unemployment depression

New Foreign Affairs article: Will Japan choose neoliberalism?

I have a new article at Foreign Affairs, which draws heavily on the ideas in this blog post from a few months back, as well as this earlier post. The article about the monumental economic and social choice facing Japan: Whether to embrace neoliberalism. Some excerpts:

Faced with economic stagnation in the late 1970s and early 1980s, most of the world’s rich countries made a fateful choice. They lowered taxes; slashed government regulation in labor, financial, and other markets; opened their economies to global trade and finance; and privatized government functions...[M]ost [economists] concur that the reforms at least contributed to higher inequality, increased economic insecurity, and, at least temporarily, faster economic growth...

Buoyed by the last spurt of its postwar catchup growth, Japan managed to sail through the 1980s without having to face hard choices about the structure of its economy...

Many features of the Japanese economy that are commonly attributed to culture are, in fact, the result of Japan trying to run a modern economy without neoliberal reform: powerful but inefficient corporations, little job mobility, low unemployment, a relatively equal income distribution, and a job market that is heavily rigged against women...

In order to enact meaningful structural reform, Abe will have to reverse Japan’s most important economic policy decision of the last half century. He will have to embrace neoliberalism...

[T]he third arrow of Abenomics is not just about lifting Japan out of its long economic slump. It is about making a grave choice that will determine the fabric of Japanese society. The failure of the third arrow means continued corporatism, and the preservation of Japan’s social model even at the cost of a slow slide into economic backwardness. Abe’s trade and labor reforms offer a way out into a frightening and uncertain future -- but one that is potentially freer.

Read the whole thing here!

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The Price and Future of Bitcoin

Guest post by Evan Jenkins.

It’s time for some Real Talk about Bitcoin.

This past month’s Bitcoin boom has brought out the usual derp from both the True Believers and the Cryptoskeptics. The True Believers point to rising prices as evidence of the impending Fiatpocalypse, while the Cryptoskeptics point to the same rising prices as evidence that Bitcoin is a mere faddish bubble, destined to pop as soon as its so-called investors get kicked out of their parents’ basements and need to pay for food and shelter.

What we haven’t seen enough of is analysis of Bitcoin as an asset. Whatever you may think of Bitcoin, it's an actual commodity with an actual price, and we can use that price to make inferences about its future. You’re welcome to unskew my analysis using whatever set of Bayesian priors you hold, but I hope this will at least give a basis for some actual dialog about the future of Bitcoin.

Bitcoin is a purely speculative asset (that is, you will never be paid anything just for holding it), which makes its pricing model particularly simple. To further simplify things, we’ll make the not entirely realistic assumptions of a zero risk-free rate and risk-neutral investors, or equivalently, a discount factor of 1. What this means is that the price of Bitcoin now is equal to the expected price of Bitcoin at any time in the future.

As I write this, the price of a Bitcoin is hovering around $300. Does this mean that twenty years from now, the price of a Bitcoin should still be around $300? Of course not! Twenty years from now, either the True Believers or the Cryptoskeptics will be proved right. If the Cryptoskeptics are right, Bitcoins will be worthless in twenty years.

If the True Believers are right, they’ll be worth a lot more than they are now. Determining exactly how much more is a tricky issue. The chart in Guan’s post shows several potential implied values for Bitcoin, based on the total value of all Bitcoins in existence growing to various levels. These values are possibly reasonable short-term goals for the True Believers, but I can’t imagine the Bitcoin hype stopping at any of those levels. In order for Bitcoin to really reach a stable value level that can reliably be used worldwide for online transactions, it’s going to need to become a sizable portion of the world’s currency. One estimate puts the current total value of currency in the world at $58.9 trillion. Let’s say that in the long run, Bitcoin will need to become 1% of that, or $589 billion. This corresponds to a price of about $28,000. (This is a larger value but lower price than the last entry in the table: I’m having this take place in the future, when there will be more total Bitcoins.)

