Everyone's got them. Mine are here.
Politics, technology, science, economics and video games discussed.
Economist: "What is Trumponomics and how does it differ from standard Republican economics?"
Trump: "We have nations where…they’ll get as much as 100% of a tax or a tariff for a certain product and for the same product we get nothing, OK? It’s very unfair."
This betrays his fundamental misunderstanding of trade between nations and competitive advantage.
Read MoreIf you ever wondered what the primary motivator is for Americans buying guns - you now have some good data: the stock prices of publicly traded gun manufacturers.
What you see here is the result of an October and November run-up because it looked like Hillary Clinton would win the election. The second that Trump was elected, their shares got crushed, and they've been hammered hard ever since then.
So what drives sales? Fear. Fear that those Democrats are going to take away all of the guns.
It will be interesting to see if this trend continues deep into a Trump presidency.
Some of the scope of the Silicon Valley tech wage suppression agreement has expanded recently, and now covers a much more vast section of the tech industry.
"Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees."
I'm going to pick on Google here, because they represent themselves as a company who bears the unofficial motto of "Don't be Evil". By doing so, they justify people calling them out on it when they do something which is absolutely, 100% evil.
"Don’t be evil. We believe strongly that in the long term, we will be better served — as shareholders and in all other ways — by a company that does good things for the world even if we forgo some short term gains."
– Google in 2004 IPO (page 32, near the top)
I'm not saying any of these other companies come out clean here. Far from it. But the hypocrisy and deception employed here is astounding. I think the only solution is to do the same thing with employee salaries as we've done with CEO salaries: make them more transparent. I think efforts like Glassdoor help to allow employees to more adequately estimate their own worth in a very complex job market. Pay transparency has been shown to account for the rapid increase in CEO pay over the last 20-30 years.
"the drive for [CEO pay] transparency has actually helped fuel the spiraling salaries. For one thing, it gives executives a good idea of how much they can get away with asking for. A more crucial reason, though, has to do with the way boards of directors set salaries. As the corporate-governance experts Charles Elson and Craig Ferrere write in a recent paper, boards at most companies use what’s called “peer benchmarking.” They look at the C.E.O. salaries at peer-group firms, and then peg their C.E.O.’s pay to the fiftieth, seventy-fifth, or ninetieth percentile of the peer group—never lower. This leads to the so-called Lake Wobegon effect: every C.E.O. gets treated as above average. With all the other companies following the same process, salaries ratchet inexorably higher. "
TL;DR version: Transparency in pay gradually forces salaries higher, because as the average pay rises with talent, average workers get paid more to account for the rising median pay.
Tech companies of this magnitude are pulling in money hand over fist, and rather than putting that money back into the pockets of the employees who are working to make it happen, they're busy holding it in off-shore accounts, likely hoping for a "repatriation tax holiday" as employed by the Bush administration in 2004.
Here's the thing, though. If they were to put those funds to work paying their employees more, those same employees would be able to afford more purchases, which grows the economy. The more money employees have, the more they can spend. The more they can spend, the more companies make. The more companies make, the more they can pay their employees. It's a virtuous circle that works to increase everyone's living standard, from the CEO to the janitor.
At the beginning of the year, Overstock.com sought to adopt Bitcoin as a payment processing method for their business.
“On January 1st, our people said they could do it within 10 days if I gave them enough people,” says Byrne. “So we put a team of 40 people on it. We locked them in a room and slid pizzas under the door, and gave them hotel rooms when they needed them. The technique of swarming to form a team was incredibly efficient.”
This is a company that did $1.3 billion in sales in 2013. They added a completely new payment method to their site in 10 days, including legal, and front end user interaction. That's pretty great. I wonder what their results have been?
Well, we found out. From the Coinbase blog, Overstock's Bitcoin processor:
"Today, we are excited to announce that Overstock.com has surpassed $1,000,000 of sales in bitcoin transactions."
Not an enormous amount, considering the overall sales expected in those 50 days. Quick napkin math says that Bitcoin sales probably amounted to a little over 0.5% of Overstock.com's sales during that period of time. What else?
"The average order size for a bitcoin customer ($226) was 34% greater compared to customers paying in USD ($168)."
That's pretty good. More than that, it's huge – but we can honestly chalk that up to the exuberance of people with a cause trying to promote it. Also, possibly people who have recently come into more money (Bitcoin's rapid rise in value over 2013) being able to spend it in a legitimate fashion.
"...over half of all customers paying in bitcoin were new to Overstock.com (58%), having never purchased goods from the site before."
Well that's pretty fantastic, actually. That means that nearly 60% of the growth from Bitcoin adoption is straight revenue growth, and didn't cannibalize from existing customers. However, we can still probably attribute these gains to people having a great outlet for their new-found wealth, can't we? It seems the most likely explanation, but it is still great for their bottom line.
What I was most interested in, though, was what this did for Overstock.com's payment processing. Bitcoin has the nice advantage that it doesn't require the traditional clearinghouse pricing - so let's see what that saves them.
"Net profitability has also improved, with processing fee for bitcoin transactions averaging less than 1% vs. ~ 2.2% plus $0.20 for credit card card transactions. For a low-margin, high volume business like Overstock.com, these savings are substantial and, ultimately, return greater value to shareholders."
