Universal Income

A basic income (also called basic income guarantee, unconditional basic income, universal basic income, universal demogrant, or citizen’s income) is a proposed system of social security in which citizens or residents of a country regularly receive a sum of money unconditionally from the government. (Wikipedia)

When I first heard about “universal income,” I laughably dismissed it as extremely naive leftist thinking that was so patently ridiculous that it bordered on satire. The government gives everybody a standard amount of money? Where does that money come from if not the very people it is being given to? Wouldn’t such a policy totally destroy any incentive to work? And then who is going to pay for it?

However, I have since learned that the idea has some interesting substance to it, and it has actually been promoted by several prominent conservative and libertarian thinkers throughout history. Discussion of the old concept has seen much revival across the Internets lately due to global economic trends and the emergence of experiments in various places that have been providing interesting results.

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Help Make Sure The Government Moves Ethanol Regulation In The Right Direction For Once

Last month, the EPA proposed reducing the ethanol mandate in 2014, due largely to unexpected decreases in fuel demand that would force producers to mix increasing percentages of ethanol into a smaller pool of fuel, with potentially dangerous consequences for older engines. News reports are calling it a victory of Big Oil over Big Ethanol, but regardless it’s a good piece of common sense finally coming out of government energy policy that has ignored the consequences of coddling ethanol for far too long. Commentators on the left and the right seem to agree.

Well, the regulation is now up for public comment until January 29, 2014. A quick perusal of the viewable comments shows plenty of pro-ethanol voices pushing to undo the rule, although contra the “Commenter’s Checklist” many of them don’t seem to have actually read the (long and wordy) proposal itself, which explains the rationale for the proposal and makes multiple requests for reasoned or knowledgeable arguments to change them.

I call on all citizens interested in sound energy policy to petition the EPA to keep or even further reduce the proposed mandates, so that we may finally begin to turn the tide against this boondoggle that has damaged the environment and economy for all of us in order to benefit a smaller set of connected energy interests. Read the Proposal And Submit Your Comments Now!

I believe this proposal is not likely to be overturned anyway, but the more voices rise up in support of the reduction, the easier it will be to carry the momentum to Congress to officially do away with the mandates altogether. And while I have no love for the special interests of oil companies either, I am not too concerned about their incidental benefiting from this proposal; electric cars and solar power have their days numbered, anyway.

Here is my comment. I used the multiple uncertainties stated in the report to strengthen my case. Please do not copy and paste it but feel free to use it as a basis for referencing relevant sections of the proposal to write your own. I encourage others with more knowledge about some of the specific environmental and economic costs of ethanol policy to elaborate on those in their comments, and to try to explain how those costs justify the regulation’s waiver authority and how those costs conflict with the regulation’s stated objectives.

I fully support the proposals to lower the RFS levels for 2014, and I fully support the broad interpretation of the waiver language required to justify it. In fact, I believe a broader interpretation that these requirements may “severely harm the economy or environment” would result in requirements that were lowered to 0.

Regarding the objective of “enhanced energy security,” the recent unexpected surge in domestic oil production has already provided far more security than these renewable fuels may ever do. Regarding the objective of “reductions in greenhouse gas emissions,” I believe there is significant uncertainty that ethanol even leads to a net reduction when all the costs and externalities are taken into account. Regarding the objectives of “economic development and technological innovation,” I believe the recent increases in gas mileage and the rise of electric vehicles are contributing more and have the potential to contribute to more innovation and development. Finally, I believe goals of energy security must be balanced with food security. When unpredictable drought strikes, every portion of the food supply that is diverted into fuel exacerbates supply and price shocks for the remaining portion, increasing the potential to “severely harm the economy” as increased food prices increase hardship and poverty both here and around the world.

I would also like to note that reducing the RFS requirements to 0 would fully satisfy the stated desire to “minimize the need for adjustments in the statutory renewable fuel volume requirements in the future,” as it would be unnecessary to reduce the standard further from 0. However, as such a severe reduction is unlikely, please consider the following recommendations regarding the proposed volumes.

Regarding cellulosic biofuels, I believe the proposed requirements are too optimistic due to the stated “common delays” in production ramp-up. Furthermore, even if the range of volumes (8-30 million ethanol-equivalent gallons) is as accurate as possible, I do not believe the Mean value of 17 million should be used, which implies there is a 50% chance that production will be below this value. It is inappropriate to mandate a level with such high odds of failure. I believe the 25th percentile of 12 million is the most appropriate of the options presented in Table II.C-2.

