There's an interesting discussion at Marginal Revolution asking "How Deserving are the Poor?" [1] I won't answer that question directly here, but I'd like to add to the conversation my slightly different take on the nature of the question, and how we might effect change with new insight.

I view child rearing as a sort of memetic recombination of minds, built atop the genetic recombination of mitosis. A meme is simply an idea--or a pattern of thought and action combined--that gets passed around from one person's mind to the next. When a child is raised in a home with reasonably responsible and capable parents, many of the helpful (and some not so helpful) memes from the parents' families of origin are 'inherited' by years of living in a mostly closed memetic petri dish called 'home'. In the absence of responsible and caring parents, children scrounge their environment--whether in school, on the street, or among friends--for whatever memes they can find. They will hang on to anything that they believe may be useful to them for survival, coping, growth, and happiness.

I think we are only in the very earliest stages of understanding the significance of memes and their interactions in human development. Although we can break ideas/memes apart for the sake of a discussion like this one, they are actually extremely complex in the ways that they interact with one another--they are essentially pieces of software running on the hardware of our minds, and they interact in ways that are difficult to tease apart cause and effect. As an example: little Jimmy, Donna and Sam might all have been raised in the same home with the same idea that "you get what you deserve." Jimmy and Sam realized that they could start a snow plowing business and they felt proud and reaped the reward for it. But Donna had an uncle who touched her inappropriately and suddenly "you get what you deserve" reacted terribly with "I got touched."

We currently view free will as a sort of mystical thing, something that must certainly exist because we see Candidate A who has lived in a terrible home, and Candidate B who grew up in a pretty great neighborhood, and miraculously A and B both make it to MIT. Isn't that amazing, we think, that A had the fortitude and desire to get in to such a great school despite his background? But this view of things, in my opinion, is just about as superstitious as the idea that Mercury affects who you will fall in love with. Don't get me wrong--I actually, paradoxically, believe in free will, and in the importance of believing in free will [2]--but free will as a model of explaining things is awfully lacking. And without a good explanation [3], it's hard to make any progress at all.

So I think the question, "How deserving are the poor?" would be enhanced by asking another question: "What are the memes of privilege?" In other words, what are the sets of co-arising memes that have a tendency to ensure inter-generational socioeconomic status? Studies of social mobility tend to focus on how likely a person within a population is to move up or down the socioeconomic ladder. But I'm not aware of any studies that map memetic cause to privileged effect. Whatever the "booting up" memes of the software layer of the mind are that yield fruitful attitudes, beliefs, behaviors, and social interactions, they need to be understood better (by society, if not by psychologists) so that 'intervention' is more than just a code word for 'taken away from a really messed up family'. If we could understand and diagnose which memes had been passed on--or which had been scrounged from the shallow memetic 'cesspool' of memes not grounded in inter-generational wisdom--we would then be able, like a doctor, to treat the underprivileged.

Part of the problem with identifying memes is that it requires a sophisticated level of pattern matching. When compared to memes, genes are actually fairly easy to identify and map--the specific sequence of nucleic acids in the double helix of a DNA strand has a specific, discrete (i.e. digital) pattern. It's difficult to determine where a gene starts and ends (and sometimes parts start and end in multiple places) but at least it has a clear encoding. On the other hand, memes passed on within the home and throughout a child's upbringing need to be identified over time using either trained professionals or (probably soon) sophisticated video and sound analysis by computer programs [4].

If the analogy proves useful, then there are a number of questions that come to mind that deserve further analysis. For example, can we measure memetic diversity in the home? Are there advantages associated with greater diversity, or are there a limited number of 'essential memes', like essential amino acids, that create healthy and 'privileged' adult characteristics? Is there a difference between the types of memes that can be transferred laterally vs. vertically? e.g. if a toddler does not experience secure attachment with a primary caregiver, is the opportunity for some memes to be transferred lost? Are there supermemes that can be distilled from a wide variety of smaller memes? e.g. forgiveness, introspection, tolerance, work ethic, etc. that lead to resilience? And since memes co-evolved with genes, can this explain some of the disparity in ethnic differences, e.g. those people that were ripped from their cultures and transplanted, then forced to adopt new memes, are they at a disadvantage?

