2018 is going to make 2017 seem like a good year

Send the damn meteor already.

FOR many people, 2017 will be remembered as an extraordinarily bad year, and it will be a tremendous disappointment to wake up on New Year’s Day 2018 and realize that no, it wasn’t a bad dream: An openly racist, misogynist, pathological liar is still the president of the United States, terrorists are still running amok in every corner of the globe, the world economy is still based on IOUs and imaginary fairy tokens, and basic facts are still being scorned in favor of willfully ignorant opinion.

By the time 2018 is over, however, we may all very likely be looking back on the year of Trump, Bitcoin, fake news, self-identifying as a gender/ethnic group/inanimate object of one’s choice, and discussing whether or not the Earth is flat like it’s even a debatable topic with a certain nostalgia. As the old saying goes, it’s always darkest just before it goes completely black. With that in mind, here are some predictions for a year we’re going to regret we had to live through, if the human species even survives it:

1. The Bitcoin Implosion

When Bitcoin first appeared, it was a novel concept, if a bit rough in that first-draft sort of way most eventually world-changing ideas seem to be when they are introduced. The distributed ledger technology – the blockchain – could have countless applications (and despite what Bitcoin zealots will tell you, it absolutely can exist without the imaginary fairy tokens), and even the idea of decentralized, digital currency had some appeal. All that went out the window in 2017, however, when Bitcoin turned into the world’s biggest Ponzi scheme. For no apparent reason – certainly not because it’s any good as a currency – it has become a hugely overvalued, sentiment-driven, speculative commodity, one that is not the diffused, crowdsourced store of wealth everyone hoped it would be, but controlled by a relatively small group of major investors and “mining” consortiums able to afford the enormous equipment and energy costs to operate the blockchain network.

That the bubble will burst sooner or later is a foregone conclusion, even among Bitcoin disciples; the most telling sign of that is the shift in tone in recent weeks of discussion in the mainstream and social media (remember, this is an asset whose value is driven by sentiment). Up until a few weeks ago, criticism of Bitcoin could elicit counterarguments with some basis in economics; granted, the arguments weren’t very good, because the idea, at least as long as its proponents were still trying to describe Bitcoin as a form of currency, has a few fundamental flaws. Now, however, all pretense of seriousness has been discarded; the only argument for “investing” in Bitcoin is its insane rise in value – a modern version of “X number of people can’t be wrong.” Since the Bitcoin market is sentiment-driven and purely speculative, its collapse is inevitable: At some point, investors will sense that it is no longer a worthwhile gamble to buy at a high price in the hope of selling at a higher price, and the rush for the exits will begin. What the trigger will be is anyone’s guess, but there will be a trigger; most likely it will come in the form of one or more big holders of Bitcoin dumping their stakes when the price passes a nice round-number threshold, $25,000, $50,000, maybe $100,000 if the insanity lasts that long.

As big as the Bitcoin market is, that catastrophic collapse would not have very serious implications if it was just confined to the strange world of cryptocurrency, but now, thanks to the world having more money than sense at this point, there is a real danger of contagion from Bitcoin’s demise having a serious impact on the real economy. Within the last two weeks, trade in Bitcoin futures and ETFs has been introduced, which puts the imaginary fairy tokens into real markets where people invest in real things, and are not going to be able to if a large part of their capital burns up in the Bitcoin conflagration. Perhaps even more alarming is the amount of venture capital that has been created through ICOs, which owe their existence to the success of Bitcoin. Once Bitcoin goes down, all those alt-coins that have value only because Bitcoin happens to be currently credible also vanish, which will de-fund a large number of startups, primarily tech firms. Thus we can look forward to witnessing both a market crash and the second coming of the dot-com bubble all at once. Good times!

When this will all happen is impossible to tell; it will be sudden when it does. The sooner the better, however, because the longer the Bitcoin bubble keeps inflating, the worse the damage will be.

2. Tesla Goes Bankrupt

Elon Musk is a visionary, multi-talented man, and something of a darling of the New Age. Unfortunately, one talent he seems to lack is the ability to run a business, as this well-researched and painstakingly detailed article published last month explains. About two months before that article came out, I did my own research into Tesla’s state in connection with my real job, and while I approached the assessment from the automotive industry perspective I’m familiar with as opposed to the market investor view of the author of the Seeking Alpha analysis, the conclusions were virtually identical, because numbers don’t lie: Not only is Tesla not working as a going concern, there is no possible way it could work without being radically restructured. The company won’t make it past midyear without that process starting in a painful way.

When it happens, it will pose a dilemma for the US government. Although Tesla is not a major part of the auto industry, it anchors a complex web of technology businesses that will feel the shock; it is an ecosystem that the US quite appropriately wants to see developed, which is why Tesla has been the beneficiary of a great deal of direct and indirect support. Given that it has a sound, or at least potentially sound, underlying product, Tesla probably could pare down its distracting, unprofitable sidelines, tighten up its management, pull its reach back to match its grasp in terms of production targets, and come out of the process a reasonably healthy company. But Tesla will hit the skids at just about the same time Bitcoin is imploding – in fact, the latter event may even trigger Tesla’s collapse, although that is not at all the source of the company’s problems – and that is going to make things very interesting indeed.

3. Terror with a capital T

The chances that those of us who have never been personally impacted in any way by Islamist terrorism will be sometime in the coming year just grew alarmingly, thanks to the completely unnecessary, stubborn, ill-conceived, and intentionally antagonistic decision of the bloated orange freak currently occupying the White House to unilaterally declare the contested city of Jerusalem the capital of Israel. Up to that point, we could legitimately look at terrorism practiced by the likes of ISIS, al-Quaeda, Boko Haram, the Abu Sayyaf, LET, al-Shabaab – geez, there’s a lot of these fuckers, aren’t there? – as being a bastardization of proper Islam (although that might be somewhat debatable), but Trump’s call, which as far as anyone knows, absolutely no one asked him to make, just gave the entire Muslim world, the just and unjust alike, a unifying cause.

I realized just how much about two days after Trump’s decision was announced, when I listened to the noontime sermon at the local mosque (it’s a hundred yards or so from my house, and evidently has a good sound system), angrily denouncing Trump and Israel, and exhorting the congregation to protest the decision. This is a small, unimportant provincial town north of Manila, with a small, peacefully innocuous Muslim population; Jerusalem has no more practical importance to these people than Mars does. And yet Donald Trump has managed to piss them off. I would be surprised if anyone of my fervent neighbors would actually go beyond expressing their anger in harsh words, but if they are any indication of how deeply the offense has penetrated the Muslim world, there are undoubtedly thousands – tens or hundreds of thousands, more likely – who will not feel so constrained.

