Decentralization is often held up as an ideal, but often proves unstable. This presentation explores the relationship between and different virtues of decentralized and centralized elements, considers randomness, democracy, and the problem of how to manage centralized elements, and finally thinks about how we might use blockchains like Ethereum to experiment with these ideas.
Dr. Charles Calomiris "An Incentive-Robust Program for Financial Reform"Nataly Nikitina
KSE Open Lecture with Dr. Charles Calomiris (Columbia University Graduate School of Business) on "An Incentive-Robust Program for Financial Reform" was held on April 12, 2011.
Basel III Greenhorn – Process and Information System MetamorphosisInfosys
This paper discusses the basic process and system architecture required to combat the Basel n+1 syndrome, and how technology can be creatively leveraged for active risk management.
This document discusses how ineffective supervision and management deterioration can lead to banking crises. It argues that even when a crisis has macroeconomic roots, good bankers can become bad bankers through a series of deteriorating attitudes and behaviors. These include technical mismanagement like overextension and poor lending practices, "cosmetic mismanagement" to hide problems, desperate measures to delay failure, and in some cases fraud. Effective banking supervision is needed to regulate banks, supervise them, and take remedial actions to prevent management deterioration and limit damages when problems arise.
The document discusses the Islamic perspective on the credit crisis from several angles in 3 parts. It begins by defining key terms like debt financing and credit financing. It then contrasts Islamic risk sharing contracts with conventional debt contracts. Finally, it analyzes several economic theories for the causes of the credit crisis and argues that the fractional reserve banking system and financialization decoupled finance from the real economy and led to instability.
The document discusses the causes of the financial crisis and solutions to prevent future crises. It argues that the financial system is too important to leave unregulated and that mistakes were made during the crisis that went unpunished. It identifies three main challenges regulators face: 1) increasing capital requirements for financial institutions, 2) increasing regulation and transparency of credit derivative markets, and 3) regulating credit rating agencies to address conflicts of interest. Nationalizing credit rating agencies and increasing clearinghouse requirements are proposed as solutions.
Corporate governance deals with how suppliers of finance to corporations assure themselves of getting a return on their investment. Stakeholders include shareholders, creditors, managers, and society as a whole. Good corporate governance practices are important for firms with dispersed minority shareholders who cannot directly influence decisions.
The board of directors oversees management and is elected by shareholders. There are executive, non-executive, and independent directors. The board ensures minority shareholder rights are protected, dividend policies are clear, quality reports are published, and information is disclosed.
Institutional investors like pension funds and hedge funds can influence corporate policies through shareholder proposals, media pressure, and direct engagement. Index funds and ETFs allow passive investment
This paper examines how financial development over the last 30 years has changed incentives in the financial system and potentially increased risks. Technological advances, deregulation, and institutional changes have led to disintermediation from traditional banks and reintermediation through investment managers like mutual funds and hedge funds. While this has benefits like risk sharing, it has also altered managerial incentives in ways that could distort risk-taking. Specifically, investment manager compensation is now more closely tied to returns compared to bank managers' fixed salaries in the past, incentivizing greater risk-taking. Additionally, performance relative to peers matters more, which could lead to herd behavior. The paper discusses these changes to the financial system and their potential implications.
Organize for Complexity, part II (BetaCodex13) Niels Pflaeging
This document discusses designing organizations to be robust and adaptable in complex environments. It argues that organizations should be viewed as networks rather than hierarchical pyramids. Key points made include:
- Organizations function as informal networks of individuals and formal networks of value-creating teams.
- Decision-making should be decentralized to allow organizations to sense and respond to their environments.
- Organizations should be designed as decentralized cell structures with autonomous peripheral cells connected by "strings" and served by central support cells.
- Transparency, relative targets, and result-based cultures better support adaptability than command-and-control approaches.
Dr. Charles Calomiris "An Incentive-Robust Program for Financial Reform"Nataly Nikitina
KSE Open Lecture with Dr. Charles Calomiris (Columbia University Graduate School of Business) on "An Incentive-Robust Program for Financial Reform" was held on April 12, 2011.
Basel III Greenhorn – Process and Information System MetamorphosisInfosys
This paper discusses the basic process and system architecture required to combat the Basel n+1 syndrome, and how technology can be creatively leveraged for active risk management.
This document discusses how ineffective supervision and management deterioration can lead to banking crises. It argues that even when a crisis has macroeconomic roots, good bankers can become bad bankers through a series of deteriorating attitudes and behaviors. These include technical mismanagement like overextension and poor lending practices, "cosmetic mismanagement" to hide problems, desperate measures to delay failure, and in some cases fraud. Effective banking supervision is needed to regulate banks, supervise them, and take remedial actions to prevent management deterioration and limit damages when problems arise.
The document discusses the Islamic perspective on the credit crisis from several angles in 3 parts. It begins by defining key terms like debt financing and credit financing. It then contrasts Islamic risk sharing contracts with conventional debt contracts. Finally, it analyzes several economic theories for the causes of the credit crisis and argues that the fractional reserve banking system and financialization decoupled finance from the real economy and led to instability.
The document discusses the causes of the financial crisis and solutions to prevent future crises. It argues that the financial system is too important to leave unregulated and that mistakes were made during the crisis that went unpunished. It identifies three main challenges regulators face: 1) increasing capital requirements for financial institutions, 2) increasing regulation and transparency of credit derivative markets, and 3) regulating credit rating agencies to address conflicts of interest. Nationalizing credit rating agencies and increasing clearinghouse requirements are proposed as solutions.
Corporate governance deals with how suppliers of finance to corporations assure themselves of getting a return on their investment. Stakeholders include shareholders, creditors, managers, and society as a whole. Good corporate governance practices are important for firms with dispersed minority shareholders who cannot directly influence decisions.
The board of directors oversees management and is elected by shareholders. There are executive, non-executive, and independent directors. The board ensures minority shareholder rights are protected, dividend policies are clear, quality reports are published, and information is disclosed.
Institutional investors like pension funds and hedge funds can influence corporate policies through shareholder proposals, media pressure, and direct engagement. Index funds and ETFs allow passive investment
This paper examines how financial development over the last 30 years has changed incentives in the financial system and potentially increased risks. Technological advances, deregulation, and institutional changes have led to disintermediation from traditional banks and reintermediation through investment managers like mutual funds and hedge funds. While this has benefits like risk sharing, it has also altered managerial incentives in ways that could distort risk-taking. Specifically, investment manager compensation is now more closely tied to returns compared to bank managers' fixed salaries in the past, incentivizing greater risk-taking. Additionally, performance relative to peers matters more, which could lead to herd behavior. The paper discusses these changes to the financial system and their potential implications.
Organize for Complexity, part II (BetaCodex13) Niels Pflaeging
This document discusses designing organizations to be robust and adaptable in complex environments. It argues that organizations should be viewed as networks rather than hierarchical pyramids. Key points made include:
- Organizations function as informal networks of individuals and formal networks of value-creating teams.
- Decision-making should be decentralized to allow organizations to sense and respond to their environments.
- Organizations should be designed as decentralized cell structures with autonomous peripheral cells connected by "strings" and served by central support cells.
- Transparency, relative targets, and result-based cultures better support adaptability than command-and-control approaches.
An Alternative Manifesto of Occupation.
The old system has returned. Over the past few decades, it has slowly crept up on us unawares.
