porcupineadvocate
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Note: "the MVT is a good empirical first approximation" is not the same as "the MVT is a good predictor of politician behaviour".
This is because of two things: first, the MVT does not necessarily hold when issues are multidimensional. Plott (1967)'s AER article demonstrates that when voter preferences are multidimensional, then the requirements for a stable majority vote to exist at all are quite stringent and unlikely to obtain in reality. The usual voting problem issues crop up. The winner is ultimately the agenda-setter, who can control the final vote and therefore the outcome.
It is however true that most contemporary issues are observed to align along a single axis. But... (read more)
It would apply if gold were legally enforced and usable as a currency, but I don't think it is.
It does apply to forex speculation, though.
Well, no. Concisely put, the problem is under-determined money demand because of readily available money or money-like substitutes (in the theoretical framework of money demand/money supply). This is an issue limited to the period of readily available new money, of which Bitcoin itself is one, really. For those thousands of years there were few such substitutes, and substitution would have been costly anyway, so the problem does not apply there.
That's not the analog; the analog would be the externality effect. An individual lowering (excessively high) prices imposes a loss on themselves but creates a positive externality on all other individuals; since the externality is never internalized, price adjustment is underprovided. If price adjustment is costly, the problem is even worse.
Wages are not thought to be sticky for this reason (real wages are not as obviously anticyclical as the argument would imply.).
Has anybody seen any reply to Tyler Cowen's argument that Bitcoin's monetary velocity is unstable?
The arguments I have encountered focus on Bitcoins' strengths as a medium of exchange, but not (as Cowen points out) as a store of value, as one currency among a monetary universe composed of many money-like substitutes. Why hold non-negligible amounts of Bitcoin (as opposed to cash for its state-enforced liquidity, or any less-liquid but higher-return financial instrument of choice - recall Fisher's equation here)?
The mainstream Keynesians like to talk up liquidity preference. The post-Keynesians and modern monetary theory types talk about fiat money demand as driven by the state (to pay taxes, etc.). Well, Bitcoin... (read more)
Hmm. The article is technically correct but irrelevant. The case where necessity fails relies on three conditions: (1) the number of voters is even (2) the number of voters is small (3) at least one voter has their optimal preferences exactly identical to the proposed equilibrium; not merely 'very close' but exactly. All three (plus some additional, complicated conditions) must hold for Plott's conditions to be sufficient but not necessary.
(2) is obviously not a concern here, for nation-state electorates. (3) is implausible: just introduce a suitably fine-grained continuum of possible policies. If you still have an ideal voter at the equilibrium, it's not fine-grained enough.
On (3), in particular: in general, mainstream... (read more)