Axis Direct Review 2020 - Trading Fuel

M&B Reading 10: FOMC

For our schedule and other discussions, see the Money and Banking — Summer 2020 master post.
For today (August 14th), we read from a 1952 report to the Federal Open Market Committee (parts one, two, and three) about how the Fed plans to run monetary policy after the Treasury-Fed accord of 1951.
From the course website:
The report itself is on 2005-2034 plus appendices (especially Appendix D 2053-55). The response of the NY Fed is on 2055-2079. We see here a kind of re-negotiation of the relationship between the Fed and the private security dealers, as part of the transition away from war finance conditions toward an imagined post-war normalcy. As always in American monetary affairs, this is a negotiation between the money interest motivated by profit and the public interest motivated by stability. In 1952, the concern was about exit from the abnormal financial conditions of wartime. At present, our concern is about exit from the abnormal financial conditions of the global financial crisis. One way to connect the document to the money view that we are studying is to think of the Fed transitioning from making the inside spread (pegging price), to making the outside spread (preventing disorderly conditions), and from holding the price of money constant to adapting the price of money to current economic conditions.
This is the previously secret Fed document that Perry Mehrling mentions in Lecture 19. I found it useful to reread the preface multiple times to make sure I really understood it before working through the main text. The report gives us a snapshot of the inner workings of the FOMC, and what the money market and monetary policy looked like at the beginning of the 1950s. It is largely concerned with how to ensure a deep and liquid market for government securities (Treasuries) and the preface explains why this is an important policy objective.
Much of the report is a response to feedback they received from market participants. They went out and interviewed the money-market dealers and solicited feedback on how they could be doing their job better. Lots of stuff in here about the different kinds of complaints that various parties had and recommendations for how to address those complaints.
P.S. Whoever finds the most typos in this document wins.


Effect on the Treasuries Market
The impact of these operations is not measured by the volume of transactions alone. It is much greater, for example, than the impact of a similar volume of purchases and sales by a private investor. The Federal Open Market Committee releases or absorbs reserve funds when it operates in the Government securities market. When the Committee buys, it augments not only its own holdings of Government securities but also the ability of other investors to enter the market on the bid side. Conversely, when the Committee sells Government securities, it does much more than add to the market supply of such securities. The reserves that it absorbs substract (sic) also from the capacity of the banking system to carry Government securities.
If the government buys a Treasury, then, as far as the rest of the economy is concerned, the Treasury has been replaced with reserves. On the other hand, if a private investor buys a Treasury, then as far as the rest of the economy is concerned, the Treasury has been replaced with deposits.
In both cases, one asset has been swapped for another. But the government purchase adds reserves to the banking system as a whole whereas the private purchase does not.
If the government buys Treasuries, then the effect is normally greater than if a private investor does. The exception would be if the private investor used cash to purchase his Treasuries. In that case, the effect should be identical because otherwise inaccessible reserves are being released into the banking system in either scenario.
They cause changes in the prices of the specific issues bought or sold, and affect opportunities for arbitrage as between various issues and sectors of the market. As a result, a new pattern of yields emerges as between all different issues and sectors of the market. When the readjustments have worked themselves out, both the prices of Government securities and the pattern of their yields will have been affected.
Mehrling emphasized the reserve effect when he described the monetary policy transmission mechanism back in Lecture 12, but I think it's also important to keep in mind the direct effect on Treasury prices as well.
In many contexts, we can think of deposits as being substitutes for reserves, but not if we're looking at the market for deposits. In many contexts, we can think of Treasuries themselves as being close substitutes for higher forms of money, but not if we're looking at the market for Treasuries.
Interest Rate vs. Credit Availability
When such borrowing is low, the tone of the money market is easy, that is, funds tend to be easily available at going interest rates for all borrowers who are acceptable as credit risks. When member banks themselves are heavily in debt to the Federal Reserve banks, the tone of the money market is tight, that is, marginal loans are deferred and even better credit risks may have to shop around for accommodation.
These responses seem to be independent, to some extent, of the level of interest rates, or of the discount rate. For example, the tone of the money market might be easy even though the discount rate were 4 percent. This would happen mainly in a situation where the volume of member-bank borrowing was low. Conversely, the tone of the money market might be on the tight side when the discount rate was 1% percent. This would occur when member banks were heavily in debt.
Hmm. So the tightness or easiness of the money market can move independently from the interest rate. I suppose one way to think about it is that banks are always going to lend at whatever the going rate is, but if money is tight, they're going to lend less. Of course, the way they lend less is by quoting higher rates.
So the question is why the tight conditions don't push up interest rates. Or maybe they do, but the interest rates hit a ceiling at the discount rate? And just because the interest rates hit a ceiling doesn't mean the tightness in the money market hits a ceiling. The tightness is then reflected in more and more banks going to the discount window. I'll have to think about this more.
Unlike the prototypical goods market, it is not true that there's just one price for everyone, and that if you pay the price, you can buy the thing. Lowering the interest rate (price of money) might create an incentive for creditworthy borrowers to borrow more, but it doesn't directly make a particular borrower creditworthy.
This connects up with CMT a little bit when we think about simultaneously paying out a basic income and tightening monetary policy at the same time. On its own, the basic income gives people more money to spend without borrowing, but it also makes borrowing easier at whatever interest rate we already happen to be at. Basic income eases the tone of the money market. So we'd have to tighten monetary policy not only to compensate for the fact that that we're supplying money directly to consumers instead of forcing them to rely—directly or indirectly—on borrowing, but also push back against the easier tone of the money market.
Discount Rate vs. Open Market Operations
The fact that the tone of the money market is responsive to the level of member bank borrowing at the Reserve banks gives a unique character to the role of open-market operations in the effectuation of credit and monetary policy. They can be used flexibly to offset the net impact on bank reserves of other sources of demand and supply of reserve funds in such a way as to result in an increase or decrease of member-bank borrowing, or, if desired, to maintain a level of such borrowing that is fairly constant from week to week, or month to month. This means that when the Federal Open Market Committee decides that a tone of tightness, or ease, or moderation, in the money markets would promote financial equilibrium and economic stability, it has the means at hand to make the decision effective.
Changes in the discount rate cannot be used in this way. They can exert powerful effects upon the general level of interest rates, but cannot be counted on to insure that the relative availability or unavailability of credit at those rates will be appropriate to the requirements of financial equilibrium and economic stability.
