Ascription is an Anathema to any Enthusiasm

The Irish decided to impose a 33 cents tax on those plastic bags that retailers use. I presume this was in part a sin tax, in part an attempt to tax the externalities created by the bags, and in part a bit of stunt. The end of the story is that it’s wiped out the use of plastic bags, shifted social norms about bag usage. It’s a fascinating story about deciding to change the way a society behaves; making it acceptable to shun those who exercise their freedom to use plastic bags.

For some reason that story is currently slotted in my mind with the health care debate’s latest point of discussion.

The question at hand is should we put everybody into the system, or should we allow people to opt out. Allowing people to opt out would presumably create incentives for people to game the system. Or putting it another way it would allow people to gamble that they aren’t going to need health care during the next time interval.

Boffins think that this single choice would have a sharp effect on costs. Plans were we all join look likely to cost us each about $2,700 a year, while those were we allow gaming would cost $4,400 per year. Intuitively that sounds about right - you just take a guess on how many people would decide to take a swag at getting away with no healthcare, say 25%, and then you figure that group is likely to be somewhat less likely to need care, say 60% less; an you get similar numbers.

So that’s 63% more expensive or additional $147/month. Our faux progressive funding system pushes most of the cost of these social programs onto the middle and upper middle class so you can multiply that as you think is appropriate. But that class struggle is less interesting to me today.
What this highlights is how it creates two classes: those who decide they want to take the gamble, in one class, are costing everybody who decides to join, the second class. It is an interesting case of creating a clear cost to the majority group by allowing a minority a freedom. The boffins think that minority is pretty large. Will those who join will shun those who take the gamble? Will the system create shifting social norms, like the Irish experience with the bags, where it becomes unacceptable behavior to take that gamble?
There is another interesting take though. An intertemporal one. I presume that many of those who might decide to take that bet they won’t get sick will be young people. There are plenty of reasons to think that. Young people tend to be less able to afford the insurance. They tend to be less risk adverse. They tend to be healthier. They tend to have less common cause with large institutions. Over time a person is two people; a young person, and then latter a older person. The first of these is raising the costs of the second one.

Actually there are really three people or more people in each individual, since for example, what makes for a healthy young person is a healthy childhood. So the healthy young person that opts out has his head in a bag, selectively blind to both to the past and the future.

For about the last six months I’ve been observing etsy.com with some interest. To first order it is a classic two sided hub, so naturally I’d be interested.   A market place in this case.   It aggregates a large number of small sellers of handmade goods and their buyers. Providing shops, search/browsing, transaction orchestration.

As a business they are not built to flip, but rather to last.  That is always risky and thus more respectable. Over all they are a rough but solid operation.  It’s no wonder that they have attracted some very high quality folks as advisors/investors/coders.

For me the most interesting aspect of esty might be called their branding.  But boy that is far too bloodless.  Worse, it leads to a misunderstanding. Etsy is entrepreneurial in two or more ways. They are building a business. One that can turn out to be a quite significant retailing hub.  Thus, they are classic business entrepreneurs with all that implies; much of which is unfortunate.

Success in creating that hub would be significant.  As a rule internet hubs aren’t good for small enterprise.   I am conflicted about that conclusion, but there it is.  Generally the internet has accelerated the hollowing out of small business.  The Internet’s power to create major intermediaries and thus break and thin out the connections between producers and consumers ain’t a healthy development for us all.

I’ve written before about my hypothesis about how to help counter that. You need to create more connections horizontally between parties. Which I call small group forming. These are hard to create in scalable ways.  But  when created they shift social and economic flows downward on the distribution of wealth rather than upward.

So should Esty succeed in doing what, say OSCommerce has failed to do, it can create a bloom of vibrant small business activity inside of the Internet.  That, in turn, it would help shift the curve. That could be a real help tempering rather than worsening the distribution of wealth.

Which brings us to the second kind of entrepreneurship that Esty is trying to execute on. It is a kind of social entrepreneurial activity. An effort to change the nature of the economy. You can hear that in some of their communication. For example talking about creating a more adaptable or robust economy is one sign of that.

This two for one kind of entrepreneurial activity is hard to execute on. There are powerful systemic forces in play that tend to hand the power to economic rather than the social side of the balancing act. There is a wide spread presumption (a fair one!) that firms talking about the social side of the game are only playing a branding game. That they are the capitalist version of a corrupt politician who uses populist rhetoric.

But, Etsy is taking a interesting swing at the problem. Surprisingly practical. For example if you look at the list of things that make businesses resistant to consolidation (franchising, chain store, mail order, etc) the Esty target market (handmade goods) is a good choice. For example their efforts to encourage their sellers to engage in local organizing is another sign of taking seriously the puzzle of how to strength, rather than suck the life out of local and small business.

Speaking of Google he says: “They create absolutely nothing!”

While I personally think that moderns tend to be amazingly cavalier and disgustingly disinterested in costs of displacement, there are days when it is very hard not to just chortle.  Some people totally deserve to be displaced.

He’s got a suit, but no clothes.

When hanging out in the world of ideas created by Ainsle’s work Emerson’s cliche “A foolish consistency is the hobgoblin of little minds.” offers a nice perspective. Possibly Emerson’s point was that given a larger mind you can house yet more than one hobgoblin.

In related news I see that when they cleaned up the data from Google prediction market they discarded some trades, including “self‐trades (which resulted from the fact that the software allowed traders to be matched with their own limit orders).” I wonder how much of that goes on in real markets. It’s clearly a sign of the temporal inconsistency which Ainsle’s work focuses on.

These trades took place between the hobgoblin that decided to place a limit order, and a later hobgoblin that decided to make a trade at that moment. It isn’t clear to me exactly why it’s best practice to remove the trades between these hobgoblins just because they were housed in the same person’s corporal body.

There is a wonderful classic poem, Goblin Market, here’s a bit of one of the many beautiful illustrations it’s engendered over the years. In this scene the heroine, after attempting to act as a middleman, has drawn down upon her the rage of the merchants.
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Some years ago this chart from the DOE convinced me that solar power was in trouble; that 4-5$/watt was about as good as it gets.  Bad news, given that coal is substantially cheaper than than.  It was beyond my wit to know what the source of this problem is.  It might be market forces - that the floor looks like it was hit just about the time the pulse of money generated by the 70’s oil crises is thought provoking.   It might be a technology limit of some kind, something in the physics say.

In any case it appears there is good news.  Because these folks are claiming they will hit a dollar a watt soon.  “we believe will make us the first solar manufacturer capable of profitably selling solar panels at as little as $.99/Watt.”   That’s the future tense, and it doesn’t include the rest of the capital equipment involved in the installation.   Good news none the less.

It’s weird that they are shipping them to East Germany; you’d think they would prefer someplace sunny.