We now live under a new system of lords, royalty and priests.
Identify in 150 - 200 words your reactions to the concepts of global.pdffathimafancyjeweller
Identify in 150 - 200 words your reactions to the concepts of globalization and Global Business
Ethics Issues.
Solution
Overview
The current financial crisis has raised questions about the legitimacy of capitalism. Ethical
failures certainly played a role. While it remains to be seen whether and how many people
blatantly broke the law, there are abundant signs of various forms of potentially unethical
behavior. These include greed, unreasonable amounts of leverage, subtle forms of corruption
(such as ratings agencies that appear to have had a conflict of interest), complex financial
instruments that no one really understood, and herd behavior where people just followed along
and failed to exercise independent judgment.
It is difficult or impossible to regulate against greed and against many of the other ethical
shortcomings that have been seen. What can be done is to force greater transparency and
accountability, a process which began with Sarbanes-Oxley and is expected to continue with new
regulations of the financial system.
Context
Drawing upon learnings from their work and experiences, the panelists and moderator exchanged
views with the audience on the ethics and legitimacy of business and capitalism in general, and
the financial crisis in particular.
Key Takeaways
The financial crisis may shift societal views on the legitimacy of business.
Each panelist offered a different perspective on the issue of ethics and legitimacy in business:
– The financial crisis has the potential to damage the legitimacy of capitalism (Di Tella). Richer
nations tend to be more right-wing in their views and have more capitalistic economic systems.
The United States is exceptionally right-leaning, even among developed nations.
These attributes are heavily influenced by beliefs regarding the reasons why people are
prosperous or poor. Americans tend to see prosperity as a product of effort more than luck; left-
leaning nations believe the opposite.
Affecting these beliefs: the number and severity of the shocks a society has weathered; and
perceptions regarding the legitimacy of business—i.e., the perceived degree of corruption.
America generally perceives that corrupt businesspeople are the exception, and punishes deviants
severely. However, this financial crisis holds the potential to shift America leftward since it: 1) is
a major shock that 2) suggests systemic corruption. Both call into some question the legitimacy
of U.S. capitalism.
– It is ethically legitimate for businesses to place the customer\'s interests above all else, because
only through profit comes the freedom to contribute to society (Vasella). Business leaders must
use their personal moral compasses to make ethical decisions. As for the business\'s compass, it
should be oriented toward satisfying customers above all stakeholders. That is the orientation
that allows for the greatest competitive success and profitability. In Mr. Vasella\'s view, only by
making a profit does a company earn the rig.
Agency — a perspective on social affairsSteve Waldman
Thinking about social affairs through a lens of human agency, and contemporary social problems as a result of a stratification of human agency, may be fruitful.
Moderninizing bank supervision and regulationcatelong
This is the testimony of Chris Whalen to the Senate Banking Committee on March 24, 2009 about bank and financial institution regulation and supervision.
This document discusses how blockchain technology could be used to rebuild finance from the bottom up by enabling small and medium enterprises to raise capital through issuing liquid, publicly traded securities. It argues that current sources of external financing for small businesses are inadequate and that regulations, while well-intentioned, have discouraged public securities issues by smaller firms that could potentially manage them effectively. The document introduces the concept of cryptographic assets, which use blockchain technology and smart contracts to automate accounting, management, and reporting in a way that reduces costs and regulatory burdens compared to traditional securities.
This document discusses decentralization and centralization of power and control in the context of money and cryptocurrencies. It explains that centralized control of money enables corruption due to human temptation to abuse power. Bitcoin was an important innovation as it technologically resolved issues of centralized control through decentralization. However, mining pools have led to some centralization of Bitcoin. Proof of stake coins like VeriCoin aim to further decentralization by basing rewards on coin ownership rather than computational power, reducing incentives for resource pooling. While the technology may be decentralized, centralized ownership can still enable centralized power, so accessibility of use is important to achieve true decentralization of money, power and control for the many.
Week-1 Into to Money and Bankingand Basic Overview of U.S. Fin.docxalanfhall8953
Week-1 Into to Money and Banking
and Basic Overview of U.S. Financial System
Money and Banking Econ 311
Instructor: Thomas L. Thomas
Financial markets transfer funds from people who have excess available funds to people who have a shortage.
They promote grater economic efficiency by channeling funds from people who do not have a productive use for them to those who do.
Well functioning financial markets are a key factor in producing economic growth, where as, poor functioning financial markets are a major reason many countries in the world remain poor.
Financial Markets
A security or financial instrument is a claim on the issuer’s future income or assets.
A bond is a debt security (IOU) that promises to make payments periodically for a specified period of time.
The bond market is especially important economic activity because it enables businesses and the government to borrow and finance their activities and because it is where interest rates are determined.
An interest rate is the cost of borrowing money or the price to rent (use someone else’s) funds.
Because different interest rates tend to move in unison, economist frequently lump interest rates together and refer to the “interest rate”.
Interest rates are important on a number of levels:
High interest rates retard borrowing
High interest rates induce saving.
Lower interest rates induce borrowing
Lower Interest rates retard saving
Information Asymmetry and Information costs
Why Financial Intermediaries
In the neo-classical world economists have argued financial intermediaries are not necessary. Savers (investors) could manage their risks through diversification.
The logic rests on the perfect market assumption – that is investors can always through their own borrowing and lending compose their portfolios as they see fit, without costs. In such a world there are no bankruptcy costs.
In such a world if taken to the extreme, perfect and complete markets imply that there is no need for financial institutions to intermediate in the financial (capital markets) as every investor (saver) has complete information and can contract with the market at the same terms as banks. E.g. Information Asymmetry
Why Financial Intermediaries Bonds
A common stock (usually called stock) represents a share of ownership in a corporation.
It is usually a security that is a claim on the earnings and assets of the corporation.
Issuing stock and selling it to the public (called a public offering) is a way for corporations to raise the funds to finance their activities.
The stock market is the most widely followed financial market in almost every country that has one – that is why it is generally called the market – here “Wall Street.”
The stock market is also an important factor in business investment decisions, because the price of shares affects the amount of funds that can be raised by selling newly issued stock to finance investment spending. (Note impact examples..
- Local currencies are emerging worldwide as alternatives to traditional bank-issued currencies. They range from loyalty point systems to cryptocurrencies to community currencies that aim to strengthen social and environmental goals.
- Complementary currencies function on a spectrum from competitive to collaborative. Some aim to increase control over financial systems while others valorize contributions to social and ecological aims.
- For local currencies to fully realize their potential to balance the current monetary system, greater political and institutional support is needed, including recognizing them for tax payments and adapting legislation. This could help unlock their ability to foster financial resilience and "real" economic growth.
1. The document discusses the concept of power and response-ability in the workplace. It argues that people are powerful and make systems work through their human response-ability.
2. It claims that treating people as objects reduces human power and leads to ineffective systems. Respecting the human side of systems releases more human power to support the system and its purpose.
3. The document advocates for balancing purpose fulfillment, relationship management, and knowledge building ("work, play, and learn") to improve organizational success and individual satisfaction. Treating people as people, rather than objects, allows their power and creativity to flourish.