Again, the point that's being made here is that because the interest rate and the availability of credit are two separate variables. Even if credit would hypothetically be more available at a lower interest rate, it's also possible to make credit more available at the current market interest rate—i.e. change the "tone" of the money market. Open market operations help with changing the tone, whereas changing the discount rate does not.
Maybe one way to think of this is that you can plot credit availability on one axis against the hypothetical interest rates on another axis. Easing the tone of the money market means moving the whole interest-rate curve in the direction of more credit availability.
In short, open market operations are not simply another instrument of Federal Reserve policy, equivalent or alternative to changes in discount rates or in Reserve requirements. They provide a continuously available and flexible instrument of monetary policy for which there is no substitute, an instrument which affects the liquidity of the whole economy. They permit the Federal Reserve System to maintain continuously a tone of restraint in the market when financial and economic conditions call for restraint, or a tone of ease when that is appropriate. They constitute the only effective means by which the elasticity that was built into our monetary and credit structure by the Federal Reserve Act can be made to serve constructively the needs of the economy. Without them, that elasticity would often operate capriciously and even perversely to the detriment of the economy.
It's interesting that the Fed ended up using open-market operations as a way of targeting interest rates, when this text is emphasizing the important differences between open market operations and interest rate policy. I wonder what they would have had to say about a world with interest on excess reserves in which reserves are not a constraint on the banking system.

Main Text

The Fed's Influence
(10) The Federal Reserve stands in a key position with respect to the entire money and capital market in this country and particularly with respect to the Government securities market. System contacts with the market for United States Government securities take four main forms—transactions in Government securities made for the account of the system, extension of credit by a Federal Reserve bank to the nonbank recognized dealers through purchases of short-term securities under repurchase agreement, transactions made as agent for Treasury and foreign accounts or for member banks, and the gathering and dissemination of information on developments in the Government securities market. Aside from some transactions executed by the other Reserve banks for the acount (sic) of member banks, these points of system contact with the market are focused at the trading desk at the Federal Reserve Bank of New York.
Mostly in this class, we focus on the first two of these. We probably take the hybridity of the Fed for granted by now. They influence the private markets by dealing in government debt.
Debt Monetization
(14) The policy of confining open market account business to a small group was adopted by the Federal Open Market Committee in 1944 in an attempt to deal only with that portion of the market where the final effort at matching private purchases and sales takes place. This approach was based on the hope that by operating closely with a small group of key dealers responsive to its discipline, the Federal Open Market Committee could peg a pattern of low interest yields in a period of heavy war financing with minimum monetization of the debt.
It's interesting that they were trying to achieve low yield pegs without monetizing the debt. In other words, they wanted to prop up the price of government debt without buying it outright. It's not clear to me how they would be able to achieve this by working with the primary dealers. Were they asking the dealers to hold the excess government debt on their own balance sheets so the Fed doesn't have to? If so, it's not clear to me how private dealers promising to hold excess Treasuries would have much of a different effect from the Fed holding them outright.
(122) The present system of official dealer recognition instituted by the Federal Open Market Committee in 1944 was an element in a technique of open market operations designed to peg the yield curve on Government securities and at the same time minimize the monetization of public debt. This technique was based on the hope that the yields on Government securities could be pegged with only a few securities monetized by the Federal Open Market Committee if all offers to the committee had to pass first through a very limited number of dealers with whom the committee would maintain intimate and confidential relations, and who would be required by the committee to make strenuous efforts to find other buyers for securities in the marketplace before they looked to the committee for residual relief.
Maybe the key is that the private dealers don't add reserves to the system when they buy the debt? This allows the Fed to keep credit conditions tight (tone of the money market) while keeping interest rates low. In other words, the government can borrow cheaply without making it too easy for everyone else to borrow? Since the dollar was still connected to gold back then, maybe this made more sense than it would today. Today, I'm not sure if there's a downside for the government to be paying higher interest rates on their borrowing.
There's a limit to how far we can go with the reserve story though. Just because the base-money reserves are constrained doesn't mean there can't be an expansion of lesser reserve instruments further down the money-credit hierarchy, like we saw with correspondent banking or the Eurodollar market in which reserves can be deposits at another institution. My guess is that banking regulations and other legal constraints play a role in keeping base-money reserves special and shaping credit conditions, at least at some levels of the hierarchy.
(123) The inexorable march of events on which that hope foundered is now a matter of history. The facts are that debt was monetized in volume and that the country suffered a serious inflation until the Federal Open Market Committee abandoned the pegs. The basic reason, therefore, that seemed to justify a small privileged dealer group no longer exists. The technique of which it was an integral part did not work out according to expectations and failed of its purpose.
Well, that at least partly answers that question. Maybe keeping interest rates low while avoiding debt monetization was just something that wasn't really doable?
Concealing the Fed's Operations
(18) Transactions for the open market account are normally handled by any 1 of 4 or 5 persons who maintain constant direct contact between dealers and the account. Transactions for the Treasury, foreign agencies, or member banks are usually handled by an individual on the trading desk who is not one of the persons regularly contacting dealers for information or normally trading for open market account. Thus, the dealers can generally distinguish between agency transactions and those for the open market account on the basis of the origin of the call from the trading desk. There are also other clues in the trading operation which dealers can use in appraising the source of a transaction. At times, however, the regular procedures of the desk may be changed in order to conceal the operations of the open market account. Orders for the account may be channeled through the individual who ordinarily handles foreign agency and member bank business, or those who usually trade for the open market account may take over business to be done for agency or foreign accounts. Pending the weekly report of condition of the Federal Reserve banks, the actual operations of the account may thus be screened from the market or the market may be led to believe that the Federal Open Market Committee was active at a time when it was not.
Sounds like the FOMC sometimes wanted to hide what it was doing. They wanted to influence the market without the market knowing that the changing market conditions were coming from the FOMC. Kind of the opposite of forward guidance, I suppose. Instead of influencing the market by telling people what you're intending to do, you influence the market by going undercover and pretending to be ordinary dealers.
Negative Carry
(30) The only serious qualification that the subcommittee makes to these generalizations relates to certain deficiencies in the credit facilities available to dealers. During recent months, the rates paid by dealers to carry their portfolios of United States Government securities have averaged above the yield on these portfolios. This amounts to a negative "carry" and obviously affects seriously the ability of the dealer organization to maintain broad markets. This problem has become more serious since the discussions with the dealers. At the time of those discussions, the dealers dealt at length with the problem of negative carry but they were referring, for the most part, to periods of stringency of very limited duration, not to the kind of continuing stringency that prevailed in most of the third quarter of 1952. The subcommittee advances suggestions to correct this deficiency later in the report.
