Fungibility – the dark side

If you give your child lunch money only later to discover they are buying candy with it you may discover your yearning for a special less fungible lunch currency. Not surprisingly there are micro-currency solutions for this problem in micro-managing your subordinates. If you give money to the local youth center earmarking your donation for youth basket ball and later find out it was spent to repair the roof the situation is less clear. When the green grapes appear at your grocer in January you can thank free trade and Chile; when there happens to be a black widow spider in the grapes you might question the wisdom of the making produce so fungible.

I used the word fungiblity a lot when I was working on Internet Identity. One of the many players in that standards making process are the firms that have huge amounts of account data about their trading partners. A strong identy system would allow them to make that data more fungible. If they could puzzle out a way to get permission to exchange that data with other parties they could convert static data in their vaults into dynamic data – a source of profit.

So I’m gobsmacked that I didn’t see this coming. The tax prep industry is seeking a rule change from the IRS that would allow them to resell the tax return data of their clients. Man is that evil! I paarticularly admire how this is framed as a clarification of tax payer privacy rights – indeed it is. Notice also how the industry is using it to protect themselves from foriegn competition. I guess this kind of thing happens almost automatically when the middlemen – in this case the tax prep industry – becomes sufficently concentrated.

Meanwhile, back on the lunch money problem. You could send you child to school with lunch already made. This would teach them valuable negotiation skills as they barter their lunch for better options. A wise parent might just send them to school with some highly fungible trade goods – cookies for example.

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