Talal Tabbaa - Smart Regulations and Crypto-systemic riskTimetogrowup
The document discusses systemic risk in cryptocurrencies and decentralized systems. It notes that over 60% of mining power is concentrated in the top 5 pools, and cryptocurrencies serve multiple interconnected roles as stores of value, means of exchange, and speculative investments. This level of concentration and interconnectivity could lead to the risk of financial contagion if one of the major players fails, similar to what occurred during financial crises like the Asian banking crisis and global financial crisis. The document proposes some remedies like stronger governance, oversight, and separating cryptocurrencies by function in order to reduce systemic risk in the crypto economy.
The document discusses a presentation about the financial crisis, its impacts on risk management, and key lessons learned. It begins with standard disclaimers and an agenda. The presentation argues that the crisis was due to systemic failures from national policies promoting homeownership, monetary policy, poor risk controls at firms, and corporate governance issues, rather than a lack of regulation. It also provides context on the Dodd-Frank Act and regulatory reform timeline.
In 3 sentences:
The document summarizes research on developing a demand-led market for third sector support infrastructure and capacity building in the UK. It discusses efforts to shift from a supplier-led model to one where frontline organizations directly purchase support from approved providers using grants or vouchers. Key challenges involved developing tools to help organizations judge provider quality in a complex market with many singular offerings.
This document discusses how digitization of money and financial innovations have helped global economic growth but current systems could not provide warnings of risks. It argues that advanced analytics applied to financial data can now provide insights to create a safer, more transparent system. Examples given include risk reduction in foreign exchange and microfinance enabling loans for the poor. A centralized risk utility is proposed to help prevent future crises through early warning signals.
Euromoney 5th Annual Private Wealth Management Forum Asia 2009: Chairman\'s K...Tuck Seng Low
This document summarizes the opening speech given at the 5th Annual Private Wealth Management Forum Asia. The chairman notes that wealth management has undergone significant changes since the 2008 financial crisis, including increased regulation and tighter credit. He argues that the industry needs to rebuild trust by returning to basics, conducting thorough due diligence, and gaining a better understanding of risks. Rebuilding trust will require reforms across financial institutions, accounting firms, credit rating agencies, and other participants to address flaws exposed by the crisis and restore confidence in the global financial system.
This paper summarizes some of the key aspects of Mathwood\'s current research into the impact of illiteracy on access to finance among 850 million rural people who earn less than $1 a day. It makes practical recommendations about how to expand access quickly and easily.
Dmitri Kosten is the President and Co-Founder of 3D Business Solutions, which focuses on how blockchain technology can transform the insurance and financial services industries. The document discusses how blockchain provides decentralization that shifts power from centralized authorities to networks, giving people more control over governance and finance. It argues this could lead to a transition from capitalism to a new system called "crypto-socialism."
Reconceptualising Global Finance and its Regulation [Updated]Raul A. Lujan Anaya
[Amended in Cap. IV, pages 6, 7]
Notes and remarks of my own, on Executive (Law Practice) Seminar: "Reconceptualising Global Finance and its Regulation" taken place at the University of Hong Kong, by mid December 2013, covering 4 topics:
1. Human Rights & Social Responsibility in Finance;
2. "Shadow Banking" & Systemic Risk;
3. Transnationalization of Compliance Frameworks;
4. 'Lex Mercatoria' Applied to Finance.
The document discusses the challenges of writing an essay about best essay writing services. It notes that there are many services to evaluate, requiring thorough research into their reliability, quality, pricing, reviews and reputation. Maintaining objectivity while expressing opinions is difficult. Additionally, the essay writing industry is always evolving, so the information must be up-to-date. Composing such an essay demands strong research, critical thinking and articulation skills. Alternatively, services like HelpWriting.net can assist those who find the topic too complex or time-consuming.
Essay – Video Analysis· Length 2-3 pages (not including title p.docxelbanglis
Essay – Video Analysis
· Length: 2-3 pages (not including title page or references page)
· Minimum of 2 scholarly sources
· 1-inch margins
· Double spaced
· 12-point Times New Roman font
· Title page
· References page
Instructions
Watch the entire video on Benito Mussolini (noted in the Required Resources). Identify and describe 3 aspects of the video you found most interesting that align with each of the following:
1. Foreign policy.
2. Violent and/or non-violent movements for social, economic, and political change
3. Governmental authority/loss of personal liberties
Conduct additional research to provide an analysis of those 3 aspects. What information did you find that the video left out? How did the video enhance your understanding of those aspects?
https://www.youtube.com/watch?v=ppHh-ubHnFk
Business as usual: The
acceptance and perpetuation of
corruption in organizations
Vikas Anand, Blake E. Ashforth, and Mahendra Joshi
Executive Summary
Many of the recent corruption scandals at formerly venerated organizations such as
Enron, WorldCom, and Parmalat have some noteworthy features in common. In most
instances, the fraudulent acts involved knowing cooperation among numerous employees
who were upstanding community members, givers to charity, and caring parents—far
removed from the prototypical image of a criminal. The involvement of such individuals
in corrupt acts, and the persistence of the acts over time, is both disturbing and puzzling.
We argue that the above phenomenon can be explained in part by the rationalization
tactics used by individuals committing unethical or fraudulent acts. Rationalizations are
mental strategies that allow employees (and others around them) to view their corrupt
acts as justified. Employees may collectively use rationalizations to neutralize any regrets
or negative feelings that emanate from their participation in unethical acts. Further,
rationalizations are often accompanied by socialization tactics through which newcomers
entering corrupt units are induced to accept and practice the ongoing unethical acts and
their associated rationalizations. We describe the different forms of rationalization and
socialization tactics and the ways in which firms can prevent or reverse their occurrence
among employees. The onset of these two tactics can establish enduring corruption in
organizations and become institutionalized in seemingly innocuous processes.
........................................................................................................................................................................
In the past, fraud was viewed as a rare event
that happened to unlucky organizations. Now
it is commonly accepted that fraud is taking
place at virtually every organization, every
business. The only question is how big it is
and how can we catch it before it gets out of
hand and destroys a company or organization
as it has done with some companies recently,
such as Enron.” (Tony Bishop, Pre ...
Like Uber, But For Slavery: The Power Of Fiat MoneySteve Waldman
Crypto types often write off fiat money as weak money, but that's not its problem. Despite the fact governments can and do print it at will, fiat is powerful, it runs the world. This talk tries to explain how that works.
sbt-ethereum: a terminal for the world computerSteve Waldman
An introduction to sbt-ethereum, a high-level command line for interacting directly and powerfully with the Ethereum blockchain, as well as developing smart contracts and integrating with Scala apps.
An Alternative Manifesto of Occupation.
The old system has returned. Over the past few decades, it has slowly crept up on us unawares.
We now live under a new system of lords, royalty and priests.
Identify in 150 - 200 words your reactions to the concepts of global.pdffathimafancyjeweller
Identify in 150 - 200 words your reactions to the concepts of globalization and Global Business
Ethics Issues.
Solution
Overview
The current financial crisis has raised questions about the legitimacy of capitalism. Ethical
failures certainly played a role. While it remains to be seen whether and how many people
blatantly broke the law, there are abundant signs of various forms of potentially unethical
behavior. These include greed, unreasonable amounts of leverage, subtle forms of corruption
(such as ratings agencies that appear to have had a conflict of interest), complex financial
instruments that no one really understood, and herd behavior where people just followed along
and failed to exercise independent judgment.