This seems like this could be a consequence of the low yields / non-monetization combination. The dealers are holding long positions in Treasuries without being compensated for it. I'm curious how the Fed was even able to get these dealers to hold Treasuries unprofitably in the first place. Was there some kind of arrangement where the price you pay for having the privilege of being a primary dealer is that you have to eat some negative carry sometimes?
(94) * Use of the repurchase facility.—The role occupied by repurchase agreements and the terms of settlement in the technical operations of the Federal Open Market Committee is a subject of considerable controversy within the dealer organization, and many conflicting points of view are present. Recognized nonbank dealers are quick to point out that their bank-dealer competitors have direct access to the Federal Reserve banks and therefore are in a position to borrow at the Reserve banks at the discount rate in order to carry portfolios when money is tight. Nonbank dealers, on the other hand, borrow at the money market banks at rates that frequently rise above the bill rate. A negative "carry" thus develops which makes it expensive and at times prohibitively costly to maintain adequate portfolios. This problem is particularly acute when money is tight over a period of weeks or months, and also when a holiday falls on Friday or Monday, necessitating a 4-day carry. In these circumstances the nonbank dealers are at a serious competitive disadvantage in their ability to make markets. In the endeavor to mitigate this situation, they try to borrow from out-of-town banks and also use credit accommodation from corporations on repurchase agreements.*
Ah. Interesting. So the negative carry problem is mostly affecting the non-bank dealers who can't borrow at a low enough rate to profitably fund the holding of T-bills.
Depth, Breadth, Resiliency
(36) In strictly market terms, the inside market, i.e., the market that is reflected on the order books of specialists and dealers, possesses depth when there are orders, either actual orders or orders that can be readily uncovered, both above and below the market. The market has breadth when these orders are in volume and come from widely divergent investor groups. It is resilient when new orders pour promptly into the market to take advantage of sharp and unexpected fluctuations in prices.
I think "resiliency" maps most closely onto our concept of liquidity. But it feels like depth and breadth are mainly important because they support resiliency.
(45) When intervention by the Federal Open Market Committee is necessary to carry out the System's monetary policies, the market is least likely to be seriously disturbed if the intervention takes the form of purchases or sales of very short-term Government securities. The dealers now have no confidence that transactions will, in fact, be so limited. In the judgment of the subcommittee, an assurance to that effect, if it could be made, would be reflected in greater depth, breadth, and resiliency in all sectors of the market.
Part of the argument here is that mucking around with shorter-dated securities is going to be less disruptive to the money market overall, while still eventually transmitting to prices all along the yield curve. Maybe this makes sense if the FOMC's operations are unpredictable or unexpected. Maybe that's how open market operations felt back in the early '50s, but my sense is that they've become a lot more standardized. There are some countries, like Japan, that have been intervening all across the yield curve for a while now. And everything everywhere has been changing since the 2008 crisis, quantitative easing, and now the corona crisis.
"Never bet against the Fed" is a popular maxim for traders. But you can only avoid betting against the Fed if you actually know what the Fed is going to do. I think another part of what the authors are getting at that by standardizing the FOMC's monetary policy, you can assure the market that they won't be caught off guard by the FOMC's actions.
For convenience, CMT goes so far as to assume that the Fed's monetary policy is basically endogenous to fiscal policy and market conditions. Whenever that's true, the dealers basically have nothing to worry about from the Fed. That's a step in the right direction, but it still doesn't assure them that fiscal policy or market sentiment is going to be predictable. A basic income calibrated to the economy's natural level would ensure even smoother sailing, especially when it comes to financial market instability.
Treasury/Fed Overlap
(68) In contrast to this view is the position which holds that debt-management and reserve-banking decisions cannot be separated. While the Treasury is primarily responsible for debt-management decisions, that responsibility under this second view is shared in part by the Federal Reserve System, and while the Federal Reserve is primarily responsible for credit and monetary policy, that responsibility must also be shared by the Treasury. According to this position, the problems of debt management and monetary management are inextricably intermingled, partly in concept but inescapably so in execution. The two responsible agencies are thus considered to be like Siamese twins, each completely independent in arriving at its decisions, and each independent to a considerable degree in its actions, yet each at some point subject to a veto by the other if its actions depart too far from a goal that must be sought as a team. This view was perhaps unconsciously expressed by the two agencies in their announcement of the accord in March 1951. In that announcement they agreed mutually to try to cooperate in seeing that Treasury requirements were met and that monetization of debt was held to a minimum.
CMT views the government as a whole as being constrained by price stability of the currency. To maintain an ideal standard of value for the market, the government is not allowed to do anything that would cause inflation or deflation. But, since the Fed is the institution with a mandate for maintaining price stability, at least today, that essentially means that the fiscal authority does what it wants and the Fed's monetary policy is endogenous to fiscal policy, as ultimately constrained by price stability.
The fiscal authority is in the driver's seat.
The Seeds of Quantitative Easing
(76) The two exceptions should be carefully explained to the market. They would occur (1) in a situation where genuine disorderly conditions had developed to a point where the executive committee felt selling was feeding on itself and might produce panic, and (2) during periods of Treasury financing. In the first case, the Federal Open Market Committee would be expected to enter more decisively in the long-term or intermediate sectors of the market. In the second case, intervention, if any, would be confined to the very short maturities, principally bills. The subcommittee recommends most strongly that the Federal Open Market Committee adopt the necessary measures and give this assurance.
By saying that they might need to intervene in the long-term or intermediate sectors of the market, they're basically saying that they might need to do QE someday. They're imagining a scenario in which they need to backstop a panic and act as a dealer of last resort in the markets for government debt. In 2008, liquidity froze up, monetary transmission mechanisms broke down, and the longer-dated securities needed to be backstopped.
QE is about more than just adding reserves to the system. We already have open market operations for that. QE is about ensuring orderly function (or preventing disorderly function) of the financial markets.
Price Stability
(137) In an even more general sense, the Federal Open Market Committee stands in a fiduciary relationship to the whole American economy. It could be called special trustee for the integrity of the dollar, for the preservation of its purchasing power, so far as that integrity can be preserved by its operations. It is especially charged, also, to use its powers to provide an elastic currency for the accommodation of agriculture, commerce, and business; i.e., to promote financial equilibrium and economic stability at high levels of activity.
