| Dear Hiveans | Liebe Hiver | Queridos Hiveanos |
|---|---|---|
| Today I'd like to share my favourite excerpts from the book "Bitcoin is Venice" (goodreads) by Allen Farrington and Sacha Meyers, about whom not very much is known. Here are some short texts from Allen. | Heute meine Lieblingsauszüge aus dem Buch "Bitcoin is Venice" (goodreads) von Allen Farrington und Sacha Meyers, über die nicht sehr viel bekannt ist. Hier sind einige kurze Texte von Allen. | Hoy me gustaría compartir mis extractos favoritos del libro "Bitcoin is Venice" (goodreads) de Allen Farrington y Sacha Meyers, del que no se sabe mucho. Aquí hay algunos textos breves de Allen. |
Foreword
… I feel comfortable saying that this book will be vastly more appreciated in five years, ten years, and twenty years, then today. It will age very well. Everyone else will get to appreciate it in due time. Today, you get a sneak peek of the future. Enjoy the ride. — Alex Gladstein
When we say that the reason some social units can avoid collapse into neo-feudalism by embracing Bitcoin, what does that mean? We are sure it seems hyperbolic to most, if not outright ludicrous, but it’s actually fairly prosaic. It means that those social units that voluntarily choose to embrace Bitcoin — a global, digital, sound, open-source, programmable money — will be in a position to accumulate long-term–oriented capital at a disproportionate rate to those who do not. They will have a superior economic foundation from which to build healthy social and political institutions, which will contrast to those left behind as medieval Venice did to the remnants of the Western Empire. This is the thesis of the book in a nutshell. [...]
We diagnose the regime of political economy dominant in the West since 1971, and particularly acute since 2009, and alluded to earlier in this introduction. This regime is often called “capitalism,” or, if acknowledged to have diverged a great deal from what “capitalism” once meant, is still felt to be somehow the inevitable end point of the dynamics of political economy that capitalism requires and creates.
We believe that nurturing, replenishing, and growing a stock of capital is a practice that is fundamental to all human affairs, not just economic exchange. Economic activity performed suitably creatively and responsibly may well be only a special case of a more general principle of social organization and behavior. It is a manifestation of a healthy society: the gauge of its health as observable with respect to its management and utilization of scarce resources and specialization of craft and output, among many other possible gauges.
Unfortunately, until recently in human history non-coercive means of convincing others were necessarily social. And as such, they suffered from Karl Popper’s paradox of tolerance where the tolerance of intolerance leads to rule of the latter. In a society of pacifists, the lone dissenter becomes the king. Violence has only ever been prevented by one of 3 means: inherent human goodness, perceived benefit from cooperation, or credible or enacted threats of violence greater and more terrifying still. An appreciation for elements of all 3 is precisely the rationale for learning martial arts, and self-defense in general: That the good and the brave might defend not only themselves, but can cooperate with those who cannot defend themselves, by threatening the malicious with greater inflicted costs than they expect in illegitimate gains. This may all sound intellectually impressive at first glance but is really nothing more than pointing out that civilization is superior to a state of nature. That the encouragement of capital and deterrent of morality (i.e., “civilization”) have historically been the best and last defenses against violence has given the immoral a clear incentive: Stigmatize and ridicule morality, demonize the honest formation of capital, or infiltrate the institutions intended to support either (voluntarily established or otherwise), and their prospective violence might generate higher returns. But now this equation features a novel variable, and one tinged with historical irony at that: After millennia of compounding technological advances taking us from the sword and shield to the longbow to the trebuchet to the handgun to the tank to the dreadnought to the fighter jet to the atomic bomb, humanity has discovered a technology that only resists and disincentivizes violence, and has no other use.
