Tag: economics

Categories
society

The Oddity of Opening

The polling and reporting tells the following story:

  1. Most people think that the measures aren’t there to reopen.
  2. Republican-connected groups have been pushing protests to reopen.
  3. Based on that, some Republican governors have been getting ahead of themselves and reopening.

It doesn’t make a lot of sense. While some businesses have a majority of Republicans supporting reopening, a lot do not, and even where there’s a majority, it’s still split (though maybe less or more if you factor in margins of error). There is, once again, a minority Republican view being pressed and causing policy here.

More importantly, there’s a huge business case to be made to pay what’s actually needed to reopen (testing and tracing). It could even be done in a VAT or similar vehicle! But instead of doing it correctly, there are businesses pushing for blanket immunity.

The self-described pro-business lobbies always seemed a bit fucked in the head, but they’re really smashing the old Budweiser can on their forehead this time. If the virus gets worse, all those businesses that reopen will just keep losing revenue. Immunity from lawsuits doesn’t pay bills.

It’s been months now, coming up on five if you count from when the administration had a heads-up from the intelligence community. There’s been ample time to stand up supply chains, to ramp up testing. They haven’t been able to do it.

The problem is this: most people in most states aren’t going to be John Rambo, so most will stay home. Business revenue won’t be improving in the way the open-uppers think it will. But there also won’t be a viable way to open up more or get people back in public, because they still aren’t working on test-trace. So the economy stays a bummer, the virus stays a plateau, and we continue to waste time and money spinning our wheels. It’s stupid. It’s ridiculous. It’s Donald John Trump.

In order for an economy to function, you need supply and demand. The supply is shut for health reasons, but also for demand reasons. Even before stay-home orders hit, many businesses were seeing demand plummet. There is demand—aspirational, “wouldn’t it be nice” demand. But there is not “I’m getting in the car, let’s go now” demand, and there won’t be unless and until there’s a good bet you won’t get sick.

From a numbers point of view, if even 50% of regular demand is there, that’s probably not enough, and if new upticks in cases happen even under depressed demand, that 50% will drop even lower and won’t recover the next time a reopen is attempted.

From a numbers point of view, the cost of the shutdown is very high, far higher than what it would cost to implement real testing and tracing, and yet… the governments are still not saying that. They aren’t doing that. They are ignoring the facts that are plain as day.

Categories
society

Risk and Economics in a Pandemic

There are a lot of different ways to think about recessions. One is a traffic model. A bustling economy is moving a lot of cars with little trouble. A hurting economy is moving fewer cars slower. Depression is outright gridlock. The need to get cars moving is the recovery mechanism. (The slow cars are slowing each other down, which is akin to cascading financial problems.)

Another metaphor is a tree, battered by disease or wind, having lost some of its leaves. It has to slow its growth to repair itself instead. In some cases, government provides artificial sunlight, artificial rain, etc. to nurture the tree along.

The main thing about economic downturns is that they are a signal that, in some way, our collective resources were misallocated. Either we didn’t regulate enough, or didn’t spend enough on the right things. Sometimes we took a calculated risk and are just unlucky. Other times, we did not calculate risk correctly.

One of those risk calculations is the healthcare and insurance system. It doesn’t fully cover the nation, and it’s largely subject to the same kinds of economic problems as the rest of the system. Under a true universal system, whether Medicare-for-All or not, that wouldn’t be. It would dramatically reduce the suffering, but it would also help to prop up the larger economy. To divorce vital industry from the economic winds is a great ballast. The tradeoff of ballast is that growth in (at least parts of) healthcare would be more limited. Slower to accelerate, but slower to halt.

Another risk calculation, made (or failed to be made) by Donald John Trump, was to underfund, reduce, and dismantle parts of our shield against pandemics. Even now, he keeps pushing for quick fixes, corner cuts, and premature reopening, all which threaten to undermine public health efforts that economic recovery depends upon.

Governors and mayors weighed the risk of stay-home orders. Ministers did, too. The risk, plus some luck either way, results in a signal of whether the decisions were apt. Sometimes the signal is in lives lost.

The Republican party in the state of Wisconsin decided the risk of having people vote the normal way at the normal time during decidedly abnormal public health conditions was worth the risk of more suffering and death.

The economic fallout will take some time to really become apparent in all of this. It depends on the length of the shutdown, which depends on the ability of government to manage test coverage in a way that ensures we can reopen and stay open. So far, that’s not materialized.

Which makes no sense! The economic output lost from having to keep protections higher, or the economic output lost from having more waves of virus or worse waves, are both in excess of the societal cost of ramping up testing to the level needed to avoid them! For all the monies appropriated by the Congress, for all the nonsense dispensed by the president (including his fantasy over an anti-malaria drug), they haven’t done the one thing! Testing! Even if a quinine-based drug were a magic bullet, testing would still be king!

The decision between minimizing risks and maximizing economy is false. Those who see what should be very welcomed reductions in projected deaths and say, “We should open up,” are inviting much larger outbreaks and tolls. Failure to expand testing is bad for the economy. Risk is what’s hurting the economy, so taking on more of the same risk is to invite ruin.

Happy and/or Merry Easter!

Categories
society

Economic Infrastructure

There are several sectors that constitute economic infrastructure. Some are real infrastructure like roads, the electric grid, but others are not typically seen as infrastructure. The housing market, for example, is not typically seen as infrastructure, but it is part of the economic infrastructure—a necessity to building economic prosperity.

Other examples of economic infrastructure are healthcare, education, and media. In order to build economy, people need health, they need a knowledge base, and they need to filter new information through that knowledge base to keep it healthy and current.