4. The US midterm elections will be a disappointment

On Tuesday, a little-known Democrat named Doug Jones narrowly defeated his Republican rival Judge Roy Moore in a special election to fill one of the state of Alabama’s Senate seats, left vacant by the promotion of former Sen. Jeff Sessions to US Attorney General. The win was immediately hailed as a blow to Trump and the Republican party, who had campaigned heavily for Moore in spite of his notoriety as a pedophile, his public exclamations that the US was better off when slavery was still a thing, that homosexuality should be treated as a criminal offense, and that all the amendments to the Constitution after the 10 that make up the Bill of Rights ought to be dropped, and despite his general demeanor as a complete piece of shit and total embarrassment to the human race.

The outcome of the election, which Moore has refused to concede and says he intends to challenge, narrows the Republicans’ majority in the US Senate to 51-49, and is being viewed as a preview of even bigger losses for the GOP in November’s midterm elections.

Except it probably isn’t. Roy Moore’s defeat, presuming he and his Republican backers don’t contrive a way to reverse it, is probably a blessing in disguise for the Trump regime. Although he is a comically grotesque, horrible, evil little man who should not even be allowed to walk around in public let alone run for the US Senate, Moore lost by less than 20,000 votes, out of about 1.3 million. Granted, that might not have happened anywhere else but in Alabama – never the brightest bulb in the American chandelier, this is the state that gave us George Wallace, after all – but it nevertheless hardly amounts to a stinging rebuke of the reign of the Pussy Grabber. On the contrary, it plays right into the hands of an administration that has been surprisingly adept at deflecting trouble.

Roy Moore’s questionable use of his penis threw Trump’s own manifold acts of sexual aggression into the spotlight, but that now goes away with Moore’s loss. Having already probably fatally derailed the special prosecutor’s investigation into his Russian connections by politicizing it in the most ludicrous way possible, inexplicably discredited most unfavorable press by shrugging it off as “fake news,” and generally gotten away with daily behavior so offensive it would get a normal person beaten to death by an angry mob, Trump has just been handed the golden prize of a political martyr in Roy Moore with whom to whip up his still evidently sizable power base. Just a few more votes, just a little bit more campaign money, and poor ol’ Judge Moore wouldn’t have been beaten by the scheming liberal elite and the biased, fake-news media, by God. You’d better believe the Trump machine will milk that for all it’s worth going into November.

And it will work, too, because by that time, the terrorist threat (that Trump provoked) will be nipping at every American’s heels; people everywhere tend to rally ‘round the flag at times like that, and conveniently forget whose fault it is they have to in the first place. By that time, the Bitcoin-inspired economic crisis ought to be at full steam as well; the message that “greedy Wall Street speculators” are ruining things for ordinary hard-working Americans has always worked no matter who’s tried it, and of course, the irony that it is usually members of that very avaricious caste shucking that particular line of jive never fails to escape the masses.

The Republicans might lose a few seats, but not enough to really matter, and certainly not enough to put Donny Trump’s crazy train off the tracks. Because Americans are, when it comes right down to it, the biggest collection of spoiled cretins in the world – a big dumb country with a lot of guns and serious self-esteem issues, who are going to wreck the entire planet with their deep stupidity.

Send the damn meteor already.

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“Denguegate” Scandal: Legislators’ grandstanding may be responsible for an epidemic

black deathOVER the past few days we have been subjected to a crescendo, led by Senator Dick Gordon at his umbrage-filled best, of self-righteous hysterics over the Department of Health’s aborted dengue vaccination program, following an announcement by drug maker Sanofi Pasteur on November 29 that the Dengvaxia vaccine could cause “more cases of severe disease” under certain circumstances.

Let’s clarify a couple of points: First, there is genuine cause for alarm, because those certain circumstances potentially apply to tens or even hundreds of thousands of Filipino children. Second, the chief architect of the greed-driven bumblefuckery that has led to this mess is former president BS Aquino III, as becomes clear when one reviews the timeline of this whole sorry saga.

Be that as it may, Gordon, along with some of his fellow legislators in the House of Representatives, had the opportunity to stop this potential public health crisis before it even started, and completely dropped the ball. If the country’s worst fears are realized and the next couple of years see an epidemic of severe and/or fatal dengue infections, he and the then-leaders of the House committees on Health and Public Accountability ought to make sure there are enough seats in the dock for themselves, alongside Bobo the Simpleminded and those of his minions who had a hand in all this.

Rush job

On December 1, 2015, BS Aquino III had a meeting described as a “courtesy call” with officials of pharmaceutical giant Sanofi Pasteur in Paris. At that point, Sanofi was just over a week away from securing Mexican approval for commercial distribution of its new Dengvaxia vaccine; the Philippines would not be the first country in the world to roll out the miracle drug, but it could be the first in Asia, and one imagines that the publicity-hungry N/A was not really a tough sell for the company.

It took exactly three weeks for the Philippine Food & Drug Administration to approve Dengvaxia (on December 22), and on January 5, 2016 – the two announcements literally book-ended the holiday break – then-DOH Secretary Jannette Garin announced the government’s astonishingly ambitious vaccination program. At a cost of P3.5 billion for the vaccine, which Garin vaguely said at the time was being funded by revenues from the sin tax, the DOH would inoculate 1,077,623 9-year-old public school students in the NCR, Calabarzon, and Central Luzon; the Dengvaxia treatment would require three doses given at two-month intervals.

Take a moment to let this sink in: In 35 days, a period which included the Christmas holiday, the government went from zero to rolling out a massive public health program, one that would affect more than a million kids, take more than a year to complete, and require more than 3.2 million doses of a new vaccine that was still in late-stage trials, using a vaguely-sourced budget that was equal to nearly half the DOH’s full-year budget for vaccines and other medicines, and would be launched just about six weeks before the national election.

And no one questioned this.

No one would until late March, when it was reported that four people who were part of a clinical trial died after being given the vaccine, which had arrived in the Philippines on February 11. On March 28, Garin dismissed the connection between the deaths and the vaccine – and to be fair, what information could be obtained about the cases suggested she was right – and said that Dengvaxia had the backing of the World Health Organization (WHO). That was slightly misleading, because at that point the WHO had not yet issued a formal approval (that would be released on April 18), although it had made several statements endorsing both the Dengvaxia vaccine and the DOH’s program. Without any significant opposition being raised to it, the program got underway in earnest on April 4.

Early warnings

Those deaths were part of a number of worrisome problems that seemed to be connected to the Dengvaxia vaccine, if only coincidentally; in similar pre-deployment tests in Mexico and other countries, complications had also arisen.

It is important not to blow things out of proportion, however; then, as now, the problems that were being seen were not problems with the vaccine itself, but conditions that could cause complications. This is actually not unusual for a vaccine, which is by nature a bit tricky; that is why testing ordinarily takes a long time unless the vaccine is being deployed in response to a crisis, which was how the DOH and Sanofi were characterizing the situation in this country.

On the part of the DOH, the cynical view would be that the program was being hastened as a political campaign stunt in support of the rapidly-declining administration candidates; the view that gives the DOH the benefit of the doubt might simply dismiss it as exuberance at finally getting to implement its long-desired program, borne out of genuine concern about the persistent high incidence of dengue infection in the Philippines. The truth is that it was probably a bit of both. In any case, the clear evidence that it was indeed haste was the supplemental budget; whatever the DOH was planning for an anti-dengue vaccination program, they weren’t planning it for 2016 before N/A had that apparently fateful meeting with Sanofi in December 2015.

