The 1% are the Atlases

The disappearance of the middle class is a direct consequence of failed economic policies enforced by bad laws.  Regulations (first) and taxes (second) destroyed the manufacturing industries. Desperate for productivity, firms seek and reward the best managers.  But they cannot work miracles.

America moved forward on information technology.  Computering is wholly unregulated, though the incomes are taxed.  But computers are only one sector.  Genetics is stalled.  Spaceflight is marginal.  Robotics is stuck.

Just like physics, to the extent that economics actually describes reality, the facts cannot be evaded without consequence.  Machinery needs motive power. Engines need fuel.  Friction must be reduced and worn parts must be replaced by preventive maintenance.  Most of all, no engine design solves all problems.  Therefore, innovation and invention – innovators and inventors - are the prime movers.  To pretend otherwise is to beg for disaster, which is where we are headed.

On the nearly-free enterprise blog, OrgTheory, from almost-rational sociologists, is a current topic spinning nonsense about the “income gap” caused by the salaries of top managers.  Idiocy is easy to find, for instance, at Huffington Post (which, in fact, delivers the marketable facts of your session to its parent AOL, a ironic and just consequence, like profits on Che Guevara t-shirts).  I single out OrgTheory because they usually exemplify good thinking about new ideas in sociology.  But sociology never shrugged off its Marxist chains.  So, sociologists labor under a burden of false assumptions and wrongful conclusions.  

The problem is not that top salaries have increased, but that the middle class has disappeared into the working poor. They were crushed by the regulations and taxes that destroyed the businesses that employed them – and made impossible other new firms offering inventions, innovations, creations, and developments which never happened. 

The Congressional Budget Office statistics are unarguable. The top quintile earns 50% of the income and pays nearly 70% of the taxes.  The broad middle class – 60% of the workers in quintiles 2, 3, and 4 – earn only 45% of the gross income and pay only 33% of the taxes., with the 4^th quintile accounting for more than the lower two. The top 1% earns 15% of all incomes and pays almost 30% (28.9%) of all federal taxes.  The richest carry twice their fair share.

We are killing the goose that lays the golden eggs.

The wealthy have proved that they are accomplished at creating and managing wealth.  We know that the government is neither.  The government does not create wealth. The government does not manage wealth.  Those are not its purposes.  If it has any function at all, government is defensive and remediatory: we look to power for justice and protection.  Even “infrastructure” is not its purpose.  President Obama pointed to highways when he told innovators and creators, “you did not build that.”  But like Bastiat’s broken window, the highways are only visible events that mask the unseen.  When the highways were built, cell phones and the internet were possible.  But AT&T was the “Ma Bell” monopoly.  Car phones were exotic luxuries; even answering machines were rare.  Private highways – the Lincoln Highway; the Dixie Highway – were created; tollroads and turnpikes did exist.  Then taxways called “freeways” prevented innovation in public transportation.  The construction of the superhighways – and the support they gave to the automotive industry – actually derailed innovation and invention by draining capital into less productive channels.

The American government invested monumental resources in a cold war against a hollow empire that never knew a successful harvest.  Every jet fighter, bomber, missile, and submarine represented one more utopian promise from 1900 never to be fulfilled.  Public education Kindergarten through College still consists of one person lecturing to a passive array of listeners – and we wonder why it failed. We speak of “cancer” the way 19^th century people did of “miasma” and “consumption.” Meanwhile latter age neo-primitives protest for laws against genetically-modified plants and animals. We do not fly to work in personal aircars, vacation on the Moon, or transship freight from highspeed rail to dirigible airships.  The missing innovations were the unseens of Bastiat’s unbroken windows.  

From the vantage point of the Wright Brothers, Robert Goddard, Thomas Edison and Nicola Tesla – or Jules Verne and H. G. Wells – we should be colonizing the asteroids by now, enjoying median IQs of 150, and inventing new art forms for 3-D displays.  Instead, we still wear colored glasses like they did in 1955 to watch remakes of 1955 cinemas, because engines of innovation and invention were stopped by the sands and sugars of regulation and taxation.

The wealth of the 1% came from the computer revolution.  It was the only sector of the economy not regulated because its very nature literally mystified the legislators.  They could not regulate what they could not understand, gratefully.  With Moore’s law racing ahead of all the other laws, computering is the only train on the track.