All right, we have our setup. Right now, the price of a Bitcoin is $320. There are two possible futures: in the Cryptoskeptic future, a Bitcoin will be worth $0. In the True Believer future, a Bitcoin will be worth $28,000. What is the probability of each future? If we let $q$ be the probability of the True Believer future, then \[300 = P_{\operatorname{now}} = E(P_{\operatorname{future}}) = 28000 q,\] so \[q = \frac{300}{28000} \approx 0.01.\] Thus, our model tells us that there’s only a 1% chance that the True Believers are right! The higher you think the future value of Bitcoin is, the less likely that that future will actually happen. (This is what makes the chart in Guan’s post so amusing!)

To finish up, I want to bring up two confounding factors, one of which is bad news for the future of Bitcoin, and one of which is good news for the future of Bitcoin but possibly bad news for the True Believers.

The first confounding factor is that the Bitcoin market, as it exists now, probably does a pretty bad job of pricing correctly. The problem is that it is very difficult for somebody who does not already hold Bitcoins to make a bet against the future of Bitcoin. The only people with the power to move the Bitcoin market down are those who have already bought into the Bitcoin market, and they likely have rosier visions of the future of Bitcoin than the rest of us. This, in my opinion, is the biggest piece of evidence in favor of calling Bitcoin a bubble. In order for the Bitcoin market to price Bitcoin correctly, there needs to be a good way to short Bitcoins. But until there is a reliable way to lend and borrow in Bitcoins, that won’t happen.

The second confounding factor is that if Bitcoin really does establish itself as a legitimate currency, we will need to throw our assumptions of how many Bitcoins there are out the window. In principle, there should be no more than 21 million Bitcoins ever produced. In fact, since Bitcoins can be irreversibly lost, we should actually expect the number of extant Bitcoins to start decreasing at some point. But, as much as the True Believers like to rail against fractional reserve banking, the truth is that once Bitcoins become a real currency, it will start being banked and invested like a real currency, which will effectively increase the number of Bitcoins in existence. Depending on how we measure total “amount of money” in US dollars is anywhere from 10 to 20 times the amount of physical currency in circulation. But there is reason to think that for Bitcoin, the mulitplier could be even higher, as Bitbanks would lack, at least initially, any sort of reserve requirement. This lowers the future price, and thus raises the probability, of the True Believer future. But is this the future that the True Believers want? Not really.

So, what conclusions do I choose to draw from this analysis? First, Bitcoin is in a massive bubble that will in all likelihood eventually pop. Second, even if I’m wrong and Bitcoin does manage to establish itself, it will end up looking a lot more like a traditional currency than the True Believers envision. Indeed, it’s possible that Bitcoin will succeed but still settle at a significantly lower price than it’s at now, due to the power of fractional reserve banking. But it’s hard to imagine a path from here to there. The True Believers are likely to resist any attempts to turn Bitcoin into a stable store of value precisely because the means to do so are antithetical to their cause. A Bitcoin future will require a concordance between the True Believers and the Cryptoskeptics, and right now, the cultural gap just seems too large to bridge. Some sort of cryptocurrency may indeed establish itself, but the signs right now do not point to Bitcoin.

Evan Jenkins is a Visiting Fellow at the Pinion Institute for Econotrolling. He occasionally rants about provincial urban development issues at his blog, Let the Midway Bloom. Follow him on Twitter at ejenk.

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An introduction to the psychotherapist depression

If you are suffering from depression or anxiety that you can realize how hell can make your life. While the family will be happy and will not have any idea of what to do when you don't know what are the reasons behind her depression. In such cases, it is best to consult a psychotherapist of depression that can determine the main source of depression. There are various factors which lead his life towards depression. It may be your busy schedule, a kind of anxiety or stress, poor nutrition, lack of hygiene, abnormal sleep patterns etc.

Psychologists are experienced professionals who will ask a series of questions and answers; they will determine your problem. The common symptoms of depression are inability to concentrate, talking about the self, insomnia, loss of appetite, to name a few. It is also recommended that if your loved one is suffering from depression make clear that it is not alone. This is because it is a very sensitive stage when a person can easily get addicted to drugs.