It is difficult or impossible to regulate against greed and against many of the other ethical
shortcomings that have been seen. What can be done is to force greater transparency and
accountability, a process which began with Sarbanes-Oxley and is expected to continue with new
regulations of the financial system.
Context
Drawing upon learnings from their work and experiences, the panelists and moderator exchanged
views with the audience on the ethics and legitimacy of business and capitalism in general, and
the financial crisis in particular.
Key Takeaways
The financial crisis may shift societal views on the legitimacy of business.
Each panelist offered a different perspective on the issue of ethics and legitimacy in business:
– The financial crisis has the potential to damage the legitimacy of capitalism (Di Tella). Richer
nations tend to be more right-wing in their views and have more capitalistic economic systems.
The United States is exceptionally right-leaning, even among developed nations.
These attributes are heavily influenced by beliefs regarding the reasons why people are
prosperous or poor. Americans tend to see prosperity as a product of effort more than luck; left-
leaning nations believe the opposite.
Affecting these beliefs: the number and severity of the shocks a society has weathered; and
perceptions regarding the legitimacy of business—i.e., the perceived degree of corruption.
America generally perceives that corrupt businesspeople are the exception, and punishes deviants
severely. However, this financial crisis holds the potential to shift America leftward since it: 1) is
a major shock that 2) suggests systemic corruption. Both call into some question the legitimacy
of U.S. capitalism.
– It is ethically legitimate for businesses to place the customer\'s interests above all else, because
only through profit comes the freedom to contribute to society (Vasella). Business leaders must
use their personal moral compasses to make ethical decisions. As for the business\'s compass, it
should be oriented toward satisfying customers above all stakeholders. That is the orientation
that allows for the greatest competitive success and profitability. In Mr. Vasella\'s view, only by
making a profit does a company earn the rig.
Agency — a perspective on social affairsSteve Waldman
Thinking about social affairs through a lens of human agency, and contemporary social problems as a result of a stratification of human agency, may be fruitful.
Moderninizing bank supervision and regulationcatelong
This is the testimony of Chris Whalen to the Senate Banking Committee on March 24, 2009 about bank and financial institution regulation and supervision.
This document discusses how blockchain technology could be used to rebuild finance from the bottom up by enabling small and medium enterprises to raise capital through issuing liquid, publicly traded securities. It argues that current sources of external financing for small businesses are inadequate and that regulations, while well-intentioned, have discouraged public securities issues by smaller firms that could potentially manage them effectively. The document introduces the concept of cryptographic assets, which use blockchain technology and smart contracts to automate accounting, management, and reporting in a way that reduces costs and regulatory burdens compared to traditional securities.
This document discusses decentralization and centralization of power and control in the context of money and cryptocurrencies. It explains that centralized control of money enables corruption due to human temptation to abuse power. Bitcoin was an important innovation as it technologically resolved issues of centralized control through decentralization. However, mining pools have led to some centralization of Bitcoin. Proof of stake coins like VeriCoin aim to further decentralization by basing rewards on coin ownership rather than computational power, reducing incentives for resource pooling. While the technology may be decentralized, centralized ownership can still enable centralized power, so accessibility of use is important to achieve true decentralization of money, power and control for the many.
Week-1 Into to Money and Bankingand Basic Overview of U.S. Fin.docxalanfhall8953
Week-1 Into to Money and Banking
and Basic Overview of U.S. Financial System
Money and Banking Econ 311
Instructor: Thomas L. Thomas
Financial markets transfer funds from people who have excess available funds to people who have a shortage.
They promote grater economic efficiency by channeling funds from people who do not have a productive use for them to those who do.
Well functioning financial markets are a key factor in producing economic growth, where as, poor functioning financial markets are a major reason many countries in the world remain poor.
Financial Markets
A security or financial instrument is a claim on the issuer’s future income or assets.
A bond is a debt security (IOU) that promises to make payments periodically for a specified period of time.
The bond market is especially important economic activity because it enables businesses and the government to borrow and finance their activities and because it is where interest rates are determined.
An interest rate is the cost of borrowing money or the price to rent (use someone else’s) funds.
Because different interest rates tend to move in unison, economist frequently lump interest rates together and refer to the “interest rate”.
Interest rates are important on a number of levels:
High interest rates retard borrowing
High interest rates induce saving.
Lower interest rates induce borrowing
Lower Interest rates retard saving
Information Asymmetry and Information costs
Why Financial Intermediaries
In the neo-classical world economists have argued financial intermediaries are not necessary. Savers (investors) could manage their risks through diversification.
The logic rests on the perfect market assumption – that is investors can always through their own borrowing and lending compose their portfolios as they see fit, without costs. In such a world there are no bankruptcy costs.
In such a world if taken to the extreme, perfect and complete markets imply that there is no need for financial institutions to intermediate in the financial (capital markets) as every investor (saver) has complete information and can contract with the market at the same terms as banks. E.g. Information Asymmetry
Why Financial Intermediaries Bonds
A common stock (usually called stock) represents a share of ownership in a corporation.
It is usually a security that is a claim on the earnings and assets of the corporation.
Issuing stock and selling it to the public (called a public offering) is a way for corporations to raise the funds to finance their activities.
The stock market is the most widely followed financial market in almost every country that has one – that is why it is generally called the market – here “Wall Street.”
The stock market is also an important factor in business investment decisions, because the price of shares affects the amount of funds that can be raised by selling newly issued stock to finance investment spending. (Note impact examples..
- Local currencies are emerging worldwide as alternatives to traditional bank-issued currencies. They range from loyalty point systems to cryptocurrencies to community currencies that aim to strengthen social and environmental goals.
- Complementary currencies function on a spectrum from competitive to collaborative. Some aim to increase control over financial systems while others valorize contributions to social and ecological aims.
- For local currencies to fully realize their potential to balance the current monetary system, greater political and institutional support is needed, including recognizing them for tax payments and adapting legislation. This could help unlock their ability to foster financial resilience and "real" economic growth.
1. The document discusses the concept of power and response-ability in the workplace. It argues that people are powerful and make systems work through their human response-ability.
2. It claims that treating people as objects reduces human power and leads to ineffective systems. Respecting the human side of systems releases more human power to support the system and its purpose.
3. The document advocates for balancing purpose fulfillment, relationship management, and knowledge building ("work, play, and learn") to improve organizational success and individual satisfaction. Treating people as people, rather than objects, allows their power and creativity to flourish.
Talal Tabbaa - Smart Regulations and Crypto-systemic riskTimetogrowup
The document discusses systemic risk in cryptocurrencies and decentralized systems. It notes that over 60% of mining power is concentrated in the top 5 pools, and cryptocurrencies serve multiple interconnected roles as stores of value, means of exchange, and speculative investments. This level of concentration and interconnectivity could lead to the risk of financial contagion if one of the major players fails, similar to what occurred during financial crises like the Asian banking crisis and global financial crisis. The document proposes some remedies like stronger governance, oversight, and separating cryptocurrencies by function in order to reduce systemic risk in the crypto economy.
The document discusses a presentation about the financial crisis, its impacts on risk management, and key lessons learned. It begins with standard disclaimers and an agenda. The presentation argues that the crisis was due to systemic failures from national policies promoting homeownership, monetary policy, poor risk controls at firms, and corporate governance issues, rather than a lack of regulation. It also provides context on the Dodd-Frank Act and regulatory reform timeline.
