The Blockchain Is A Solution In Search Of A Problem

It is hard to think of another term that is as hyped right now as “blockchain”. It is a new fad that has taken the financial world by storm. Everyone is talking about blockchain, firms are rushing out press releases announcing their interest and countless new proposals appear every day claiming they will revolutionise pretty much every industry. Even people uninterested in Bitcoin are taking a look at blockchain, in fact because so few people actually use the cryptocurrency to buy anything, the shift has focused instead to the technology aspect of Bitcoin. The situation resembles the Emperor’s New Clothes, with no one wishing to admit they don’t see any use to blockchain for fear of seeming behind with the times or not tech savy. Continue reading “The Blockchain Is A Solution In Search Of A Problem”

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Why The Free Market Doesn’t Prevent Racism

In economics textbooks there is a simple story told about racism. It explains how the free market punishes prejudice of any kind and instead builds an environment where all people compete equally regardless of their background. The explanation is simple – any business that refused to serve certain customers would earn less profit than a more tolerant rival. If you refuse to hire the most competent job applicant due to their race, gender, sexuality etc then they will work for your competitors or set up their own business and undercut you. Continue reading “Why The Free Market Doesn’t Prevent Racism”

Regardless Of Its Price, Bitcoin Is A Flawed Currency

I’ve noticed that some of my old articles about Bitcoin have been getting a lot of attention lately. I first started writing about Bitcoin back in 2013, when I considered it to be a bubble that would soon burst. When it did burst, I wrote about its flaws and figured that would be the end of the story. I mean after seeing people dramatically lose a lot of money extremely quickly, who else would want to jump in? After seeing a bubble collapse why would anyone want to repeat the process?

Yet as the price of Bitcoin soared to almost $20,000, I got an increasing number of “I told you so” and “Look who’s laughing now” comments. I was just a dumb statist shill who failed to recognise the glory of Bitcoin and missed my chance to get rich as a result of it. In fairness, I was wrong to predict that Bitcoin would fade away, I made the mistake of presuming people would learn from their mistakes and not be swindled by another bubble. As you can imagine, these comments quickly disappeared after the price crashed by three-quarters to $6,000. Funnily enough, my blog still gets shared on Bitcoin forums, however this time it is used to show that dramatic crashes are normal events, if Bitcoin can survive 2013 & 2014, it can survive 2018. There seems to be little consideration of the idea that massive price crashes shouldn’t be a normal feature of a currency or asset and wild volatility should be treated as a bug not a feature.

Since the collapse, the price has risen considerably and currently sits at around $10,000. Most of the discussion now focuses on which direction the price will go, will it rise again or face another crash? Did we just experience a market correction or the beginning of the end? Continue reading “Regardless Of Its Price, Bitcoin Is A Flawed Currency”

Why We Need The European Union

In two weeks time, Britain will vote on whether or not it will leave the European Union, a major decision which could have wide reaching ramifications. Even though as an Irish citizen I cannot vote, the decision will have a large impact on both Ireland and myself. Leaving aside the specifics of Brexit (whether Britain could still have access to the common market and whether it would still be bound by EU regulations) and political ironies (the same people who opposed Scottish independence are making essentially the same agreement in support of leaving the EU) I think it’s worthwhile to discuss the EU as an institution in general and consider whether it is beneficial or not. Continue reading “Why We Need The European Union”

No One Has Time For A Completely Free Market

The free market often sounds quite simple and straight forward. Consumers simply decide whether product A or B benefits them more and then choose accordingly. If the same or similar product is sold by shop A or B consumers simply choose whichever is cheaper, better quality or otherwise benefits them. It is easy and doesn’t require any complicated plan or someone telling consumers what is best for them, people simply decide themselves. This is the market as described by economists, politicians and writers, especially when they are trying to make a political point. After all, if the market is so simple and straight forward, why do we need the government interfering? All these rules and regulations only get in the way, surely it is better for everyone if we just leave the consumers to decide for themselves. Continue reading “No One Has Time For A Completely Free Market”

Why Do People Work Hard When They Have No Economic Incentive To Do So?

Let’s play a game. I will name two forms of football and you tell me which you think offers better incentives to players. On the one hand is soccer, the world famous sport which receives huge funding from sponsorship, merchandise and ticket sales. This allows large investment in the sport and the ability to pay good (sometimes even exorbitant) wages. On the other hand is Gaelic Football, played only by Irish people mainly in Ireland. Unlike soccer, it is an amateur sport and none of its players get paid. All athletes must also have full time jobs, meaning they can only train in the evenings after work.

This should be obvious. Continue reading “Why Do People Work Hard When They Have No Economic Incentive To Do So?”

What Motivates People To Work?

It’s funny that despite being such an important part of the economy and our lives, not much thought is given to why we work. It is generally taken as a given while economists focus on more important work. It is usually assumed that work is something that people don’t want to do and they must be compensated with money to make them do it. No one would work unless they had to, its only the need of money that gets people up in the money. It is an article of faith among economists that people respond to incentives and this usually refers to monetary incentives. After all, didn’t the Soviet Union fall because people weren’t paid enough and therefore motivated enough to work? Simply, if you want to motivate someone to work, you must pay them to do so. Continue reading “What Motivates People To Work?”