January 2022 Newsletter: Spotting talent on the dance floor.
Never miss a leap year
Recognising talent on the dance floor
The virtues of cash
It's well known that every four years is a leap year. Less well known are the exceptions to this rule: if a year is divisible by 100, but not divisible by 400, then it's not a leap year.
The year 2,000 was a leap year, but the years 1,900 and 2,100 were not.
If you're reading this now, like me, you'll probably never miss a leap year.
Talent on the dance-floor
If you look at someone dancing, you can roughly tell how good they are. But what if they're standing at the bar..? waiting on the side to be asked to dance? How do you know if they're going to be good to dance with?
At least on the salsa/bachata dancing scene, I find shoes to be a decent indicator. Here are some photos to give you a grounding:
Alright, that's enough of that.
The virtues of cash
Cash has been in decline for some decades now. Some countries like Sweden have almost eliminated cash (as they should). The practical benefits of electronic payments are widely appreciated, but the loss of anonymity for small payments is under-appreciated. As cash is eliminated more widely, I see a need to replace some of its desirable properties.
Electronic payments are highly traceable in their current form (debit cards, credit cards and bank transfers) and becoming even more traceable as central banks (slowly) move to issue digital currencies that are managed on a single centralised ledger. China is far ahead on this front, as I wrote in August 2021 here.
In many countries, cash is used to avoid taxes on quite a few transactions:
Paying for childcare. Making these payments electronic (and then traceable and then taxable) will increase the already high costs of childcare
Paying for odd-jobs. Making these traceable/taxable will predominantly hit lower wage jobs. Already I've heard of people wary of paying for grinds/jobs using Revolut/Venmo.
Giving money to kids. In many countries, there are limits on what can be given to adult kids tax-free (in Ireland it's 3,000 EUR). This isn't much money and many adult children rely on their parents financially. Making these payments traceable/taxable will have a social impact. You might say Irish banks don't yet gather the full details of each transfer, but it's reasonable to think that with digital currencies - where money has increased metadata attached to it - traceability and pressure for taxability will increase.
Consider Irish parents who gift or lend their kids money to buy a house. "Irish parents" as a bank would be one of the largest banks in the state. While this tax avoidance evidently favours wealthier families, it would be quite unpopular if these loans or gifts were actually taxed in line with what the law states. With money and taxes increasingly becoming programmatic, maintaining differences between theory and practise will become more difficult.
One solution is to accept all of these taxes, not just in theory, but in practise - and readjust other tax rates and/or rules to balance things out. I don't think that works, because many societies have cultures where they don't want to be taxed when moving money between family members.
I support moving on from cash, but think it's wise that we plan for a digital alternative that maintains some of its properties - notably anonymity, particularly for small transactions. Generally speaking - and we can do this with digital systems - it seems sensible to have high anonymity for smaller amounts and high transparency for larger amounts.
Over the last weeks, Canada used emergency powers to block the bank accounts of trucker protestors. Blocking bank accounts is somewhat standard in cases of laws being broken, but blocking bank accounts without warrants or due process is unusual in liberal democracies. The use of emergency powers reminds me of a book I'm reading on Northern Ireland (Say Nothing) where emergency powers were frequently used. Invoking emergency powers kills transparency and is a bad recipe for public trust, particularly the trust of minority groups (whether you sympathise with them or not).
Over the rest of this century, I see less alliances between people based on geography in favour of alliances based on online interactions. Nationality will be less important and membership of online associations/networks will become more important. How could this not happen? Communication & travel has become easy globally and will only get easier over the rest of the century. Physical location matters less and less. Online work, interactions and associations matter more and more.
I see two options for today's countries:
Insist on a direct mapping between what is online and what is physical, e.g. China's current approach, and - to a much lesser degree - the US (e.g. with financial sanctions/regulations) and EU (e.g. with GDPR and import laws) approach.
Take a flexible/open approach with some core values (e.g. freedom of movement, trade, freedom of speech, freedom to transact, maybe healthcare), but welcome people that are part of a wide variety of associations that have heterodox values outside of these core values.
As the balance of power shifts from offline to online, I think the second strategy becomes dominant because land becomes more of a complement to what is online - rather than vice versa. [There are quite a few ways I could be wrong though: 1) online organisations may monopolize/dominate certain physical countries, 2) it may be the case the countries consolidate/merge in order to increase their bargaining power with online communities.]
[Side-note: Wars likely move from physical to cyber, where they are much less based on geography.]
Here are some small countries I think have done well in being flexible and can do well as bases for online associations:
Denmark - have their own currency and charted an independent course on COVID.
Ireland - do their own thing on corporate taxes (at least so far) and high quality primary and secondary education.
Singapore - a bit authoritarian on certain political fronts, but transparent on other fronts such as business disputes.
Switzerland - have their own currency; have a system with strong local control by cantons (states).
There are more that I need to visit.
That's it for this month. Thanks for reading.