is going up (i.e. the average investor makes money), the median investor loses money.

It's hard to beat the market. But what causes the market signal in the first place? That's right. Savvy investors who find information not already incorporated in the market price, and incorporate it into the market price.

Raymond Geuss posts this "brief guide to recent health-care plans" in the UK.

He describes that healthcare in the US as a "free market". It isn't remotely. Therefore, his argument that "Efficiency in this area is one thing ‘free markets’ cannot attain" is not even minimally respectable.

The rest of his argument is similarly bad. For some reason, he thinks that putting healthcare management "out to tender for the most efficient bid" will lead to "costs rising".

For some reason he implies that profits are bad. He ignores whether it is possible to make a profit and improve quality of healthcare (it is).

Inequality is only a problem because people say it is

As you know, I don't think wealth or income inequality is in any way at all a problem.

I am increasingly of the opinion, though, that people who endlessly use the media to tell the masses that they *should* resent the rich, are turning it into a problem.

C.f. the reaction in the rest of the media to this article:

http://www.yorkshirepost.co.uk/news/debate/columnists/dr_john_sentamu_our_unequal_unjust_society_the_richest_are_getting_richer_and_the_poorest_lose_all_hope_1_3940550

Could there possibly be a mechanism through which wealth or income inequality cause social unrest without the media and the upper class using it to tell people they should resent rich people?

Over the last hundred years, the British people have known that there are people fantastically richer than them: film stars and celebrities. They're even featured in the media every day. But for some reason the tales of expensive parties and clothes entertain the masses rather than enraging them.

Maybe the people don't resent film stars because of the entertainment they provide (both through their films and through their actions as celebrities (being photographed at parties for Hello magazine)). But I suspect that the media could create a resentment towards rich actors if they wanted to. (Wouldn't that be funny?)

Perhaps people resent the bankers because they can't see what value the bankers create. But my guess is that it wouldn't be an issue unless the media made it one. The explanation that the bankers drew attention to themselves by causing the financial crisis doesn't work, because high salaries were not the cause of the financial crisis, yet people talk about reducing pay much more than they do about fixing the causes. I don't think people would resent bankers without the media.

(By upper class I mean people like Polly Toynbee and the entire "liberal elite". (I never liked the phrase because they're not liberals, but it's certainly clear exactly who it's referring to, and I can't think of an alternative that means quite the same.))

I was influenced by Comment #6 here: http://timworstall.com/2011/10/28/occupy-the-city/

"Here’s one issue: is this all about greed per se as our principled Dr Giles Fraser would have it, or is it just a political fight with bankers?

If it is really about greed, now there is one profession that frankly makes your average banker look like Mother Theresa. Have a look here: http://www.therichest.org/entertainment/vanityfairtop-40-highest-paid-stars-in-hollywood/ .

Robert Pattinson is apparently British. Never heard of him. Even Guy Ritchie is topping $1m a month. OK, directing is a lot harder work than acting (very hard work) but $1m a month?

Now we’re talking about real roll in the mud, face in the trough stinking hot oinking greed. Now personally, I don’t begrudge them the dosh if there someone willing to pay. It doesn’t bother me. But if ‘greed’ is the problem, then this lot are as greedy as it gets.

The fun will start if the Occupy mob start attacking the entertainment profession for greed. Front-row entertainment.

Especially seeing Ritchie getting stuck into his actor clients. And being such a man of principle, his ire cannot be far away."

"a political fight with bankers?" What is the true motivation?

Is it about creating an excuse to tax them (personally, and tax the banks) and needing to create public support for it? Or is it about just needing an enemy to somehow increase votes for the left? (Possible causal mechanism: it gives the left something to do and keeps them in the public eye. It gives them a policy to offer the people (which they need because they don't really have much else in the way of policy to offer the people).)

Or are they scapegoating the bankers for the financial crisis because it was really the politicians that caused it? (Using the bankers as a proxy.)