I like this. The economy requires a stable standard currency against which to set prices. If the Fed fails to ensure reasonable enough stability of the dollar, not much else of what they do will matter much. The FOMC faces a price stability constraint.
Structure of the FOMC
(138) This unique structure of the Federal Open Market Committee was hammered out after long experience and intense political debate. Like other components of the Federal Reserve System, it exemplifies the unceasing search of the American democracy for forms of organization that combine centralized direction with decentralized control, that provide ample opportunity for hearing to the private interest but that function in the public interest that are government and yet are screened from certain governmental and political pressures since even these may be against the long-run public interest.
I'm actually not sure how much the structure of the Fed or the FOMC has changed since this document was written. But it's remarkable how often one of the most well-functioning institutions of our democracy is derided for being "undemocratic."
(142) Should all or part of the staff of the Foreign Open Market Committee be separate and distinct from the staffs of the Federal Reserve Board and the Federal Reserve banks? However paid, should they wear one hat, and one hat only, devoting all their time exclusively to the operations of the Federal Open Market Committee? There are both advantages and dangers in this suggestion which must be weighed. The Federal Reserve System is a family, and the Federal Open Market Committee urgently needs the knowledge, the judgment, and the skill of all the memebrs (sic) of that family. It would be extremely difficult to build up a new and independent staff as qualified as the personnel which It now enlists to work on its problems. It would be equally unfortunate to lose the contributions of that staff to System problems that fall outside the limited area of responsibility of the Federal Open Market Committee. Yet there are equal dangers in a situation where the time of no one person on the whole staff of the Committee is wholly devoted to its responsibilities, where everyone wears two hats, and where each must fulfill duties separate and distinct from those imposed by the Federal Open Market Committee.

Appendix D: Call Money Facilities

It is fully recognized that one major question regarding the feasibility of a present-day call-money post for loans to Government security dealers would be whether lenders could safely depend on it as an adequate, consistent outlet for credit. Could such a call-loan market be large enough and stable enough to be a reliable mechanism for handling the secondary reserve positions of outlying banks? Obviously, a call-loan market of this size would require time for development. Dealers now are carrying positions which are small in relation to the size of the market. Nevertheless, in view of the fact that dealers are making outside arrangements for credit at considerable cost, it may be worth while to explore the possibility that an organized market might again be developed.
Unless I'm missing something, my feeling is that the repo market has evolved to fill this role. There's not much difference between a call loan and an overnight loan that perpetually rolls over until you choose to stop.
Please post any questions or comments about the reading (or my take on it) below!
submitted by spunchy to cmt_economics [link] [comments]

Discussion: black level and viewing angle enhancement film (x900h vs x950h)

This is a very long post, but I feel it is an important discussion for there seems to be some misconceptions considering the data and the viewing angle enhancement filter. Hopefully, you find this interesting.
I just saw a comment on this subreddit that the black level of the x900h is superior to the x950h due to better native contrast. Indeed, the native contrast measurements seem to support this. The comment below it was downvoted into oblivion, with the remark that the enhanced black level was due to reduced brightness instead. Let's investigate this.
For this discussion we will need to compare the measurements of the x950h vs x950g (link). In case you do not believe that the x950g will be representative for the x900h for the discussed metrics; va lcd technology is essentially ancient, and we should not expect any miracles this year. To really get an idea of the difference in black level, you will need to open both viewing angle figures in separate taps and switch between them, in order for the measurements to replace each other (x950h , x950g).
The on-axis black level of the x900h is ~33% better vs x950h, judging from the native contrast measurement (1:3000 vs 1:4500). So this is the black level at the spot straight in front of the viewer. However, the corners of the screen can easily be at ~15-20 degrees at a normal viewing distance. This is important.
RTINGS reports that the black level doubles at ~15 degrees for the x950g. Therefore, in terms of effective native contrast, the x900h will darken the black level towards the center of the field-of-view by ~50% compared to the edges. Essentially, a black hole is generated in front of the viewer, though this might not be directly visible in real life viewing.
The x950h will still suffer from this effect, but to a lesser degree. The viewing angle enhancement filter has essentially raised the black level of this hole by 50% compared to the x900h. This would thus results in a black level of 75% compared to the edges of the screen. However, actually de edges of the screen are slightly darkened compared to the x900h, for the viewing angle enhancement film is already in effect here, thereby further enhancing black level uniformity.
Effectively, for on-axis viewing, the viewing angle enhancement film trades a darkened area in front of the viewer for a more uniform black level; it lifts the black level of the hole and darkens the edges ever so slightly. For even slight off-axis viewing the enhancement film will yield significant benefits. Here is a good testimony to this discussion (link).
In conclusion; on-axis contrast is not a real world performance metric because we are always looking at a screen at an angle due to our field-of-view, and VA lcd viewing angles are notoriously poor. I stress that it is insufficient to sit straight in front of the screen, as some people seem to imply that this nullifies the benefits of the filter. In terms of native viewing angles, even at 20 degrees off-axis VA lcd has reduced to ips levels of contrast (~3x contrast reduction); the effect is not subtle.
In practice, the effective native contrast of the x900h appears hardly better than the x950h, and what the downvoted person remarked IMO must be true; any significant difference in black level between the two must originate from reduced brightness. To be honest, there is nothing wrong with this; it is still a real benefit for the x900h, and it implies that the enhanced brightness of the x950h might be of limited use in a dark room.
IMO, people seem to be stuck in the z9f days, where the viewing angle filter downgraded the on-axis native contrast to ips level. This is not the case for the xh95, and the impact on effective on-axis black level is actually rather marginal. As far as I am concerned, the improved viewing angle enhancement film is highly desirable, and one the biggest recent innovations in LCD technology. It still can't compete with oled, but it is an important step for the technology; you can now enjoy somewhat similar PQ with three people on a couch without major sacrifices to on-axis viewing.
All this being said, the x900h still looks like a great tv, this is not the point of the discussion.
submitted by 1234VICE to 4kTV [link] [comments]

Why don't Chinese people hate their authoritarian government as much as we think they should? — Kaiser Kuo explains

I've been PMed by multiple people to repost this after my original SSC post was deleted, so here it is again:
The following was originally written by the talented Kaiser Kuo as an answer to a question posed on Quora, but for the sake of easier readability, shareability, and the mobile users who don't want to create a Quora account, I've decided to repost it in text post form. I've also added the last part of the answer and postscript in the comments because of Reddit's character limit. Apologies in advance if that breaks any rules. Anyway.
