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Phillip Johnson
An economist interested in antitrust and intellectual property (and politics)
An economist interested in antitrust and intellectual property (and politics)
Phillip's posts

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Bitcoins Are Less Anonymous than Gold or Dollars
Nice article comparing and contrasting bitcoins to other more familiar currency tyes.
[B]itcoins, used as I have described, are not only not an anonymous currency, they are in a sense the least anonymous currency ever created.

The distinction between wallet and owner provides some degree of anonymity, analogous to the anonymity provided by a numbered Swiss bank account. To see the limits of that anonymity,  imagine that the FBI decides that the Free State Project is a subversive organization—as, in a sense, it is. An FBI agent procures some bitcoins and uses them to pay for his registration at Porcfest. He now has the public key of a wallet connected to the Project—call it wallet A. If he wants to find out whether some suspicious person that uses bitcoins has ties to the Project, he makes a payment to that person's wallet and then checks to see if it has ever sent or received a payment to or from wallet A, or to a wallet that has sent or received a payment to or from wallet A, or ...  . He can, in other words, engage in traffic analysis using only public information—no need to tap any phones.

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I'm not sure yet what to think about Bitcoin's future. A fiat currency does not need to be "real" to have real value and anonymous currency with strictly supply constraints has interesting advantages in times of currency inflation or risk. The virtual aspect of the currency has some attraction but at the same time brings substantial limitations to Bitcoin's perceived advantages.  Ultimately a virtual currency is only as reliable and anonymous as the network. Networks are not always reliable (e.g., a network failure) or secure (e.g., China).

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"He's a politician," Paul said. "He was elected by a majority, but the majority doesn't get to decide who we execute."

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The New (Bleaker) Normal?

The recovery since 2008 has been the weakest in the modern era. As bad as the effects have been in the short term, it is the new long term outlook that is the most depressing. Between 1965 and 2007 our long term growth trend averaged 3.07%. This period of generally good growth was interrupted by recessions, but the recovery growth always quickly brought us back to trend. That has happened this time and the CBO thinks that substantially slower growth (2.35%) will be the norm for the foreseeable future. That 0.7% a big drop because it accumulates over time. If correct, the lost growth means that in 15 years our country will have a GDP--the total goods and services we produce and enjoy annually--10% lower than if we could have remained on the higher growth track.

That 10% is a lot to have lost. Let's hope that the choices we make in the coming year will help make the CBO's forecast wrong and get us back on track to recovering the loss.

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Eyeglasses and The Economics of Good Intentions

Virginia Postrel does an excellent job explaining why donating used eyeglasses for reuse by the poor is a complete waste. She describes a study that compares costs of reused glasses versus another approach and concludes it would be more charitable to just throw your old glasses in the trash (in part because by donating you're essentially dumping them in a very expensive trash can).

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The Ten Pillars of Economic Wisdom
By David R. Henderson

1. TANSTAAFL: There ain't no such thing as a free lunch.
2. Incentives matter; incentives affect behavior.
3. Economic thinking is thinking on the margin.
4. The only way to create wealth is to move resources from a lower-valued to a higher-valued use. Corollary: Both sides gain from exchange.
5. Information is valuable and costly, and most information that's valuable is inherently decentralized.
6. Every action has unintended consequences; you can never do only one thing.
7. The value of a good or a service is subjective.
8. Creating jobs is not the same as creating wealth.
9. The only way to increase a nation's real income is to increase its real output.
10. Competition is a hardy weed, not a delicate flower.

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It's Time to Plan for the Demise of of U.S. Postal Service

It's just going to keep getting more and more expensive the longer we carry this dinosaur of an institution.

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Amazon replacing the post office? Faster please.

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I wish our parks here in Sacramento would move further towards this model. Recently, during budget cuts, they began closing the public restrooms because of layoffs (the unionized work force refused to take a pay cut instead of layoffs). Around our neighborhood park, William Land Park, a volunteer group is contributing their time every month to assist with upkeep.
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