Tales from the crypt(o)

NBA commentator Jeff Van Gundy’s well-placed, near-extemporaneous “back at the crypt” comment notwithstanding, ubiquitous references to crypto currency range from annoying to cloying. Everything about digital money is either scammy or… that seems to be mostly it. Scammy neatly encompasses the over-hyped, Ponzi-schemed, last-one-in nature of the the collection of binary data that necessarily requires us to put all the usual finance-related terms in quotes: “ownership” “collateral” “token” “transaction.” You could go on.

And besides the obvious downsides of NFT’s – from terrific money-laundering possibilities to the proliferation of really bad art – we’d be remiss in not noting crypto’s climate impacts:

Crypto’s overall climate impact remains massive, with certain currencies swallowing up entire nations’ worth of processing power from individual computing units and data centers—much of whose power comes from fossil fuels. The most common form of cryptocurrency mining, proof of work, requires a massive amount of processing power. Alternative mining methods have a mixed track record so far, with some ostensibly “sustainable” mining systems still requiring significant amounts of dirty or clean power. And transacting any tokens across the blockchain, whether an NFT or a Litecoin, sucks up the collective energy feeding into the transaction, no matter the product at hand. One estimate claims that a single NFT trade across the much-used Ethereum blockchain uses enough energy that could power an entire house for several days. And this is all so the buyer can have bragging rights about “owning” an image.

Celebrities who are selling NFTs and also claim to care about the environment: What are you doing? Whatever it is, there sure are a lot of you. Here’s a list—surely incomplete—of luminaries who brand themselves as climate-conscious yet have also been hawking NFTs in some form or the other, ensuring this bizarre digital culture product will linger in the public discourse while possibly ruining the art world, the planet, and our collective sanity.

Not even-close-to-exhaustive list of scam-adjacent proponents at the link. Yes, engaging in yet another form of workaround for doing not the things we need to do about global warming: what are we doing? The climate question at the center of everything, that we’ve been needing to ask for decades, that we still need to answer.

Image: the crypt in question

Social Impact Bonds

Okay, so this is so… questionable. In their thirst to find news ways of making money, the cunning quants at Goldman Sachs have hit upon an ingenious scheme in which New York City is:

embracing an experimental mechanism for financing social services that has excited and worried government reformers around the world, will allow Goldman Sachs to invest nearly $10 million in a jail program, with the pledge that the financial services giant would profit if the program succeeded in significantly reducing recidivism rates.

The city will be the first in the United States to test “social impact bonds,” also called pay-for-success bonds, which are an effort to find new ways to finance initiatives that might save governments money over the long term.

Alright, I’m going to slow pitch this one under-hand. See the ball, here it comes:

If you are going to do this, there are other ways to make money that will save a lot more than save governments money over the long run. More, as in shorelines and aquifers. How about financial incentives for people to use less energy? For power companies to sell less energy? For regions to pump less carbon into the atmosphere? Is this that difficult? I know you can get there GS, come on.

The more you read the article, the more obscene it gets, private equity dabbling in social programs. At its essence, truly obscene. But if it works, they are going to do this, rather than provide any actual societal goods, they are going to fund them through profit-taking. Fine. Whatever. It is a kind a evolution, I guess. Better than incentivizing our destruction, which is exactly what has led us so close to it. But there are all kinds of other problems to which this could be readily applied. Get ready for a very twisted society, in which late-term capitalism comes around to save itself by incentivizing positive social and environmental outcomes.

Actually, who cares why we do it, as long as we do it.  It’ll be a boon for philosophy book publishers.

The nugget:

“This will get attention as perhaps the most interesting government contract written anywhere in the world this year,” Dr. Liebman said. “People will study the contract terms, and the New York City deal will become a model for other jurisdictions.”

But social impact bonds have also worried some people in the nonprofit and philanthropy field, who say monetary incentives could distort the programs or their evaluations.

“I’m not saying that the market is evil,” said Mark Rosenman, a professor emeritus at Union Institute and University in Cincinnati, “but I am saying when we get into a situation where we are encouraging investment in order to generate private profit as a substitute for government responsibility, we’re making a big mistake.”

Mmmm. Why would you think the market is evil?