Make no mistake: it was not Al Gore or even his science advisor Dr. Michael Nelson who built the Internet.  It was hackers and hobbyists who built the first consumer modems and wrote the cyclic redundancy check programs for them to let ordinary people in their homes use the voice-grade landlines while the government-backed AT&T Bell monopoly wanted to charge “business rates” for data grade lines.  As BBSes were spreading, local Bell operating companies were lobbying for laws against them, seeking government-sanctioned permission to offer the only dial-up information services.  That did not happen.  They did not build that.  And we have some thin blanket of prosperity against the chill of regulation and taxation.

Atlas Shrugged, Part 2 will be out this week.  

You Only Have to be Better to be Equal

She’s Such a Geek: Women Write about Science, Technology, and other Nerdy  Stuff, Annalee Newitz and Charlie Anders, eds., (Seal Press, 2006) is an anthology of autobiographical vignettes.  In each, you meet a woman.  Some are introduced as girls.  One enters when she was a man.  Overall, each found fun, validation, achievement, intellectual challenge and social challenge in her attraction for science, technology, engineering or mathematics.  Generalizations are not easy.  These are 24 insightful essays from a field of over 200 entries.  As a guy myself, I do not get much chance to spend all the time I want with two dozen female nerds.  This is highly recommended.

Over on Prof. Mark Perry’s blog, Carpe Diem (now with the American Enterprise Institute) are numbers about the huge gender gap in the SATs, the Scholastic Aptitude Tests that figure so largely in college admissions.  The reality of the gap is unarguable. So are the social policy implications.  On the almost-free market blog, OrgTheory, is a link about gender bias in science research hiring.  Even women who head labs preferentially hire and pay men in excess of women with equal qualifications. 

The full depth and breadth of prejudices active in our society is astonishing and disappointing.  While Asians tend to score higher on SATs than Caucasians, they need to: the averages are that an Asian needs to be 140 points higher to get into the same college program as a non-Asian.  The fear is that we will have “too many” in college, as 100 years ago Ivy League WASPS worried about having too many Jews and limited their enrollment, despite their qualifications.

 After California forbade state universities to consider race in admissions, the percentage of Asian students at the University of California at Berkeley rose from 37 percent to 44 percent. At the California Institute of Technology, which similarly doesn't look at race, more than one-third of students are Asian.

Asian-American students who enrolled at Duke University in Durham, North Carolina in 2001 and 2002 scored 1457 out of 1600 on the math and reading portion of the SAT, compared to 1416 for whites, 1347 for Hispanics and 1275 for blacks, according to a 2011 study co-authored by Duke economist Peter Arcidiacono. Read here: Asians are the New Jews

Incidentally, SAT scores are at a 40-year low.  (Washington Post here.) But do not blame public education.  Soviet agriculture almost worked.  Maybe this experiment just needs to run a little longer, too… 

The widest policy implication is that our culture is collectivized to the point where individual achievement is difficult to perceive.  Should we adopt numbers in place of names?

Also on Necessary Facts:

• Nerd Nation: Danika McKeller, Natalie Portman, and Felicia Day 
• Nerd Nation 4.5: Miyiam Bialik
• Nerd Nation 4.0: Even GQ Says Smart is Sexy
• Nerd Nation 3.0: How Dungeons and Dragons Changed My Life

 

Understanding Objectivism

The 2012 edition of Dr. Leonard Peikoff's 1983 lecture series, edited by Dr. Michael S. Berliner, does not so much explain Objectivism as it does argue against intrinsicism, subjectivism, rationalism and empiricism.  The book opens and closes with a problem we all know from personal experience: Objectivism versus the world.  Does life have to be one long argument against everyone else's wrong ideas?  Are we condemned to live among dishonest and foolish people? 
(This review is edited from posts and responses I placed on Rebirth of Reason and Objectivist Living discussion boards.) 

"... the fact is, since you're in a very small intellectual minority, if you're an Objectivist, you're going to quickly conclude that people in general are rotten and that life is miserable." (page 351)  His answer may not be satisfying, as he offers no pollyanna reply.  By a string of examples, he suggests that a reasonable person, an Objectivist, must navigate a dreary swamp of depressing nonsense.  The best you can hope for is good friends - a good spouse - and the knowledge that the purpose of Objectivism is to make you happier.   Unfortunately, like much else here, the specifics are missing. 

