A Skeptic’s Thoughts About Crypto

Disclaimer:  I am no expert on crypto currency or the blockchain technology underlying it, but I do have 45 years of experience in a world driven by technological change and hype.

Part of the early allure of crypto currencies like bitcoin was the idea that they could replace and improve upon the existing financial world of banks, currency exchanges, and other financial service components that were seen as bureaucratic, costly and archaic.  Blockchain technology offered the tantalizing prospect of money flowing in the world without third party inconvenience and control.  The technology would allow two entities to exchange funds directly with an assured chain of custody and security that would be impervious to fraud, theft or scrutiny.

 

To me this type of perfect world hypothetical is reminiscent of so many of the software technologies that I saw come and go over the last 30 years.  And like so many of its predecessors, the blockchain technology that launched the crypto coin world does indeed have some very attractive features.  It promises to allow transactions to be conducted in complete security with an impenetrable and unalterable ‘ledger’ or chain of custody.

 

But the immediate application of this super-hyped technology to a form of currency unleashed a torrent of speculation and get-rich schemes evangelized by messianic tech wizzes and, later, various famous talking heads.

 

A currency utilizing blockchain technology and avoiding standard banking and financial markets may seem blissful to many stick-it-to-the-man types, but it doesn’t take a lot of insight to realize that there is a reason for financial markets and regulating organizations.  When there is no referee at all, the game becomes wildly chaotic and is easy prey for the most unscrupulous characters – the drug gangs, the scam experts, the tax-cheats, the porn industry, the con artists.  It also becomes one huge pyramid or ponzi scheme.

 

The human notion of 'value' is strange and abstract in many ways.  Gold and art are traded as 'fungible' items but their value is purely a construct of human imagination.  Food, shelter and clothing have value that is at last partly based on actual utility.  Currencies are also constructs, but they have utility as a means of facilitating commerce and exchange.  When they change radically it is typically because the country associated with that currency (and guaranteeing it) is experiencing economic problems.

How in the world can one believe that a currency rising and falling as wildly as cryptocurrency can become a trusted means for normal commerce?  While it is true that all currencies, and for that matter all things that we put a price on, have a value that is tied to a perceived worth, the world currencies at least have a basis for their valuations – the economic and political systems that back them up.  A crypto currency has nothing but the lemming-like tributes from true believers and a pseudo-techie aura of inevitability.  And FOMO can only go so far in sustaining a fad or a movement.  At some point reason must prevail.

Is there a role for blockchain technology?  Definitely!  There are many transactions that would benefit from being conducted through blockchain.  And there is definitely money to be made in a more traditional sense by investing in the technology itself and earning real world profits as it finds means to provide a service.

 

But in my view, using blockchain to move money would create more problems than it would solve.  We already have rapidly growing inequality of wealth and income in the world.  Crypto currency would make financial dealings and wealth accumulation even more opaque than they are now, making it significantly more difficult for nations and municipalities to tax and monitor the situation.  We may all hate the bureaucracy and intrusive nature of taxes, but imagine a world that no longer has the ability to monitor and redistribute wealth for purposes of social progress, infrastructure development, education and healthcare.

 

Technological bandwagons are very seductive, because they lend an air of sophistication to their promoters and create a fervent desire for others to become part of the in-crowd.  It is so easy to compare each new idea to past technologies that made millions for those who were courageous and wise enough to embrace them.  Toss in a lot of technobabble and concepts that most people don’t really understand, and you have a perfect scenario for conning millions out of their hard-earned savings.  

 

And like all pyramid schemes, the stories of fantastic earnings by the few at the top of the pyramid are enough to pull in the hordes at the bottom.  But at some point, the magic fades and the music stops.  It is only a matter of time. 

 

 

 

 

The World Needs More Imposter Syndrome

There are two psychological terms to describe the opposite traits of lack of confidence and over-confidence.  If people question their abilities or accomplishments and worry that they do not deserve credit or accolades, then they may have ‘Imposter Syndrome’.  If, on the other hand, they are over-confident and consider their accomplishments to be extraordinary and their talents to be under-rated, then that is termed a ‘Dunning-Kruger Syndrome’.  