In 3 sentences:
The document summarizes research on developing a demand-led market for third sector support infrastructure and capacity building in the UK. It discusses efforts to shift from a supplier-led model to one where frontline organizations directly purchase support from approved providers using grants or vouchers. Key challenges involved developing tools to help organizations judge provider quality in a complex market with many singular offerings.
This document discusses how digitization of money and financial innovations have helped global economic growth but current systems could not provide warnings of risks. It argues that advanced analytics applied to financial data can now provide insights to create a safer, more transparent system. Examples given include risk reduction in foreign exchange and microfinance enabling loans for the poor. A centralized risk utility is proposed to help prevent future crises through early warning signals.
Euromoney 5th Annual Private Wealth Management Forum Asia 2009: Chairman\'s K...Tuck Seng Low
This document summarizes the opening speech given at the 5th Annual Private Wealth Management Forum Asia. The chairman notes that wealth management has undergone significant changes since the 2008 financial crisis, including increased regulation and tighter credit. He argues that the industry needs to rebuild trust by returning to basics, conducting thorough due diligence, and gaining a better understanding of risks. Rebuilding trust will require reforms across financial institutions, accounting firms, credit rating agencies, and other participants to address flaws exposed by the crisis and restore confidence in the global financial system.
This paper summarizes some of the key aspects of Mathwood\'s current research into the impact of illiteracy on access to finance among 850 million rural people who earn less than $1 a day. It makes practical recommendations about how to expand access quickly and easily.
Dmitri Kosten is the President and Co-Founder of 3D Business Solutions, which focuses on how blockchain technology can transform the insurance and financial services industries. The document discusses how blockchain provides decentralization that shifts power from centralized authorities to networks, giving people more control over governance and finance. It argues this could lead to a transition from capitalism to a new system called "crypto-socialism."
Reconceptualising Global Finance and its Regulation [Updated]Raul A. Lujan Anaya
[Amended in Cap. IV, pages 6, 7]
Notes and remarks of my own, on Executive (Law Practice) Seminar: "Reconceptualising Global Finance and its Regulation" taken place at the University of Hong Kong, by mid December 2013, covering 4 topics:
1. Human Rights & Social Responsibility in Finance;
2. "Shadow Banking" & Systemic Risk;
3. Transnationalization of Compliance Frameworks;
4. 'Lex Mercatoria' Applied to Finance.
The document discusses the challenges of writing an essay about best essay writing services. It notes that there are many services to evaluate, requiring thorough research into their reliability, quality, pricing, reviews and reputation. Maintaining objectivity while expressing opinions is difficult. Additionally, the essay writing industry is always evolving, so the information must be up-to-date. Composing such an essay demands strong research, critical thinking and articulation skills. Alternatively, services like HelpWriting.net can assist those who find the topic too complex or time-consuming.
Essay – Video Analysis· Length 2-3 pages (not including title p.docxelbanglis
Essay – Video Analysis
· Length: 2-3 pages (not including title page or references page)
· Minimum of 2 scholarly sources
· 1-inch margins
· Double spaced
· 12-point Times New Roman font
· Title page
· References page
Instructions
Watch the entire video on Benito Mussolini (noted in the Required Resources). Identify and describe 3 aspects of the video you found most interesting that align with each of the following:
1. Foreign policy.
2. Violent and/or non-violent movements for social, economic, and political change
3. Governmental authority/loss of personal liberties
Conduct additional research to provide an analysis of those 3 aspects. What information did you find that the video left out? How did the video enhance your understanding of those aspects?
https://www.youtube.com/watch?v=ppHh-ubHnFk
Business as usual: The
acceptance and perpetuation of
corruption in organizations
Vikas Anand, Blake E. Ashforth, and Mahendra Joshi
Executive Summary
Many of the recent corruption scandals at formerly venerated organizations such as
Enron, WorldCom, and Parmalat have some noteworthy features in common. In most
instances, the fraudulent acts involved knowing cooperation among numerous employees
who were upstanding community members, givers to charity, and caring parents—far
removed from the prototypical image of a criminal. The involvement of such individuals
in corrupt acts, and the persistence of the acts over time, is both disturbing and puzzling.
We argue that the above phenomenon can be explained in part by the rationalization
tactics used by individuals committing unethical or fraudulent acts. Rationalizations are
mental strategies that allow employees (and others around them) to view their corrupt
acts as justified. Employees may collectively use rationalizations to neutralize any regrets
or negative feelings that emanate from their participation in unethical acts. Further,
rationalizations are often accompanied by socialization tactics through which newcomers
entering corrupt units are induced to accept and practice the ongoing unethical acts and
their associated rationalizations. We describe the different forms of rationalization and
socialization tactics and the ways in which firms can prevent or reverse their occurrence
among employees. The onset of these two tactics can establish enduring corruption in
organizations and become institutionalized in seemingly innocuous processes.
........................................................................................................................................................................
In the past, fraud was viewed as a rare event
that happened to unlucky organizations. Now
it is commonly accepted that fraud is taking
place at virtually every organization, every
business. The only question is how big it is
and how can we catch it before it gets out of
hand and destroys a company or organization
as it has done with some companies recently,
such as Enron.” (Tony Bishop, Pre ...
Like Uber, But For Slavery: The Power Of Fiat MoneySteve Waldman
Crypto types often write off fiat money as weak money, but that's not its problem. Despite the fact governments can and do print it at will, fiat is powerful, it runs the world. This talk tries to explain how that works.
sbt-ethereum: a terminal for the world computerSteve Waldman
An introduction to sbt-ethereum, a high-level command line for interacting directly and powerfully with the Ethereum blockchain, as well as developing smart contracts and integrating with Scala apps.
Fiat currencies issued by strong stable states are generally very effective despite potential ethical concerns over management. While claims about fiat money being weak, prone to debasement, or unstable can sometimes be true, they are rarely true of currencies issued by states that can tax citizens and have diversified economies. For now, major fiat currencies provide more effective price stability than existing cryptocurrencies.
The document discusses the economics of blockchain application design. It defines blockchains as networked application architectures that automate the production of authority in a costly, labor-intensive way traditionally. Blockchains allow authority to be produced more cheaply, enabling novel applications. The type of blockchain application depends on factors like the community it aims to be authoritative for, privacy needs, and costs of traditional authority production. Permissioned blockchains within defined communities and hybrid public-private models are discussed as alternatives to open blockchains.
Lots of people have an intuition that "fiat money" -- money based on government paper with no commodity like gold to "back" it -- is something of a scam, weak and doomed to failure. That intuition is wrong. Fiat money runs the world, obviously, and that isn't an accident. Here's how (I think) it works.
This document discusses using blockchain technology and smart contracts to recreate mutual aid organizations for economic security. It outlines a baseline model of a distributed autonomous mutual insurance company using regular premiums paid into a smart contract in exchange for benefits triggered by adverse events. Various strategies are proposed to reduce the size of financial guarantees needed to support benefits, such as member selection, social controls on behavior, and non-financial benefits from membership. The document considers how features of historical fraternal organizations like rituals, federation structures, and political participation could be designed into social networks supporting such systems. It raises questions about whether recreating powerful mutual aid groups that demand conformity could infringe on individual freedom.
It is increasingly possible to represent all kinds of assets as cryptographic tokens, but how should we understand what they are worth? As a designer of a cryptographic token, how should you think about the value of what you are defining? This talk offers some tools that will hopefully be of help to creators and eventually users of cryptographic assets.