Page 170, the Q&A for Lecture 5:  About Peikoff's list of 20 key items, arranged hierarchically, a student asks: "If metaphysics comes first in the branches of philosophy, then why do the first ten items go back and forth between metaphysics and epistemology?"  (The list is presented and discussed on pp.  150-166.)  Peikoff says: "Because metaphysics does not come first.  Metaphysics and epistemology are simultaneous -- what exists and how we know it are the foundation that starts together. ... The two are completely intertwined."  

On that basis, the three fundamental axioms of Objectivism are (page 166 and again page 224):

• Existence. (Existence exists)
• Consciousness. (Consciousness as the faculty of perceiving existence.)
• Identity. (A is A, with corollaries "The Primacy of Existence" and "Free will and volitional consciousness." pp 166-167)

It was a surprise to me after all these years.  I always thought that the Three Axioms of Objectivism were metaphysical: A is A (identity), Either-Or (the excluded middle), Non-Contradiction (Aristotle's statement of the law of identity). He also says later that these three cannot be arranged in a hierarchy of their own. The desire for a single root axiom - A is A - is an example of the fallacy of monism applied to Objectivism. (Page 224)

Peikoff frames the lectures more as refutations of error than as positive assertions.  The text starts with strawman arguments made up by students who attempt to validate certain truths; and then it also includes about 170 pages (four chapters) that explain the errors in Intrinsicism, Subjectivism, Rationalism, and Empiricism.

Certainly, I did gain some insights from reading this.    But this is ultimately unsatisfactory.  Demonstrations by negation are not assertions.  His summaries of other people's philosophies is always suspect. Based on what I learned in freshman philosophy, he is very good with Leibnitz; and Peikoff admits several times to being a rationalist before coming to understand something objectively.  But his other sketches are little more than parodies. I found his presentation of subjectivism (before and after page 172) is wholly unsatisfactory.  As I understand it, subjectivism is not based on an irrational desire to substitute emotions for perceptions.  Regardless of how we feel about our perceptions, we nonetheless perceive differently.  Rather than attempt to solve that, Peikoff defeats a straw man.  Overall, he invests over half the book setting up opponents of his own invention.  Even after his students fail to integrate Objectivism in the opening chapters, four more chapters (pages 171 to 307) expose the errors in Instrinsicism, Subjectivism, Rationalism, and Empiricism.

Peikoff's positives come in Lecture 11 "Intellectual Honesty."  There, he really gives good advice on what Objectivism should be in practice in the narrow events of discussing ideas with other people.   The valuable advice involves judging the intellectual honesty of other people.  Regarding the personal in philosophy he says, only: "Assuming that your self is not identified with irrational principles, there is no reason whatever to have a conflict between philosophy and your self." (p. 371).  With other people, though, as we know, it is different.  

I think that the best advice is to remember that you are not the standard for the expected intellectual development of others. "And this is one of the tests of a good teacher or communicator -- to be able not to take your own knowledge as the sole standard , to realize that honest confusion can exist, even though to the speaker himself perhaps the issue was always clear." (page 357)  

Depending on your social context, other people may not be "formalizers" who actively build and maintain an explicit understanding of the world.  So, when someone makes a statement you disagree with, realize that for them, this may have no wider philosophical implications, and not much emotional investment, either.  You can let it go without comment.

According to Peikoff, (pp 350 et seq) you do not need to engage anyone who is intellectually dishonest.  Ignore anyone who explicitly repudiates reason or facts.  Ignore anyone who explicitly attacks values as such. Ignore anyone who advocates political totalitarianism.  Again, context is important.  You will not change their mind.  They will never accept your facts or your logic.  You may have an audience - as at a party - but, again, you can say "I disagree with you, but this is not the place to discuss it" and drop it.

And so, much of his good advice in Lecture 11 is contextual. He does not provide Easy Rules to Remember.  If you are discussing politics or whatever with someone who resorts to ad hominem arguments, name dropping and name calling, you can ignore them.  If someone is reasonable and responsive while discussing ideas, you can engage them.  However, many college professors have long experience talking reasonably only as intellectual entertainment for themselves.  They sound honest, but are not. Similarly, when confronted with a surprising opinion on global warming or child labor, an ordinary person can become emotional because they feel threatened.  If they recover the next day and reconcile with you socially, that can show intellectual honesty.