In short: Bitcoin fixes this. In long: the remainder of this book.
| These are great points, especially the importance of self-defense - physical (by learning martial arts) and financial (by holding Bitcoin). | Das sind gute Punkte, insbesondere die Bedeutung der Selbstverteidigung - körperlich (durch das Erlernen von Kampfsport) und finanziell (durch das Halten von Bitcoin). | Son puntos estupendos, especialmente la importancia de la autodefensa - física (aprendiendo artes marciales) y financiera (manteniendo Bitcoin). |
To quote Knut Svanholm’s One-Shot Principle from Bitcoin: Independence Reimagined: “Absolute mathematical scarcity achieved by consensus in a sufficiently decentralized distributed network was a discovery rather than an invention. It cannot be achieved again by a network made up of participants aware of this discovery, since the very thing discovered was resistance to replicability itself.” It’s Schelling points all the way down.
Markets have many characteristics. We suggest they are subjective, uncertain, complex, stochastic, adaptive, fractal, reflexive — really any clever-sounding adjective you like — just not efficient. This means there is no “correct price” and strongly suggests that degenerate fiat finance is self-serving bullshit.
- I fully agree.
This Is Not Capitalism
It is somewhat concerning to us that people seemed, and still seem, to be lining up to both defend and attack “capitalism,” when the object of discussion could hardly be further from any worthwhile meaning of the word but is rather better described as: To boost aimless consumption, primarily with uncollateralized debt, by destroying the price signals for capital and depleting its stock. [...] The money created by credit extension can be perfectly legitimate if the risk of the maturity transformation is priced freely by interest, borne by the equity holders of the lending institution, mitigated with collateral they understand, and accepted in exchange by willing economic actors.
You need stocks to create flows, and you need flows to replenish stocks. You need financing to start a business, and you need profits to maintain one. Profits are required to pay back the financing, and will eventually give the business owner the ability to eschew financing entirely and maintain the business’s capital requirements sustainably and internally. This is as true for a single business as when aggregated to “the economy.”
The health of a single business, and the health of the aggregation of all businesses, should not be measured by “growth” in revenue, or in profits, or even in capital, but in the ratio of profits to capital. The rate of return. And ideally, it should be (geometrically) averaged over a very long time — not only can no meaningful investment take place over a single year but the length of credit cycles will obscure what is really happening over as long as 10 or 20 years. A high rate of return is a high flow to stock ratio. If all the flow is reinvested, it will be the rate of increase of the stock, and reflect the meaningful growth of “the economy.”
Recall once more the “dimensionality” argument: The ratio of profit one year to profit the year before is not even “growth.” It is an “increase.” Return on capital is a growth rate. Its units are one over time. Economic well-being and sustainability can only be sensibly measured with aggregated return on capital. Unsurprisingly, this is not at all how anybody does so.
| I find the difference between stock and flow, and between growth and increase very important. GDP cannot grow, only increase, as it is a flow. | Ich halte die Unterscheidung zwischen stock (Bestand) und flow (Fluss/Strom) sowie zwischen Wachstum und Anstieg für sehr wichtig. Das BIP kann nicht wachsen, sondern nur ansteigen, da es ein Fluss ist. | Me parece muy importante la diferencia entre stock y flujo, y entre crecimiento y aumento. El PIB no puede crecer, ya que es un flujo. |
“The modern obsession with growth, and leverage to achieve that growth, is fundamentally philosophically at odds with the notion of creating a harmoniously balanced society, leading as it does to repeated cycles of debt-fuelled lunacy. Like a long-suffering father bailing out his son’s gambling debts, governments have become accustomed to entertaining moral hazard by subsidizing risk taking by their financial institutions.”
—Harris Irfan, Heaven’s Bankers
Money is the stored and accepted value of work done in the past, redeemable for goods and services in the present or future. Money should not constantly decline in value. […] all else equal, over a long enough period of time you would expect the purchasing power of money to increase roughly in line with aggregate return on reinvested capital, because the same past work done now has access to a greater amount of goods and services. This means you would only lend capital to risky enterprises because you want to, not because you have to in order to have any hope of preserving your wealth. This in turn means capital would be priced so as to accurately reflect society’s preferences for saving and consumption, and investment projects would be coordinated accordingly.
