Cookie warnings and Brexit by Mike Hudack

Yesterday, while trying to buy tickets from my phone for Schoolboy Q at Brixton Academy, I kept getting full-screen and difficult to dismiss modals warning me that TicketWeb uses cookies. This terrible modal is necessary because of the EU Cookie Regulation

From the UK Information Commissioners Office, the office responsible for enforcement of the regulation:

You must tell people if you set cookies, and clearly explain what the cookies do and why. You must also get the user’s consent. Consent can be implied, but must be knowingly given.

The regulation is idiotic. Nearly every web service (and app) in the world uses some mechanism for tracking users and almost all those mechanisms use cookies. Tracking is used to provide utility to end users and also to make money. 

The cookie regulation causes a ton of damage, the worst being that I almost didn’t buy my Schoolboy Q tickets because I got about half a dozen cookie modals and they made me so frustrated that I nearly abandoned the purchase flow. That would have created about £75 in economic loss attributable directly to this regulation.

There’s an old Erwin Knoll quote that goes like this:

Everything you read in newspapers is absolutely true, except for that rare story of which you happen to have first-hand knowledge.

There should probably be a corollary: “Every regulation issued by the European Union is absolutely proper and correct, except for the rare regulations in areas in which you are expert.”

If the EU Cookie Directive is at all indicative of other areas of EU regulation then maybe Brexit has some sense to it. There must be an equivalent of the EU Cookie Directive in the Common Agricultural Policy and in so many other areas of EU jurisdiction. Maybe all of them.

And before you say that all regulation has its equivalents of the Cookie Directive and that an exited Britain would just introduce its own equivalents, let me suggest one more rule: the larger and less representative a regulatory body is, the more likely it is to produce stupid regulation.

Estonia probably has less bad regulation than larger countries like the United States, and the United States probably has less bad regulation than supranational blocs like the European Union. So theoretically a smaller and more representative state should produce less bad regulation and more good regulation, if only because those being regulated have more of a direct voice in government.

Which, after all, was the reason why America exited the United Kingdom a few hundred years ago.

PS: Schoolboy Q is awesome, and while I’ve never been, I hear Brixton Academy is too. You should go to the show so we can hang out and grab a drink.

Relying on bank lending for stimulus is inefficient by Mike Hudack

It’s struck me for a long time that much of monetary policy that’s meant to stimulate lending actually benefits people who are already wealthy and who are also, therefore, less susceptible to stimulus intended to increase their spending.

I also think that these policies are responsible for rising inequality in the world in the past decade or so as money has become cheaper and cheaper for people who already have it, with little real change for people who don’t already have it (since their wages have been stagnant and their borrowing ability is therefore limited).

A much more efficient program would be a form of helicopter money in which the government or central bank simply gave money to people who most “need” it, and who will quickly spend it. Such an approach would be much more efficient: it would get rid of all the middlemen and make every dollar much more likely to enter circulation since the poorer people receiving the checks would get immediate benefit from spending it (and, unlike rich people, relatively little benefit from saving it).

Such a direct stimulus program, however, is difficult to implement using current money technology: the government would literally have to write everyone checks, or physically hand them cash. This is part of the reason I believe we should build a new cryptocurrency-based backend for our money system — to make policy response to the next recession better and more efficient.

Anyway, the St. Louis Fed, as part of their ongoing research into the policy response to the Great Recession, has published a new analysis showing that Fed policies designed to stimulate bank lending weren’t all that efficient at achieving the policy goal:

To help address the Great Recession, banks were provided with lower-cost capital and liquidity. One of the goals was for banks to pass these benefits through to consumers by extending extra credit, encouraging them to borrow more to stimulate the economy.

Recent research shows that these credit pass-throughs made their way to some consumers. However, they didn’t go to the consumers who were most likely to spend and boost the economy.

The Fed and other central banks should be moving much faster to transition the monetary system so that they can deploy helicopter money effectively in the future.

