Third pass addressing the more common pseudo-arguments raised by the very stupid people that like the Gavin scamcoin proposal

Saturday, 31 January, Year 7 d.Tr. | Author: Mircea Popescu

X. A mousy Princeton graduate who resides in Amherst, Massachusetts and has lived his entire life firmly attached to the govenrment tit is going to "save Africa" from imaginary problems it doesn't actually have by inflating the Bitcoin blockchain to the point nobody but his USG owners can maintain a full record. This is good for Bitcoin.

You are an idiot. Go the fuck away.

XI. Raising the limit doesn't force the blocks to be filled. It just gives miners the option to make bigger blocks should market conditions make it to their advantage to do so.

This is not how economics work. Quoting Buffetti :

The domestic textile industry operates in a commodity business, competing in a world market in which substantial excess capacity exists. Much of the trouble we experienced was attributable, both directly and indirectly, to competition from foreign countries whose workers are paid a small fraction of the U.S. minimum wage. But that in no way means that our labor force deserves any blame for our closing. In fact, in comparison with employees of American industry generally, our workers were poorly paid, as has been the case throughout the textile business. In contract negotiations, union leaders and members were sensitive to our disadvantageous cost position and did not push for unrealistic wage increases or unproductive work practices. To the contrary, they tried just as hard as we did to keep us competitive. Even during our liquidation period they performed superbly. (Ironically, we would have been better off financially if our union had behaved unreasonably some years ago; we then would have recognized the impossible future that we faced, promptly closed down, and avoided significant future losses.)

Over the years, we had the option of making large capital expenditures in the textile operation that would have allowed us to somewhat reduce variable costs. Each proposal to do so looked like an immediate winner. Measured by standard return-on-investment tests, in fact, these proposals usually promised greater economic benefits than would have resulted from comparable expenditures in our highly-profitable candy and newspaper businesses.

But the promised benefits from these textile investments were illusory. Many of our competitors, both domestic and foreign, were stepping up to the same kind of expenditures and, once enough companies did so, their reduced costs became the baseline for reduced prices industrywide. Viewed individually, each company's capital investment decision appeared cost-effective and rational; viewed collectively, the decisions neutralized each other and were irrational, just as happens when each person watching a parade decides he can see a little better if he stands on tiptoes.

After each round of investment, all the players had more money in the game and returns remained anemic. Thus, we faced a miserable choice: huge capital investment would have helped to keep our textile business alive, but would have left us with terrible returns on ever-growing amounts of capital. After the investment, moreover, the foreign competition would still have retained a major, continuing advantage in labor costs. A refusal to invest, however, would make us increasingly non-competitive, even measured against domestic textile manufacturers. I always thought myself in the position described by Woody Allen in one of his movies: "More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray we have the wisdom to choose correctly."

For an understanding of how the to-invest-or-not-to-invest dilemma plays out in a commodity business, it is instructive to look at Burlington Industries, by far the largest U.S. textile company both 21 years ago and now. In 1964 Burlington had sales of $1.2 billion against our $50 million. It had strengths in both distribution and production that we could never hope to match and also, of course, had an earnings record far superior to ours. Its stock sold at 60 at the end of 1964; ours was 13.

Burlington made a decision to stick to the textile business, and in 1985 had sales of about $2.8 billion. During the 1964-85 period, the company made capital expenditures of about $3 billion, far more than any other U.S. textile company and more than $200-per-share on that $60 stock. A very large part of the expenditures, I am sure, was devoted to cost improvement and expansion. Given Burlington's basic commitment to stay in textiles, I would also surmise that the company's capital decisions were quite rational.

Nevertheless, Burlington has lost sales volume in real dollars and has far lower returns on sales and equity now than 20 years ago. Split 2-for-1 in 1965, the stock now sells at 34-on an adjusted basis, just a little over its $60 price in 1964. Meanwhile, the CPI has more than tripled. Therefore, each share commands about one-third the purchasing power it did at the end of 1964. Regular dividends have been paid but they, too, have shrunk significantly in purchasing power.

