You’re permanently entrenching them as the winner, and reducing the incentive for a competitor to emerge. The cost of developing these platforms is high and clearly it’s hard enough to compete, why would you kneecap future competitors from the get go?
I’m surprised at the comments here. Why should the government set the “right” margin?
If you cap the margin, you’re entrenching the monopoly forever. Allow them to charge what they want, and set tax rates on corporations commensurate with the size of their profits. Make it easier for competitors to start.
The path to a sustainable marketplace does not come from top down enforcement of margins. It comes from competition
Fascinating - especially this quote about AdT:
"Especially in matters Kennan understood well, he thought the public should have no say. His diaries show that he was a keen reader of Alexis de Tocqueville, and while he never mentions this specific point, his insistence that foreign policy be conducted by the well born and well educated, without interference from the masses, echoes the French nobleman’s argument that aristocracies are better than democracies at diplomacy. ... Yet at least Kennan was honest about his preference for expert rule; our present elites, by contrast, insist that their expert rule actually is democracy."
If you view the early 20th century as peak-institutionalism, it's clear the pendulum has swung to populism... but how much further can it continue to swing? What was the most populist period of our history? William Jennings Bryan comes to mind but I don't have a sense for that era of populism compares to now
This is the most cogent and succinct explanation for what happened. The future for print magazines is a lot more niche and lot more pricey. The internet ate the mass-market in every sphere.
appreciate the response - your second point especially rings true for me and has set off some thoughts of my own:
I would say my 'theory of crypto' is that they're rediscovering the financial system. The financial system can do everything crypto can and more. The fact it does not is due almost entirely to regulation.
This implies crypto will be most useful in environments where you can skirt regulation the longest. I imagine cross-border payment systems(esp to emerging market countries) are the most promising examples of where this would be useful, and i know there are some groups working on this already.
This also implies that in the developed world, crypto has capped upside. The point at which it's big enough to matter is the point at which its regulated. It will rapidly converge to 'Trad Fi' without the institutional support the financial world already has.
Just some thoughts bouncing around my head that your comment spurred...
Sure - and these are all great examples of what you can do with crypto. Where I see parent pushing back is that all of these things were already possible before. You could buy jpg's with credit cards, you could buy gold with the dollar.
Before the spreadsheet it was extremely difficult to do arithmetic at scale. After the spreadsheet it was much, much quicker.
What's the killer feature that cannot be replicated easily without crypto?
The key point to 'taroof' is creating a tiny strain of egalitarianism in a deeply fragmented society.
The article mentions this a little..
"in a hierarchical society such as Iran, where favours and services can be interpreted according to the stratum of the provider, this behaviour “produces social stability, because when both persons are doing this, they achieve equality”."
This is sort of similar to how strict dress codes (black tie etc.), despite being associated with the more pretentious elements of society, are actually deeply egalitarian. By telegraphing exactly what is and is not allowed, variation is diminished and stratification by social class is harder.
It obviously has its negative elements (and definitely adds friction to each interaction), but in an increasingly atomized world I find these tiny holdovers of tradition refreshing.
The alpha dynamics of a liquidity related sell-off are heavily tilted towards folks with locked up capital. Why do you think every manager and their mother has raised a distressed fund?[1]
You can have access to that return profile simply by having some capital ready to deploy as an individual, for the reasons I described above. This can add massive alpha.
As an individual you have one advantage over professional traders: complete control of your capital.
This is a huge advantage, and one that should deliver you alpha independent of having an edge, having a super computer, having a huge network, etc...
What most folks outside Wall St don't realize is that the job of a trader isn't just to maximize alpha. Most of the job boils down to getting senior management comfortable with risk so they don't walk over one day and give you the infamous "tap on the shoulder." Management's job is to get their bosses (investors in the fund.. often pensions, endowments, UHNW family offices, etc..) comfortable with the risk.
Until one day... when end investors pull their money from the fund, and management walks over to the traders with one word: "sell." Often times both management and the traders know this is the wrong trade, but they have no choice.
It's important to understand if sell-offs are caused by fundamentals or liquidity... the first part of march was the former, the second part of march was the latter.
Complete control of your capital means you don't need to be any smarter than the pros, you just need to know when the sell-off is liquidity related and not fundamentals related.