On Sanofi’s part, however, there was a clear business motive. Vaccines are losers for pharmaceutical companies; expensive to produce, difficult to market, and subject to small profit margins. The faster Sanofi could get Dengvaxia sold and establish market leadership with it, the better off the company would be; others were already working on their own dengue vaccines, so if Sanofi encountered any obstacles, it could see a considerable investment go up in smoke.

Barely a week into the DOH vaccination campaign, there was another disturbing report: An 11-year-old boy who had received the vaccine on March 31 as part of a test group had died. Again, the DOH dismissed the connection with the vaccine, but in a way that should have instantly – but didn’t – caused alarm about how the DOH was screening vaccine recipients; the child had a congenital heart defect, it was reported, and probably shouldn’t have been inoculated.

And still no serious questions were raised. Almost on cue, the WHO issued its formal approval a week later, on April 18: Dengvaxia was recommended for populations with a dengue infection incidence of at least 50%, should be administered on the three-dose, six-month schedule, and should not be given to children under nine years.

New leadership, same old stumble and heave

With the country swept up in election frenzy, the vaccination issue faded from the public ken until July 18, when Aquino holdover and new DOH Secretary Paulyn Ubial issued an order “deferring” the program, citing the questions about the vaccine’s safety and efficacy that were being raised. Ubial’s later actions, however, would lend weight to the quietly-circulating tsismis that the “deferral” was not so much motivated by clinical concern as it was by Ubial’s desire to take the piss out of Garin, with whom she had feuded. The concerns were still very much alive, though; on July 28, the WHO issued a formal position paper on Dengvaxia that was even more carefully-worded than its April endorsement, stressing it should only be used in areas where there was a severe dengue problem, and that careful screening and monitoring of recipients should be carried out.

Under Ubial the DOH had prioritized its own vetting of the vaccine it now had a warehouse full of and was still administering to students who had already been given their first or second doses. A review by a panel of experts was inconclusive; Dengvaxia seemed to have some serious side effects for a small number of patients, and these questions were yet to be resolved by clinical study, but otherwise seemed to be largely effective. The review did not, however, reach an unequivocal conclusion one way or another; although it is somewhat speculative, it seems as though the fact that the vaccination program was essentially in caretaker mode at that point was taken as a sign that the DOH would hold off on restarting it at full scale until more clinical trials were completed.

Despite the unanswered questions, Ubial reversed her earlier decision on September 28, issuing an exemption for Dengvaxia and allowing the vaccination program to proceed. And finally, 21 months after the scheme was first hatched, questions about it were raised at an official level. On October 5, the chair of the House committee on Health, Quezon City 4th district Rep. Angelina Tan, filed a resolution calling for an inquiry; this emerged after the DOH announced plans to expand the vaccination program to the Visayas in a hearing on the 2017 budget. On October 17, Nueva Ecija 1st district Rep. Estrellita Suansing also filed a motion calling for hearings.

The matter was not pursued with anything resembling a sense of urgency, however; it would be more than a month before the Health committee would convene for its hearings (November 21), and then immediately postpone them when they realized they had neglected to include former DOH chief Janette Garin on the list of “resource persons.” In the meantime, responding to the controversy that was beginning to cause a minor media stir, the Philippine Foundation for Vaccination issued a statement supporting the DOH program and calling for its expansion.

More blown chances

On December 6, the Health committee hearings resumed, while across town, Senator Gordon was lording over his own “blue-ribbon” panel on the matter, primarily focusing on the question of how the DOH managed to get its hands on P3.5 billion that wasn’t in its budget for 2016. Over in the House, the committee heard from Dr. Anthony Leachon, an independent director at PhilHealth and a member of DOH’s panel of experts, who said that the panel had actually recommended the deferral issued in July by DOH head Ubial, after two people reportedly died after being given the vaccine in another trial group.

Despite Leachon’s revelations, and despite Gordon’s catching DOH officials with no legitimate explanation for how they developed or funded a huge, rapidly implemented, election year public health drive, neither hearing accomplished anything except to generate a bit of news copy for a day or so, and the issue was quickly forgotten for the time being.

In another development that must have put Sanofi executives on edge, Japan-based pharmaceutical company Takeda announced just after Christmas that it had made significant progress on its own dengue vaccine, and was in the process of developing a clinical trial program. The Philippines, where Takeda has a sizable presence, would be one of the countries where the trial would be conducted, the company said.

Meanwhile, the lame efforts of the Legislature to appear relevant and involved continued, with the House committees on Health and Public Accountability forming a joint panel to continue the inquiry into the vaccination controversy. A hearing was held on February 21, 2017 – the program now progressing according to the whims of the DOH for more than a year – where former DOH secretary Garin was quizzed about the program’s out-of-spec budget; but again, the hearing produced no actual result. Nor would anything emerge from the joint panel’s next hearing, which was not held until late July.

In the intervening five months, the DOH seemed to be making a concerted effort to give everyone the impression that they were quickly losing control of their own program. On May 5, the department announced that the vaccination program would be halted after those children who had already started the inoculation process were given their third injections. On June 9, however, the DOH said that it would extend the vaccination program to Cebu. The dubious reason for the sudden change in plans was that barely half of the schoolchildren targeted in the original program had received the vaccine, leaving a considerable surplus inventory that needed to be used before it expired.

And that was basically the end of the Dengvaxia controversy until last week. Although there was some low-volume skepticism being raised by some, and Sanofi and Watsons Pharmacy were hit by the FAA for improperly advertising Dengvaxia in October – for which each had to pay a fine in the breathtaking amount of P5,000 – there was no real outcry raised, and certainly not any definitive action taken, until the crisis exploded with Sanofi’s warning on November 29.

How big a problem this might become is anyone’s guess; although the DOH finally halted the program last Friday – two years to the day after BS Aquino’s fateful meeting in Paris – the damage, as the horde of new critics have been hysterically highlighting for the past few days, may have already been done to more than 700,000 Filipino kids. Although the risk is real, again it must be stressed that it is important not to blow it out of proportion. What the Sanofi advisory says exactly is, “For those not previously infected by dengue virus, however, the analysis found that in the longer term, more cases of severe disease could occur following vaccination upon a subsequent dengue infection.”

What that means, exactly, is that if your child has not ever had dengue fever, has had the Dengvaxia injections, and at some point is infected with dengue, he might become severely ill. That’s not exactly a death sentence, and if anything, should be taken as motivation to make a bigger priority of dengue prevention efforts.

But it’s bad enough, as warnings go; certainly bad enough from the pharmaceutical company’s perspective that commercial distribution should be stopped until more testing is done, and from a parent’s point of view, bad enough to conclude that there is no way in hell my kids are getting those shots.

