Archives: 07/2015

A Conversation on Bitcoin

(Last month, the Chilean webzine El Libero interviewed me about Bitcoin and other cryptocurrency topics. Here is the English translation of the conversation with Juan Pablo Couyoumdjian.)

1. Bitcoin is a class of “crypto-currency,” but what, exactly, are these crypto-currencies? How do they emerge? And why?

LHW: Cryptocurrencies — Bitcoin and its competitors — are digital assets, secured by cryptography, that can be circulated from peer to peer like currency.

Like government fiat money, they are not redeemable at a fixed rate for any commodity or other money. Unlike government fiat money, there is no issuer with discretion to increase the quantity at any time. In the case of Bitcoin, the number of Bitcoin units is programmed to increase at slow and known rate. In the case of Ripple, the top competitor, all the Ripple units to be made were made at the start.

Bitcoin originated (and remains) as a public-interest non-profit project by a programmer (who’s identity is not known) who wanted to create a tamper-proof private non-state currency. Some other cryptocurrencies arose similarly, by other groups of programmers who introduced improved designs (faster, more robust, more user privacy). Once Bitcoin rose to prominence and considerable market value at the end of 2013 (the total value of all Bitcoins currently held is about US$3.4 billion), private for-profit competitors like Ripple and BitShares and Nxt came along with advanced designs and full-time development and promotion teams.

Prof. Krugman: Fast and Loose with the Facts

Paul Krugman, “Killing the European Project”, NY Times, July 12, 2015: “The European project — a project I have always praised and supported — has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasn’t the Greeks who did it.”

Paul Krugman has always praised and supported the European project? Really? Here’s Prof. Krugman in his own words on the centerpiece of the European project, the euro:

  • Paul Krugman, “The Euro: Beware Of What You Wish For”, Fortune, December 1998: “But EMU wasn’t designed to make everyone happy. It was designed to keep Germany happy - to provide the kind of stern anti-inflationary discipline that everyone knew Germany had always wanted and would always want in future. So what if the Germans have changed their mind, and realized that they - along with all the other major governments - are more worried about deflation than inflation, that they would very much like the central bankers to print some more money? Sorry, too late: the system is already on autopilot, and no course changes are permitted.”
  • Paul Krugman, “Can Europe Be Saved?”, NY Times, January 12, 2011: “The tragedy of the Euromess is that the creation of the euro was supposed to be the finest moment in a grand and noble undertaking: the generations-long effort to bring peace, democracy and shared prosperity to a once and frequently war-torn continent. But the architects of the euro, caught up in their project’s sweep and romance, chose to ignore the mundane difficulties a shared currency would predictably encounter — to ignore warnings, which were issued right from the beginning, that Europe lacked the institutions needed to make a common currency workable. Instead, they engaged in magical thinking, acting as if the nobility of their mission transcended such concerns.”
  • Paul Krugman, “Europe’s Many Economic Disasters”, NY Times, July 3, 2015: “What all of these economies have in common, however, is that by joining the eurozone they put themselves into an economic straitjacket. Finland had a very severe economic crisis at the end of the 1980s — much worse, at the beginning, than what it’s going through now. But it was able to engineer a fairly quick recovery in large part by sharply devaluing its currency, making its exports more competitive. This time, unfortunately, it had no currency to devalue. And the same goes for Europe’s other trouble spots. Does this mean that creating the euro was a mistake? Well, yes.”

When reading Prof. Krugman’s works, it’s prudent to fact check. Prof. Krugman has always been in the Eurosceptic camp. Indeed, the essence of many of his pronouncements can be found in declarations from a wide range of Eurosceptic parties.

Ida Wells (1862-1931) and the Interconnectedness of Liberty

Today’s Google Doodle honors Ida Wells, born into slavery in Mississippi on this date in 1862, fearless and tireless anti-lynching activist and heroine of free speech. Writer and owner of several publications, Wells was best known for documenting the post-Reconstruction horrors of “sanctioned violence outside the machinery of the state,” as I described it in this space recently

By the time Wells came to national note in the 1890s, the threat of mob violence had come to be accepted as an endemic part of American life across much of the South and a good part of the North as well. Press freedom, however, was also something real, and Wells could bring the ghastly specifics of lynching practice, as well as the falseness of the arguments used in its defense, to a national audience. Soon a mob in Memphis proceeded to storm and destroy her printing press. But it could not silence her; she was free to carry on from other, safer cities. Is there a better lesson in how civil liberties work to reinforce each other? Because of America’s broad degree of press liberty, Wells could build her case methodically for a right to freedom from mob violence; because mob violence was held in check across enough of the country, Wells could not be prevented from writing, speaking on tour, and soon becoming an internationally known figure of reform and African-American advocacy. 