[1] http://marginalrevolution.com/marginalrevolution/2012/01/how-deserving-are-the-poor.html
[2] http://www.spring.org.uk/2009/01/do-you-believe-in-free-will.php (Research suggests that believing in free will is itself a socially important meme, and I agree--and I'm sure there's more to the story which we will discover in time)
[3] http://www.ted.com/talks/david_deutsch_a_new_way_to_explain_explanation.html (An incredible 17 minute presentation on the difference between a good explanation and a bad one)
[4] http://www.ted.com/talks/deb_roy_the_birth_of_a_word.html (Deb Roy records the entire first year of his son's life and analyzes the data using computer vision and sound technology to discover how speech is learned.)

  Suppose you want to tackle the problem of unemployment from the highest possible level.  In other words, you want to increase the net jobs in society and in the world--you don't want to just create one job here that takes away another job there.  What is it that increases the total number of jobs for humanity?

What if we had mandatory taxes, but voluntary distribution? For example, an individual would have little say about whether or not the government takes 30% of their income, but the individual would specify precisely in what ways the government could spend his or her income.  For practicality's sake, I imagine the voting ballot, in addition to including the people we vote for at each level of government, also including a set of government funds that the voter could allocate percentages of their taxed income to.  If the voter declines to enter these details, then the voter is indicating that he or she defers to the candidate to choose.

This approach seems to have some pretty significant upsides. As opposed to "voluntary taxes", it avoids the tragedy of the commons because it requires that we contribute to the commons, but leaves the ranking of priorities within the commons open to each conscience.  Also, psychologically, when we feel that we are "in charge" we tend to care more about the process--voluntary distribution, therefore, would promote civic discourse and participation in the political process. And last but not least, it would provide a better feedback mechanism to the extremely slow-to-respond government which would make for faster change, and more meaningful change (imagine how many people would distribute funds for war vs. education?)

Also, while I'm musing about this, what if the income tax rate were set as precisely the number of people who desire the tax rate to be increased, divided by the number of people who desire the tax rate to be decreased?  Some people are aware of how some areas of our society are floundering, while others are more aware of how stifling taxes are to individual happiness and economic growth.  Both groups are right, and it probably changes over time.  What if each ballot includes the question: "Do you want to increase federal income tax this year? [ ] Yes [ ] No" and then set the tax rate at the ratio of the disagreement in the population.

Reason and rational thinking are powerful adaptations of the human
mind. Our neocortex--the most recent addition to our cognitive
system--is capable of higher level thought that we believe, at least
so far, is unique to human beings. It gives us much of the power of
logic and reason that has enabled new developments in society and
technology.

But I think what the previous generation of objectivists forgot was
that our center of reason does not come hardwired with 60 million
years of mamallian evolutionary lessons. Instead, we have an old
system that works (hey! it propagates!) with a newfangled rational
thinking gizmo slapped on.

In spite of the apparent friction between old and new brains, the
maleability of the new brain inspires me to a challenge: our objective
in life is to systematically bring the biases, probability
distributions, and logic of our mammalian old brain into the new
brain. We need to learn what our own biases are before we can augment
them--simply discounting that we have them, or thinking that they are
a weakness, are both insufficent as choices. Instead, we need to
accept that our biases evolved for particular reasons, and understand
why and in what circumstances they are useful, so that we can go on to
augment them by creating more general solutions to life's problems.

For example, in Ayn Rand's case, love seems to have been a bit of a
blind spot in her objectivism. If she had fully integrated the power
of physical attraction and the importance and circumstances in which
she might be unreasonably susceptible to it, then perhaps she might
have found a different but equal solution to the other benefits of
working together with Branden.