Existing blockchain apps (e.g. Bitcoin, Ethereum) are mostly "antidiscretionary". Ideally nodes merely verify changes of state initiated by users. Discretion by the nodes themselves is a form of attack. An alternative vision, a "discretionary" blockchain, would recognize each nodes of a consensus networks as representatives of people with diverse preferences, and embody the process of consensus formation as a kind of politics. Discretionary blockchains, "made of people".
Essential Tools for Modern PR Business .pptxPragencyuk
Discover the essential tools and strategies for modern PR business success. Learn how to craft compelling news releases, leverage press release sites and news wires, stay updated with PR news, and integrate effective PR practices to enhance your brand's visibility and credibility. Elevate your PR efforts with our comprehensive guide.
13062024_First India Newspaper Jaipur.pdfFIRST INDIA
Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
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Youngest c m in India- Pema Khandu BiographyVoterMood
Pema Khandu, born on August 21, 1979, is an Indian politician and the Chief Minister of Arunachal Pradesh. He is the son of former Chief Minister of Arunachal Pradesh, Dorjee Khandu. Pema Khandu assumed office as the Chief Minister in July 2016, making him one of the youngest Chief Ministers in India at that time.
केरल उच्च न्यायालय ने 11 जून, 2024 को मंडला पूजा में भाग लेने की अनुमति मांगने वाली 10 वर्षीय लड़की की रिट याचिका को खारिज कर दिया, जिसमें सर्वोच्च न्यायालय की एक बड़ी पीठ के समक्ष इस मुद्दे की लंबित प्रकृति पर जोर दिया गया। यह आदेश न्यायमूर्ति अनिल के. नरेंद्रन और न्यायमूर्ति हरिशंकर वी. मेनन की खंडपीठ द्वारा पारित किया गया
2. prologue: financial crisis nostalgia
...ever fewer banks (longstanding trend, accelerated a bit post-crisis)
Number of US banks
3. prologue: financial crisis nostalgia
...ever more concentrated at the top (locked-in pre-crisis ‘00s development)
Asset share of the top 5 US banks
4. prologue: financial crisis counterfactual - the path not taken
What if we had...
’ taken mark-to-market-insolvent banks into receivership
’ written off equityholders, equitized uninsured creditors
as necessary to achieve generous capitalization
’ defenestrated prior management on ungenerous terms
; while aggressively investigating practices that were colorably
fraud or misconduct to deter legal adventurism
’ instructed new management to gradually reorganize into
“small” new entities, over a period of several years
’ gradually released these small banks back into the market
as a reconstituted private banking system
7. prologue: financial crisis counterfactual - the path not taken
After the revolution, couldn’t market
competition regulate the system?
Couldn’t we just impose size caps to
prevent a recrudescence and be done?
Would we still need annoying,
corruptible, arrogant, confused,
captured bureaucrats?
8. prologue: financial crisis counterfactual - the path not taken
After the revolution, couldn’t market
competition regulate the system?
Couldn’t we just impose size caps to
prevent a recrudescence and be done?
Would we still need annoying,
corruptible, arrogant, confused,
captured bureaucrats?
Wouldn’t work.
Yes, definitely.
No.
9. prologue: financial crisis counterfactual - the path not taken
Decentralization is unstable.
’ Banks large and small are copycats, they pile into trendy
assets (c.f. late 80s S&L crisis)
; tacit centralization by virtue of coordinating on systemic signals
’ “Too big special to fail” spontaneously emerges, time &
again
; derives from a network effect that creates real value for creditors,
shareholders, and bank managers, at the expense of the state
’ Parity of deposits requires government guarantees (de jure
or de facto) of the liabilities of individual banks
; the state is the ultimate creditor of every bank, and like any
large creditor must be able to monitor and restrain controlling
stakeholders, whose interests often diverge from its own
; at an individual bank level, supervision and regulation serve a
rolewhollyanalogousto“covenants”imposedbyprivatecreditors
11. prologue: financial crisis counterfactual - the path not taken
Decentralization is achievable! How?
’ Regulators (centralized bastards!) must first and foremost be
charged with sustaining the decentralized market structure
as a first-order mandate, rather than as a discretionary
instrument in the service of other goals.
’ But...regulatorsthemselvesarea“coordinatingsystemicsignal”
(centralizing bastards!) whose mandates threaten substantive
decentralization.
’ As much as possible, their instrument should be “tax and
subsidy” (imposition of regulatory costs at adjustable levels),
enabling that aggregate goals to be achieved while permitting
diverse trade-offs among the regulated.
12. prologue: financial crisis counterfactual - the path not taken
Decentralization is achievable! How?
’ Regulators should “tax” size. But not just. They should tax
“interconnectedness”, “centrality” with respect to derivative
positions, every and any observable, evolving marker of
indispensibility or source of network effects.
’ Market structure should be regulators’ core target, for which
they are held to account.
’ Regulators are responsible for aggregate outcomes, not
just or primarily for the health of individual banks. In
particular, regulators are responsible for ensuring adequate
diversification of the aggregate banking system portfolio.
’ The “decentralized” regulated must adapt or die. Frequent
failure and entry are marks of a healthy industry, not of
regulatory failure.
13. a tao of (de)centralization
decentralization ⇔
ce
ntralization⇔decentralizat
ion⇔centralization⇔
dec
entralization⇔centralizati
on ⇔
14. a tao of (de)centralization
decentralization ⇔
ce
ntralization⇔decentralizat
ion⇔centralization⇔
dec
entralization⇔centralizati
on ⇔
dude.
16. a tao of (de)centralization
Core claims conjectures...
17. a tao of (de)centralization
Core claims conjectures assertions...
18. a tao of (de)centralization
Core assertions...
19. a tao of (de)centralization
Core assertions...
’ Decentralized social systems almost always fail,
gracefully or sometimes suddenly, often silently,
towards centralization.
; “Michels’ Iron Law of Oligarchy”
’ Centralized systems may not so ostentatiously fail — they
may endure a long time — but when they do fail, they
collapse abruptly, catastrophically. They are brittle.
’ Virtuous social systems marble together centralized and
decentralized elements, paradoxically charging centralized
components with the task and responsibility of sustaining the
decentralization that otherwise would decay.
’ “Decentralization” is not an answer, not a solution to any
problem in itself, but a challenging question of “how?”
20. virtues of (de)centralization
Virtuesattributedtodecentralizedsystems
’ Tolerate and enables “agency” of constituents
’ Reconcile “freedom” (constituent) with “function” (aggregate)
’ Resistent to corruption (while they remain decentralized)
’ Outcomes are “natural”, “fair”, “legitimate” to constituents
’ Regulable internally
; It is plausible to hold individual constituents to account
’ Stable: Independent entities shift slowly in aggregate
; Coordination “problems” are the solution to the problem of stability!
; No “single point of failure”
’ Multiplicity of status hierarchies
; Enable more people to be positional “winners” in competitions they value
’ Inclusive, participatory
; Participants have comparable roles in driving behavior of the system
’ Hayekian information flows
; Incorporates and responds to fragmented, distributed, “organic” information
; Recruits and makes use of highly distributed expertise regardless of credential
; Tilt toward meeting internal goals (welfare of participants)
21. virtues of (de)centralization
We like decentralized systems
for their virtues!
