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825 sats \ 12 replies \ @elvismercury 11 Oct 2023 \ on: Intercontinental energy grids. 🌎←♻️→🌍 bitcoin
It's interesting that in the Libertarian / ancap circles that dominate btc, the idea of a subsidy would presumably be considered a Great Market-Distorting Sin. Yet according to this account, much productive development came from it. The usual critique of subsidies and govt meddling of all kinds is that when there's a real market need, a market solution will arise.
Is there an obvious place where this governmental interference perverted this undersea cabling ecosystem in some way? What does the alternate past without subsidies look like?
Technically, the economic distortion from subsidies is known as a "Dead Weight Cost". The idea isn't that what is produced via subsidy is worthless. Rather, those resources would have been expected to generate more value on the open market.
As with much economic analysis, it's about the seen vs the unseen. Only uncritical observers make their judgements solely based on the observed outcome.
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Yeah, fair. I think the real insight is that everything's tradeoffs. You put dead weight loss on one side, and coordination failures + externalities on the other, and try to behave sensibly given those tradeoffs. Pretending that either one doesn't exist (which is the usual partisan arguing) is dumb.
But the seen vs unseen is important to keep in mind, I think any reasonable person would agree on that.
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There's a very interesting conversation to be had about whether it's actually possible for non-market actions to be efficient: i.e. whether it's possible to correct for market failures at a lower cost than the cost of the failure. This gets skipped in basically every discussion about externalities justifying state interventions.
The theoretical framework for doing it requires accurately knowing exactly how much value each person attaches to the externality and then charging/compensating them for it with money from whoever created the externality (or paying the creator of positive externalities).
Since the requisite knowledge is impossible to attain, the entire endeavor is quite suspect.
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I can see that point.
Another interesting conversation to be had is over the fact that market mechanisms can only function over domains for which there is a pricing signal; and even then, markets can only be efficient insofar as the price accurately encodes the values that it purports to encode at all [1]. Both of those assumptions are violated in practice; the question is: by how much?
So then those are the imperfect strategies you set against each other. And the approaches are not equally palpable to people, e.g., it's easy for someone to look at how the groundwater has been fucked and to say: "Something needs to be done!" and for that to seem reasonable, vs a more theoretical market-efficiency argument.
[1] A better way of putting it: they are efficient, but efficient with regard to what?
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Now you understand the incompleteness of subjective value theory. It is just that value is subjective at a local scope, and human life is perceived largely from the local scope. But just like we can do math and understand galaxies beyond the human scale, there is a global objectivity in value, which is nothing more than maximizing negative entropy (dubbed exotropy by some). This is what is done most efficiently with freedom and ALL government interference/subsidies is MATHEMATICALLY GUARANTEED to make efficiency drop, and poverty to increase, which is measured in energy.
Bitcoin is what gives you a measure NOW, but total energy is how you measure real world wealth. I explained it all here: https://heaviside.substack.com/p/bitcoin-mining-wastes-energy-but
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Is there a relationship between minimized local entropy and Pareto Efficiency?
I've thought about economic order in entropy terms as an analogy, but I've never looked into how literal that relationship is.
markets can only be efficient insofar as the price accurately encodes the values that it purports to encode
The thing is, market mechanisms are such that "insofar as" becomes greater over time, whereas I'm not aware of any evidence that non-market forces have similar self-correcting mechanisms.
The "Something needs to be done" people may not realize it, but what they're usually advocating is that their preferences override the preferences of others by force. However, in your example, the real issue is a tragedy of the commons, which is an expected trait in non-market environments.
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The thing is, market mechanisms are such that "insofar as" becomes greater over time.
Provocative statement. What are you basing that claim on?
whereas I'm not aware of any evidence that non-market forces have similar self-correcting mechanisms.
I don't think asymptoting to "correct" can be demonstrated at all except in a toy domain, since defining what "correct" is is the heart of the issue.
Correct, not is it only suspect, it is thermodynamically provable as less efficient via Landauer's principle because the bitcoin a person holds is literally the only prove of information that anyone can provide with skin in the game. This is the crux of everything, and it is absolute. There is no "small" exception.
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Probably financial markets and the businesses there would have no option but to finance it. The advantage for them was probably greater than any other. Overland (domestically) it was the railroad and logistics industry that needed it most, for scheduling-dispatching-safety, and for weather.
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