Most people have experienced the imposter syndrome at some time in their lives.  When you receive compliments or an award you may humbly accept the accolade but feel secretly that you are really not so special and that you are a bit of an imposter.  You may feel that you were lucky or had the benefit of some set of circumstances that enabled the achievement – that you should really not be singled out for praise.

 

This type of reaction can become pathological in some cases, reflecting a general inferiority complex, and this is why there is much written about women and minorities having the imposter complex and thus limiting their achievements or success because of self-doubt.  This is an unfortunate occurrence and society should make every effort to affirm any achievement in a healthy manner.

 

But I believe there is a more pernicious tendency in this realm.  Once people begin to gain recognition, success or wealth they may initially be surprised and delighted.  In this early phase, they may have moments of imposter syndrome as they realistically appraise the nature of their achievements.  

 

But as their success grows, the steady drumbeat of reward and adulation has a corrupting influence.  They begin to believe what they hear as others gush over their accomplishments.  The lens through which they see the world and themselves begins to warp and the image of their prowess begins to dominate their view.  They forget that success has a large component of good fortune and that wealth begets more wealth and fame begets more fame.

 

Soon they believe that they have a unique gift or unerring intuition. They begin to imagine that their success implies a much broader genius at work than the domain in which their achievements lie.  They are soon convinced that they are simply more capable than the rest of humanity.  They grow weary of the folly of lesser beings.  They yearn to impose their brilliant thinking on the world in ever greater ways.

 

This ever-expanding self-aggrandizement is the opposite pathology of the imposter syndrome, and it is much more dangerous to humanity.  The Trumps and Putins and Musks of this world no longer experience the braking effect of self-doubt, and the juggernaut of their egotism goes unchecked.

 

But it is not only the most notorious cases of out-of-control vanity that trouble our world.  The increasing centralization of wealth in finance and technology has launched a thousand ships of freighter-sized egos.  Being suddenly bloated with hundreds of millions of dollars, an entourage of sycophants and endless social media adulation is a short path to narcissism and a conviction that the world simply must benefit from one’s genius.  We see these people everywhere and they wield their wealth and prestige in ways that roil our society, exacerbate tensions and waste valuable resources.

 

Yes, the world would be a much better place if every hedge fund mogul, real estate tycoon and  tech titan were to fall prey to the imposter syndrome and abandon their master-of-the-world fantasy.  There is something very healthy and cathartic in recognizing that one is at least partly an imposter. We are all only human after all, even those most showered with wealth and fame.  A little (or a lot) of humility is in order.

Risk and Reward

Life is full of risks.  A risk, by definition, is an exposure to danger, harm or loss.  There are financial risks, transportation and travel risks, adventure risks, health risks and many others.  When one speaks of a risk, there must be uncertainty in an outcome of some event or behavior.  There must be some probability that a bad outcome could occur.  The level of risk is based on how high the probability is of that bad outcome.

A risk is typically undertaken because there is some expected reward associated with the event or behavior if things go well.  The reward may have significant monetary, psychological or experiential advantages, or it may simply be the completion of an ordinary but necessary task in one’s life.

 

Some people are described as risk-takers.  They are not afraid of taking ‘chances’ with their money or their health or even their lives.  Others are described as risk-averse.  It is interesting to contemplate what these descriptions really mean and what is the thought process involved in taking or avoiding risk.  

 

When I drive a car each day, I am taking a risk.  If I ride a bicycle on a street with cars, I am taking a risk.  If I clean the gutters on my roof, I am taking a risk. Do we internally calculate or otherwise estimate the probability of being hurt in these activities? 

 

Is driving a car an acceptable risk because it has a low probability of producing an accident with injuries, or is it simply something we do without thinking about the risk?  If I were to be paralyzed in a car accident, would driving all those years have been an acceptable risk?  I cannot imagine anyone blithely conceding that point.  Something is an acceptable risk only before a bad outcome occurs.  In most cases we use the term acceptable risk to describe a risk that is low enough to feel reasonably secure that the bad outcome will never happen.