Consider Figure 3 of finance as a proportion of US GDP. Something is wrong here. Finance certainly ought to grow: If done properly, it contributes enormously to societal well-being by helping allocating capital efficiently. This is all well and good. But it should not grow faster than everything else, because it typically charges a percentage fee of the face value of the assets or securities that pass through its allocating hands. For finance to consistently grow as a proportion of GDP, either it is simply upping its take — which might be reasonable within bounds, but raises questions of adequate competition in the sector and of possible regulatory capture — or it is making more and more MBS-like time bombs. It is spinning off flows of toxic financial exposure, of whose values it is taking a cut but not a stake, that don’t actually contribute to real economic returns, and hence to the aggregate growth in the stock of capital.
Accelerated Descent
“What does Wall Street get out of financialization? A valuation story to sell. What does management get out of financialization? Stock-based compensation. What does the Fed get out of financialization? A (very) grateful Wall Street. What does the White House get out of financialization? Re-election. What do YOU get out of financialization? You get to hold up a card that says ‘Yay, capitalism!’” — Ben Hunt, This Is Water
- Great quote
The dominant regime of political economy in the West since 1971, and particularly acute since 2009, has been built on a set of related economic fallacies: There are no adverse consequences to manipulating the price and supply of money; economic well-being can be measured by increases in flows of revenue rather than the growth rate of profit over capital; such measures as GDP growth and stock market capitalization ought to be maximized at all costs; and the growth rate of the average matters but not the average growth rate. Had we built a capitalistic society on the principles of sound money and long-term returns, a great many institutions and incentives would likely be radically different to what we see today. The structure of economic production would be far more robust to shocks, far more inclusive in its creation and distribution of wealth, and far less corrupting in its rewarding of political cronyism. The factors we falsely deem to cause economic well-being are, in fact, finetuned to accelerate our inevitable descent into ever greater fragility, inequality, extraction, and financialization, and, ultimately, to the total depletion of capital. This is your brain on central banking, regulatory capture, and financialization. This is not capitalism.
Ludwig Wittgenstein once asked a friend, “Tell me, why do people say it is more natural to think that the sun rotates around the Earth than that the Earth is rotating?” The friend said, “Well, obviously, because it just seems like the sun is going around the Earth.” Wittgenstein replied, “Well, what would it seem like if it did seem like the Earth were rotating?”
“Knowledge is at the heart of dynamic civilization — but so is surprise. A dynamic civilization maximizes the production and use of knowledge by accepting widespread ignorance. At the simplest level, only people who know they do not know everything will be curious enough to find things out. To celebrate the pursuit of knowledge, we must confess our ignorance; both that celebration and that confession are central to dynamic culture. Dynamism gives individuals both the freedom to learn and the incentives to share what they discover. It not only permits but encourages the incentives to share what they discover. It not only permits but encourages decentralized experiments and competitive trial and error — the infinite series by which new knowledge is created. And, just as important, a dynamic civilization allows its members to gain from the things they themselves do not know but other people do. Its systems and institutions evolve to let people develop, extend, and act on their particular knowledge without asking permission of a higher, but less informed, authority. A dynamic civilization appreciates, protects, and nurtures specialized, dispersed, and often unarticulated knowledge.” —Virginia Postrel, The Future and Its Enemies
“The quantities of consumption goods at human disposal are limited only by the extent of human knowledge of the causal connections between things, and by the extent of human control over these things. Increasing understanding of the causal connections between things and human welfare, and increasing control of the less proximate conditions responsible for human welfare, have led mankind, therefore, from a state of barbarism and the deepest misery to its present stage of civilisation and well-being, and have changed vast regions inhabited by a few miserable, excessively poor, men into densely populated civilized countries. Nothing is more certain than that the degree of economic progress of mankind will still, in future epochs, be commensurate with the degree of progress of human knowledge.” —Carl Menger, Principles of Economics
- I still think Hive will be an important means to the progress of human knowledge.
