4 ms·

Hedge funds buy up all available LPFs on the market. They manipulate the market to drive up LPF prices of politicians who vote according to the fund managers w

Hedge funds buy up all available LPFs on the market. They manipulate the market to drive up LPF prices of politicians who vote according to the fund managers wishes. Politicians do the bidding of the fund managers, sell their inflated shares, and get rich. Bribery money laundered.

A1kmm 6y ago
I think it is more likely to be lobbyists at companies with business models that directly benefit from short-term policies rather than hedge funds, who could just exit their long position on companies most affected. The key point is that the scheme only works if no one is willing to make a loss buying LPFs. But in reality, there are companies that would willingly lose money on LPFs if it meant buying short-term policies in their interest that pay back more for them than what they lose. This scheme would provide a legal way for them to outright buy such policies, and hence probably do more harm than good.
- mola 6y ago
  Such an obvious failure mode, thanks for articulating it.
darawk 6y ago
That's why it's a market. If they do that, and you seem the pushing policies that you don't think will work, you and everyone else who likes money can bet against them. Bribery would be prohibitively expensive relative to the value gleaned, if the market were liquid.
- mola 6y ago
  This sound like dogmatism. Markets fail, a lot. The fact a thing is a market is not a guarantee for the intended consequences. At most it adheres to a paradigm of thinking which is now very popular due to percieved successful past.
  - darawk 6y ago
    Markets do fail in certain circumstances, but I outlined a specific mechanism. If you think there's a way for that mechanism to fail, i'd be interested to hear it, but just saying 'markets sometimes fail' in a generic sense, isn't really much of a counter argument.
- rjmunro 6y ago
  I disagree, I think bribery would be cheap and legal. The value of the 40 year future payoff would be tiny compared to the value of getting what you want now. You might be able to reduce this issue by issuing 1000 LPFs, giving politicians only 1, and making rules that they are only allowed to sell on the public market, not in a private deal. Then in order to bias the market you'd have to spend 1000x what the politician will receive.
gruez 6y ago
Or they short it instead, and profit from the country going to shit. https://astralcodexten.substack.com/p/list-of-fictional-cryptocurrencies https://astralcodexten.substack.com/p/list-of-fictional-cryp... >ConTracked: A proposed replacement for government contracting. For example, the state might issue a billion ConTracked tokens which have a base value of zero unless a decentralized court agrees that a bridge meeting certain specifications has been built over a certain river, in which case their value goes to $1 each. The state auctions its tokens to the highest bidder, presumably a bridge-building company. If the company builds the bridge, their tokens are worth $1 billion and they probably make a nice profit; if not, they might resell the tokens (at a heavily discounted price) to some other bridge-building company. If nobody builds the bridge, the government makes a tidy profit off the token sale and tries again. The goal is that instead of the government having to decide on a contractor (and probably get ripped off), it can let the market decide and put the risk entirely on the buyer. >Banned because: Wall Street developed a financial instrument that let them short ConTrackeds, then tried really hard to prevent bridges from being built.
- vessenes 6y ago
  Scott is wrong about the short narrative here: a bridge company wanting to build a bridge would love an insane shorter from goldman; it would cheapen the base cost of acquiring an asset the builder knows will be worth a lot later. If instead the tokens aren’t fungible and cant be sold after the initial auction then the only instruments will be virtual, a sort of prediction market, and again the bridge builder would benefit from engaging in those markets. If the bridge builder was already going to fail then there would be incentive to sell short the virtual token and the market would therefore have added some prediction value: I don’t think it is broken like Scott suggests.

A1kmm 6y ago

I think it is more likely to be lobbyists at companies with business models that directly benefit from short-term policies rather than hedge funds, who could just exit their long position on companies most affected. The key point is that the scheme only works if no one is willing to make a loss buying LPFs. But in reality, there are companies that would willingly lose money on LPFs if it meant buying short-term policies in their interest that pay back more for them than what they lose. This scheme would provide a legal way for them to outright buy such policies, and hence probably do more harm than good.

mola 6y ago
Such an obvious failure mode, thanks for articulating it.

darawk 6y ago

That's why it's a market. If they do that, and you seem the pushing policies that you don't think will work, you and everyone else who likes money can bet against them. Bribery would be prohibitively expensive relative to the value gleaned, if the market were liquid.

mola 6y ago
This sound like dogmatism. Markets fail, a lot. The fact a thing is a market is not a guarantee for the intended consequences. At most it adheres to a paradigm of thinking which is now very popular due to percieved successful past.
- darawk 6y ago
  Markets do fail in certain circumstances, but I outlined a specific mechanism. If you think there's a way for that mechanism to fail, i'd be interested to hear it, but just saying 'markets sometimes fail' in a generic sense, isn't really much of a counter argument.
rjmunro 6y ago
I disagree, I think bribery would be cheap and legal. The value of the 40 year future payoff would be tiny compared to the value of getting what you want now. You might be able to reduce this issue by issuing 1000 LPFs, giving politicians only 1, and making rules that they are only allowed to sell on the public market, not in a private deal. Then in order to bias the market you'd have to spend 1000x what the politician will receive.

gruez 6y ago

Or they short it instead, and profit from the country going to shit. https://astralcodexten.substack.com/p/list-of-fictional-cryptocurrencies https://astralcodexten.substack.com/p/list-of-fictional-cryp... >ConTracked: A proposed replacement for government contracting. For example, the state might issue a billion ConTracked tokens which have a base value of zero unless a decentralized court agrees that a bridge meeting certain specifications has been built over a certain river, in which case their value goes to $1 each. The state auctions its tokens to the highest bidder, presumably a bridge-building company. If the company builds the bridge, their tokens are worth $1 billion and they probably make a nice profit; if not, they might resell the tokens (at a heavily discounted price) to some other bridge-building company. If nobody builds the bridge, the government makes a tidy profit off the token sale and tries again. The goal is that instead of the government having to decide on a contractor (and probably get ripped off), it can let the market decide and put the risk entirely on the buyer. >Banned because: Wall Street developed a financial instrument that let them short ConTrackeds, then tried really hard to prevent bridges from being built.

vessenes 6y ago
Scott is wrong about the short narrative here: a bridge company wanting to build a bridge would love an insane shorter from goldman; it would cheapen the base cost of acquiring an asset the builder knows will be worth a lot later. If instead the tokens aren’t fungible and cant be sold after the initial auction then the only instruments will be virtual, a sort of prediction market, and again the bridge builder would benefit from engaging in those markets. If the bridge builder was already going to fail then there would be incentive to sell short the virtual token and the market would therefore have added some prediction value: I don’t think it is broken like Scott suggests.