Mar 17, 2023Liked by Brett Scott

:D:D:D "all that progress on building AI-generated cat picture platforms, or killer drone technology, or mind-control devices, or surveillance tech is called into question too." Oh nooo! 😱

That gloating description of SV got me by surprise. Had to laugh loud.

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Mar 16, 2023Liked by Brett Scott

Hey Brett, hope you're doing well and I'm glad to see you writing on Substack again.

Re: "the contradictions of capitalism" and "seemingly unaware that in doing so they’d trigger a chain reaction that would undermine the collective interests of all the startups in whole ecosystem.".

This is somewhat of a pet peeve of mine. Although I am not part of the SV ecosystem and don't have access to any of their group chats, I very much doubt it happened the way you describe. I suspect everyone, especially the most connected/powerful knew exactly that mass withdrawals could undermine the bank and that it would be better for them, collectively, that they not do that.

That does NOT mean they had the power to stop it or even that attempting self-sacrifice by not withdrawing themselves was a good idea..

Collective action problems are hard, actually. Nor are they limited to 'capitalism', they happen in any social system. There are countless historical examples of armies that had a good chance of winning if they stuck together breaking on contact with the enemy and getting routed.

Knowledge alone is not a solution to a collective action problem. Actual solutions require either very strong interpersonal solidarity (not easy to get, not the kind of thing you can build in group chats) or some sort of institutional power to enforce the collective good.

For instance, if the casino chip owners of SVB had previously organized a "withdrawal institution" (WI) that had the sole right to request withdrawals from SVB, they could have used this to stymie the bank run by having that institution reject withdrawals that were unnecessary and save SVB.

Of course, this WI could have led to a lot of other issues. More paperwork for normal withdrawals, the costs of needed withdrawals being flagged as 'unnecessary', abuse of power by the WI, capture of the WI by SVB, etc.

Institutions are hard, actually. Concentrating power to enforce solutions to collective action problems safely is something people have been trying to do for thousands of years. With very mixed success.

"If only they had organized and worked together instead!" says the left. "They could have easily solved their problems".

"What a brilliant insight!" I say, "Dangling off the edge of this cliff would be a lot less dangerous if I could just sprout wings and fly off. How about that huh?"

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I'm confused, where did the startups get L1 money? isn't the only L1 money available to the public is physical notes and coins as you stated in your CBDC article? rest of the digital money in the banking system is originated through deposit creation via loans ie bank chips no?

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Why is your perspective of why government is going after the small banks like Signature?

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