Why do many people feel that the Chinese can't possibly be basically okay with their government or society?
I’m going to attempt an answer in three parts.
First, I’ll look at the gap in political culture between China and the liberal western democracies, especially the United States. I’ll argue that there is little appreciation among most WEIRD individuals—that is, Western, Educated people from Industrialized, Rich, and Developed nations—for just how highly contingent political norms they take for granted really are from an historical perspective. I’ll sketch the outlines of the major historical currents that had to converge for these ideas to emerge in the late 18th century. Then, I’ll compare this very exceptional experience with that of China, which only embraced and began to harness those engines of western wealth and power—science, industrialization, state structures capable of total mobilization of manpower and capital—much later. And late to the game, China suffered for over a century the predations of imperial powers, most notably Japan. Hopefully, I’ll show why it was that liberalism never really took hold, why it was that Chinese intellectuals turned instead to authoritarian politics to address the urgent matters of the day, and why authoritarian habits of mind have lingered on.
Next, I’ll argue that a lot of unexamined hubris lies not only behind the belief that all people living under authoritarian political systems should be willing to make monumental sacrifices to create liberal democratic states but also behind the belief that it can work at all, given the decidedly poor record of projects for liberal democratic transformation in recent years, whether American-led or otherwise. It’s important to see what the world of recent years looks like through Beijing’s windows, and to understand the extent to which Beijing’s interpretation of that view is shared by a wide swath of China’s citizenry.
Finally, I’ll look at the role of media in shaping perspectives of China in the western liberal democracies and in other states. A very small number of individuals—reporters for major mainstream media outlets posted to China, plus their editors—wield a tremendous amount of influence over how China is perceived by ordinary Anglophone media consumers. It's important to know something about the optical properties of the lens through which most of us view China.
Part I — The Values Gap: The Historical Contingency of Liberal Western Thought and Institutions
One evening, I was chatting online with a friend here in China, another American expatriate living in another city, about the great disconnect in recent Western understandings of China—the thing that this question and answer seeks to get to the heart of. He suggested that at least for Americans (we’re going to use Americans here, mainly, to stand in for the Anglophone western liberal democracies) the question underlying the disconnect boiled down to this:
“Why don’t you Chinese hate your government as much as we think you ought to?"
The modern Chinese party-state, after all, is a notorious violator of human rights. It cut its own people down in the street in 1989. It prevents with brutal coercion the formation of rival political parties and suppresses dissent through censorship of the Internet and other media. It oppresses minority populations in Tibet and in Xinjiang, depriving them of religious freedoms and the right to national self-determination. It persecutes religious sects like the Falun Gong. It behaves in a bellicose manner with many of its neighbors, like the Philippines, Vietnam, and India. It saber-rattles over disputed islands with its longstanding East Asian adversary, Japan. It presses irredentist claims against Taiwan, which has functioned as an effectively sovereign state since 1949. It has pursued breakneck economic growth without sufficient heed to the devastation of the environment. It has not atoned for the crimes committed during the Cultural Revolution or the Great Leap Forward, when tens of millions died because of absurdly misguided economic policies. It jails rights activists, including a Nobel Peace Prize laureate. I could of course go on.
Why then would any American not ask this question? Seems pretty obvious from the perspective of anyone from a liberal western democracy that this is a political system that needs to go, that has failed its people and failed to live up to basic, universal ideas about what rights a government needs to respect and protect. They’ll have heard the argument that China’s leadership has succeeded in other ways: it has allowed China to prosper economically, lifting hundreds of millions out of poverty, creating a substantial and comfortable middle class with expanded personal (if not political) freedom. And the Chinese Communist Party has managed to ensure a relatively long period of political stability, with orderly leadership transitions absent the political violence that had accompanied nearly all others until Deng Xiaoping’s ascent.
"Yeah, but so what?" asks the American. "Anyone who would trade a little freedom for a little personal safety deserves neither freedom nor safety,” he asserts, quoting Benjamin Franklin. He quotes this as gospel truth, ignoring the irony that many Americans advocated just such a trade in the aftermath of September 11. That aside, why shouldn't he quote it? It’s deeply engrained in his political culture. Political liberty is held up practically above all else in the values pantheon of American political culture.
The American myth of founding sees the Puritan pilgrims, seeking a place where their brand of Protestantism might be practiced freely, crossing the Atlantic in the Mayflower, creating en route a quasi-democratic quasi-constitution, the Mayflower Compact, landing at Plymouth Rock in 1620, and over the next 150 years growing into the colony that would lead its 12 sisters into rebellion for freedom from the "tyranny" of King George III. Americans hold the ideas enshrined in their founding documents very dearly, and can't really be blamed for doing so: they are, after all, some very high-minded and frankly very beautiful ideas.
What he doesn’t quite appreciate is the precariousness of the historical perch on which these ideas—ideas he holds so strongly and believes so ardently to be universal truths—ultimately rest. Americans, like everyone else for that matter, tend not to take much time to understand the historical experiences of other peoples, and can't therefore grasp the utter contingency upon which their own marvelous system rests.
I'm going to grossly oversimplify here, in this grand backward tour of European history, but the political philosophy that gave rise to modern American political ideals, as even a fairly casual student of history should know, emerged during the 18th century in the Enlightenment—an intellectual movement of tremendous consequence but one that would not have been possible save for the groundwork laid by 17th century naturalists who, taken together, gave us an "Age of Reason" (think Newton and all the natural philosophers of the Royal Academy). Their great work could be pursued because already the intellectual climate had changed in crucial ways—chiefly, that the stultifying effects of rigid, dogmatic theology had been pushed aside enough for the growth of scientific inquiry. That itself owes much to the Protestant Reformation, of course, which people tend to date from 1517 but which actually reaches back over a century earlier with John Wycliffe, Jan Hus, arguably Erasmus, and the other pre-Lutheran reformers.
And would the Reformation have been possible without the rediscovery of classical learning that was the animating spirit of the Renaissance? Would the Renaissance have been possible without the late medieval thinkers, such as Abelard, who sought out to subject theology to the rigors of Aristotelian logic and reason? Would all this have been possible, if not for the continuous struggles between Emperor and Pope, between Guelph and Ghibelline factions—partisans for the temporal power of the Vatican and Holy Roman Emperor? The fact is that this series of historical movements, eventually carving out politics that was quite separate from—indeed, explicitly separate from—theocratic control, was only really happening in this small, jagged peninsula on the far western end of the great Eurasian landmass. And in the rest of the world—the whole rest of the world—none of this was happening. Political theology remained the rule with rare, rare exceptions.