Peikoff also enunciates a truth contrary to both strict rationalism as (by error) Objectivism as practiced by many of its adherents: "... the essential process of knowledge is not from principles but to principles."(page 276) 

Overall, when I started the book, I was less than sanguine about its prospects.  On the second read, despite the long detours of denunciation against Kant and Leibnitz, the book is a good read for anyone who already knows Objectivism, but wants to understand more.

Documentation is Specification

Good software design begins with documentation.  Write the user manual first.  The design documents specify the desired outputs, and the inputs, actions, and processes that cause them.  The library of design documents will include the experience interface, the online helps, the installation guide, training manuals and tutorials, and, of course, the programmer’s references.  

One of several bad designs discussed here

Overwhelmingly, that is not how software is designed; and that is why so much of it is unsatisfying. Even programs that we find useful have annoying bugs, quirky features, and unhelpful demands. It is true that software is complicated. It is an easy claim - sort of like Goedel’s Proof - that every non-trivial program has one bug. But that is not the problem. The pain we all endure - from impatience and annoyance to angst and anger -  comes from the overarching pride - hubris - of programmers at all levels who believe that they know better than you what you want and need.

This is an old problem. In Computer Power and Human Reason: from Judgment to Calculation (1976), Joseph Weizenbaum warned of hackers whom he compared to compulsive gamblers. Driven by the superstition that one more patch will fix their problems, they stay up late, bleary-eyed and disheveled, working ever more frantically on a program they began without any reference to the substantive literature in the field in which they claim to be working. They do not know first-hand the daily lives of their users.

Typically, a project manager or systems analyst finds out from meetings what the customer wants. They even “jad the users” referring to JAD the Joint Application Development process that is supposed to bring the customer into the process. The manager or analyst prepares “design documents” of a sort that define data structures, and meta-dictionaries, language requirements, interfaces, and many other nice things, none of which actually describes how the customer will engage the system.

Even 25 years ago, Dan Bricklin - the inventor of VisiCalc - created a rapid prototyping tool called Demo. Today, RoboHelp has competitors; but RoboHelp and its competitors are not perceived as design tools. They are add-ons, paste-ins, superstitious rituals that hackers in suits (“account executives”) call upon to cure problems caused by a fundamental ignorance of the goal.  The goal was never explicitly stated. 

The user experience, the installation guide, the training materials, the online helps, those define the goal. Without them, the best we have is a good guess by an insightful and benevolent technician who imagines what they would want if they were you... which they are not.

A strong design process begins with JAD sessions, of course. In our time, it is very easy to let a customer’s own design team drive the process of creating the user interfaces, menu and dialog choices, and the building of queries and reports. Our own development team brings to this their expertise based on hard-won wisdom. User experience design and user interface design are key skills in the creation of any system. Moreover, we know that experts working alone do better than peer groups of novices.  But "better" at what? And measured how?

No silver bullet solves the problem. The process of creating information systems that meet the actual needs of the client community requires the cooperation of all contributors at every stage. Among those contributors are the documentation experts who most often are called in only when the product is ready for shipment.    

Also on Necessary Facts:
Readability is the only Metric
The Genius of Design
Objectified - a film about design by Gary Hustwit

Art & Copy: when advertising changed

Start the Presses! Typeface by Justin Nagan and Helvetica by Gary Hustwit

Programmers Night Before Christmas

I found this on a blog by Michael Boyd Clark (here) dated 10 December 1997, 1:56 pm. However, it goes back at least to the 1970s if not the 1960s. I edited some bugs.

'Twas the night before implementation and all through the house
not a program was working, not even a browse.
The programmers hung round their cubes in despair
with hopes that a miracle soon would be there.

The users were nestled all snug in their beds
while visions of inquiries danced in their heads.
When out of the tube there arose such a clatter
I sprang from my desk to see what was the matter.

And what to my wandering eyes should appear
but a super contractor with a six pack of beer.
His resume glowed with experience so rare.
He turned out great code with a bit-pushers flair.

More rapid than eagles, his programs they came -
He whistled and shouted and called them by name:
“on UPDATE, on ADD, on ENQuire, on DELete!On batch jobs,
on closing, on function complete.”