Systems “decentralized”
in some formal way or according to
putative measures may lack
many of these virtues.
We shouldn’t like those so much!
22. virtues of (de)centralization
Virtuesattributedtocentralizedsystems
’ Scalability
’ Efficiency
’ Predictability
’ Rationality
; Can be organized to effectively pursue specific objectives
’ Adroitness
’ Regulable externally
; Those who control the “center” can determine the system’s actions
’ Weberian information flows
; Recursively summarize widely dispersed information
; Divide work/choice between routine (dispersed) and exception (towards center)
; Recruit and makes use of formally credentialed expertise in impersonal roles
; Tilt towards meeting external goals (build the bridges, win the war)
23. virtues and vices of (de)centralization
We can read centralization’s vices in
many of the virtues of decentralization
that it lacks.
And vice versa!
24. virtues and vices of (de)centralization
“Pure decentralized” social systems
inevitably collapse towards ad hoc
centralization.
“Pure centralized” social systems fail due
to corruption (Lord Acton) and/or the
“high modernist” conceit (James Scott)
25. virtues and vices of (de)centralization
So, we might consider centralized
and decentralized elements to be
complements rather than competitors
(How much each sort of element should
predominate depends on which virtues
we prioritize.)
But if there are centralized elements,
“someone” is in control of them.
Who???
An obvious, if problematic, “least-
worst”, answer is “democracy”.
26. the strange case of democracy
Are democratic institutions...
’ Centralized?
; democratic decisions become imperative commands
; democratic institutions often control centralized bureaucracies
’ Decentralized?
; democratic decision-making can be inclusive and participatory
’ Who even cares how we classify them?
27. the strange case of democracy
Democratic institutions: virtues & vices
’ Does a right to vote amount to meaningful “agency”?
’ Are they, or can they be made, resistant to corruption?
’ Can they recruit and reflect fragmented, dispersed
information beyond the small quantity and range that gets
summarized in votes?
’ How can decisions handed down from the demos be
reconciled with freedom at an individual level?
’ “Democratic” institutions are in practice always arbitrary
games, subject to cynical manipulations, whose outcomes
often turn on details unrelated to anyone’s conception of
the “true” voice of the demos.Can they really be legitimate?
28. a (familiar!) proposal: “law of large numbers” democracy
Distribution of Aggregate Outcomes
Distribution of Individual Behavior
29. a (familiar!) proposal: “law of large numbers” democracy
“ Democratic decisions” at the center
about how to tax and subsidize the
edges, in order to reconcile...
’ Freedom
; Individuals have real choices, make tradeoffs, within broad ranges
’ Function
; The behavior of the polity is predictable, manageable in aggregate
’ Democratic control
; But democratic institutions are corruptible, contestable, arbitrary,
fragile, not always perceived as natural or legitimate. More soon!
’ Hayekian feedback
33. A (familiar!) proposal: “Law of Large Numbers” Democracy
A lot like status quo neoliberalism, except...
’ Decentralization is a per se mandate
; “Anti-trust” is not justified contingently by consumer welfare, but
is a non-negotiable precondition of reconciling effective governance
with the agency and freedom of constituents.
; Applies to anti-concentration very generally!
’ Governance is explicitly “social engineering”
; Explicitly repudiates libertarian-ish superstition that there exists
some virtuous “natural” outcome that would obtain if property
rightsweredefined“correctly”andgovernment“gotoutoftheway”
or ceased “distorting”
; But retains Hayekian feedback to push back against decisions that
seem sensible at the center but awful at the edges
’ Challenges federalism / subsidiarity
; Turns the logic of federalism on its head
; The center incentivizes the edges, not an intermediating hierarchy
35. tendentious diagram: a horseshoe theory
“DemocraticLeft”
“Small Biz Left”
Law
of Large Numbers Democr
acy
Neoliberal
Plutocratic
Quasidemocratic
Tyranny
(With apologies to a lost tweet by Matt Bruenig)
--You are here!
V
36. example: subsidizing complements to labor
Nordic labor force participation
’ Nordics famously offer generous welfare states and
levy high GDP shares as taxes
’ Neverthless, “despite” this, they tend to have
higher-levels of labor-force participation than the
work-incentive-focused US
’ High taxes fund benefits that are explicit
complements to labor
; generous child care / elder care
; paid parental leave
; education
; active labor market policy
’ Creates large incentive to capitalize on subsidized
benefits for which citizens must pay regardless
37. speculative example: neoliberal desegregation
“Buying” desegregation
’ Offer a (potentially large) subsidy to households
directly based on the “representativeness” of their
neighbors
’ Would such an incentive encourage
neighborhoods, realtors, municipalities, to
coordinate “at the edges” to extract the subsidy,
and in doing so fulfill the social goal?
’ Is this approach ethical?
38. speculative example: neoliberal desegregation
Why households directly, not states or
localities?
’ Conflicting incentives within local governments
’ Too many degrees of freedom of response
’ Potential for coordinated resistance
’ Compare to...
; ACA Medicaid expansion
; Elizabeth Warren’s
“American Housing and Economic Mobility Act”
39. other examples
’ Capital Account Protectionism
’ Carbon-tax-financed dividend
; But not straight carbon tax (why not?)
40. epilogue: “law of large numbers democracy”
Institutionalpluralismisagoodthing.
Ships still have captains.(but we have some work to do before we are able to follow them again!)
41. stochasticism: random numbers to save democracy
These two things fit very poorly together.
’ Majority rule
; “Winner take all”
’ Representative government
; “Everybody has a voice”
42. stochasticism: random numbers to save democracy
Conventional “plurality voting” is horrible
’ Tend towards a stable, unsatisfactory two-party
equilibrium (“Duverger’s Law”)
’ Despite formal equality, in practice voters do not
have equal weight in determining outcomes
’ Outcomes are extraordinarily fragile
’ Outcomes are extraordinarily fragile in a manner
that permits, and invites, corruption
’ Brutal changes from tiny shifts in voting, “noise”
’ For multimember legislative bodies, outcomes are
very susceptible to intentional gerrymandering or
unintentional quirks of grouping
43. stochasticism: random numbers to save democracy
Conventional “plurality voting” is sneaky
(Even when you think you have a more robust and
pluralistic system, the flaws of plurality voting
sneak back in at the last minute)
; Tiny parties with weird concerns often have outsize
power as “king makers” even in multiparty parliamentary
democracies
44. stochasticism: random numbers to save democracy
Provocative fragility (two parties, A & B)
0 20 40 60 80 100
0.0
0.2
0.4
0.6
0.8
1.0
0 20 40 60 80 100
0.0
0.2
0.4
0.6
0.8
1.0
0 20 40 60 80 100 0 20 40 60 80 100
% expected to vote for Party A % expected to vote for Party A
No Uncertainty Some Uncertainty
Marginaleffect
(“power”)ofvoter
Probability
PartyAwins
45. stochasticism: random numbers to save democracy
Endogenous corruption
’ With two major parties or coalitions, near evenly
matched votes are common
; Parties strategically modify their platforms, identity, and
branding to not remain electoral losers
’ Outcomes turn on a very small number of
marginal or “swing” voters with outsize power
’ These most powerful voters are, paradoxically,
the voters most indifferent to the core dimensions
by which the parties distinguish themselves
’ This invites influence campaigns, wacky overt
policy bribes, and covert corrupt financial bribes.
