From MR comes a link to a brief intro to assurance contracts, a supposedly general mechanism for routing around the free rider problem. A very large number of important social problems can be cast into this mold: it's not just how to fund free software, which is where I first encountered it, but also national defense, fire and police, zoning, scientific research, environmental protection, good lawmaking, patents, etc. Notice that every one of these areas generally involves the coercive power of the state to tax and spend. Specific examples of people who've tried assurance contract type ideas include various free software types (dunno how successfully), Stephen King once tried to release a book that way, etc. So far I haven't seen it working well, the state seemes to have pretty much captured the market on being a state, but innovative ideas are always helpful. Patents can be read as one example: if you define a new thing, and prove that it's new, and show everyone how to do it, you can get a state-enforced monopoly on that new thing for some fixed period. There's a lot of problems with patents -- the paperwork is expensive for society, the period is fixed, irrespective of the problem domain, there's no connection between the value to society of having the methodology discovered and published vs the cost to society of granting the monopoly, and so on. I wonder if there couldn't be some kind of market mechanism, some bidding thing, which might make more sense. It's a difficult problem, though.

Yeah, or so says Morgan Stanley. (Props Cosh)


I don't buy it. Not that there aren't trading fluctuations, and sure, less demand from China could drive prices lower for awhile. But trading fluctuations do not place more oil in the ground. It could just be a difference in perspective: I'm interested in the price over the next ten or twenty years, Morgan is probably interested in the next 10 or 20 weeks. And "collapse" is relative too: if you're leveraged long, $45/barrel might make you bankrupt, but it wouldn't influence national energy security policies, nor even oil company investment decisions. Oil execs remember $10/barrel like it was yesterday, those were lean years. They no longer assume it might go back there, but "stress testing" investment decisions against something like $20/barrel oil is still required.


As for the "bubble", I bet Morgan is just short.

Aside from the vodka, of course? Here's a short film. (Props Creek Running North.)

Richard Rahn on Sarbanes-Oxley, Elilott Spitzer, and counter-productive government regulation. I'm glad to see I'm not the only one to dislike Spitzer's policies and practices. Looks like KPMG will follow in Andersen's footsteps. Bad news if you work for KPMG, or if you need to hire an accountant, or if you buy stocks which get audited (your costs just went up again). Good news if you're working for one of the remaining accounting firms (your life just got more exciting, but your income went up again).