His eyes were glazed over, fingers nimble and lean
from weekends and nights spent in front of the screen.
A wink of his eye and a twist of his head
soon gave me to know I had nothing dread.

He spoke not a word but went straight to his work
turning specs into code; then he turned with a jerk
and laying his finger upon the enter key,
the system came up and worked perfectly.

The updates updated, the deletes they deleted,
the inquiries inquired, the closing completed.
He tested each whistle, he tested each bell,
and with nary an ABEND, all had gone well.

They system was finished, the tests were concluded,
the client’s last changes were even included.
And the users exclaimed with a snarl and taunted,
"IT’S JUST WHAT WE ASKED FOR, BUT NOT WHAT WE WANTED.”

The Simple Origins of Complexities

A New Kind of Science by Stephen Wolfram (Wolfram Media 2002)..

“Three centuries ago science was transformed by the dramatic new idea that rules based on mathematical equations could be used to describe the natural world.  My purpose in this book is to initiate another such transformation, and to introduce a new kind of science that is based on the much more general types of rules that can be embodied in simple computer programs.” 

For example:

1. All squares are white.
2. Start with a black square.
3. A cell is made black when it or either of its neighbors were black on the step before.

Or, for example:

1. All squares are white.
2. Start with a black square.
3. A cell is black if either of its neighbors was black on the step before.
4. A cell is white if both of its neighbors were white on the step before.

 Beginning with rules like these (and hundreds of others approximately no more complex), fantastic images, patterns, random and pseudo-random runs evolve. 

We know that truth is self-supporting.  No truth in biology can contradict a truth in chemistry, physics, psychology, or economics.  If they are, indeed, truths, statements support each other.  Here, too, the simplicity suggested by Stephen Wolfram has been explored by Benoit Mandelbrot.  Fractals of the form

z_n+1 = z_n² + c

produce complex geometries based on reiteration of a basic pattern.  These fractals are related the Julia sets, which are also complicated yet generated from simple initial conditions expressed by terse functions.

Julia set (in white)
for the rational function associated to
Newton's method for ƒ:z→z3−1.
Coloring of Fatou set
according to attractor (the roots of ƒ)
(Wikpedia)

Wolfram is associated with two major websites, Wolfram Science and Wolfram Mathematica.  Both offer you the opportunities to download samples, purchase home editions or professional tools.  Wolfram Mathematics was one of the supporters of the television series NUMB3RS.  Having written a couple of fractal programs for the IBM-PC and DEC VAX many years ago, I had some identification for Wolfram when I saw them go by in the credits for NUMB3RS.  My interest this time was sparked by an off-hand comment from Fred Bartlett, a consulting engineer whom I know from Objectivist discussion boards.

Wolfram Science -

Wolfram Mathematica: Professional, Home, and Student editions.

Stephen Wolfram's personal website.His Wikipedia biography.
Sorry now that I was so close and never knew...

SLOW DOWN AND THINK

Thinking, Fast and Slow by Daniel Kahneman (Farrar, Straus, and Giroux; 2011)

Humans generally have two modes of perception.  System 1 is intuitive and it tells us all about a person and their immediate context relative to us by looking at their face.  You know when someone is happy, sad, angry, puzzled.  System 2 is effortful and computational; it informs us of our choices for agency by engaging mental concentration.  This book is about the very many errors caused by confusing the two modes.  For example when statisticians intuitively assess statistical data, they are predictably wrong. 

Kahneman is primarily a psychologist, but his Nobel prize was awarded for his work in economics.  Economics is all about choice; and yet since Adam Smith economists have had only a rough, poor, or wrong understanding of how people choose.  Economics is supposed to be about our calculations to maximize our advantages.  This book examines our habitually wrongful processes of intuitive calculation. 

Kahneman’s advises that for anything involving computation, we must slow down and think to avoid error and arrive at the right conclusion.

We easily think well in terms of metaphors.  We can identify causes.  We can associate facts and processes.  But we do not think well easily about statistics.  This leads to overconfidence supported by erroneous inferences of hindsight.  System 1 makes up stories to explain what System 2 misunderstands. 

• You see a woman reading the New York Times.  Is she more likely to hold a doctorate or to lack a high school education? 
• Tom W. is of high intelligence, but lacking true creativity.  He has a need for order and clarity.  His writing is dull and mechanical, but sometimes flashy with puns and allusions to science fiction.  Is he more likely to be a librarian or a farmer?

