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Suppose you are in charge of a large political campaign (like, say, the ones for Obama and McCain that are going on the moment here in the US). You have a certain amount of money to spend and want to spend that money in a way that will make as many people vote for your candidate as possible. As always with such things, there are bound to be more things that you can conceive of doing than there is available money, so you have to choose only the things that meet a certain “expected number of voters swung per dollar” threshold. I wonder what that threshold is? I.e. if you give $100 to a political campaign, how many extra votes does that buy?

This isn’t the same as the total number of votes cast for a candidate divided by the total amount that campaign spent, because some of those voters would have voted for that candidate anyway without the campaign spending any money. I’m interested in the marginal cost of a vote.

I’m sure the figure varies from day to day (if the other candidate makes a big gaffe, you can probably exploit that to swing a lot of voters relatively cheaply) and from state to state (votes in swing states are more valuable than votes in safe states, so it’s worth spending more to swing them). I expect it also varies depending on how much the other campaign spends (since it costs money to undo their work). I’m sure the political campaigns do calculations to figure this stuff out - it would be interesting to see their statistics.

I’ve been reading a lot about startups lately, specifically in the essays of Paul Graham. There is a part of me that regrets not having ever tried to start my own startup - unfortunately the bursting of the bubble and the intricacies of US immigration policy meant that there was never really a practical time. While being filty rich does have a certain appeal, the more compelling reason is the one at the end of this essay - getting the business of getting enough money for life over with as quickly as possible in order that I can work on whatever I want to. The summer/autumn before I started at Microsoft, when I had several months of mostly uninterrupted time to myself to work on whatever I wanted to was one of the most intellectually satisfying (not to mention relaxing) periods of my life.

I have always thought of myself as having progressive politics but this is the best argument I have seen yet against taxing the rich. I guess one possible counterargument is that maybe taking very big risks isn’t really necessary to develop new technologies (nor necessarily particularly beneficial to society as a whole) - the only reason that this has been true in the past is that developers and funders of new technologies have very little information about whether these new technologies are likely to be successful or not. With better information, perhaps we will be able to pick the winners before a lot of money has been spent, meaning that the big risks will be unnecessary.

One other thought: as startups become cheaper than ever to create and run, perhaps we will see more of them following the model of craigslist - staying small (in the financial sense) and private and concentrating on what users want instead of aiming for explosive growth, trying to become as profitable as possible and then either go public or get aquired. While the latter is more lucrative, I suspect the former might be more intellectually and spiritually satisfying.

What do Bruce Schneier, Mark Chu-Carroll and Paul Graham have in common? They’re all bloggers (though Graham prefers to describe himself as an essayist) who seem to have gradually transitioned towards writing about economics starting from their more specialized subjects (cryptography, mathematics and lisp respectively).

I guess this is because economics is a very powerful subject - if you want to change the world you have to make it worth peoples’ while to do so, which means you have to set up the economic conditions for it to do so. Conversely, if you know (or think you know) how the world is likely to change in the next few years you can use economic principles to figure out what to place bets on (invest in).

I think that at some point in the future we will develop nano-replication technology (a la Star Trek: The Next Generation) and there will be perfect open-source recipes for these machines for everything from roast beef to nano-replication machines.

Shortly after that will come the complete collapse of society, because we won’t need anyone else for our basic necessities any more. We will just replicate power generators (solar, wind or both depending on climate) and devices for collecting rainwater and making it drinkable. Our waste will be recycled into the raw materials the replicators need (as disgusting as that sounds, I’m sure we’ll learn to deal with it) and our internet connections will be made out of wi-fi meshes and long-range point-to-point radio connections.

How can you have any sort of economy with such an absence of scarcity? Well, presumably there will still be some things that are scarce and desirable (like land in nice locations). And presumably there will still be people doing particularly creative things that improve peoples’ lives (making movies or inventing new recipes) - we’d just need some way to connect the two.

I’m not advocating for intellectual property as such here (that makes the accounting far more complicated than it really needs to be and introduces artificial barriers to creativity) - instead I’m imagining something more like Nielsen ratings (but for everything) to determine who gets the scarce wealth.