What we've now taken as the norm and the correct form for the whole world—liberal, secular, democratic, capitalistic—is truly exceptional, recent, rare, fragile, and quite contingent.
Let’s turn and look for a moment at China, which is arguably much more typical. China is a civilization that didn’t until much later and perhaps still doesn't fit neatly into the modern conception of the nation-state; a massive continental agrarian empire, a civilization with an integrated cosmology, moral philosophy, and political philosophy which together formed the basis of a holistic orthodoxy, deep knowledge of which was required for any man (alas, only men) who wished to climb the only real available ladder of success: the Civil Service Exams.
The China that the West—in this case, chiefly the British—encountered in the late 1700s was really at or just past its peak, ruled by a reasonably competent and conscientious Manchu emperor who history knows as Qianlong, ruling a land empire matching, roughly, the contours of the contemporary People’s Republic, almost entirely self-sufficient but willing to sell its silk, porcelain, and especially its tea to anyone who brought minted silver bullion—two-thirds of the world’s supply of which, by the time of the American Revolution, was already in Chinese coffers.
What followed was a crisis that lasted, with no meaningful interruption, right up to 1949. Foreign invasion, large-scale drug addiction, massive internal civil wars (the Taiping Civil War of 1852-1863 killed some 20 million people), a disastrous anti-foreign uprising (the Boxers) stupidly supported by the Qing court with baleful consequence, and a belated effort at reform that only seems to have hastened dynastic collapse.
The ostensible republic that followed the Qing was built on the flimsiest of foundations. The Republican experiment under the early Kuomintang was short-lived and, in no time, military strongmen took over—first, ex-dynastic generals like Yuan Shikai, then the militarists who scrambled for power after he died in 1916. China disintegrated into what were basically feuding warlord satrapies, waging war in different constellations of factional alliance. Meanwhile, China's impotence was laid bare at Versailles, where the great powers handed to Japan the colonial possessions of the defeated Germany, despite China having entered the Great War on the side of the Allies.
During this time, liberalism appeared as a possible solution, an alternative answer to the question of how to rescue China from its dire plight. Liberalism was the avowed ideology of many of the intellectuals of the period of tremendous ferment known as the May Fourth Period, which takes its name from the student-led protests on that date in 1919, demonstrating against the warlord regime then in power which had failed to protect Chinese interests at Versailles at the end of World War I. (The May Fourth period is also referred to as the New Culture Movement, which stretched from roughly 1915 to 1925). The "New Youth" of this movement advocated all the liberal tenets—democracy, rule of law, universal suffrage, even gender equality. Taking to the streets on May Fourth, they waved banners extolling Mr. Sai (science) and Mr. De (democracy).
But with only very few exceptions they really conceived of liberalism not as an end in itself but rather as a means to the decidedly nationalist ends of wealth and power. They believed that liberalism was part of the formula that had allowed the U.S. and Great Britain to become so mighty. It was embraced in a very instrumental fashion. And yet Chinese advocates of liberalism were guilty, too, of not appreciating that same contingency, that whole precarious historical edifice from which the liberalism of the Enlightenment had emerged. Did they think that it could take root in utterly alien soil? In any case, it most surely did not.
It must be understood that liberalism and nationalism developed in China in lockstep, with one, in a sense, serving as means to the other. That is, liberalism was a means to serve national ends—the wealth and power of the country. And so when means and end came into conflict, as they inevitably did, the end won out. Nationalism trumped liberalism. Unity, sovereignty, and the means to preserve both were ultimately more important even to those who espoused republicanism and the franchise.
China's betrayal at Versailles did not help the cause of liberalism in China. After all, it was the standard bearers of liberalism—the U.K., France, and the United States—that had negotiated secret treaties to give Shandong to the Japanese.
Former liberals gravitated toward two main camps, both overtly Leninist in organization, both unapologetically authoritarian: the Nationalists and the Communists. By the mid-1920s, the overwhelming majority of Chinese intellectuals believed that an authoritarian solution was China's only recourse. Some looked to the Soviet Union, and to Bolshevism. Others looked to Italy, and later Germany, and to Fascism. Liberalism became almost irrelevant to the violent discourse on China's future.
For anyone coming of age in that time, there are few fond memories. It was war, deprivation, foreign invasion, famine, a fragile and short-lived peace after August 1945, then more war. Violence did not let up after 1949—especially for the hundreds of thousands, perhaps millions, who were "class enemies" on the wrong side of an ideological divide; or for the hundreds of thousands of Chinese soldiers sent to fight and die in Korea so soon after unification. And even with peace, prosperity didn't come: 1955 saw Mao announce a "high tide of collectivization," which was followed by the tragic folly of the Great Leap Forward and ensuing famine, in which tens of millions perished.
A friend of mine named Jeremiah Jenne who taught US college students at a program here in Beijing once said something to the effect of, “When Americans create their movie villains, when they populate their nightmares, they create Hitler and the SS again and again: Darth Vader and the Stormtroopers.” The fear of the liberty-loving American, he implied, is of a surfeit of authoritarianism.
What of the Chinese? The Chinese nightmare is of chaos—of an absence of authority. And such episodes of history are fresh in the minds of many Chinese alive today—only a handful are old enough to actually remember the Warlord Period but plenty can remember the Cultural Revolution, when Mao bade his Red Guards to go forth and attack all the structures of authority, whether in the classroom, in the hospital, in the factory, or in the home. And so they humiliated, tortured, sometimes imprisoned and sometimes even murdered the teachers, the doctors, the managers, the fathers and mothers.
In the 25 years since Deng inaugurated reforms in 1979, China has not experienced significant countrywide political violence. GDP growth has averaged close to 10 percent per annum. Almost any measure of human development has seen remarkable improvement. There are no food shortages and no significant energy shortages. Nearly 700 million Chinese now use the Internet. Over 500 million have smartphones. China has a high speed rail network that's the envy of even much of the developed world. China has, by some measures, even surpassed the U.S. as the world's largest economy.
So try telling a Chinese person that anyone willing to trade a little personal liberty for a little personal safety deserves neither liberty nor safety, and they’ll look at you like you’re insane. Therein lies the values gap.