; “Leverage” — small effects have huge consequences!
; That corruption is competitive doesn’t render it usefully
deliberative!
46. stochasticism: random numbers to save democracy
Fair, stable, difficult to corrupt...
0 20 40 60 80 100
0
20
40
60
80
100
0 20 40 60 80 100
% expected to vote for Party A
Regardless of Uncertainty
Marginaleffect
(“power”)ofvoter
Probability
PartyAwins
47. stochasticism: random numbers to save democracy
Fair, stable, difficult to corrupt...
’ You could achieve this effect by just throwing all
the ballots in a hat, then randomly drawing one
winning ballot!
’ You probably wouldn’t want to elect a President
this way
; 10% chance of electing some weirdo only 10% of voters like
; (but look what our current system just did!)
; (might be OK with low-vote cutoffs & supermajority certainty)
’ You would want to elect a legislature this way!
; Any individual might be a bit “random”
; But the body as a whole would be reliably representative!
; Proportional representation, “Duverger’s Law” doesn’t apply
; Resistent to party-list insiderism
; Composition of legislature as stable as public preferences
48. stochasticism: random numbers to save democracy
One weird trick to save the world...
’ Read Choosing Representatives by Lottery Voting, by
Akhil Reed Amar
; https://pdfs.semanticscholar.org/6fd7/0eabac758800771f8baf880e7064cf361aa3.pdf
’ See also an excellent explainer by David MacIver
; https://www.drmaciver.com/2013/09/towards-a-more-perfect-democracy/
’ An alternative, but I think inferior, stochastic
approach is sortition (see e.g. Brianna Rennix &
Nathan J. Robinson)
; https://www.currentaffairs.org/2017/06/why-not-have-a-randomly-selected-congress
49. interlude
To what degree is political hyperpolarization
“exogenous”
(we’ve all just somehow come to have starkly
divided preferences & beliefs)
}
how much is
“endogenous”
to the fact that each political party is
desperate to define, construct,
and sustain 50% + 1 electoral coalitions or
else be shut out of power?
50. stochasticism: random numbers to save democracy
Intralegislative ideas (speculative!)...
’ Random alternatives
; Subject to low-support cutoffs and certainty under
supermajority, coalitions present same-domain legislative
alternatives whose probability of enactment is fraction of
support
; Reconsideration or “do-overs” forbidden for some period of
time without the intercession of a supermajority
; Renders corruption expensive and defying the weirdos easy
; May be challenging to define and police!
’ Stochastic Gong Show
; Periodically put legislators at risk for early recall (e.g.
US senators with 6-year terms might face unexpected re-
election challenge after 2- or 4-years.)
; Probability of recall determined by population-level
favorability of the legislative body
52. psychotomimesis
RadicalTM
IdeasTM
: What’s the path from
bullshit speculation to real application?
’ There may not be an amendment to the US
Constitution in favor of Lottery Voting—or
Quadratic Voting—too soon
’ Darn.
’ Conventional social science is not, on its own, a
reliable or practical guide to institutional reform
; Theoretical methods are inherently unreliable:
— You can convince yourself of anything, in theory, with
the “right” math and assumptions!
; Observational methods are inherently conservative:
—Youcanonlyobservewhatyou’veseen!Hardtointerpret!
; Experimental methods are limited, practically & ethically:
— The stakes have to be real!
53. psychotomimesis
Blockchain “experiments” seem to have
external validity!
’ They’ve reproduced “real world” social dysfunction
with remarkable fidelity!
’ For example, with #TheDAO in 2016, Ethereum
managed, over a remarkably short period, of
time to spontaneously generate a Too Big To Fail
institution, experience a crisis, and bail out its
stakeholders in defiance of clear ex ante norms.
’ In conventional contexts, this kind of thing takes
yearsorevendecadesandputstrillionsofdollarsat
risk. (At its peak, #TheDAO was worth $245M USD.)
54. psychotomimesis
Blockchain “experiments” seem to have
external validity!
’ ThestoriedBitcoin/ICObubbleof2017reproduced
many characteristics of a major equity bubble, but
never put at risk more capital than the value of a
single large public firm (despite outsize press).
’ To be clear, while these experiments were small
relative to the overall economy, they were large
relative to participant wealth, a lot of people
were seriously harmed and others became rich
without delivering value (some nefariously,
others naively).
’ These“experiments”weretoobig,andveryshoddy.
55. psychotomimesis
Blockchain “experiments” seem to have
external validity!
’ Nevertheless, they have demonstrated that
blockchain-ish technologies represent a space
in which novel institutional forms can be
rapidly sketched (never say “engineered”) and
deployed, engendering very real and so realistic
incentives among participants.
’ There has never been a petrie dish for social/
economic institutions quite like this.
56. psychotomimesis
It’s too early to be scalable
’ Most blockchain experiments have been failures
for most participants
’ It’s very early for mass-adoption “dApps”. We don’t
know what we are doing.
’ It’s a great time for “artisanal” experiments
built with care in hopes of success but deployed
tentatively, recognizing the likelihood of failure
; #TheDAO was a really creative and interesting experiment,
designed around a very novel approach to managing the
traditional corporate finance problem of “minority interest”
; Weshouldtrymorethingslikeit—withcreativeapproaches
to voting, creative use of payout patterns and escrow to
shape incentives etc.
; But lower stakes, please.
57. psychotomimesis
TINOPD
’ There Is No Other Petrie Dish
’ It is extraordinarily difficult and costly — and
inaccessible to most due to social stratification —
to implement bespoke institutional experiments
that shape the incentives of large numbers of
participants via arbitrary flows of economic value
using traditional legal, banking, and regulatory
systems
; Genuinely interesting experiments are novel and likely to
fail. Traditional legal, banking, and regulatory systems are
conservative. By design, they make it difficult to construct
denovo,likely-to-fail,institutions.Evenwhenitispossible,
they make it very, very expensive.
photo credit https://commons.wikimedia.org/wiki/Margaret_Thatcher#/media/File:Margaret_Thatcher_(1983).jpg
58. psychotomimesis
Model psychosis
’ When LSD was discovered, its major first proposed
use was as a psychotomimetic, a technologically
inducible and reproducible means by which
psychologists might study and gain empathy for
the difficult experiences of troubled patients.
’ Early researchers also experienced the ways in
which LSD and similar drugs could be psychedelic
— “mind expanding”. Some, most notably
Timothy Leary, were excited to emphasize this
more ambitious use to the broad public.
59. psychotomimesis
Model psychosis
’ That probably did some good for some people. But
it did clear, sometimes vivid harm to others. An
exaggerated panic among journalists and other
social gatekeepers caused these substances to be
banished almost completely from legitimate use
or study, provoking a 50 year winter from which
we are only just, just, beginning to emerge.
’ Psychotomimesiswasagoodstart.Itwasahumble,
cautious way to frame the possibilities of this new
frontier of experimentation.
60. psychotomimesis
Model psychosis
’ Blockchain technology has proven itself a
remarkably capable, rapidly iterable, high fidelity
psychotomimetic for social and economic
phenemona.
’ Framed this way, we might cautiously use them
to explore how we might develop somewhat less
psychotic social and economic institutions.
’ That on its own is a big deal. Let’s be careful about
making claims very much grander than that.