Here's an idea I had while learning about evolutionary psychology from
John Tooby at the Singularity Summit last year. According to his
research, older children lose all sexual attraction to younger
siblings who are seen sucking at their mother's breast. It makes sense
that there needs to be some kind of cross-cultural message that
indicates "this is a sibling: off limits". I don't know the full
parameters to this off-switch (does it stop working after the older
sibling reaches a certain age?) but suppose for the purpose of
argument that it remains an inflentual force throughout a person's
life. What if a person could use this switch to their advantage? For
example, if a man is living with or frequently seeing a woman who is
married, and wants to guarantee that he does not see her as a sexual
possibility, could he employ some kind of visualization that triggers
the mammalian brain to accept her as an "off limits" younger sibling?

The more we truly understand about ourselves from an evolutionary
standpoint--the causes and effects, the ways we are influenced, the
hidden desires or surprise needs--the better we are equipped to take
advantage of the newfangled neocortex attached to the other parts of
our brain. Or in other words, if science can help us discover the
heart's reasons, then reason will be all the more powerful.

As human beings, we have this in-born sense of judgement called "fairness". Kids know what it is, it seems, almost as soon as they can talk. It's a heuristic, though, and as I've been learning throughout my life, not always a very good one. The common retort to "it's not fair" is "life's not fair". I used to think this was a cold-hearted answer from the "grown ups" but the more I understand life, the more I realize that part of the problem is that our intuition about fairness is just wrong.

The Code of Hammurabi sought to bring fairness and justice to the world by introducing many laws, including such gems as, "if a son strikes his father, his hands shall be hewn off", and "if a man knocks the teeth out of another man, his own teeth will be knocked out". In the Jewish scripture, or the Christian Old Testament, it is written in their (former) justice system that restitution should be "an eye for an eye, a tooth for a tooth". Contrary to popular belief, these laws were not regressive or repugnant--they were actually a major improvement over the lawless interactions between human beings. In a world where a man might strike out another's teeth, and then get killed in return, a "tooth for a tooth" was a statement of the maximum retribution permitted by law.

So in that sense, fairness is a good heuristic--it indicates in a very simple way (through our juvenile ability to detect symmetry) what is going too far, and when someone is taking advantage of another. But where our intuition fails us is in thinking that fairness is "best" or "optimal". In many cases, fairness is not only suboptimal, but can actually come back to hurt us more than if we had not demanded justice. This seems especially true when we are a part of a complex system such as the economy.

If economists were also hackers, Bitcoin would have been an inflationary currency. I doubt it would have been adopted (who wants to store value in an inflationary currency if they have a choice?) but from following discussions like this one it seems fairly clear to me that economists in general do not believe deflationary currencies can work at scale (i.e. in a global economy). In other words, the people who spend their lives thinking about currency and economies almost unanimously uphold a system that is not fair, from an individual's point of view. (Why is it fair that my $1,000 of buying power can't buy as much later if I keep it safe in the bank?)

So that got me thinking. Perhaps the whole argument behind Keynesian economists boils down to "fair is not optimal". In other words, our intuition about the symmetry of transactions and the fairness of stimulus programs might not lead us to an optimal solution for society. And while I don't think Keynesian economics is optimal, I do wonder if there is something for me to learn here.

Also, as a sort of footnote on the idea of economist-hackers making Bitcoin... is it possible that inflationary currencies cannot be created except as a second-order currency? In other words, perhaps our sense of fairness would prevent us from agreeing to an inflationary currency, if it were introduced to us outright, but once we have our "gold standard" (deflationary) training wheels on, we are then in a position to accept an inflationary currency?

Update: I forgot to mention an example I was thinking of that also led me to write this post: how we deal with members of our societies with drug addictions. The "fair" way to deal with it is to put addicts in prison for breaking the law. The "optimal" way is to regulate drugs and offer counselling resources to those who wish to quit (as most do), like they have done in Portugal.

