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I have some sympathy for companies that object to government support for competitors – after all, the pockets of the goverment are deep, and how can you compete with a competitor that has access to unlimited funds? On the other hand, it should be possible for a government to decide to invest in industries and technologies on behalf of all of its citizens. Slapping on extra tarriffs whenever this happens is unhelpful for innovation from a global perspective.

It would be generally helpful if governments could agree internationally what subsidies are unfair, and which are fair game in support of economic development. Equity investments in private companies are common in some countries, less so in others. Loans can be made at non-market rates: when does this equal an unfair subsidy? As long as we don’t agree on this, standards are likely to differ across the world, leading to an uneven playing field. Ironically, in a climate of increased isolationist forces there seems very little chance of such international cooperation. As a result, stories such as Boeing’s are likely to keep occurring.

On November 30, 2017, Josephine-vL commented on Dilemma Facing Banks – Tulip Crisis or Internet 3.0? :

Based on the very helpful and clear description of the underpinnings of bitcoin in this article, Mr. Dimon’s comparison of bitcoin with the tulip crisis actually seems apt.

Much like bitcoin, the 17th century tulip bubble in the Netherlands developed because of a new technology: a virus that infiltrated the bulbs, but rather than killing the flowers made them flare up in interesting color combinations in flaming patterns, which were coveted because of their beauty and initially mainly coveted by the rich. It also made rare breeds more unique, and difficult to copy. Another new technology that acted as a catalyst for the burgeoning flower market were futures contracts, developed a century earlier to support the trade in grain and herring. [1]

Introduction of futures for bulb trading around the year 1620 increased the supply of tulips, which suddenly made them accessible to the masses. A brief dip in prices was followed to steady gains year-on-year. Many people then realized that by trading futures, they could get involved and not even own a garden. Around 1635, townsmen began to meet at night in local taverns to trade the contracts, as if they were trading stock. [2]

This sequence of events led to the world’s first speculative bubble and market crash, as experts realized that there was no underlying principle to support the price of bulbs. In early February 1637, bidders for bulbs failed to show up at an auction in the town of Haarlem. News spread quickly to other towns: within a week, prices dropped to 1% of what the value had been. [3,4]

I believe it is not inconceivable that a similar scenario plays out with bitcoin. Whereas the underlying blockchain technology clearly has inherent value, the bitcoin currency itself seems indispensable only for actors in the shadier side of the economy. Unlike other currencies, there is no economic activity that cannot function without it. If in the coming years, 99% of its value is wiped out, I would not be all that surprised.

[1] Barbour, Violet. Capitalism in Amsterdam in the Seventeenth Century. Ann Arbor: University of Michigan Press, 1963
[2] Peter Garber: Tulipmania, Journal of Political Economy. Vol 97, No 3
[3] Dough French: The Dutch Monetary Environment during Tulipmania. Quarterly Journal of Austrian Economics 9/1, 3-14
[4] Roel Janssen: Grof geld – Financiele Schandalen En Speculatie In Nederland. De Bezige Bij, 2011

On November 30, 2017, Josephine-vL commented on AK Steel: Casualty of a Protectionist War with No Winner in Sight :

This is certainly an interesting dilemma for the companies involved, and a clear case of the startup and winddown time fuelling a significant decrease in profitability in the face of market uncertainty. I would be very interested in learning more about the cost-benefit analysis that led to your conclusion that BOF’s are no longer economically viable. Based on the dynamics you describe, I would expect this to be strongly driven by expectations for future developments in protectionist policy. Given the uncertainty of the political climate, I wonder at your recommending such a drastic and hard-to-reverse step.

It will be very interesting to see what happens here. For a long time, Uber has thought themselves invincible, and it was to be expected that their chickens would come home to roost when they kept creating so much bad will in markets they entered. As you point out, the outcome of the legal battle with Waymo will be crucial, and could damage both Uber’s finances and its development progress for the project. However I would expect that that would still be no more than a temporary setback. The expected impact of autonomous vehicles on Uber’s business is too great for them to stay out of the game indefinitely.

On November 30, 2017, Josephine-vL commented on The Beef with Beef :

An interesting article, which makes it very clear that our beef consumption is not sustainable in the long run, and we will need to come up with alternatives. As you mention, alternative protein sources may be able to replace a large portion of our beef in the future, although for e.g. in vitro meat replacements it may be years until this can be done at lower environmental impact, and at competitive cost. [1]

When this does happen, I expect that meat replacements will mainly usurp the space of ‘low-end’ beef consumed by the mass market, where animal suffering tends to be the most horrible. It is my hope that the decline of meat consumption will not cause the living animals don’t die off. One outcome could be that they become a more highly valued ‘luxury’ option, and are cared for properly during their lives. Even though their gasses are bad for the environment, we definitely don’t want cows to ever disappear completely, though it is unlikely we can teach them not to be flatulent.


On November 30, 2017, Josephine-vL commented on Will Digitization Eat Blue Apron for Lunch? :

While I agree with Patrick that the intensifying competition is a big problem for Blue Apron, I question the inevitability of the death spiral diagnosis in figure 2. Does investing in operational efficiencies necessarily lead to lower service quality? I suspect that investing in efficiencies such as delivery system speed and agility could improve both operational efficiency and service quality. As btaylor mentioned in his comment, TOM students can help them get out of their rut, and they can do it by increasing their top as well as their bottom line.