And it didn’t have to reach this point. Any of those so-called leaders expressing outrage about the whole thing now could have, at any point after the FDA’s unprecedented quick and highly questionable approval of Dengvaxia on December 22, 2015, which is when the drug first appeared on the public radar, put a stop to it; if not for the questions about the drug’s safety, which were public knowledge as early as April of last year, then for the blatant misdirection of public resources for obvious political purposes by the former administration even before then.

But they didn’t; instead, they resorted to their standard “let’s make it look like we’re actually working” trope, a few rounds of the historically utterly useless grandstanding called “hearings in aid of legislation,” called it a day, and infuriatingly are being praised for making a fuss now, long after whatever harm may come from their inaction is already done.

National Dedma 

Reuters report raises uncomfortable questions (again) about Durterte’s drug war, but still fails to make an impression on the public, and most likely never will. 

THE people at Reuters by now must be completely exasperated. More than a year of effort that has produced a series of well-constructed and compelling reports detailing the seemingly wanton brutality of President Rodrigo Durterte’s “war on drugs” has elicited, at best, complete indifference among the Philippine public, and in not a few instances, accusations that the news agency is pursuing an agenda to destabilize a popular administration. If history, human nature, and the everyday realities of a world in which drugs are a fact of life are any sort of reliable guides, Reuters’ otherwise commendable work will almost certainly continue to be an exercise in futility.

In the latest installment of its series of reports, Reuters on Monday revealed CCTV footage from a midday drug raid in a Tondo neighborhood on October 11, which ended with three suspects shot dead by police. The official explanation from the police was predictable: The suspects opened fire on officers during a “buy-bust” operation, and were struck when the officers returned fire; in spite of the usual diligent effort by the officers on the scene to rush the wounded perpetrators to the hospital, they were declared dead on arrival. 

Reuters did not explain why its November 27 report was not published sooner, but in hindsight it probably should have, because the delay gave PNP chief Ronald Dela Rosa an excuse to deflect the salient point of the article – that the police account of the incident was obviously utter bullshit – and complain that its publication was simply “timed to make the PNP look bad.” President Durterte, who had taken the responsibility for leading the anti-drug campaign away from the PNP and given it to the Philippine Drug Enforcement Agency after criticism in the wake of the apparent police execution of a 17-year-old – the bureaucratic transfer coincidentally happened the day after the October 11 raid in Tondo – has said that he will put the PNP back in charge, but has yet to make the order. Presumably, the publication of a clearly damning report showing that the PNP remains as uncontrollable as ever would cause him to think twice about doing so. 

Culture Clash

Or perhaps not, as public reaction one way or another to the report has been virtually nonexistent. Part of that might be due to the manner in which the story was instantly trivialized by the Philippine Daily Inquirer, who ran it as the paper’s banner story on Wednesday. Not only did using a two day old wire story as a banner have media professionals and what little critically-thinking audience the Inquirer has left shaking their heads in astonishment, the paper’s carefully cultivated reputation as a media instrument of the reviled Liberal Party shades even their most innocuous news stories as propaganda; fairly or not, it has reached a point where the quickest way to ensure an important story is dismissed is to make sure that the country’s largest newspaper puts it on the front page. 

A more substantial reason is that Reuters’ approach to the broader story of the “drug war” and the reaction, or lack thereof, to it by the Filipino public are illustrative of two completely different and utterly incompatible ethics. Although there is very little to find fault with in Reuters’ exercise of journalism in its long investigation of the drug war, some shallow-minded critics have accused the global news agency of having “an agenda” in producing negative stories. The irony in that is that those critics are right, albeit for a reason they are likely unaware of, and almost certainly incapable of understanding. 

While the country is occasionally globally newsworthy, it is not now and probably never will be enough of a priority for Reuters to put its reputation on the line – a reputation that predates the Philippines’ independent existence by close to half a century, incidentally – to try to manipulate local politics. These are people who are accustomed to looking at much wider horizons than that. Nevertheless, the truism that objectivity in journalism is a clumsy myth applies as much to the professionals at Reuters as it does any Manila-based hack. Reuters does have a bias that drives a clear agenda, but it is one that is more pure (which is not to say it is correct or incorrect, but simply intellectually unsullied by the messy nature of reality) than it appears to most, and particularly dissenters of the DDS ilk who are inseparable from their own biases. 

A philosophical consequence of looking at the world from a very broad perspective is the adoption of a deontological ethic; the patterns of life on this planet, if observed on a large scale and over a long period of time, reveal that there are at least a few moral rights and wrongs. The world is a big place, and Reuters has been around since 1851; a lot of water has gone under the bridge in that time, so to speak, and as an organization Reuters has watched enough of it pass to internalize certain sensibilities, whether the people in the organization consciously realize it or not. Large numbers of people dying at the hands of others, in a manner organized to some degree by the state, and apparently because of who they are, is prima facie wrong – it offends one of those sensibilities, and impels Reuters to approach the story from that perspective. Conscious professionalism stops them short of going beyond the deontological compulsion to report, “this is happening,” and conclude, “there is, as far as we have been able to determine, no sound reason why it should be happening in the manner it is.” 

Of course, those who are offended by Reuters’ apparent questioning of the righteousness of Durterte’s war on drugs invariably point out that the reporters are not reporting the “other” side of the story: The crime, the violence, the corruption that the pervasiveness of drugs has wrought, the tragic, and just as morally wrong, cases in which some innocent is robbed/assaulted/raped/murdered by the “drug-crazed” criminal who is allowed to run amok because of a broken system infested with corrupt cops and politicians. Those sorry circumstances are also legitimately morally wrong; implicitly or explicitly, the human toll of the drug war is justified, and justified in its means, because of the necessity to at least try to right that wrong. 

Reuters could certainly investigate that story – it is not unreasonable to assume that its collective experience has imparted the sensibility that the existence of a violent drug culture is as morally wrong as the systematic, state-sanctioned extermination of people for legal cause but without due process – and perhaps it should. But if it did so and remained faithful to both the deontological and journalistic ethics that are the bases of its credibility, it could never conclude that the facts of that story justify the facts of the other. 

Again, it comes down to a matter of scale of perspective. Reuters has the benefit of a view that takes in a century and a half of the entire world, more than enough input to learn that, in the long run, the human quirk of self-destructiveness and the economy of intoxicating substances it has created can be controlled to a tolerable level at best but not eliminated; that in the long run, the only guaranteed result of violence is violence; and that in the long run, societies prosper when order and regularity, in whatever form it takes, prevails. The average Filipino, on the other hand, whose perspective is understandably narrower in terms of both time and space, knows that his well-being and comfort would be more secure if the pestilential presence of unproductive drunks, drug users, petty criminals, and other threatening riff-raff infesting his and every other neighborhood in the country no matter how many laws exist were removed now

His perspective is as correct in its own context as is Reuters’, which is why the readers and the reporters will remain eternally perplexed as to why the other just doesn’t “get it”: In one world the ends justify the means; in the other, the means reap the ends they logically deserve. Neither is more right nor wrong than the other, and in the vast vacuum that lies between them, nothing can change. Under those circumstances, pretending nothing is wrong with things as they are literally becomes the best option, and the realization that it is for so many people in so many other places, too, is not much of a consolation.