 

Mountain climbers or hang-gliders who consider their death-defying acts as acceptable risks are also making the assumption that they will not die.  They love the activity of mountain climbing enough to take the risk, but it is doubtful they would say in retrospect that the risk was worth it if they are horribly maimed in an accident.  It seems the risk was only acceptable when nothing bad happened.

 

Men gleefully enlist and march off to war for the reward of unique experiences and perhaps a chance for exhibiting their courage.  But if they lose a leg or two, I highly doubt they will say that the risk was an acceptable one or that the experience or possibility of an award for valor was worth the lifetime of suffering they will now endure.

 

Financial investments and employment changes are also interesting versions of risk-taking.    The many well-publicized rags-to-riches stories make financial risk-taking seem very exotic and exciting.  But one wonders how many financial failures and hard-luck tales there are for every successful entrepreneur or investor.  Did the failures consider their doomed exploits to have been a ‘reasonable risk’?

 

Risk-taking may also be somewhat age dependent.  I know I was much more of a risk-taker in terms of physical challenges in earlier years.  And I capriciously experimented with drugs in my teens and early twenties in a way that I would never do today.  As age progresses our awareness of the consequences of our actions is better informed and applies the brakes to certain types of risky activity.

 

For the most part I doubt there is a way to quantify or even comprehend risk when one embarks on a new venture of any type.  There may be a gut feeling or an instinctual sense that the activity is worth doing.  The risk-takers are those who seem to have either no fear of failure and retain that feeling of youthful immortality, or are so driven by the need for change, recognition or wealth that they are compelled to choose the path of higher risk. The risk-averse are either more peacefully content with their lot or more sensitively aware of the potential for true damage, harm or loss.

 

There are extremes on both ends of the risk scale.  Wingsuit base jumping and free soloing would certainly seem to be examples of risk-taking that border on suicidal behavior.  And there are lots of people who timidly avoid any risk and thus severely limit their life experiences.

 

In the end, it seems that risk-taking is primarily a personality trait that has little analysis behind it.  It is difficult to say what kind of effect one’s willingness to take risks has on quality of life or one’s sense of fulfillment.  We are all unique creatures and must find the balance of risk and reward that makes sense for us and not feel compelled to emulate others.

 

 

On the Absurdity of Relying on Polls and Other Election Nonsense

Despite all the recent election evidence that polls are more or less worthless we seem to make them the basis of our political machinations.  Let’s explore why they have so little value.  And while we’re at it, let’s look at whether TV or Internet ads are a good use of money.

Number one, a poll with a relatively small number of respondents compared to the total population is statistically weak, and most polls fall into this category.  It only can be accurate if you believe that the respondents are strongly representative of the total population.  This brings us to the second point, that the people who respond to polls are most likely not even close to being a representative group of the general electorate.

 

Think about it!  Who answers their phone at all unless it’s a number they recognize?  In this time of spam, botmails, robocalls, and endless attempts to gain our attention, not to mention malicious attacks, scams, viruses and phishing, there is a totally understandable reluctance to engage with unknown entities.

 

And who has the time to respond to a survey?  What with Facebook, Insta, TikTok, YouTube and a thousand other claims to our precious time weighing heavily on us, who is going to be willing to submit to the drudgery of taking a survey?  This is clearly a self-selecting group, not a random collection of voters.  I’m not exactly sure what defines this group, but it must be a rather strange and motley crew.

 

Given the amount of money spent on polls and the consultants who make up the political money machine, I am sure there is a wealth of quasi-scientific efforts to justify poll-taking.  But I don’t buy it.  They are rubbish.

 

And of course, the polls then feed into the whole machinery of opinion influencing – the attack ads, the mailbox fillers, the TV portrayals, the mind-numbing drivel on social media, the even more outrageous YouTube slander and outright falsehoods.

 

Let’s face it, our election process is a colossal waste of time, money and good will.  Probably 99% of people make up their minds based on opinions and biases that are unaffected by the billions and billions of dollars spent.  We would be better served as a nation to dismantle the whole political process and start over again.