Filter Bubbles and the Universal Hipster by Mike Hudack

The Verge captures the homogenization of culture that’s been bothering me for a long time:

Igor Schwarzmann is the German co-founder of Third Wave, a strategy consultancy based in Berlin that works with small-scale industrial manufacturers. The company’s clients range across Europe, the United Kingdom, and the United States, so Schwarzmann often finds himself moving between poles of the global economy. While traveling, he turns to Foursquare for recommendations about where to eat and drink. “It knows what I like,” he says.

Every time Schwarzmann alights in a foreign city he checks the app, which lists food, nightlife, and entertainment recommendations with the help of a social network-augmented algorithm. Then he heads toward the nearest suggested cafe. But over the past few years, something strange has happened. “Every coffee place looks the same,” Schwarzmann says. The new cafe resembles all the other coffee shops Foursquare suggests, whether in Odessa, Beijing, Los Angeles, or Seoul: the same raw wood tables, exposed brick, and hanging Edison bulbs.

It’s not that these generic cafes are part of global chains like Starbucks or Costa Coffee, with designs that spring from the same corporate cookie cutter. Rather, they have all independently decided to adopt the same faux-artisanal aesthetic. Digital platforms like Foursquare are producing “a harmonization of tastes” across the world, Schwarzmann says. “It creates you going to the same place all over again.”

I wrote about this in a different context the other day. Filter bubbles and increasing intra-class connectedness (but not much extra-class connectedness) are making our world, at least the cosmopolitan corners of it, homogenous.

Independent coffee shops around the world are all the same. Every city has good New American food. Our intra-class connectedness means that Brooklyn and Dalston and Kreuzberg and the Mission are extremely similar. We’re losing local character and losing extra-class empathy. The Dalston hipster doesn’t have much empathy for the inhabitants of post-Industrial Britain, and the Brooklyn hipster couldn’t care less about the former West Virginian coal miner.

This has always been true to at least some extent, but it’s getting worse. Filter bubbles and cheap jet fuel make it so.

Schwarzmann’s coffee shops are all the same because of the network and its filters. The relationship between them is as circular and emergent as a ranked feed. We all have one aesthetic now. We are all one. Except for those of us who don’t get the technology and don’t live in a major cosmopolitan city. They inexplicably vote for Brexit and Trump.

This will take a while to be sorted out. There will be pain in the meantime. But at least during this process we know that we can get a good quality single origin pour over coffee almost anywhere in the world, and with some nice smashed avocado toast on the side. With chili flakes and lemon.

Refuting Picketty by Mike Hudack

A new IMF working paper refutes Picketty:

Thomas Piketty’s Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.

From the conclusion:

On inequality, the evidence against Piketty’s predictions is even stronger: for at least 75% of the countries, the response of inequality to increases in r − g has the opposite sign to that postulated by Piketty.

This finding makes sense to me since Picketty doesn’t make sense to me. I find it much more likely that power is shifting  away from financial capital than that financial capital is accumulating unchallengable power. 

What I mean by this is that capital is no longer scarce — it’s productive applications of capital that are scarce. If this is true I think it means that Picketty is wrong. 

The biggest problem with Alexa by Mike Hudack

We have three Echoes in our house. The one in the kitchen gets the most use. We use it to listen to the radio in the morning, to play music, set timers and do kitchen conversions.

We don’t use it for anything complicated. We’ve tried, but gotten frustrated quickly and given up. The reason is that Echo is bad at keeping state. It can’t have a conversation. I think part of this is a simple UI problem: it’s hard to have a conversation with a black cylinder. Humans offer lots of non-verbal feedback during conversations, and Alexa offers virtually none. Even if her software were capable of maintaining state during a complicated conversation as a human does a person talking with her would likely lose track because there’s no feedback mechanism other than words. She doesn’t even have different tones of voice.

Changes in intonation, posture, raised eyebrows, glances and shifting weight all help us keep track of where we are in a conversation. Absent these cues we use conversational pauses and tone. Absent these rougher cues — in messenger platforms or e-mail — we use written history to keep track of our conversation.

Alexa offers none of these affordances, and so she’s hard to have a conversation with. It strikes me that until she offers some kind of feedback other than words spoken in a monotone we won’t find it easy to do much with her other than ask for Radio 4 or an alarm when the boiled eggs are ready.