A welcome end to the Philippines’ Red Annoyance

WE may be seeing the beginning of the end of the world’s most embarrassing rebellion, now that President Rodrigo Duterte has finally become as fed up as the rest of the country has been for a long time and declared enough is enough as far as the planet’s longest-running and least effective Communist insurrection is concerned.

On Thursday, Duterte signed Proclamation 360, formally “stopping” peace talks between the government and the Netherlands-based Communist Party of the Philippines, which, only proving that it has no more skill than any other Filipino organization at creating an effective acronym, likes to refer to itself as the CPP/NDF/NPA. The reason given for the decision, according to the declaration, is that while the government has tried to be constructive in engaging in talks, the Communists have not honored any ceasefire agreements and continue to pursue violence, indicating a lack of sincere interest in peace.

That perception is entirely accurate, as is the implicit assumption that the CPP will never act in good faith, because it is actually impossible for them to do so. Their rebellion is, ultimately, the expression of the aspirations of an academic poser and caricature of a man who would be king, who simply advanced a boilerplate ideology in the hope of grasping some profitable influence in the frequently chaotic vacuum of Philippine politics. 

Having welded themselves to a dogma that has failed miserably everywhere else it has been attempted, Jose Maria Sison and his band of adherents have never seriously considered peace, because that’s not what the ideology is about. Its sole objective is to overturn the existing political structure and assume power for itself; anything less would diminish the influence of  its leadership at best, and likely render them altogether superfluous. 

The cry of the CPP now, as it has been every other time they have felt themselves slighted by the government, is that the State is ignoring “the root causes of the armed conflict.” Although they like to give them impression that they fancy themselves the ideological brethren of such winning organizations as the Khmer Rouge and the Pathet Lao (but not those capitalistic bastards the Viet Minh), the “root causes” largely exist in the aspirations of one perverse old man. In that sense, the government is, at long last, doing exactly what the CPP demands and addressing them properly.

Even if they were sincere in trying to remedy the serious social and economic inequities that admittedly do exist and are not being adequately addressed in this country, the CPP would inevitably fail. Socialism in almost all its forms has been rapidly waning since the 1980s, as I discussed in a recent paper presented in a different context recently (I will be publishing a version of it for public consumption soon). 

A large part of the reason for the shrinking left, as it were, is that the concept of monolithic class groups, a fundamental component of socialist theory, has all but disappeared. The off-the-shelf brand of Communism employed by Sison and Co. to pursue their power-seeking agenda relies on the weakest class concept of them all, that of a homogeneous and politically useful agrarian class. Everywhere it has been tried, this form of semi-Maoism has utterly failed, leaving wrecked economies and mountains of dead bodies in its wake. 

That is why the successful Communist regimes are not really Communist any more, but resemble a sort of corporate state; they were able to adapt, probably because their collegial leadership was less concerned about power for its own sake than they were strength on a national scale.

So now that the CPP and its various political tentacles have been more or less declared “no longer to be taken seriously,” what happens next? For the most part, the Communist problem now becomes a law enforcement issue; the motley crew of bandits the CPP refers to as its” armed wing” are serial violators of a whole host of laws, as are those who support and incite them, and they should be dealt with appropriately. But diligently; all Proclamation 360 did was stop any further official negotiations, and it cannot be used as a basis for carrying out an extralegal witchhunt, appealing as that idea may be to some. Simply espousing the ideology, regardless of how pathetic it is, is not a crime, so long as it is done within the bounds of the law. 

Of course, those bounds proscribe expressing such notions as armed rebellion and overthrow of the government, which leaves honest Communists very little else to talk about; the point is, however, that eradicating the red annoyance must be carried out in response to actual unacceptable behavior, and not be the convenient justification for abuse some fear it has been and may become even more. That caution having been offered, however, it does seem the CPP seems willing enough to engage in unacceptable behavior that the corrective response can be instructively harsh.

One practical and probably quite legal step the government could take immediately is to shut down the “legal fronts” of the CPP, and thereby make its already laughably ineffective extralegal components even less of a threat by robbing them of support. Revoking the accreditation of the various Communist-linked party-list groups, NGOs, and student and other civic organizations puts all the Fellow Travelers on the wrong side of the law with the stroke of a pen, and would cause most of them to simply evaporate. And it would give the current administration a bit of a boost by further hamstringing the feeble, Liberal Party-led opposition, which has made a successful effort in recent years to co-opt Red political personalities, perhaps even enough to warrant a serious inquiry into whether the LP is abetting the Communist cause. 

Update: Job losses – Probably not the change we were looking for

(This is an update of an earlier post, resulting from the inclusion of some additional data and a better method of handling some inconsistencies in the way the Philippine Statistics Authority presents its results of the quarterly Labor Force Survey. The basic conclusion has not changed, and in fact from a certain perspective may even be a little more dire than I originally thought: In President Rodrigo Duterte’s first year in office, there have been an alarming number of jobs lost, in spite of a relatively benign official unemployment rate and a respectable rate of economic growth. To better explain what seems to be happening and – hopefully – at least point toward a reason why, this new and improved version contains a few more technical details and more accurate figures than the original.

THE archetype of populism Rodrigo Duterte was swept into office in May 2016 on a wave of optimism that he and his no-nonsense, charming-asshole approach to governance could undo the emotional and structural harm of six years under the elitist, corruption-riddled regime of the Liberal Party and its feckless avatar BS Aquino. Duterte’s rise, however, has apparently come at a substantial practical cost: In his first year in office, 782,000 jobs have disappeared, not the change anyone expected when they were informed “change is coming” in the heady atmosphere of last year’s election campaign. Based on official government data, which is already engineered to put the country’s labor situation in the most favorable possible light, overall employment under Duterte is about 2.4% lower than it was in the last year of the term of his predecessor, a man who was generally regarded as being unlikely to even know how to spell “economy,” let alone manage it. Given the dubiously optimistic way in which the Philippine Statistics Authority defines and measures employment, the jobs situation in the country may in reality be much worse than these figures indicate. 

What is happening is relatively easy to figure out; why it is happening is something that will undoubtedly be the subject of intense debate, or at least it should be. 

When Duterte was sworn into office on June 30 of last year, he inherited a working-age population (people aged 15 to 64 years) of 68.443 million, of whom 40.92 million were employed according to the ridiculously broad definition applied by the PSA in the Labor Force Survey; those figures are from the July 2016 LFS, which was conducted immediately after Duterte took office, and serves as a baseline for his administration’s performance on jobs. The official unemployment rate as of July 2016, given that not all the working-age population participates in the labor force (the labor force participation rate, or LFPR, at the time was 63.2%), was a reasonably respectable-sounding 5.4%, although a more empirical way to look at the labor situation is to consider the proportion of employed persons to the total working-age population, which was 59.79%. 