The Sad Inevitability of Liberal Democratic Decline

The wolves are at the door.  Authoritarian regimes are multiplying.  Nativist political movements are on the rise.  A lifeboat mentality is beginning to take hold in formerly open, progressive societies.  Fear is taking hold.  Is there nothing to be done?

Perhaps the most powerful warning signal of the precarious position of our world is the recent success of the anti-immigrant, far right party in Sweden, a country that had been the bastion of liberal democracy and an example of successful efforts to form an equal, peaceful and thriving society.  But recent immigrant waves and increases in crime and gun violence have heightened tensions and created a tide of nationalism and nativism that threatens to profoundly change Swedish society.

 

The rise of populism is not recent or surprising.  The uneven balance sheet of globalization, free trade, outsourcing and technological progress over the last 30 years left much of the middle and lower middle class frustrated and resentful.  Then came the added burden of refugees from a long series of wars in the 1990’s and 2000’s as well as the ever-increasing waves of immigrants from countries with broken political systems and drug-gang infested cities.

 

But now the world is grappling with even greater threats on multiple fronts.  Three years of pandemic, a Russian war of aggression in the Ukraine, global inflation and climate change have created ideal conditions for a toxic political backlash against liberal democracies and globalization.

 

These latest crises have accelerated the refugee and immigrant flow and crippled the economies that these asylum seekers have pinned their hopes on.  There is growing resentment in the industrialized nations of these ‘outsiders’, some of it xenophobic and racist, but some of it simply a fear that there is not enough work or resources to share.

 

Refugees and immigrants can be assimilated in small numbers without destabilizing a nation, but the modern tidal wave of desperate Middle Eastern, African, Eastern European, and Central American people has overwhelmed even the most kind-hearted nations.  The developed nations that they flee to now have their own problems – inflation, a looming recession, increased political unrest and general disenchantment.  The milk of human kindness is running thin.

 

As global warming puts even greater pressure on many poor countries this flood of refugees will only increase.  This will in turn fuel the careers of power-hungry demagogues.  There is no easier target for fear-mongering than immigrants and refugees.

 

This sad progression seems inevitable at this point.   There is always hope that we will somehow maintain our civility and find a way to make the lifeboat of earth work for all of humankind.  But Sweden’s transformation may be the canary in the coalmine for a type of political change that bodes ill for us all.

Vacation Travel and a Guilty Conscience`

In Scandinavia they have a term for it:  flygskam – flight shame.  This expresses the guilt feelings and shame that many are beginning to have over the use of jet travel to indulge one’s wanderlust.  Another expression, tågskryt - train brag, is the corresponding positive feeling that one has when utilizing a more ecofriendly transportation option.  The Germanic languages have such a lovely way of encapsulating complex concepts in a single word.

Now I could argue that it is easy enough and a bit disingenuous for Europeans to indulge in such fine-tuning of conscience given the compact nature of their countries, the travel distances and their delightful train network.  But how the world travels and what impact it has on hydrocarbon emissions and global warming is a reasonable thing to ponder.

 

I won’t go into the details, but a little simple math yields the fact that an airplane is about 4 times as efficient as a car in taking people from A to B.  The average miles per gallon of an airplane is about 100, whereas it is closer to 25 for a car in round numbers.  Sounds good, right?

 

The problem is that air travel racks up the miles much, much faster than car travel.  If the average American puts 10-12,000 miles a year on his car, then a trip to Europe more than doubles that mileage.  Even a trip to California and back from the east coast increases it by half.

 

Between business travel and pleasure travel jet engines contribute about 2.5% of global emissions of CO2.  This seems like a small number, but when normalized to a per capita statistic it takes on a different meaning.  A small percentage of the world’s inhabitants use air travel.  In 2018, 11% of the global population took a flight, 4% flew abroad and 1% was responsible for half of global aviation emissions.

And private jets are the worst offenders – with a typical private jet owner emitting on average 540 times the hydrocarbons the average person will emit.  So it is not so much the total impact I and others are having through our privilege of our travel, but the unfairly disproportionate share we so blithely take as our own.