Part II — The View through China’s Window: Liberal Hegemonism in US Foreign Policy
In the first part, I laid out a case for why it’s quite natural, given the tendency of Americans (as with all people) to ignore or understate historical contingencies and recognize their own privileges and prejudices, for Americans to be puzzled by Chinese acquiescence toward—indeed, by their often quite vocal support for—a political system so execrable by certain American standards.
The hubris of some Americans about their own political system seems to me especially natural, even forgivable, in the years following the collapse of the Soviet Union. From the vantage point of 1991, a kind of triumphalism was inevitable: the liberal west, with America at its vanguard, had just vanquished the second of the century’s great ideological enemies. First was Fascism and Naziism with the defeat of the Axis powers in 1945 (never mind that Bolshevik Russia, from the time Hitler invaded Russia, never faced less than two-thirds of German divisions in the field), then Bolshevism with the end of the Cold War.
And what was on the minds of Americans—who had watched the Berlin Wall come down, Lech Walesa and Vaclav Havel assume the Polish and Czech presidencies, Yeltsin defend the Russian parliament and Gorbachev declare the Soviet Union’s end—what was on their minds as they turned thoughts to China?
Tiananmen, of course, with its incredibly potent imagery: a million people in the Square, Tank Man, and the Goddess of Democracy. Looming ever present in nearly every conversation about American perception of China in the last quarter century—now in the background, now in the fore—is the bloody suppression of the 1989 student-led protests in Beijing. (Fun Fact: The first democratic elections in Poland were held on June 4, 1989, the very day of the crackdown on the Beijing protests).
The years that followed the end of the Cold War would see gathering in American foreign policy a new ideology that would come to supplant the realist school that had dominated from the time of Richard Nixon. This is what the MIT political scientist Barry R. Posen calls Liberal Hegemonism: an activist, interventionist thread that believes in the pushing of liberal democratic politics and capitalism through all available means from “soft power,” to operations aimed at destabilizing authoritarian governments, to actual preemptive war (the Bush doctrine) and the “regime change” of the Neoconservatives. Some of its basic assumptions—not all, but some—are shared both by liberal interventionists and NeoCons. For American liberals, it was guilt from failure to act in the Rwandan Genocide, or to the “ethnic cleansing” that characterized the wars during the breakup of Yugoslavia, that gave impetus to this; for NeoCons, it was the unfinished business of Desert Storm. They found much common ground in their support for “color revolutions” in the former Soviet republics. They may have debated tactics but the impulse was to spread American values and institutions, whether or not doing so would serve a specific and definable American interest. That could be done the Gene Sharp way, or the Paul Wolfowitz way. Neither way was something Beijing wanted done to it.
And I don’t think it takes a whole lot of empathy to see what things have looked like from Beijing over the last 25 years. Deng Xiaoping, while he was still alive, pursued a policy of “biding its time and hiding its power” as he focused on building China's domestic economy, avoiding any real confrontation and trying to rebuild relationships post-Tiananmen.
But it wasn’t long before tensions sparked. In May of 1999, US smart bombs fell on the Chinese embassy in Belgrade, and virtually no Chinese believed the American explanation that it was a mistake, the result of an out-of-date map that showed the embassy as an arms depot. Later, in April of 2001, the collision of an American EP-3 spy plane with a Chinese fighter jet off of Hainan Island, off China’s southern coast, sent another chill through Sino-American relations. And things looked like they might have taken a turn for the worse, had not September 11 taken the pressure off.
The “War on Terror,” which China could notionally join in, distracted the U.S., which quickly found itself fighting two long wars in Afghanistan and Iraq. Meanwhile, the Chinese economy was in high gear, chugging along at double-digit growth rates right up to the eve of the Financial Crisis. The Sino-American waters were probably never calmer than in the years between 2001 and 2008.
Perhaps history will see 2008 as an important turning point in these attitudes: during the same year that China staged its first Olympic games, the financial crisis, which China weathered surprisingly well, walloped the West (and much of the rest of the world) with what was arguably its signal event, the bankruptcy filing by Lehman Brothers on September 15—happening just three weeks almost to the day after the closing ceremony of the Beijing summer games on August 24.
It was China’s turn to feel a kind of triumphalism, which often took the form of an unattractive swagger. Meanwhile, a sense of declinism gnawed at the American psyche. After 2008, China became the object of global (read: American) attention again, fueled for some by anxieties over the rapidity of its rise, in others by anger over major flare-ups in western China: riots in Lhasa, Tibet’s capital, in March, 2008, and in Urumqi, Xinjiang’s capital, in July, 2009. Factory conditions became a growing concern as Americans realized that even the most sophisticated electronics they sported—everyone had an iPhone by then, right?—were manufactured in China.
Remember, too, that excitement over the political potency of social media was also enjoying something of a heyday in this period of liberal hegemonic ascent. As one color revolution after another was live-tweeted (Moldova was perhaps the first, but not the only, of the street movements to be called “The Twitter Revolution”), as every movement had its own Facebook page and Youtube channel, China’s reaction was to censor. There is, after all, one belief about the Internet that the most hardline Chinese politburo member shares with the staunchest American NeoCon: that the Internet, unfettered, would represent an existential threat to the Communist Party’s hold on power. They have of course very different views as to whether that would be a good thing or a bad thing. But can we really be surprised that, able as they are to open to the op-ed section of any American broadsheet and find this idea that Internet freedom is the key to toppling authoritarian single-party rule, the Communist Party leadership would conclude that their approach to censorship is correct? But this of course has created another potent issue over which Americans, very naturally, express outrage—and puzzled frustration that Chinese aren’t (literally) up in arms over Internet censorship.
Beijing obviously lamented the Soviet empire’s incredibly rapid implosion. It doubtlessly chafed at how NATO expanded its membership practically up to the Russian doorstep. It certainly hasn’t loved it that American troops are operating from Kyrgyzstan and Uzbekistan, and were present in great numbers in Afghanistan (which by the way borders China, if only at one end of the narrow Wakhan Corridor). Beijing has surely fretted as American-backed NGOs (the National Endowment for Democracy, or NED, is the big boogeyman for pro-Beijing types—perhaps as Confucius Institutes are the bête noire for their anti-Beijing American counterparts) conspired, or so they believe, with the instigators of color revolutions. And it certainly sees the Pivot to Asia—now rebranded the “Rebalancing”—as a species of containment. But what I suspect really has Beijing freaked out, what really seems to have confirmed that America still has its cherished liberal hegemonic ambition, was the Arab Spring. Is Beijing so wrong, looking out on the smoldering wreckage of Libya and Syria, at the mess that Egypt still remains, to want to avoid that outcome at whatever price? Or to think that America’s true, ultimate intention might be regime change in Beijing? Kissinger once famously said that even a paranoid can have enemies.