A year on, despite accelerating economic growth and continuing solid public support for the administration, the employment situation had deteriorated. The working-age population increased by 1.721 million to 70.164 million as of the July 2017 LFS, but total employment had declined to 40.138 million, 782,000 fewer than a year earlier. Employment as a percentage of the working-age population also dropped significantly, registering just 57.21%, or 2.58% lower than a year earlier. 

The unimpressive figures are not a one-off result, but part of an apparent trend that has taken hold this year. The October 2016 LFS results were promising, and showed progress from the situation Duterte had inherited; the number of employed persons jumped by more than 700,000 to 41.669 million, and the overall employment rate topped 60% (60.62%, to be precise) for the first time in years; the official unemployment rate also fell sharply to 4.7%. By the next LFS in January, however, the situation had dramatically reversed itself; overall employment dropped below 40 million to 39.33 million, or 56.66% of the working-age population, and the unemployment rate climbed nearly 2 percent to 6.6%. Things recovered a bit in the April LFS with employment reaching 57.9%, but that was still 619,000 fewer working than in July 2016. The downward trend resumed with the July LFS, with employment falling again from 40.301 million in April to 40.138 million, an overall employment rate 2.58% lower than what the Duterte government started with, reaching just 57.21%.

These figures are even more sobering when they are considered in the context of the extremely favorable bias applied by government statisticians in determining official employment/unemployment rates. First, the LFS is conducted in January, April, July, and October, which correspond to cropping months in most of the country; employment at these times is generally as high as it can be. 

Second, participation in the workforce is very loosely defined. The available workforce is defined as those of working age who are working or are seeking work, and not those who have no justifiable impediment to working (such as being a full-time student, or disabled, or incarcerated) and could be working or seeking work. Thus, for example, a 20-year-old male, a physically fit, reasonably intelligent high school graduate who is not otherwise engaged as a student or worker, but who simply chooses to sit around his mother’s house all day in his underwear and entertain fantasies of translating learning to play guitar from watching YouTube videos into a musical career is not unemployed as all outward appearances suggest he is, but is simply “not participating” in the workforce. It is only the level of employment among workforce “participants” that is measured to provide the official government statistics. Third, the definition of employment is generously broad, and includes people who are unpaid interns, and workers in their own family’s businesses, whether compensated or not.

All of these dubious parameters have been in place for years, and have the effect of minimizing real unemployment, although to what degree is uncertain and probably depends a great deal on methodology. As a comparison, however, the widely-reported SWS unemployment survey, which is conducted quarterly, generally reports an unemployment rate about four times higher than the official government figure. 

Exactly why jobs in the early stages of the reign of Rodrigo Duterte seem to be evaporating is at this point a bit of a mystery. It is not helpful to make comparisons with the previous administration in search of a clue, because manipulation of the LFS methodology over the past couple of years by the PSA and its predecessor the NSCB make meaningful comparisons almost impossible. For one thing, all the published data from the October 2013 LFS through the April 2015 LFS is incomplete, as the province of Leyte was excluded due to the Aquino administration’s inability to come to grips with the aftermath of Typhoon Yolanda. Another annoying glitch is that the final report for the January 2016 LFS was apparently never published, possibly lost in the shuffle of the handover of the government in June last year. While there are usually no differences at all between the preliminary and final LFS results, the oversight nevertheless introduces a small degree of uncertainty that can’t be completely ignored. And starting with the April 2016 LFS, the PSA adopted an updated survey methodology that adjusted the sample size (from about 50,000 households to about 44,000), and updated its population baseline from the 2000 census figures to those from the 2010 census. While there was nothing wrong with those changes per se, being mainly an exercise in statistical housekeeping, one practical effect is that they made any comparison of unemployment data before and after April 2016 unavoidably inaccurate. 

It may be just as well to avoid comparisons, even if an objective comparison was possible; for one thing, it precludes the distasteful possibility of casting anything BS Aquino did in a positive light, though he may welcome the attempt in light of the fact that he and a record number of his former officials are facing a variety of criminal indictments. From a more serious perspective, comparisons are invidious because unemployment has more immediate implications than most other economic indicators. A rule of thumb in developed economies is that that a significant change in unemployment whether good or bad will have an impact on the wider economy in terms of consumption and output within two months (which is why the US and most of the other OECD countries monitor their employment situations on a monthly cycle); here, the time between cause and effect is likely much shorter, although the country’s wide income inequality seems to ironically mitigate the impact to some extent – otherwise, GDP growth would not be as high as it is. 

For Duterte, unemployment and the rapid loss of jobs should be a grave and immediate concern; it affects his popular support base, which has potentially unpleasant political implications, and poses an obstacle to carrying out other large-scale initiatives – such as tax reform – that assume and rather require that employment be expanding, not shrinking, in order to be effective. 

To be fair to Malacanang’s current house-sitter, the results of the latest LFS conducted last month – the public release of which will probably be made next month – may show an improved situation, although it is hard to imagine that a deficit of more than three-quarters of a million jobs could be erased in three months. If it does show that some ground has been made up, then the president and his economic team ought to examine the results carefully to determine what worked, and do more of the same. If, on the other hand, the situation remains unchanged or has gotten worse, then it must be regarded as the crisis it actually is, and dealt with as aggressively as possible.

Here’s your sign

IN June, 1863 the Confederate Army of Northern Virginia invaded Pennsylvania. As the soldiers of General Robert E. Lee fanned out across the countryside, they noticed that some of the nervous residents were greeting them with all manner of bizarre gestures.

When they finally asked someone just what the hell was going on, the soldiers were told that some days ahead of the advancing army, agents had arrived and promised to teach, for a hefty price, of course,  the terrified Pennsylvanians secret signs that would protect them from having all their possessions looted by the invading horde.

On hearing this, the Confederate soldiers laughed their asses off, and took what they wanted anyway. Fortunately for the great Commonwealth of Pennsylvania, the Southerners got those very same asses handed to them by the Union Army a few days later, but no one ever got their stuff or any of their money back.

Throughout history, hand signs and gestures have proven to be of limited use. Some legitimate applications include conversations between deaf people; passing short messages such as “Blue 14,” or “X out and fly” in the course of certain sporting events such as football; and as secret communication among members of exclusive groups. For example, my fraternity had a “secret handshake,” which was useful when meeting a member from another chapter. It conveyed the message, “We are brothers, because we belong to the same group. Let’s go drink beer until we throw up.”

Filipinos, however, have elevated the use of hand signals to what they no doubt believe is a sublime art in participating in the democratic process. The latest is a plucky young lady named Shibby De Guzman, not “shibby” as in Dude, Where’s My Car? but rather a “student protest leader” who, despite remaining a complete cipher to most of the country even after someone talked Time magazine into naming her “an influential person,” is leading the youth protest against “extrajudicial killings” with the power of the Hang Ten:

Surf’s up, dudes.