Yes, of course we all worked hard for our success.  And business and tourism travel are major engines for the world economy.  A world without jet travel would be a very different world.  Nothing is simple.

 

Unfortunately, airplanes are unlikely to go electric in the near future – the battery and motor technologies are a long way from being capable of powering a large plane over any distance.  There are efforts to optimize fuel economy and there have been significant improvements, but air travel will never get close to zero emissions. 

 

As a relatively recent retiree and avid traveler, I struggle somewhat with the pangs of conscience.  But those air travel specific pangs are just part of a package of guilt that anyone who is honest and logical has for having won the lottery of birth and opportunity.  I could stop traveling, just as I could give all my money away or live in a 'tiny house' or stop taking showers or never eat meat again or spend all of my time working in homeless shelters.  But I won’t.

 

I rationalize that I will only be doing this type of extravagant travel for a few years and will eventually ramp down to domestic road trips in an electric car.  But in the meantime, I will just have to wrestle with flygskam along with all the other contradictions and paradoxes in life that confront me.

Population Growth - Too Much or Too Little?

As if the world didn’t have enough of Elon Musk’s musings, he recently made the news with the claim that population decline is a greater problem than climate change.  He was quoted as saying (which I must admit is a somewhat clever turn of phrase) "If the alarming collapse in birth rate continues, civilization will indeed die with a whimper in adult diapers." 

The global birthrate is indeed declining.  The graph below shows the change over the last 70 years.  It has basically been cut in half.  

Developed countries have seen their birthrates fall particularly quickly, as seen in the second graph. Japan has had such a rapid decline that it is predicted that their population will be cut in half by the end of the century.  They are particularly vulnerable because they do not generally allow immigration.

It is interesting to compare Musk’s dire warning with previous hysterias that have posited almost exactly the opposite point of view.  In the early 1800’s Robert Malthus developed a theory that population growth would overwhelm the world’s ability to produce food and that a natural collapse due to famine and/or war would result.  He argued that population growth is exponential whereas the growth of resources is more linear.  At the time, any curbs on fertility such as birth control were considered immoral so the birthrate would naturally approach exponential growth.  

 

Malthus described what has since been termed the ‘Malthusian Trap’ - that technological progress in agriculture and industry would allow human population to explode and eventually outpace production of food.

 

When one looks at the history of population growth in human society it is not hard to believe that Malthus was correct on the effect of technology on population.  See the graph below:

The danger of over-population was embraced and ratcheted up several notches by Paul Ehrlich in the 1970’s with his explosive book ‘The Population Bomb’.  The opening paragraph read:

 

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate.

 

Paul Ehrlich appears to have been a bit hyperbolic in his prediction, but his description of the stress that a growing world population puts on resources and the environment was prescient.

 

So, who is right?  Are we facing imminent disaster from over-population or is civilization going to implode due to a declining birthrate?  Well, both!

 

The problem with a declining birthrate is that it has the potential to create nations of old people who drain resources while a diminishing number of young workers struggle to support them and keep the economy afloat.  This is a very real danger and is already having significant effect in Japan.  

 

The problem is not with a lower birthrate, but with how rapidly the birthrate decreases.  Stability is the key word here.  Given how desperate the global warming crisis is, there is no doubt that the world would be better off with less people demanding energy and using up natural resources.  There is no a priori need for world population to continue growing to prop up the economy and maintain civilization.  But if it slows down too rapidly, the economic and social/cultural effects will be de-stabilizing and possibly catastrophic.

 

The best method for stabilizing populations and gradually reducing total population would be to allow more fertile immigrants from lands where climate change, poverty and political instability are rampant into countries where lower birthrates are threatening to have destructive consequences.  This would kill the proverbial two birds, and even a third, with one stone – solve immigration problems, stabilize declining populations, and mitigate climate change.  The sad fact is that such a remedy is completely out of the realm of possibility in these times of populism, authoritarianism and governmental paralysis.  And so it goes.