You can read Wells’ work in many primary sources online: “Lynch Law,” 1893; speech, “Lynch Law in America”; and the pamphlet “Southern Horrors: Lynch Law in All Its Phases,” with a letter of encouragement from Frederick Douglass in Anacostia. Her accomplishments should be of interest to every libertarian and every American. 

P.S. As Nicholas Johnson has recounted at the Volokh Conspiracy, Wells is a notable figure in the history of the Second Amendment as well.

“John Doe” Justice at Last

A quick notice: The Wisconsin Supreme Court’s much anticipated decision in the long running “John Doe” investigations of alleged campaign finance violations came down this morning, and it’s a resounding rejection of the prosecution’s entire theory of the case. By way of very brief background of a very complex case, here’s the opening paragraph from an April 27 post I wrote for Cato@Liberty:

Just when you thought the long-running “John Doe” prosecution/persecutions in Wisconsin couldn’t get any worse—SWAT teams conducting pre-dawn raids on family homes, gag orders on the victims, and the prosecutor’s recusal motion directed against no fewer than four state supreme court justices, all over politically driven campaign finance allegations—Milwaukee County District Attorney John Chisholm suggested over the weekend that Gov. Scott Walker could be criminally charged for lying. Walker’s “crime”? In Iowa on Saturday, he questioned whether the prosecution’s tactics were constitutional.

You can’t make stuff like this up. Well here’s just a bit of the language this morning from Justice Michael J. Gableman:

[W]e invalidate the special prosecutor’s theory of the case, and we grant the relief requested by the Unnamed Movants. 

To be clear, this conclusion ends the John Doe investigation because the special prosecutor’s legal theory is unsupported in either reason or law.  Consequently, the investigation is closed.  Consistent with our decision and the order entered by Reserve Judge Peterson, we order that the special prosecutor and the district attorneys involved in this investigation must cease all activities related to the investigation, return all property seized in the investigation from any individual or organization, and permanently destroy all copies of information and other materials obtained through the investigation.  All Unnamed Movants are relieved of any duty to cooperate further with the investigation.

Language like that makes one appreciate the importance of an independent judiciary. You can read the whole opinion here

Tariffs on Clean Energy

Here is Paul Krugman the other day, touting President Obama’s efforts to promote clean energy:

Some things I’ve been reading lately remind me that there’s another major Obama initiative that is the subject of similar delusions: the promotion of green energy. Everyone on the right knows that the stimulus-linked efforts to promote solar and wind were a bust — Solyndra! Solyndra! Benghazi! — and in general they still seem to regard renewables as hippie-dippy stuff that will never go anywhere.

So it comes as something of a shock when you look at the actual data, and discover that solar and wind energy consumption has tripled under Obama.

True, it started from a low base, but green energy is no longer a marginal factor — and with solar panels experiencing Moore’s Law-type cost declines, we’re looking at a real transformation looking forward.

You can argue about how much this transformation owes to federal policy. …

I don’t know all the reasons why solar and wind energy consumption has tripled in recent years, but yes, you can argue about the role of federal policy here. The federal policy that I follow most closely is trade policy, and what trade policy has been doing is imposing really high import taxes on solar and wind products, thus raising their costs.  Here’s what my colleague Bill Watson and I wrote about this a while ago:

Over the last couple of years, trade remedy actions on clean energy products have intensified. In the wind industry, the Wind Tower Trade Coalition, an association of U.S. producers of wind towers, brought an AD/CVD complaint against imported wind towers in 2011. The U.S. Commerce Department started an investigation, and announced a preliminary decision in December 2012.

This decision found both subsidization and dumping in relation to Chinese imports and imposed an antidumping tariff of between 44.99% and 70.63%, as well as countervailing duties of 21.86%–34.81%. The Commerce Department also established a separate antidumping duty of 51.40%–58.49% on Vietnamese wind tower manufacturers.