I'd like to focus on an economic aspect of this parable that seems relevant to digital "piracy", or freeloading, in our time. I live in a privileged situation right now--I have a good income and a stable job--and I can pretty much afford access to any music, books, or software that I want.

I have some young friends in high school who have very little income and whose parents make significantly less than I do. We spoke about music and software and all of the digital media they have on their Zunes (surprisingly not ipods) and smartphones. It was pretty apparent that the hundreds (thousands?) of songs they had were not endorsed by our society's current legal conception of copyright.

But the fact that they do not pay for access to these songs is an interesting puzzle: what is best for our society? Given the infinitely copyable nature of digital goods, should we cut off those who have less money, and create a legally-enforced (and fictitious) scarcity? Or should we ignore freeloading that takes place on the fringes of society, because pursuing legal channels for compensation from the poor is not economical anyway? Or is there a way to improve copyright law to accommodate the new reality and prominence infinite goods in our economies?

In the world of physical goods, the customer's time and energy is considered negligible during a transaction. For example, the time that it takes to go to the store, pick up some groceries, wait in line, exchange money, and leave the store is considered part of the cost of shopping. But what if the 'negligible' part of that assumption is no longer true? What if the value present in my visiting the store equals or exceeds the value of the products I can buy there? I think this is what is happening in the case of digital goods. Companies didn't used to have to think much about the time they were taking from their customers. As is evidenced by the "advertising frenzy" of everything online, however, attention is the new currency. Companies are willing to pay you to read, download, evaluate, and possibly buy their products. Products are not scarce, human time is.

I think the solution to this puzzle lies in properly analyzing scarcity. Value comes from the balance between supply and demand--money is valuable, for instance, in part because there is a limited supply of it (cf. Bitcoin). In the world of digital goods, what has become scarce? Time--the time (and money) that it takes to produce it, as well as the time that it takes to download it, listen to it, and use it. The fact that the consumer's time matters so much is, economically, quite revolutionary. The scarcity that we are dealing with is not the availability of the product, but the combined waking hours of all human beings. Infinite goods, then, should be priced in terms of the scarcity of human time.

But how do you make money in this kind of economic inversion? What if the marginal cost of distributing a digital good is so low that, if companies were honest about it, they would pay some of their customers to download it or share it with their friends? And what about the cases where the reverse is true--where customers ought to pay for a valuable digital good? How do you account for that? How do we keep people honest? Or, to put it another way, how do you make an accounting system that promotes the good of the group, rather than favoring one side of a transaction or another?

The only way out of the copyright war between content generators and consumers is to more intelligently valuate each others' time and effort. Corporations tend to assail consumers (and potential customers) for "stealing" their creations. And consumers tend to accuse corporations of greed, thus justifying their freeloading.  Media producers want to get the most that they can for their work. Media consumers want access to all media, even though they can't consume it all, because they want the freedom to prioritize what they consume (especially in the context of social participation).

As was recently concluded by Canada's International Development Research Centre, in emerging markets piracy is primarily a market failure, not a legal failure. If that is the case, what if we borrow value from the 2000-year-old parable above, and begin to adjust the exchange of digital goods by individual income?

Imagine for a moment what it might be like if you could buy access to the world's digital goods for a fraction of your income (in reality, it would be a marginal cost calculation, so that a billionaire would not be spending millions of dollars per year to listen to her music). The poor would have access to the wealth of the world's media. And because the cost is within their reach, they would actually be incentivized to pay their meagre mite for the music, movies and software they care about. Content producers would make more than they currently do because the market for their goods would be closer to saturation (let's not forget that each consumer is also a distributor in the modern networked world).

In an ideal situation, the originality (novelty), as well as popularity (social value) would also be a part of the equation. A subscriber could opt to increase the income-percentage payment in exchange for access to newer or more popular titles. But the world's library of older titles would still be legally available--a library worthy of world heritage status.

What do you think? Where is the right balance, and can income-based marginal-cost subscription serve all sides fairly?