The importance of economic infrastructure is two-fold. First, it provides the same support role that traditional infrastructure provides: it girds the other social and economic activities of a society. It allows commerce to operate efficiently and with routine expectations that fade into the background of life, letting those engaged in other activities focus on their local problems and challenges. Second, just like traditional infrastructure, it creates a base of economic activity to itself. This base activity furnishes a minimum and continuous economy that can cushion the dynamic economy that sits atop it. Even when downturns occur, children continue to go to school, medical practices continue to operate, and housing is still needed for all inhabitants.

Those that argue, for example, for Medicaid expansion in the states, are arguing for improvements to the economic infrastructure. As with traditional infrastructure, more developed societies should expect and require advanced economic infrastructure. A modern society could not function without a network of paved roads, nor should it attempt to function without schools, universal healthcare, and other robust forms of economic infrastructure.

Even the Internet, while built of physical infrastructure, also includes volumes of economic infrastructure in the forms of protocols and software, much of it open source, which allows for interoperability that supports massive economies.

In seeking to shore up traditional infrastructure, it is important to do the same with these institutional, economic structures that are as important to the modern economy.

Categories
society

Economic Problems

We see it on education. On healthcare. On climate. On recreational drugs. On abortion. On practically every issue our nations face.

Our debate isn’t really about any issue, per se. It’s all come down to the economic structures we use to do work.

Take education. We know how to teach people things, more or less. While there are challenges, the fundamental question of education is one of funding. The conservatives want to have McSchools pop up across the land, where you go in and order a number six with cheese and you learn how to do algebra (with cheese). The liberals want to continue to have school lunch: you go to school and the meal is the meal.

In both scenarios, the mechanism of learning is basically the same: read, hear, watch, then practice. The idea that we need to undercut the fabric of education, that this has to be a debate rather than an experiment, is silly, but for scarcity of time and money.

The same is true on healthcare. There’s nobody saying we need to trepan patients’ skulls to let the demons out. The medical science is advancing as it is, more or less on schedule. The argument is over how much money should be made, and how should it be allocated. The courts are currently blocking the march to private-single-payer with their rulings on anti-trust actions by the DOJ.

And climate, where the oil companies aren’t arguing that global warming isn’t real (not really), that the disasters aren’t coming, but that we should pay for it by enduring its effects, rather than mitigating it. Or, as some Republicans now push for a carbon tax over regulation, maybe there can be a market structure.

Reduced to this high-level view, our problems are fundamentally about who profits and how much, a frank discussion that is sorely needed but that is continually obfuscated by pretending it’s about healthcare or abortion.

We should not be fanatical about which side of the imaginary public-private line a service like education or healthcare resides on. But, more importantly, the people should demand high-quality and low-cost with protections and rights retained wherever the service lives. That includes representation, due process, fiduciary duties, and the like.

The politicians need to stop having fake arguments about issues and start having the real argument about the monetary structures of society.

In unrelated news, 1.5% of the current presidential term is already over. Just remember, every fortnight is 1% more of the term gone.

Categories
biz

Thoughts on Steam Trade Holds (Escrow)

Valve’s Steam service is set to roll out an escrow on non-two-factor-authorized trades. They are calling this a “Trade Hold.”

Alice wants Bob’s hat and Bob wants Alice’s key. They agree to trade.

Alice has Steam Guard Mobile Authenticator (SGMA), Bob does not. After the trade, they wait three days to get their items.

At this point, it’s unknown whether Alice could know at the point of trade whether she was risking the trade hold. It seems likely she will, and thus she could avoid it.

Problems with the system include:

  1. People without Android or iOS devices being unable to use SGMA.
  2. Automated trades via bots being unable to deal with escrow without major changes.
  3. People feeling that, generally, they are being disadvantaged due to a minority of users who fall for scams or install malware.

Valve has a scam/malware problem masquerading as a customer service problem. They have looked at improving customer service, but correctly realize that will not really solve the problem. They do need better customer service, but they also need to do more to address the problem of fraudulent trading. The escrow is supposed to be a pressure valve, to relieve some stress by limiting the damage that fraud traders can mete out.

Education of users is important, but simultaneously unrealistic short of Valve creating a trading simulator game that people want to play and it teaching them the hard-learned lessons of what to avoid. Users that would be helped by education either already educate themselves or will be a minority. Forcing education (e.g., through testing prior to granting trade privileges) would deter users from trading altogether.

Previously, Valve has used e-mail confirmations. This failed for hijacked accounts, because the users would simply have their e-mail accounts compromised in the hijacking. SGMA differs in that the likelihood of also compromising a mobile device is much lower.

If machine learning is mature enough, Valve may be able to leverage it to identify fraudulent trading patterns in a bulk of cases, in a manner similar to the credit card industry. It isn’t clear if it is up to this task, nor is it clear how easily Valve could implement such a filter. It seems reasonable to expect that will be a large part of their eventual strategy in fraud prevention.

What does not seem likely is Valve Customer Service becoming a peudo-law-enforcement agency. Investigating claims of fraud and trying to uncover the realities of events after the fact is just not in the cards for a video game services company. They will undoubtedly continue to seek to prevent the fraud.

It seems reasonable to say nobody wants to wait three days for a trade to go through, including Valve who will have to keep track of the trades. But Valve also does not want to have the volume of scammed items and problems sustain their current rates or grow. So they have to keep trying stuff, even if the community feels burdened.

Some minority of users may circumvent the protections of SGMA via emulators and desktop applications implementing the HMAC technology that SGMA uses. It’s a risk, and there doesn’t seem to be a easy way to avoid it, but that user count will likely stay small, sustaining the general integrity of SGMA/trade holds.