There are several types of depression ranging from mild to severe depressions such as bipolar disorder. The length and the treatment of depression depends on the severity of an anguish that a person is suffering in particular.

Therefore, if you are suffering from some kind of depression, it is best to make an appointment at a clinic for depression aid as soon as possible. The psychologist will ask questions the more effective that will be dedicated for you to remember that you are not able to remember under normal circumstances. These psychologists will help to solve your problem in their own way.

In addition, they you will not questions one after the other to make the patient unsafe and confusing. Based on the situation, as well as the daily lifestyle of the patient they will suggest some techniques that can be easily followed by you, but they will have strong effects. They also prompt some strategies for handling different situations. They would ask to join a local support group as it is extremely beneficial when it has suffered a huge loss of love or money, and if that is the reason for his depression.

Most of the time, has also been observed that patients say psychotherapists things that they even tell your closest friends.

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An introduction to depression psychotherapist (Gregor Kowal)

There are several types of depression ranging from mild to severe depressions such as bipolar disorder. The length and the treatment of depression depends on the severity of depression that a person is suffering in particular.

Most of the time, has also been observed that patients say psychotherapists things that they even tell your closest friends.

Processing of...

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Valuing Bitcoin

Joe Weisenthal presents this … uhm, interesting slide that tries to impute a price for Bitcoin based on the market value of Western Union and PayPal, as well as the monetary base of Turkey or 5% of gold.

The best arguments for the long-term viability of Bitcoin that I have seen revolve around its usefulness for making payments. If Bitcoin becomes a popular way to make instant payments, rather than as an investments, then the value of Bitcoin will mainly derive from the fact that you need Bitcoin to make Bitcoin payments.

Western Union processed $71 billion in transactions in 2012.* If you assume that each bitcoin can, in practice, be used once per day for payments (allowing some for “investment” purposes and the need to keep some around in case you need to make payments), you need only $195 million in Bitcoin to make payments. So a bitcoin would only be worth about $16 to be as big as Western Union.

ACH, which processes most small-value payments in the US, handled $36.9 trillion in 2012. If Bitcoin payments become as big as, say, 5% of ACH, we would have a price per bitcoin of about $1,700.

The key assumption here is probably the velocity of circulation of Bitcoin. Perhaps a commenter who makes frequent Bitcoin payments can give us a better estimate. You could imagine a scenario where payment consumers hardly need to keep any bitcoins around, so each bitcoin can turn over dozens of times a day.

* It is probably more in 2013, but then again there are probably more than 11.9 million bitcoins around today.

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Happy 18 Brumaire!

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8 Rules for Better Dialog

When I was an undergrad at the University of California, Irvine, I was privileged to take a course in playwriting under William Inge, who won an Oscar for Splendor in the Grass and a Pulitzer for Picnic. For ten weeks, ten of us wrote one-act plays, then listened to Inge read from them.

William Inge

Inge had emphysema (he smoked continuously throughout class), wheezing more than talking. He could barely speak. What I most remember him saying, as he looked up from someone's homework assignment, is: "Do real people talk like this?"

Good dialog is hard. Finding out how bad a piece of written dialog is usually requires nothing more than reading it aloud. (Actors are a help. But in a pinch, you can just stand in front of the mirror.) Still, it's surprising how much bad dialog you can find in novels, stage plays, screenplays—not only amateur-written material but a lot of professionally written stuff as well. For me, bad dialog always stands right out: Wooden characters who speak in complete sentences, never using contractions, never interrupting each other, always spewing bland phrases that reinforce their predictable (and undifferentiated) personalities; characters whose swear words don't even sound right.