Shibby and her gang of grrll power up there are following in some mighty footsteps, most notably the tattered remnants of the Liberal Party, which has reconstituted itself, token Muslim and all, as Tindig Pilipinas, a Tagalog phrase that means, approximately, “Why won’t you love me, Philippines?” in English. The movement, which opposes the incumbent administration of President Rodrigo Duterte, has adopted the defiant salute from the popular Hunger Force 10 From Navarone movie (Is that what the movie was called? I don’t know. I don’t watch that shit.) as its call to arms. Or maybe they are signaling, um, three? It’s hard to tell. But they have a symbol, dammit:

Risa didn’t get the email about the OOTD.

Former Vice President Jejomar Binay used to do that one, too:

But Binay’s a Boy Scout, and the Boy Scouts have owned that one for about a century, so he gets a pass.

Other protest groups have adopted their own unique symbols, though not all of them have been comprehensible. A case in point: The Black and White Movement, which got its start when former Secretary of Awkward Hair Coloring Corazon “Dinky” Soliman, seen here with former President Cory Aquino, and some of her other Cabinet colleagues decided they had milked their association with then-President Gloria Arroyo for all it was worth, and set themselves up as an “opposition.”

Aging is a bitch, ain’t it.

The group adopted an interesting, rather Grecian style of the Shocker as its talisman, seen here on Black and White leader Leah Navarro, looking quite a bit more current than the 30-year-old avatar she uses as a social media profile picture:

 

Recently, however, it seems the group may have learned their signature might not mean what they think it means, because they seem a little uncomfortable:

Wave your hands in the air like you don’t care

And of course, the granddaddy of them all, the pioneer in the art of hand signs, is the once-formidable Liberal Party, here displaying their famous L-sign:

Once again, Mar demonstrates there is nothing so insignificant that he can’t find a way to screw it up.

But the hand sign is not merely a form of protest among Filipinos. Even popular President Duterte has his physical signature:

Feel free to disagree with me, but I think Manny Pinol was about the best move Duterte has made.

But to his credit, it at least doesn’t come across as a product of a focus group:

You damn kids stay off my lawn.

All jest aside, the Pinoy penchant for showmanship — that they would rather spend more time on attracting attention through sight gags than substance — is a serious character flaw that leaves this country unable to graduate from banana republic status. An unwillingness — and not, I think, an inability — to face any sort of complexity will keep the Philippines from even moving in the direction of its potential, to say nothing of reaching it until society as a whole develops at least a measure of disdain for the trite. 

As I have written before, one of the most important parts of an effective democracy is a legitimate, productive opposition. The “war on drugs,” for example, needs to be challenged, because historically,  in any country the “war on drugs” has been oversold and underdelivered. The US has fought a “war on drugs” for better than 40 years, and is currently beset by an opioid epidemic. Colombia, which supposedly got a handle on its drug problem about the time Pablo Escobar got blown off a roof 20-odd years ago, just last week seized 12 tons of cocaine. It is the height of folly to assume that a career provincial mayor has all the answers and is beyond making mistakes. It is likewise unreasonable to assume that he cannot offer a solution, or a significant part of it. But it takes reasoned dialogue and engagement to determine that one way or the other. It takes dissent not merely concerned with stopping or removing him, but to oblige him to exert real intellectual effort, and adapt when it’s logically necessary to do so, to hold onto the mandate he’s been given.

When the country is collectively more determined to use its heads rather than its hands, perhaps then it will see progress worth waving about.

Stand there like that long enough, maybe you’ll catch the hint. Let us know how that works out.

Whatever it is, Bitcoin is not money (and never will be)

IF you have any awareness of the concept of money, you have in all likelihood already been made painfully aware — either by an acquaintance who overuses exclamation points, excessively exuberant news reports, or some combination of the two — that unless you recognize that Bitcoin is a revolutionary idea that will change finance as we know it, you are an intellectual peon and a willing tool in the hands of big government.

“It’s decentralized currency, man!” the ardent True Believer insists. “No government can control it. It can’t be devalued or forged, and just look at what it’s worth! It’s gone over $7,000! Seven grand, bro! You can’t look at that and tell me everyone’s wrong about this.”

That, by the way, is the more or less verbatim answer I got from a friend of mine who is all about Bitcoin, in response to the question, “Just for the purpose of discussion, what is Bitcoin, and why should I care?” Many Bitcoin advocates are of course able to discuss their favorite topic in terms that are a great deal more robust, but are, sadly, hardly less naive. Whatever Bitcoin is, it’s not money, and never could be unless its design and in some respects even the rationale behind it is fundamentally changed.

A problem of value

The first problem Bitcoin has that prevents it from being considered actual money is that there is no useful context for its value. As a commodity, it has of course become very valuable — but only in terms of other, conventional fiat currency of the sort it supposedly should replace:

Here’s a simple explanation. If I have a dollar, I can define the value of that dollar as a quantity of some commodity; for example, one large cup of coffee at Circle K. Yes, I can also define the value of my dollar in terms of some other currency; I know that it is approximately worth 51 pesos or 1.03 Swiss francs, but when I do the minor bit of mental gymnastics to figure that out, I still have to take one more step to conceptualize the value of the equivalent currency in terms of something useful. One dollar equals 51 pesos equals 1 kilo of the good rice, for instance. 

Therefore, the value of any medium of exchange is fundamentally based on the value — in the sense of utility — of all the possible commodities. (The concept is called regression theorem, and because Bitcoin doesn’t fit, many of the more academic-minded in the Bitcoin “community” argue that it actually disproves it, 100 centuries or so of economic evolution notwithstanding.) That is why, in the absence of some unnatural influence on the value of money — intervention by a central bank or extraordinary economic circumstances, such as a war — money’s value changes only gradually.

None of that precludes the introduction of a new currency, but unless it is introduced in an interventionist way, for example the manner in which the euro was adopted, the new currency must be commonly accepted to represent a value of commodity. In other words, in order for me to recognize and use Bitcoin as money, I have to be able to translate the worth of a unit of Bitcoin into cups of coffee at Circle K, or kilos of rice, or gold, or minutes of dryer time at the laundromat, or whatever else has utility value to me. This is where Bitcoin fails as a legitimate candidate for a new form of money. 

While that “something of utility value” could be another variety of currency, the exchange rate has to make sense, and in order for it to make sense, there has to be commodities other than other forms of money whose values can be expressed in terms of the new forms of currency. Unless I am one of the intrepid first pair of people to agree to use the new form of currency as a medium of exchange between us — which I’m not, and neither are you — then others will have to be using it for transactions before I will accept and use it myself. And because I am the public who is wary of new things, it will have to be a substantial number of others, whose transactions involve commodities about which I have already formed a basic judgment of value.