What do humans collectively take prices to mean when they are purposefully acting? What opportunity cost do they all have in common? Consider that rather than accepting a price that is dependent on literally every other demand and supply in the network, you could always make the widget yourself. If there are literally no widgets for sale anymore, you needn’t assume your purchasing power has “infinitely decreased” if the inputs can still be purchased and the knowledge of how to combine them still exists and can be accessed. You can still “purchase” a widget, and you can still sensibly conceive of its cost: The initial purchase of the inputs, plus the opportunity cost of your own time and energy, since any time and energy you devote to making a widget you can’t devote to making or doing anything else that might later be traded for money. If, on the other hand, widgets are still mass produced, you will very likely find that the difference between the cost of the inputs versus the available market price of the finished widget is one you cannot reconcile as a viable opportunity cost of your time and energy turning one into the other. Since so much effort has been put into minimizing this exact opportunity cost of time and energy on the part of the widget manufacturer as a requirement to stay competitive, you will probably rather pay the difference than commit this time and energy yourself. […] The entirety of the chain of prices across all exchanges is shown to be a series of independent and real-time decisions about how to value one’s own time and energy and best guesses as to how others value theirs.
| Great explanation for why I don‘t repair my car, install new lamps in my apartment, etc. It‘s not that I am lazy (ok, perhaps also 🤔), it‘s opportunity costs. Division of labor is great 👌 | Eine gute Erklärung dafür, warum ich mein Auto nicht repariere, keine neuen Lampen in meiner Wohnung installiere usw. Es liegt nicht daran, dass ich faul bin (ok, vielleicht auch 🤔), sondern es sind die Opportunitätskosten. Arbeitsteilung ist toll 👌. | Gran explicación de por qué no reparo mi coche, instalo nuevas lámparas en mi apartamento, etc. No es que sea vago (vale, quizás también 🤔), son los costes de oportunidad. La división del trabajo es genial 👌 |
It is worth being as clear as possible that money is not capital. Money is the right to time entirely in general. It is liquid and fungible. Capital is time that has been crystallized towards a specific end. It is illiquid and nonfungible. This should also elucidate that savings is not investment. Savings is money, and investment is capital; savings is clearly required for investment, as time in general is required to then be crystallized by specific allocation and direction. But fungible savings must be transformed by purposeful action; savings become “investment” by wrestling with uncertainty and seeking to create productive capacity with the potential to increase the capital stock, and ideally eventually reward the original contribution of the saver. […] money is the right to dictate what capital is formed, but it is not itself capital. We are honestly not entirely sure what the objectors even think they mean in making this objection, but it may be something along the lines of: If everybody merely saves rather than invests, then all that capital is wasted. This is absurd. “Capital” will reflect as much time as people collectively are willing to devote to deferred rather than immediate consumption; to crystallizing uncertain effort in illiquid form rather than cashing in on the efforts of others right now. Money merely bids for this time and directs it to one end or another, but it cannot be “wasted” by not being spent; it is not capital. There is no such thing as “hoarding,” except in the minds of degenerate fiat economists attempting to moralize their own predilection for appropriation.
| The "hoarding" of money - a discussion I had oftentimes with colleagues. Here this proposition is debunked. | Das "Horten" von Geld - eine Diskussion, die ich oft mit Kollegen hatte. Hier wird diese Behauptung widerlegt. | El "atesoramiento" de dinero - una discusión que he tenido a menudo con colegas. Aquí se desacredita esta proposición. |
The absolutely only way to sustainably increase the economic output that is available for consumption is to grow the capital stock above its natural rate of depreciation. If we have more capital, the same amount of human time and energy will create a greater output available for consumption. Hence it ought to take less human time and energy to exchange for a given proportion of this output.
The tricky thing about growing the capital stock is that it is by its nature an uncertain process. It cannot be automated, nor reduced to an algorithm. It is necessarily experimental. New capital is as much discovered as invented. This is why money is so important to efforts to create capital: These efforts themselves take time and energy that might otherwise have gone towards more certain avenues of production. Only some small group may have the knowledge and skills to credibly experiment with creating a particular new tool or new organization, and they may not be willing to take the risks required. Some other group may have the willingness to take the risks but not the knowledge or skills to do so. Money provides a means for coordinating the risks of attempting to create capital such that those contributing to the risk taking are not necessarily those bearing the risks.