If you think Wikileaks is purely anti-secrecy, then yes, it's a huge dark spot on their otherwise idealistic banner. But that's not what Wikileaks is about. Its purpose is to make big secrets hard to keep in large, secretive circles. In other words, in Wikileaks' ideal world, the magnitude of the secret should be inversely proportional to the size of the "conspirators' circle".

As has been said before, Wikileaks adds a huge tax to the cost of maintaining a distributed network of secret-keepers such as is done in the US state department. This makes it much more difficult for one "tribe" ("go USA!" "vive la France!" "O Canada!") or another to  drive coordinated action in the interest of its few. Another way of saying this is that by diminishing the power of large-scale secret organizations, slower-acting but more intelligent decisions can be made on a global scale. The group optimum, or "win-win" exchange is more likely to be reached wherever more minds are focused on the problems we face as connected human beings.

From this perspective, the Wikileaks NDA is not hypocritical--it is merely a tool needed for the furtherance of its mission. If Wikileaks becomes a large, secretive organization (currently, it is a small, secretive organization) then it will be bitten by precisely the same rules it seeks to apply globally--someone, somewhere, will risk leaking sensitive information. In the meantime, secrecy in a small tight-knit group is necessary for Wikileaks to survive long enough to curb its larger, more powerful peer organizations.

I'm excited to have something tangible to show people when they ask about bitcoin. But before I endorse the beta version of these bills, let me just say these are very cool, but not yet entirely ready for prime time.  Two reasons:

1. Importing private keys are not a part of the bitcoin client yet.
2. The quality of the QR Code printout is poor, and therefore impossible to scan.

I'll go into a little more detail on these two points.

The basis of a bitbill is that the private key of a single-use bitcoin account (containing bitcoins equal to the face value of the bitbill) is encoded ONLY in the bill itself--there are no copies of the private key anywhere else in the world or on the internet.  This makes the bitbill the sole means of signing online transactions for the account and therefore the only way to turn the physical bitbill back into electronic online currency. It's a brilliant idea, and one that I look forward to endorsing soon. In the meantime, I understand the bitbill folks are working hard at making some improvements.

1. Importing private keys

So far, the only way to import a private key to your wallet is to compile a custom version of the bitcoin daemon (or client?) using a patch available from bitcoin.sipa.be. Unfortunately, compiling bitcoin is not "easy" as far as this developer is concerned--it still requires a lot of manual dependency hunting, makefile tweaking, and manual patching.  If and when the patch is brought into the main trunk, however, this hurdle will become more of a "howto".

2. Quality of the QR Code printout

Since I haven't been able to import it, I won't post the pictures of the QR-encoded private key yet, but I'll describe my experience here first. The QR code was secure in that I could not find a way to get it out without obviously tampering with the bitbill--so priority #1 has been achieved in the beta--but once removed, the small 3/4" x 3/4" printout looks like it was made on an inkjet printer. Gratefully, it's encased in laminate, so it was somewhat protected by my razor blade as I cut it free. When I attempted the scanning of the QR code, however, it was just too small and too grainy to be scanned by my iPad.

My grainy iPad camera wasn't my only option, so I tried taking a picture with an 8.0 megapixel Canon PowerShot, only to find that even an imported picture from this higher quality and higher resolution camera was still unscannable by The QR Code Machine (iPad app). Part of the problem is that the tamper-proof seal sticks to the surface of the QR code--it can be wiped off, sort of, and I did that the best I could, but stickiness and surface distortion remains. Also, in my haste as I extracted it, I lightly cut the surface of the QR code with my razor. A single cut makes it that much more difficult to differentiate between a white and black code square.

In short, I think the bitbill folks need to make a larger QR code, and improve the resolution of the printer (or perhaps the quality of the surface they are printing on?) before I would accept a bitbill as easily as a bitcoin.  When this is improved and the bitcoin client software has an "import private key" option, the transition between virtual and real world peer-to-peer currency will be a snap.

(download)

Click here to download:

First_Impressions_of_Beta_Bitb.zip (755 KB)