This devastating outcome for the shareholders indicates what can happen when much brain power and energy are applied to a faulty premise. The situation is suggestive of Samuel Johnson's horse: "A horse that can count to ten is a remarkable horse, not a remarkable mathematician." Likewise, a textile company that allocates capital brilliantly within its industry is a remarkable textile company, but not a remarkable business.

My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: "When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact." Nothing has since changed my point of view on that matter. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.

So, no : infinite blocks to not give "the miners" any sort of option, because "the miners" as a collective noun do not exist. There exist individual miners exclusively, and the incentives of individuals are, should the Gavin scam actually be implemented, firmly oriented towards destroying the commons that is Bitcoin.

There's no way out of this problem, and simple ignorance of economy or game theory is not a solution.

XII. The current 1Mb limit is arbitrary. We want to change it. Please ignore the fact that the discussion is about whether to change or not to change, and please ignore that the onus is on whoever proposes change to justify it. Instead, buy into our pretense that the discussion is about "which arbitrary value". Because we're idiots, and so should be you!

Go away.

XIII. Bitcoin has worked fine so far, and is sending the world's elite running for cover - from political to financial to media elites. Clearly this means more of the same won't work in the future, and it must be changed to more closely conform to what these elites like to see, which only coincidentally happens to strictly resemble each and every other previous challenge to their authority, which only coincidentally happened to all fail. Because we're idiots, and so should be you! For equality!

Go away.

XIV. We all agree.

Good for you, too bad you're irrelevant. Bitcoin is about money and about power, not about opinion and social media. You can agree until you are blue in the face, that's not what makes a difference. Your public humiliation on this score - in case your shepherd be dumb enough to actually take the field and be humiliatedii - should be instructive for you.

Take notice on the why and the how you don't matter, understand why "MP doesn't cater to my idiocy which makes me want to support anything else" doesn't actually do anything, break through the shell of your own idiocy and start actually developing as a human being already. Going by your infantile behaviour this is clearly the first time you had the chance, but going by the messy state of the world around you it might actually be your last, too. Try and make the best of the very little you have at your disposal.

That'd be it. This third installment actually covers the entirety of the "arguments" brought by the idiots (and assorted incentivised shills / "political activists") pushing this particular attack on Bitcoin. Ridiculous how little they have, considering how much they cost their government, their parents and the Earth generally. But such is life.

  1. Really, you should do a lot more reading of MPOE-PR - she is pretty much the only avenue for a tardstalk user to actually relate to Bitcoin. Everyone else there is just hallucinating nonsense. []
  2. Seems improbable, if nothing else on the strength of the recent very embarrassed Fed release - apparently once MP destroyed their shill in Bitcoin they're not even willing to name Bitcoin at all anymore, it has to be "Digital Value Transfer Vehicles" now. Nothing quite like wounded narcissism in bureaucrats, eh ? []
Category: Bitcoin
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7 Responses

  1. Considering you are not part of the rotten branch that brought us MtGOX and also support the Gavin clown, I expect you to win again, righteousness.

  2. Mircea Popescu`s avatar
    Mircea Popescu 
    Sunday, 1 February 2015


    a) I am part of the branch in the sense of the root of the branch that did away with MtGox, over the kicking and screaming pile of the "community" "elite", various captn's o' industree arrayed behind vessenes and his foundation. Most of those are out opf the game today, so nobody remembers them, with possibly the exception of gallipi and his marry band of bitpay.

    b) I actually supported gavin, in early disputes with various nuts (like hearn). That ended sometime in late 2012.

    c) If you review the record, I have to lose one yet. Out of dozens of engagements, the first one being... Pirate. (Yes, seriously, my PR agent was the first anyone ever to put pirate on the spot. April 2012. Tru story & Fancy that.) The second (major) one being BFL. (And yes that cost them a lot, and yes it's a funny story, review the discussions of the period re the bet fixing fraud BitBet broke etc).

    So... yeah. The only thing new in this world is the history one doesn't know.

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