By disconnecting the bearing of the risk from its execution, we incentivize those willing to bear risk to seek out those risks whose reward seems the greatest, unburdened by their own particular circumstances. We will collectively run not only more experiments that have the potential to increase our economic wellbeing, but we will also prioritize running the best experiments. Functional money facilitates all this parceling up and trading of risk.
- Great explanation!
“Money has been the oil that has kept the wheels of society turning and allowed the complexity of our present civilization to develop, but credit, the centralized creation of money, interest, and particularly compound interest, have seriously destabilized the relationship between money and the goods and services, or wealth, it originally represented.” —Allan Savory, Holistic Management
What about if or when savers revolt against the obvious tax on their savings that negative rates require? Inflation may be a stealth tax that is unavoidable as far as they are concerned, but surely this obnoxiously direct tax can be avoided by removing deposits? Unfortunately, this will do little more than trigger a liquidity crisis that will have to be patched by long-term inflationary reserve creation, from which yet more short-term inflationary leverage will predictably metastasize. And if you think about it, this nuisance would be rather solved by simply banning cash, introducing purely digital state money, or both, such that fungible pan-bank liabilities are not liabilities against anything in particular, besides the loans that created them. It would be jolly good for banking stability to protect it from the animal spirits of the rabble. We wonder if anybody has considered this.
To date, it has been very difficult to conceptualize what value, exactly, has peacefully opted out of fiat and into bitcoin. Pricing only happens at the margin, and marginal fiat exchanged for bitcoin is just a bank liability that the bank relabels. [...] This will change when people start selling not just their fiat, and not just their time, but when they start liquidating real assets. Gold will probably be the first victim, for readily understandable reasons as bitcoin is an upgrade in almost every respect. But gold is not systemically important. This shift will be noticeable but not otherwise impactful. When the accumulation drive hits short-term credit, real estate, and passive equity, that is when the party will really start.
- I am all in for that. Bring it on! Hyperbitcoinization
But really, money is logos. Bitcoin is just the best logos. It is the economic language in which it is by far the most difficult to lie. This is perhaps the cleanest and quickest way to dismiss modern monopoly money theory, albeit in a marginally cryptic and highbrow manner: The MMM theorists, and an assortment of larping “crypto-influencers,” believe money is a public good, but they are mistaken; it is a common pool resource. Case closed.
Economics is resolutely not a science and anybody who claims otherwise is a charlatan. One cannot run controlled experiments in economics and one cannot consistently measure outcomes of uncontrolled experiments. Economics is, at best, 4 loosely related disciplines: applied logic, statistical analysis, social theorizing, and historical analysis. And, to be frank, the final 3 are variations in approach to the same core task: practical analysis of real economic behavior, differentiated only by the intellectual toolkit chosen. The first we might call exclusively theoretical analysis of abstract economic behavior. All are certainly worthwhile and create clearly useful knowledge if practiced rigorously and with adequate humility. But none are science. Economics makes no predictions. It might generate wisdom but it does not generate facts.
- I agree, as written here.
Gall’s law, from John Gall’s Systemantics, A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.
- Gall's law applied to Bitcoin - here a great article.