I don't claim to be an expert here, but I do believe (based on reading as much awkward, wooden, silly dialog as I've read) there are rules you can follow to keep yourself from writing the Worst Dialog Ever. In that spirit, I present the following eight easy rules for writing better dialog:

People use contractions (don't, I'm, you're, etc.) when they speak. Only prigs and ESL students use fully expanded forms.
People swear in normal conversation, but not as often as you think.
Characters should interrupt each other. Because that's how most conversation is.
Write for low syllable count.
Use many periods, few commas.
Avoid patois unless you're Mark Twain, which you're not.
Let subtext (not the actual spoken words) carry the scene, when possible.
Don't be boring.

I'm tempted to add one more rule (for screenwriters): Don't insert explicit beats in dialog. Years ago, it was common to insert "(beat)" here or there to control tempo. You'll find opinions divided on whether this is still an acceptable thing to do. My advice? Play it smart and refuse to resort to "(beat)" in your script. Control tempo with sentence length, punctuation (including ellipses where necessary), the (very) occasional wryly, action description, and so forth. Can you imagine Hemingway or Fitzgerald inserting "(beat)" in the middle of a conversation? Think how comical and intrusive it would be if novelists inserted explicit beats in dialog to control tempo. You wouldn't do that in a novel, because it would make for a patently awful reading experience. Why should your screenplay read that way?

The enter-a-scene-late/leave-early rule applies to dialog. We don't need to hear characters greet each other, except maybe at the start of a phone conversation. Likewise we don't need to see/hear them say good-bye, unless the whole scene is about parting.

In one scene of my screenplay Greeners, two characters (principals in an investment firm; a father and a son) are about to discuss the day's dismal results. I can think of a million boring, straightforward ways to begin the discussion. (E.g.: The son says: "My God, what a day," or "How was your day?" or something equally banal.) What I ended up with is this: The father, sitting at his desk, collar loosened, disheveled and dejected, pushes a few papers away. As the son (standing nearby) points a finger at the papers, the old man pulls a bottle of Scotch out of his desk and says: "Don't even ask."

"Don't be boring" is probably the most important rule you can follow. Even when characters have to say ordinary things, try to spice it up. When my main character, Dylan, has to talk to a fast-food drive-up menu box, I could have had him say "I'll have a sausage-egg biscuit and a large coffee." Instead, he says: "I'll have a sausage-egg biscuit and a large, black, coffee. Black. With extra coffee." A few seconds later, when the cashier recognizes him and starts motor-mouthing (because she's so excited to see him), he answers her over-animated "How are you??" with "Sixty-forty"—and then she goes on talking. The fact that she doesn't stop to ask what "sixty-forty" means is, in itself, a subtextual clue that she's more interested in hearing herself talk than in what he might have to say. Likewise, the fact that he chose to say "sixty-forty" (instead of "so-so" or "can't complain," or something equally vapid) suggests that maybe he already knows she's not going to pay attention to whatever he has to say. Plus, it gives the audience something to chew on. Is he saying things are sixty percent good and forty percent crappy, or the other way around? What, exactly, does he mean by "sixty-forty"?

When you write dialog, consider what I call orthogonality. Two characters, when talking about their conflicting needs/desires, will tend to speak to their own individual concerns more than to the other person's concerns. (Joe wants to talk about the raise he didn't get at work; Mary wants to talk about Joe Junior's bad day at school.) This is what I call orthogonality. You can use it to build realistic-sounding dialog that accentuates (rather than amalgamates) the characters' differences. You've seen this technique used a million times in TV shows and movies. David storms into Tyler's office and says: "Why the hell didn't you tell me we lost the Frankenhammer account?!" Tyler takes a sip of coffee and says: "I'm fine, thanks for asking. How about yourself?" That's orthogonality.

So, to the foregoing list of 8 items, you can add two more:

9. Don't use explicit beats.

10. Exploit orthogonality.

There's more to good dialog than just following these rules. But if you follow them, chances are you'll at least avoid having someone ask you (after reading something you labored over for hours, days, or weeks) "Do real people talk like this?"

If you'd like to take a look at my WGA-registered screenplay, Greeners, write to me. (Tell me something about yourself.) My hushmail dot com address is kasthomas.

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