In the solar industry, in October 2011, the Coalition for American Solar Manufacturing, a group of seven U.S. solar panel manufacturers led by Solar World Industries America, accused Chinese solar panel companies of dumping products in the United States. The Commerce Department opened an investigation in 2011 and announced the final ruling in 2012. The decision was to impose antidumping tariffs ranging from 24% to 36% on Chinese producers.

If we wanted to promote clean energy, the first thing we could and should do is stop imposing tariffs on these imports! 

Obama’s Sales Pitch on the Iran Deal

With a potentially historic agreement on Iran’s nuclear program in place, President Obama immediately focused his attention on the fight at home. When he announced the deal Tuesday morning, the president warned Congress that he would “veto any legislation that prevents the successful implementation of this deal.” A few hours later, he sat down with the New York Times’s Thomas Friedman to sell it on its merits.

“We are not measuring this deal by whether it is changing the regime inside of Iran,” the president said. “We’re not measuring this deal by whether we are solving every problem that can be traced back to Iran, whether we are eliminating all their nefarious activities around the globe.”

The aim of the negotiations was on ensuring that “Iran could not get a nuclear weapon.”

And that is where he wants the ensuing debate over the final terms of the agreement to be focused. “What I’m going to be able to say, and I think we will be able to prove,” he told Friedman, “is that this by a wide margin is the most definitive path by which Iran will not get a nuclear weapon, and we will be able to achieve that with the full cooperation of the world community and without having to engage in another war in the Middle East.”

That is what the president would like people to believe. But it may not be so simple.

Congress has 60 days to review the deal for final approval, but many GOP leaders have declared the agreement dead on arrival. Some Republicans, as I noted, lambasted the administration for appeasing the Iranian regime even before the details were announced. Accordingly, the administration will likely focus most of its time on reassuring skeptical Democrats to block the passage of legislation that would undo the deal, or, failing that, to sustain a veto.

An override seems unlikely, but the coming congressional debate will not be limited to the merits of the deal.

As Justin Logan and John Glaser wrote on CNN.com:

The debate over Iran diplomacy was really two debates, in which each side was arguing over something different. On the one side was a strikingly broad consensus of nearly the entire arms control community, which recognizes what the deal can achieve in terms of nonproliferation and regional stability. On the opposing side is the Iran hawk community, which focused less on the nuclear issue than on finding ways to isolate and ultimately destroy Iran’s clerical regime, by military force if necessary, nuclear program or not.

The agreement is a clear success for nonproliferation advocates. Unfortunately, that’s not what matters to some of those who now control its fate. 

“Think Tank Attacks Kaptur over National ID Card”

I really like Sandusky Register reporter Tom Jackson’s piece responding to my post yesterday about congressional appropriators and our national ID law, the REAL ID Act. Jackson is paying attention to all that is said about Ohio’s congressional delegation. Not just following the herd, he’s looking out for new and different things that might be interesting to the folks back home.

The gist of his argument is that calling Ohio Democratic Rep. Marcy Kaptur 75 percent supportive of REAL ID is unfair because she voted against it when it passed the House as a stand-alone bill in 2005. She did vote against it that once, but she also allowed a voice vote on the rule that attached REAL ID to a later appropriations bill, and she voted for that bill and the conference report, both votes helping to make REAL ID a federal law.

Rep. Kaptur doesn’t stand out as a pro-national-ID legislator—true—but that is precisely how log-rolling in Washington works. Bills that tie controversial matter like a national ID law to broadly supported priorities like military funding and money for tsunami relief allow representatives like Kaptur to vote for a national ID twice without standing out.

I didn’t do a good enough job of explaining the procedure by which REAL ID was passed, and Jackson understood me to be blaming Kaptur for funding REAL ID. In fact, my post focused on votes for passage of REAL ID itself. But Kaptur and other appropriators will be voting soon on the FY 2016 Department of Homeland Security appropriations bill, which year after year provides funds to push state implementation of REAL ID. The bill has lots of other priorities in it, but Rep. Kaptur and her colleagues on the Appropriations Committee’s Homeland Security Subcommittee are responsible for all of the bill’s content. Given that any of them could de-fund REAL ID and the national ID project with a simple amendment, I believe it’s appropriate to hold all of them to account for not doing so.