“Perhaps we can’t imagine life after ‘the Internet’ because we don’t think that ‘the Internet’ is going anywhere. If the public debate is any indication, the finality of ‘the Internet’ — the belief that it’s the ultimate technology and the ultimate network — has been widely accepted. It’s Silicon Valley’s own version of the end of history: just as capitalism- driven liberal democracy in Francis Fukuyama’s controversial account remains the only game in town, so does the capitalism-driven ‘Internet.’ It, the logic goes, is a precious gift from the gods that humanity should never abandon or tinker with. Thus, while ‘the Internet’ might disrupt everything, it itself should never be disrupted. It’s here to stay — and we’d better work around it, discover its real nature, accept its features as given, learn its lessons, and refurbish our world accordingly. If it sounds like a religion, it’s because it is.” — Evgeny Morozov, To Save Everything, Click Here
“Perhaps in the end the open-source culture will triumph not because cooperation is morally right or software ‘hoarding’ is morally wrong … but simply because the closed-source world cannot win an evolutionary arms race with open-source communities that can put orders of magnitude more skilled time into a problem.” — Eric Raymond, The Cathedral and the Bazaar
“The cheapest option for power generation” is by definition any that is free, in the sense that generated energy would otherwise be wasted, and intermittent sources of power such as wind and solar face a permanent load balancing problem given the sources of their generation is inherently unpredictable and will never match up perfectly, or even nearly, with grid demand. Adding a bitcoin mining rig to a renewables project provides a permanent buyer of otherwise wasted electricity, lowering the volatility of cash flows of renewables projects, which in turn lowers their cost of capital, ensures more get financed and on better terms, and drives down the deflation curve even faster given Wright’s Law indicates a strong and almost certainly causal link between the rate of exponential cost declines and the pace of cumulative production increases. Bitcoin will be the greatest catalyst to renewables adoption in the history of the industry. The authors are professionally aware of numerous vast projects underway to this exact effect, and, once again, this may be entirely well known and appreciated by the time the reader has arrived at this material.
The case for natural gas flaring is even more stark: Methane leakage is a natural part of the process of extracting and transporting natural gas and is a far more potent greenhouse gas than carbon dioxide. Prior to Bitcoin, this problem had no economical solution. Bitcoin mining puts this otherwise wasted energy to work in a way that is not only profitable, given the source is properly contextualized as “free” for the same reasons as wind and solar excess detailed above, but is clearly and indisputably environmentally friendly. This statistic will certainly be out of date by the time of publication and forever after, but at the time of writing, global methane flaring alone consumes around twenty times the energy of the existing bitcoin mining outlay.
| That's one of the reasons why Bitcoin should initiate a power generation revolution, making renewable energies (especially nuclear energy) greatly more efficient. | Das ist einer der Gründe, warum Bitcoin eine Revolution in der Stromerzeugung auslöst, die erneuerbare Energien (insbesondere Kernenergie) wesentlich effizienter macht. | Esa es una de las razones por las que Bitcoin debería iniciar una revolución en la generación de energía, haciendo que las energías renovables (especialmente la nuclear) sean mucho más eficientes. |
Like Bitcoin, it doesn’t care, but unlike Bitcoin, that apathy is reflected in unrelenting violence. Humans and humans alone care and self-regulate their capacity for violence and use their surplus time and energy above subsistence to attempt to protect and conserve the environment that is constantly trying to kill them. Humans alone have advanced to civilization, or, personal sacrifice and interpersonal compromise in the pursuit of the fruits of voluntary cooperation rather than immediate-term selfish violence. While many plants and animals might appear to plan and act for the future, only humans have a time preference that they arrive at intellectually rather than merely instinctively. […] Practically, the only rational hope for protecting non-human life forms and ecosystems is to first and foremost prevent human suffering. Desperate, suffering, and mal-incentivized humans will inevitably destroy things. They will consume capital — and more. … They will cause biodiversity loss, for example, without a second thought.
- Yes, prosperity first, environmental protection will follow.
Civilization certainly makes life better, but earned at the cost of hard work. Civilization is proof of work. Civilization is the choice, as a community of individuals opting into voluntary cooperation to defer gratification: to invest rather than to consume. Individuals are perfectly free to opt out of these hard choices by returning to a pre-civilizational state, but it would be preferable to all if, in doing so, they had the decency to in fact remove themselves from civilization rather than skimming its consumable surplus while contributing nothing to its maintenance.