Regarding biodiesel production, I believe the proposed requirement of maintaining the 1.28 billion level is reasonable but perhaps even optimistic due to the likely expiration of the significant $1/gallon tax credit and the stated lack of estimates of production and demand if the credit is not extended.

Regarding ethanol production, I believe the estimates are too optimistic. I believe it is hasty to entirely dismiss E0, which has increasing demand as evidenced by the website pure-gas.org, as well as the record increases in electric car sales, which are essentially equivalent to “E0” as far as ethanol consumption is concerned. I also believe it is imprudent to assume that the very recent “conditions that have led to” the favorable “price relationship” of E85 over E10 will “continue in the future,” due to the historic relationship and a complete lack of explanation of what those new conditions may be and why we should expect it to become a long-term trend (or if it is even a trend at all since data was only available from two states). I also believe it is quite likely that non-ethanol fuel demand will continue to trend lower than currently estimated, and it should be remembered that the whole reason these standards are being lowered is that fuel demand has been overestimated in the past.

For all of these reasons I would support the 25th percentile of 15,084 million gallons as the most appropriate of the presented potential approaches, although I certainly would suggest even lower values for increased security, economic, and environmental benefits to the United States overall.

It is also important to note that a reduction in minimum production requirements does nothing to affect “maximum” production, or rather the potential for higher production levels if consumers demand it. If these renewable fuels are truly cleaner, cheaper, and better as claimed by proponents in many vigorous but shallow comments, reducing the minimum should have no effect as consumers could and would still rush to demand higher volumes via FFV/E85. If, however, these fuels have significant risks in supply, demand, and/or externalities, reducing the minimum could prevent severe negative effects on both the economy and the environment.

What The Pundits Are Still Missing About Bitcoin

Pundit Joe has changed his mind from thinking Bitcoin is completely useless to admitting that it’s at least very useful for buying drugs. Pundit Matt still thinks that’s not really very useful at all.

I don’t blame their narrow impressions; until recently I didn’t grok much more than that (besides the currency’s limited supply, which has no appeal to non-libertarian/Austrian types). But now that I understand Bitcoin a little better, I think pundits like Joe and Matt are still completely missing some of the more revolutionary and universally appealing aspects of the elegant but complex protocol behind the surging cryptocurrency. Bitcoin potentially solves several key weaknesses of the modern financial system that are more easily understood at the extreme ends of the scales.

Bitcoin is a quick, safe, and cheap way to transport very large sums of money. I’m not personally familiar with how hard it is to, say, instantly transfer thousands of dollars to a relative on another continent, although trying to do it with cash is clearly difficult. I don’t how long it takes for wired funds to settle, or how much it costs, or what banks you have to go through, or what information you have to provide. But I’m highly confident that it’s much easier with Bitcoin (especially on a Sunday) – essentially, you just enter the address and wait a few minutes for the next mine block to verify it. It’s difficult to overstate the possible value of lowing these barriers.

Bitcoin is a quick, safe, and cheap way to transport very small sums of money. This end of the spectrum I understand better. The light bulb went on for me when I saw redditors randomly tipping each other in cents and realizing there was basically nothing else like it. Credit cards have enabled the e-commerce explosion, but the overhead of transaction costs rules out tiny purchases. Even with miner fees for quicker verification, Bitcoin obliterates the current system’s minimum viable transaction level, which I think is bound to unlock a whole platform of previously infeasible business models.

Of course, the nearly feeless nature of Bitcoin transactions could appeal to retailers doing business of all sizes; it’s just easiest at the very large and very small levels to see the strengths of cryptocurrency’s cheap, instant, and secure transfers over the weaknesses of the existing system’s expensive, slow and insecure transfers.

Naturally, these advantages attract illicit activities among its early adopters, but as far as I’m concerned that’s beside the point. And cryptocurrencies like Bitcoin, or whatever later supplants it, still face downside risks like scalability, the opportunity cost of relying on electricity, or the third-party add-ons necessary to encourage common adoption (Bitcoin transactions themselves are inherently secure, but storing the result is definitely not.)

But there are enough fundamental advantages that I don’t think optimism is only for the cranks and crackheads. The utopian dreams about ceding power from governments and bankers to the common man may be a little, well, utopian, but to dismiss the whole thing entirely risks sounding like the old doubters of the newfangled Internet who said “no online database will replace your daily newspaper.” Sometimes you just have to wait for the pundits to figure it out.

(Full disclosure: I currently possess 0.00001726 BTC as well as an undisclosed amount of USD.)