 If you are primed to spot trick questions, you guessed that the woman was more likely to lack a high school education, and that Tom W. was more likely to be a farmer.  If these, and the many other examples throughout, were just the amusing foibles of the average citizen, this book would have limited value.  Kahneman and his collaborator, the late Amos Tversky, found by careful sampling that scientists who should know better routinely rely on their intuition and therefore produce research results that have a 50% chance of being wrong.

The Law of Small Numbers is the complement of the gambler’s fallacy, the so-called “law of large numbers.”  Flip a coin five times.  Most people will say that HHTHT is a more likely outcome than HHHHH.  But in any large run, both small sets will appear.  The fallacy is the assumption that a small sample reflects the larger population.  The Law of Small Numbers leads us to conclude that recent profits are the result of good management.  That is System 1 talking, telling you a story to explain an intuition. 

This book is dense, replete with examples that are citations to research conducted by Kahneman and Tversky (and others).  A large array of basic truths supports the many thematic points. 

• You cannot refrain from understanding a simple sentence in your own language.
• If you are shown a word in a language you know, you will read it.
• Conservatism is defined as the underestimation of the impact of evidence.
• Frowning increases your vigilance and reduces your overconfidence for intuition. 

Kahneman claims (pp 411-415) that the libertarian policies of the Chicago school of economics must fail to bring the greatest good to the greatest number because humans are not the System 2 rational calculators that economists suppose.  My reply is that if this book were assigned to all 12-year olds, we would be.

ALSO ON NECESSARY FACTS
Science versus Common Sense
Two Books on Fermat's Last Theorem
The Man Who Loved Only Numbers
Science in the Middle Ages

ELI THE ICE MAN: Science and Technology

In this Presidential election year, the major party candidates drop hints about creating jobs by fostering technology and innovation.  Sociologist Anthony Giddens defines and delimits their thinking when he cites “innovation centers” near universities such as Cambridge.  Former Secretary of State Condoleezza Rice even mentioned Austin as a magnet for people from around the world with advanced university degrees.  But it is at once more complicated and simpler than that.  Basically, the nature of innovation defies planning, a harsh reality for all the planners running for political office.

Electrical technicians know the mnemonic ELI the ICE man.  In an inductive (L) circuit the measured voltage (E) sine wave precedes the measured current (I): E Leads I.  In a Capacitive circuit, the sine wave of current (I) precedes the measured sine wave of voltage (E): ICE.  Thus, Eli the Iceman.  So, too, with technology and science, does one or the other lead to simplify the analysis.  In fact – in reality for both non-trivial circuits, as for economic systems – isolating one or the other is a convenience of analysis.  No formula exists for creating innovation centers or every town with a college or university could boast of having one. 

It is a principle of Austrian economic theory that entrepreneurship is ineffable.  Yes, it helps to know accounting, and marketing, and organizational development, and to have motivation, being willing to work hard for 18 hours a day, and to know how and when to delegate responsibility, and all that and more.  Ultimately, the pieces do not add up.  The whole is greater than the sum of its parts.  Case studies show people who fail despite having all of these, and others who succeed despite lacking one or more of them.

“Laissez nous faire!”  According to historical legend, the phrase stems from a meeting in about 1680 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a certain M. Le Gendre. When the eager mercantilist minister asked how the French state could be of service to the merchants, and help to promote their commerce, Le Gendre replied simply "Laissez-nous faire."  Wikipedia here. 

If you examine the broad history of science and technology from the steam engine and thermodynamics through electricity and its opening up the physics of quantum mechanics, to the atomic age, the space age, the post-industrial revolution of the information age, and the immediate promise of 3-D printing and nanotechnology, it is obvious that government programs to “create” high-technology centers can only (at best) replicate the successes of the previous generation.  Note that according to Moore’s Law a “generation” in technology is 18 months, not 30 years. 

Sometimes, so-called “pure science” does lead to new inventions. The theories do not grow out on their own, but only explain known facts.  From the medieval siege weapons and clock towers that were explained with the theory of “impetus” through Galileo, to Newton, Watt, Henry, Marconi, Einstein, and to our own time each invention made possible a better understanding which was expressed as a theory.  But the “theory” that was accepted was only a replacement for a paradigm.  Each paradigm at first suggested new inventions and then was discarded when further discoveries could not be explained in those terms.

