View profile

Matt's Thoughts In Between - Issue #79

Matt’s Thoughts in Between
Matt’s Thoughts in Between
This week: what Trump/Greenland tells us about the future of sovereignty; why central bankers are talking about cryptocurrency; the case against reason; and more…

Forwarded this email? Subscribe here. Enjoy this email? Forward it to a friend.
Trump, Greenland and experiments in sovereignty
Last week, Donald Trump floated a desire to buy Greenland for the United States. The proposal was immediately dismissed by Denmark (and ridiculed on Twitter) and in response Trump cancelled a planned trip to Denmark. In some ways, it’s just another example of the Great Weirding*, but in others it points to genuinely interesting trends in geopolitics. 
Territorial acquisitions used to be commonplace (much of the US was put together this way), as this thread shows. But changing ideas about sovereignty and the concept of a “homeland” in the period since World War Two have made straight up purchases of sovereignty (as opposed to mere leasing of land) rare. Interestingly, though, climate change is putting the idea back on the agenda. One reason Greenland has become more attractive (and not just to Trump) is that receding ice has made its mineral wealth more accessible. And the island nation of Kiribati bought territory from Fiji recently in a pre-emptive move against future land loss.
As Josh Keating, author of the book Invisible Countries, points out, technology (see next section), globalisation and transnational risks are putting traditional ideas of sovereignty under pressure. From innovative governance models like charter cities to major international shakeups like Brexit, I expect we’ll see many more experiments in sovereignty over the next few decades. 
The establishment case for decentralised currency
Since its inception (and even before), bitcoin advocates have argued that it is precisely one of these sovereignty-shifting technologies: it undermines the monetary monopoly of nation states. Until recently, however, this argument has had few adherents in conventional policy-land. It was striking this week, therefore, that Mark Carney, the Governor of the Bank of England, gave a speech in which he talked about a future world where the dollar’s place as the global reserve currency is taken by a decentralised digital asset.
Carney’s argument is that the dollar’s dominance leaves the global economy vulnerable to damaging “spillovers” from the US domestic economy. For example, half of global trade is denominated in dollars, but the US accounts for just 10% of imports. Just as at the time of Bretton Woods in the aftermath of Second World War, the world’s international financial institutions no longer reflect economic fundamentals.
Carney suggests that the answer may be a “synthetic hegemonic currency”. He doesn’t mention bitcoin by name, though he does refer to Facebook’s Libra (see previous coverage) - and some of the regulatory challenges* it has encountered right out of the gates. For bitcoin true believers, though, a major crack has appeared in the fiat currency dam. In Tuur Demeester’s words, “Technology has the potential to destroy the dollar’s network effect. I have never heard a central bank figure say this”.  Interesting times.
The case against reason
I recently read Joe Henrich’s The Secret of Our Success (Thanks Marc for the recommendation). It’s one of the best books I’ve read recently in terms of creating new mental models. It’s extremely rich, and therefore difficult to excerpt, but I highly recommend these reviews by Tanner Greer and Scott Alexander (and this conversation between Henrich and Tyler Cowen).
Henrich’s core argument is that “culture is smarter than we are” and that our cultures and our genes co-evolved to make us the successful species we are. In other words, our our collective brains are much smarter than our individual brains. He demonstrates this with copious examples - most strikingly the inability of modern Westerners to figure out basic survival techniques from first principles in new environments (e.g. the Arctic) versus the cultural transmission of these techniques by groups that might appear relatively less advanced (e.g. Inuit peoples). 
The book presents a strong case for epistemic humility. As Scott Alexander summarises, “for basically all of history, using reason would get you killed” - so we should be cautious of claims that we’ve transcended inherited wisdom and can replace it with new ways of living designed from scratch. Of course, there are limits to this argument (and the potential socially reactionary implications are troubling), but for many of us a nudge away from intellectual overconfidence is probably a move in the right direction.
Quick Links
  1. Then it came for the front end web developers. Amazing demo of a deep learning model that turns mockups into code.
  2. Private affluence, public squalor, revisited. Polemic on New York City’s profound infrastructure problems.
  3. The end of history forecasts. Tyler Cowen on the predictable unpredictability of China.
  4. United States of Florida? Striking map of where Clinton and Trump spent their time in 2016.
  5. We’re all US creditors now. In a world of negative interest rates, 95% of all available investment grade yield is US-based.
Your feedback
Thanks for reading Thoughts in Between. If you enjoy it, I’d love you to forward it to a friend who might like it too. Do feel free to hit reply if you have any comments - or chat to me on Twitter.
Until next week,
Did you enjoy this issue? Yes No
Matt’s Thoughts in Between
Matt’s Thoughts in Between @matthewclifford

Matt Clifford's Thoughts In Between

In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Created with Revue by Twitter.