Legal scholar and prolific political blogger Glenn Reynolds made the following astute observation in a 2010 post: „The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.“
What Reynolds identifies here is the effect of a top-down decree to skip to the reward of the nurture, replenishment, and growth of social capital. Tragically, the effect is to undermine the process of ever hoping to generate this reward in a bottom-up manner — which is, of course, to say, sustainably.
In her essay, The Language of Sex, Marilyn Simon writes, There are a number of prominent tenets that characterize current values surrounding sex and sexuality. The overarching one is, of course, a belief that we are freer, wiser, and more ethical with regards to human sexuality than any civilization prior to us. This is our “pride.” And while it is self-evidently true that official political and institutional systems have become much more open and accepting of sexual orientations, this does not mean that the past was as monolithically repressive as we like to assume. All one has to do is read the Marquis de Sade, or Dostoevsky, or Christopher Marlowe, or Chaucer, to say nothing of the exploits of Roman antiquity, to know that even the most unconventional, “non-binary” sexual appetites have been abundant for many, many centuries. Yet because contemporary notions of sexual liberty require a repressive past from which we have freed ourselves, our ethics of sexual freedom engender feelings of arrogance and superiority, which are hardly ethical attitudes to hold, to a historical inheritance that we neither know nor understand.
- Interesting.
Among the great banking families of late medieval and Renaissance Florence and even perhaps Italy, none shine so bright as the Medici. And yet, the three great Florentine families of the 14th century, the Acciaiuoli, Bardi, and Peruzzi once controlled more extensive and richer banks than the Medici ever did. Neither were the Medici particularly innovative bankers. […] The Medici were successful bankers, of course. They made a fortune from the European wool trade, with branches as far from home as London and Bruges. Their control over both the Papal accounts and the alum trade, which had been monopolized by Rome, provided reliable profits shielded from competition. But the Medici legend was born from investing not in banking or even in commerce but in intangible cultural projects that would yield impossible-to-measure returns. Through patronage, the Medici would allocate capital, accumulated through meticulous and conservative banking activities, to ventures of which no accountant could make sense. And yet, the value the Medici created outlasts all that of the more financially successful Italian families.
Jane Jacobs forcefully makes this point in the ominously titled, Dark Age Ahead, writing, „Perhaps the greatest folly possible for a culture is to try to pass itself on by using principles of efficiency. When a culture is rich enough and inherently complex enough to afford redundancy of nurturers, but eliminates them as an extravagance or loses their cultural services through heedlessness of what is being lost, the consequence is self- inflicted cultural genocide. Then watch the vicious spirals go into action.“
We propose the Farrington-Meyers Law of Institutional Dynamics: Knowledge and competence only flow up, and ignorance and incompetence only flow down. Global ignorance and incompetence will lead to local ignorance and incompetence, while local knowledge and competence might lead to global knowledge and competence. Notice the latter implications are not exhaustive: On the one hand, local agents can be ignorant and incompetent, and global agents can be knowledgeable and competent. The former is contained and the latter is delicate. It seems to us there could be some sort of hand-wavy minimax principle at play here: Global knowledge and competence is likely to be the minimum of the local knowledge and competence it governs, while local ignorance and incompetence is likely to be the maximum of global ignorance and incompetence which governs it — all crucially contingent on the strength of information flow up and authority flow down.
| Though the book is rather long and some text passages are rather long-winded, I enjoyed this book. It contains some great explanations and new presentations of facts and relationships. | Obwohl das Buch recht lang ist und einige Textpassagen langatmig sind, hat mir dieses Buch sehr gut gefallen. Es enthält einige tolle Erklärungen und neue Darstellungen von Fakten und Zusammenhängen. | Aunque el libro es bastante largo y algunos pasajes del texto son bastante prolijos, lo he disfrutado. Contiene magníficas explicaciones y nuevas presentaciones de hechos y relaciones. |
Have a great day,
zuerich
Very interesting reading that book you chose, Bitcoin is Venice.Have a happy evening.
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Very interesting reading that book you chose, Bitcoin is Venice.Have a happy evening.
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