That is what Bitcoin lacks; despite having existed for almost nine years, there is almost no use of it as a medium of exchange. Businesses that have adopted it as a payment option — Overstock.com, a major online retailer in the US, is a notable example, and there are others as well — report that Bitcoin transactions are few and far between. Overstock.com reported its sales in Bitcoin have been about $5 million a year, which sounds impressive but still only accounts for about 0.27% of the retailer’s $1.8 billion annual revenues. A Bloomberg report in July, citing research from Morgan Stanley and business monitor Internet Retailer noted that only three of the top 500 online retailers accepted Bitcoin as a payment option in 2016; that was a drop from five the year before.

Some of the problems are practical, and likely could be addressed without fundamentally changing the Bitcoin model. The rash of ransomware attacks last year, where the hijackers were able to take advantage of the inherent anonymity of Bitcoin transactions to collect their payoffs, is cited as one reason for business hesitancy to adopt Bitcoin, although it’s not apparent that has anything to do with an organization’s vulnerability to attack. Another factor blamed for the lack of enthusiasm that makes a bit more sense is that Bitcoin transaction fees are unreasonably high. The fees charged vary depending on the payment portal being used, but are always charged on a per-transaction basis; this adds too much to small purchases, and is a problem that only gets worse as the exchange value of Bitcoin increases, further discouraging customers from using it.

That high value is a problem for adopting Bitcoin as a means of payment, too, and one that can’t be solved without potentially wrecking the Bitcoin ecosystem. It’s not that the high value is necessarily a problem — although whether it makes sense or represents an inevitably calamitous speculative bubble is a worthwhile debate to have — it’s the volatility, the changes in value that are both rapid and large-scale. As the chart illustrates, the dollar value of one bitcoin increased tenfold in a year. During that time, however, there were at least ten occasions — or one an average of every six weeks — when there was a significant drop in Bitcoin prices.

An investor looking at that chart (and not thinking too much about whether or not there’s any sound reason for Bitcoin to be worth that much) would see a positive picture of an asset that has steadily gained value over a period of time that’s a useful yardstick for investing. A yardstick marked in increments of a year, however, is not at all useful for merchant businesses whose cycles are measured in months or weeks. So a retailer looking at that chart is going to see three dilemmas for which he will not find ready answers:

1. Foreign exchange accounting will be a nightmare. In the month ending November 8, for example, the dollar price of Bitcoin increased by close to 67%, an average change of +1.67% per day; its most extreme daily changes in price were +12.51% and -6.73%. By contrast, the exchange rate of the Japanese yen, which is considered a fairly fast-moving currency, changed by +1.19% in that same month-long period. It is certainly not impossible to do the necessary accounting for whatever reporting period the business uses (usually a month or a quarter), but using Bitcoin increases its complexity to a degree that might not be considered worthwhile. 

2. Prices will have to be adjusted frequently, at least daily, or they will be hyperinflated. At the current average rate of Bitcoin’s price increase, an item priced at one bitcoin today will cost a customer $122 more tomorrow. And if the business is also buying products priced in Bitcoin, it will have to ensure that its suppliers are also adjusting their prices. 

3. As long as the value of Bitcoin keeps rising, every sale effectively represents foregone income: The item sold for one bitcoin today would be worth 1.0167 bitcoins tomorrow, and more the day after that, and so on. Thus there is no incentive to actually sell the item. The same thing happens with any other currency, true; but the degree of change over even a long period of time is practically negligible under normal circumstances. 

Bitcoin has value as a commodity, but that value, both in terms of how it is derived and its scale, makes Bitcoin at best highly impractical and more likely completely unworkable as money. It does not invalidate the regression theorem, it simply fails to meet its conditions. 

In order to be a workable currency, its high exchange value might not need to be reduced, but its extreme volatility must be. That would entail imposing some forms of control over its trade, control that would have to be effectively centralized, because in order for the control to work, all of the various Bitcoin exchanges would have to agree (or be compelled) to allow it. That might not even be possible the way the Bitcoin system is designed, but even if it is, it would be completely unacceptable to the “community,” since it runs counter to the entire decentralization philosophy.

And none of that would fix Bitcoin’s other major flaw, which is

A problem of finite supply

New bitcoins are created as a reward for “miners” — those who maintain and continuously update the distributed ledger known as a blockchain — and the system is designed so that only 21 million bitcoins will be produced. So far about 14 million bitcoins have been “mined,” and in practice the total number that will actually exist will be something less than 21 million due to coins being irretrievably lost (which is actually alarmingly easy to do).

A currency with a finite supply is a complete novelty in economics, which one might think would be a sign to Bitcoin acolytes that maybe it’s not a good idea. But there are some people who see the forest, some who see the trees, and others who see fairies and talking animals, and they will all respond to the same set of facts in different ways.

Whether Bitcoin has an exchange value with other currencies or not, its finite supply makes it inevitably deflationary. Price, and the inflation or deflation thereof, is a function of the ratio of the total of all possible tradable commodities — goods and services — to the total supply of money (yes, there are other ways to define ‘price’, but this one is the most fundamental). In a real-world economy, both those aggregate totals grow; inflation or deflation occurs as the result of some imbalance of their growth rates. With a finite supply of money, only the aggregate of commodities grows, so the supply of money is divided into progressively smaller units per unit of a commodity. Eventually, the currency will be divided into fractional units so small that their value becomes effectively meaningless. What’s left of humanity will be reduced to gangs of mentally unhinged leather fetishists roaming the Australian outback in scratch-built vehicles, and no one will be able to have nice things anymore.

The workaround for that is giving Bitcoin an exchange value with other currencies. The system can handle fractions down to one-billionth (0.000000001) of a bitcoin, and since the finite supply confers scarcity on the cryptocurrency, its value will continue to rise, thus holding off the problem of terminal deflation, if not forever, than at least a lot longer than anyone actually needs to worry about.

That’s the theory; the problem is, no one really knows if it will actually work. The record of Bitcoin’s performance so far suggests it won’t. As we have already seen, Bitcoin’s market price and growth rate already makes it deflationary, so it is very unlikely that its sentiment-driven market would self-adjust to keep the growth rate down to a level closer to the rate of overall economic expansion, which is the only way the ‘workaround’ could actually work.

What is a bit of a mystery is that there is no really compelling reason why the total supply of bitcoins has to be limited. It might not be possible to retool the Bitcoin code to allow for open-ended creation of new coins, but simply eliminating that one arbitrary bound might actually solve all of the problems that prevent Bitcoin from being a useful form of money. Other kinds of cryptocurrency have been created that in fact dispense with the limitation; none have been able to gain much traction, though, and have been buried by Bitcoin’s critical mass, because it’s Bitcoin, man.

Bitcoin, or more appropriately, the concept of cryptocurrency, is certainly not without its promise. Blockchain/distributed ledger technology has applications that we have only begun to explore, and even the idea of a decentralized digital currency does have potential. In order for those potentials to be explored and realized, however, the global economy needs to stop letting a noisy advocacy cram the flawed first draft of what may be a good idea down everyone’s throat. Let Bitcoin exist as a novel form of security — regulators already seem inclined to regard it as such, anyway — and put effort into developing something that will actually work for its advertised purpose.