I guess we’ll probably always have some form of money, and I’m sure the arguments about how it is accounted for will be as heated as ever. How do you decide on the relative value of the recipe your dinner was made from verses the movie you watched?

A few times now I’ve heard the meme comparing carbon offset credits to Catholic indulgences - where one can “buy one’s way out of punishment”. I think this argument is completely bogus and that the similarities are superficial at best.

Carbon offsetting is an economic solution to an economic problem. Many people want to live a more green life but don’t want to change their habits to do so - many of the things that they want to buy or do (like air travel) don’t have (more expensive) carbon-neutral equivalents. Perhaps such equivalents are possible but the demand isn’t sufficient yet for them to be practical. But just like the invention of money made trades possible that were impractical with the barter system, carbon credits make it possible for some people to be carbon neutral without everybody having to be so at once.

The key here is that the aim of the exercise is to reduce the total amount of carbon dioxide in the atmosphere. Doing something which adds CO₂ and something else which removes it is just as good as doing neither.

Sin, forgiveness and punishment don’t work like that, though - doing one good deed doesn’t (and shouldn’t) make up for an unrelated sin of equivalent value, because (unlike CO₂) the total amount of sin isn’t a meaningful concept - everyone just cares about the sins that are made against them in particular.

Also, Carbon credits can have a measurable effect whereas it’s impossible to be sure just how long you’re going to spend in purgatory. So fraud is more difficult (though still possible - we do need to have some way of ensuring that the money spent on Carbon credits is actually being spent on what it is being purported to instead of being squandered and that that activity is having the desired effect).

Imagine if one measured the amount of money one had as a fraction of the total amount of money in the world rather than in arbitrary units. That way, when inflation happens, the number representing the amount of money you have goes down rather than prices going up.

Obviously that would be rather difficult to do with old-fashioned coins and notes but it would be trivial for a Cryptonomicon-style completely electronic currency. We’d probably use units of trillionths or thereabouts (or maybe “year 2000 dollars”) to avoid having to write too many zeroes (and avoid accidents miscounting them).

One advantage of such a way of measuring money would be that the effects of inflation would be rather more obvious to people (at least, those of us who keep a more careful eye on our bank accounts than we do on the consumer price indexes) and might therefore discourage inflation somewhat. It would feel more like a tax (which, of course, is what it really is when it comes down to it - a very fair tax, I think, since the people with large reserves of cash seem to be the people who can best afford to pay taxes).

Another advantage is that it becomes easier to compare prices over time (since you don’t have to adjust for inflation). A third is that things that tend not to be index linked (but which really should be, like salaries) would be more likely to.

A side effect would be that the velocity of money would greatly increase - cash would be a hot potato.

I used to think economics was a terribly dry subject, but lately (especially since I’ve become part of the working population and a homeowner) I have been finding it interesting to think about how wealth, money and value are created, destroyed and moved around.

For example, would we all be better off if we tried to create wealth that lasts at the expense of ephemeral wealth? Perhaps to some extent, but on the other hand one can have too many marble statues and too few cheese sandwiches.

There was an interesting piece on the radio a while ago about some people who had a religious objection to war - specifically, their religion said that they could not pay taxes if that money would go to funding a war.

That got me wondering - what would be the consequences of trying to accommodate these people? Suppose that your tax forms had a series of boxes which you could check to tell the government what you want your tax money to go towards. Then the government could try to ensure that the war was funded only by the tax money from people who had ticked the “war” box on the tax form, and fund everything else with what is left over.

Of course, the government couldn’t guarantee that peoples’ money went where they wanted it to go (if they could, many people would probably just leave all the boxes unticked, or just tick the cheapest boxes in an attempt to pay no tax or less tax.

But even as a non-binding thing, the aggregate data could be useful as a gauge of public opinion - if the war is costing much more money than the taxes paid by the people who actually think it’s a good idea, maybe it’s time to elect a government that will end the war. Similarly for roads, schools, healthcare and welfare. Such a thing might encourage governments to be more open about what your money is being spent on and why.