Of all of the information presented, this should be the most exciting to businesses thinking about adopting Bitcoin processing: it literally saves you more than 1.2% on every single purchase. Think about the math behind that for a company like Overstock that did $1.3 billion in 2013, with a net income of $88 million. If they were to convert those sales to bitcoin, that 1.2% would have amounted to $15.6 million, or a 17.5% benefit to the company's net income for the year. That is absolutely staggering.
I think this is what I find most frustrating about explaining what Bitcoin does for business. The second it gets mentioned in conversation, people tend to be in one of two camps:
I'll admit I used to be in the latter category, however, it's become extremely clear that the value of the currency is not as a store of wealth – its value is as a medium of exchange, the actual use of currency.
Even for a small business doing $2-300k in sales, rolling over to Bitcoin for processing could add up to $2400-3600 yearly if VISA/MasterCard purchases were swapped over to Bitcoin purchases. That's a lot of money for that kind of shop.
If Apple were to have adopted Bitcoin, imagine how much they could save on credit card processing for iTunes, where they try and group your purchases for a day or two so that they avoid eating processing fees on every single song or app purchase. $.20/transaction adds up fast when you're selling billions of songs and apps.
Widespread adoption is not going to happen overnight, but companies like Overstock.com are starting to show how Bitcoin can substantially improve a company's bottom line.
... or lack thereof, if your company's name is not "Apple" or "Samsung".
Apple and Samsung continue to soak up all the industry's profits, McCourt says. Apple claimed 87.4% of phone earnings before interest and taxes in the fourth quarter, he said. Samsung took in 32.2% of industry profits. Because their combined earnings were higher than the industry's total earnings as a result of many vendors losing money in Q4, Apple and Samsung mathematically accounted for more than 100% of the industry's earnings.
A year ago, Apple accounted for 77.8% of mobile phone industry profits, followed by Samsung with 26.1%, McCourt said.
Mobile phone market hits 'the great moderation' - Investors.com
Given that they tally to roughly 120% of the mobile handset profits, and they make rather a lot of profit, a 20% loss across HTC, Nokia, Motorola, Sony, etc. is huge. Not only is no one else making money, but no one else is even close to being a viable competitor.
I suspect the biggest reason Samsung is so competitive among the Android handset makers is that it's able to control its own supply thanks to its semiconductor, memory & screen fabrication business.
The Verge has an article today, which goes over Economists and their dislike for Bitcoin as a currency.
University of Berkeley economist Brad DeLong believes that Bitcoin will fail because the cost of producing a Bitcoin clone is zero. George Mason economist Tyler Cowen agrees, and adds a warning about deflation.
-The Verge, 12/31/2013
These views are fundamentally incorrect, and show a massive misunderstanding of the infrastructure that supports the blockchain. The cost of producing a bitcoin clone is... quite high, actually. Creating an alt-currency is a near-zero cost endeavor, but producing an actual clone of Bitcoin, with the mining/transaction nodes in place is prohibitively expensive, as is encouraging a wide audience to adopt the currency, and put it into use. The difficulty for crypto-currencies is adoption, not creation. Imagine it more like trying to start a new religion: the writing is easy, it's getting people to believe that's hard.
I have had and am continuing to have a dialogue with smart technologists who are very high on BitCoin — but when I try to get them to explain to me why BitCoin is a reliable store of value, they always seem to come back with explanations about how it’s a terrific medium of exchange. Even if I buy this (which I don’t, entirely), it doesn’t solve my problem. And I haven’t been able to get my correspondents to recognize that these are different questions.
What Krugman should take a look at is Bitcoin's base value as being derived from the computational power and infrastructure required to manage the transactions and the blockchain. Every node active on the Bitcoin network adds value to the currency, in somewhat the same way that gold's value can be seen as a store of value because it can be used to make pretty jewelry.
Now, obviously no one would value gold simply on it's ability to be melted down and made into rings and necklaces, or serve as a conductive material, right? Two other key points go into the base value of gold: its rarity, and its ability to be used as a medium of exchange for goods and services.
Don't look now, but Bitcoin manages to meet both of those requirements as well, but is arguably far better as a medium of exchange, due to its ease of use in transfer.
Bitcoin does have a lot of issues facing it in the future. To name a few:
None of these are issues caused by knock-off alt-coins.
Bloomberg Report: The U.S. Lags in Life Expectancy Gains
In the past 40 years, America has dropped from above average to below average life expectancy among developed countries, despite the fact that we spend significantly more per capita on healthcare.
“Life expectancy [in the U.S.] is now more than a year below the OECD average of 80.1,” the OECD said in a press statement, “compared to one year above the average in 1970.”
- Organisation for Economic Co-operation and Development report
Every single country doing better than us has some form of socialized healthcare. Purely privatized healthcare for the vast majority of Americans is not fine. The Affordable Care Act may have some serious issues in both implementation and, you know, affordability, but the system is a step in the right direction. It needs to be fixed, not scrapped.
Unless, of course, someone got serious about an actual single-payer system.
For the first time ever on Mt. Gox today. I wonder how long this run can continue.
Update: That didn't last long. Now it's at $670.