Previously on "Necessary Facts"
The Structure of Scientific Revolutions
Great Scientific Experiments
Browne on Kuhn
Is Physics a Science?

Coins Without Realms

Hayek suggested an end to monopoly banking and an open market in monetary media.  The national governments of the world did not take his advice - at least not directly.  However, innovation continues, of course. Bitcoin is well-known today as the latest in line of development perhaps originating with cryptographer David Chaum, as public-key cryptosystems such as RSA and PGP made it possible to validate anonymous transactions.

Americans have an uneasy love affair with money.  Benjamin Franklin's Way to Weatlh (available here) was quoted at length by Max Weber in The Protestant Ethic and the Spirit of Capitalism.  If we had kept to the capitalism of Benjamin Franklin and Adam Smith, Ayn Rand could not have written Atlas Shrugged. 

When polled on the paper dollar versus dollar coins, Americans overwhelmingly decline the coin and demand paper.  This is nothing new.  For an entire generation, men's wallets have lacked coin purses.  That is why this item from Gizmodo about a portable safety razor, the "Carzor" startled me.  Perhaps a European, this man's wallet is bulging with coins. 

The Carzor fits into your wallet 
but coins may not ... or need not...

Today, even though Americans demand paper, the US Mint strikes dollar coins, currently, the Presidents series. Congress directs the Mint.  The result is in your wallet (or maybe not). 

This past April, the Royal Canadian Mint asked developers to submit proposals for "MintChip" a digital currency.  Responses were thick and the Monnaie Royale Canadienne quickly closed its request.  Forbes commentator Jon Matonis cogently noted: "The point of digital currency, and especially free-market digital currency, is to broaden the avenues for issuance and adoption of alternative nonpolitical monetary units. Most electronic cash systems already expand and revolve around the State-issued currencies although they don’t have to." (Article here.)  
Be that as it may, the winners of the Mint Chip Challenge (Le Défi Cybermonnaie) will be announced September 12, 2012. (Link in English here au en francaise ici.) 

The Royal Canadian Mint has been pushing the limits of its products and markets for over 20 years.  They launched a commemorative 25-cent coin program which the US Mint copied.  The MCR offers coins in 5-Nines gold, .99999 pure, which the US Mint does not copy.   So, their testing the markets for digital currency perhaps indicates the maturity of this medium.  

Cryptographer David Chaum suggested digital currency in the early 1990s, as an application of public key cryptosytems.  Despite - or perhaps because of - interest by IBM and other large entities, nothing came of that.  However, less formally, over the past 20 years e-gold and flooz also appeared and then collapsed, both, in fact, as a result of law enforcement investigations.  While e-gold was ad hoc, flooz actually seemed like a dot.com possibility.  I sold essays on numismatics to a libertarian website.  They paid me in e-gold which I used to buy a facsimile of Noah Webster's 1828 Dictionary of the American Language from a Christian bookseller.  Before my next transaction, the markets were closed.  

One form does seem to have be working.  People do use their iPods to transfer money.  I have seen people buy coffee at Starbucks.  When I mentioned this to a co-worker majoring in physics at the University of Texas, he said that his bank let him transfer money to a friend's credit card when they were out to dinner.  

My interest in numismatics only came late in life and as a direct consequence of my having read Atlas Shrugged long ago.  I have been a member of the Michigan Token and Medal Society (Mich-TAMS); and I have exhibited both coal mine tokens and Bay Bucks community currency at conventions of the Michigan State Numismatic Society.  Hayek only called on governments to recognize that competitive markets in monetary media always have existed and only will continue to evolve. That said, I factor in a memorandum of caution.  Chatting in a coin store, a Mich-TAMS officer reminded me that one foot outside the doorway of a video game parlor, my video game tokens would be deeply discounted.  In other words, theories are nice, but reality is more conservative.   So, with digital cash, we must wait and watch.

Also on Necessary Facts

Mere Gold is Not Enough: Hayek's "Denationalisation"

Numismatics Informs Economics

Debt: the Seed of Civilization

Numismatics: the Standard of Proof in Economics

Objectivism and the Gold Standard

Money as a Crusoe Concept