What does all this foreign policy stuff have to do with Chinese attitudes toward their government? It’s fair to ask this; after all, the question I’m trying to answer isn’t specifically about the Chinese state and how it sees things, but rather the Chinese people, and the attachment they seem to have toward a state that comes up so short by American measure. It’s the rare person who can truly separate, at both an intellectual and an emotional level, criticism of his or her country from criticism of his or her country’s government—especially if that government is not, at present, terribly embattled and is delivering basic public goods in a reasonably competent manner. States tend to try to reinforce that conflation of people with state (and in China’s case, party). They encourage the basic state-as-family metaphor, something that in the Chinese case is part of the deep structure of Confucian political thinking and is therefore probably easier to nurture than to extirpate. I don’t doubt that propaganda has a role in this, but I would assert that its role is generally exaggerated in American thinking about China.
In any case, if you’ll indulge some pop psychological speculation, I’ll go out on a limb and posit confidently that external criticism of a leadership will tend to, if anything, reinforce a citizenry’s identification with the state and blur the lines even more between “government” and “people.” Perhaps I’m wrong. But most people I know who are known to bitch occasionally about their own parents get awfully defensive when people outside the family offer unsolicited criticism. This seems especially to be the case with mothers.
And so it is that many ordinary Chinese citizens, online and inevitably aware now of the timbre of China discourse in English-language media, tend to elide criticism of the state and Party with criticism of China, and take it personally. They feel a distinct sense of having been singled out for unfair criticism and will reach easily for handy explanations: Hegemonic America can't abide another serious power rising in the world, and just wants to sow discord and strife to keep China down; America needs to create a boogyman, an enemy to replace its fallen Cold War foe and placate its military-industrial complex. And in any case, America doesn't appreciate just how far we've come under the leadership of this party, however imperfect.
People will debate what the Party’s real role has been in poverty alleviation: is it accurate to say that the Chinese government “lifted 300 million people from poverty” or is it more correct to say that they mostly got out of the way and allowed those people to climb out of it themselves? (I tend to like the latter phrasing). That’s not the only accomplishment in China’s 35+ years of reform that will be fought over. But the simple truth is that by many, many measures of human development, the great majority of Chinese people are undeniably better off today than they were before Deng inaugurated reform. The grand unofficial compromise, in a kind of updated Hobbesian social contract, that the Party made with the Chinese people—“You stay out of politics, we’ll create conditions in which you can prosper and enjoy many personal freedoms”—has been, on balance (and to date), a success.
No thinking Chinese person of my acquaintance believes that the Party or its leadership is anything close to infallible. Most can be quite cynical about the Party, the venality of officials, the hidden factional struggles, the instinct for self-preservation. They’re fully appreciative of the Party and leadership's many shortcomings. They don’t shrink from criticizing it, either; they aren’t reflexively careful of what they say and who might be listening.
But they don’t bandy words like “revolution” about casually. They tend to have a sober appreciation for what’s at stake, for the price that would have to be paid. They’re realistic enough to understand that the Party is not apt to tip its hat adieu and go gently to history's proverbial dustbin. They still believe, and not entirely without evidence, that the Party leadership is attuned to public opinion and will respond when the will of the people is made manifest. They support reform, not revolution.
I’ve little doubt that desire for more formal political participation, for a renegotiation of terms in that unwritten contract, will grow stronger. That’s in the cards. You’ll get no argument from me that it’s been a raw deal for many people with very legitimate grievances. There are many who’ve broken with the Party-state, who openly or secretly dissent, whose relationship with it is entirely and irreversibly oppositional. Among these are many whose courage of conviction and towering intellects I deeply and unreservedly admire, and others who I think are mere gadflies or attention-seeking malcontents without a sense of what’s at stake. In the case of all of them, regardless of what I think of them personally, I regard it as a black mark on the Chinese leadership each time a dissident is locked up for ideology, speech, religious belief or what have you. But most Chinese people tend to be pragmatic and utilitarian; the state’s ability to deliver social goods gives it a kind of “performance legitimacy." The good (prosperity, material comfort, sovereign dignity) and the bad (a censored Internet, jailed dissidents, polluted rivers, smog) go on the scales. For now, it’s unambiguous in which direction those scales are tipping.
Part III — The Anglophone Media Narrative on China and Sources of Bias
If you're a denizen of the Anglophone world, your impressions of China are almost certainly formed primarily by the media that you consume. There are of course exceptions: some 100,000 Americans have, in the last five years, spent time working or studying in China; there are several thousand enrolled in East Asian Studies graduate programs, or taking serious upper-division undergraduate coursework on China, or pursuing an academic discipline that focuses on China; and there are probably a few thousand more who, for personal reasons, have taken more than a passing interest in China and have read a good number of books on contemporary China or on modern Chinese history, have undertaken the study of Chinese, or have otherwise immersed themselves in trying to gain a deeper understanding of China. Taken together, though, these people represent a small percentage of the general media-consuming audience—the college-educated American who, say, reads a paper once in a while, watches cable or network news with fair regularity, listens to NPR on her drive to work, and occasionally clicks on a China-related tweet or on a friend's Facebook page, or her counterpart elsewhere in the Anglophone world. All told, that's several tens of millions of people, I'm guessing, in the U.S., Canada, the U.K., Ireland, Australia, and New Zealand.
It's worth reflecting on that, for this majority of news-consumers, impressions of China are almost entirely dependent on the reporting produced, at least regularly and in the main, by probably fewer than a hundred individuals. I'm talking about the reporters for the major newswires like Reuters, Bloomberg, Dow Jones, and AP, whose stories appear not only in the major papers and on news portals online, but also in smaller metropolitan and even local markets; the journalists who write for the major newspapers and news magazines; television news reporters; and the foreign desk editors, subeditors, and producers working with the reporters. There are also the news assistants, unsung heroes without whom many of the China-based reporters who haven't mastered enough Chinese to read local media or documents, or conduct interviews in the native tongue of their interviewees, would be unable to do their jobs. If we include them, the number perhaps doubles but it's still no more than 200, perhaps 250 individuals whose contributions to the gathering, reporting, writing, and editing of news and the creation of news-related commentary actually matters.
What, though, do we really know about these people? If this is the lens through which so many Americans (once again, I'll remind folks that "American" here is really shorthand for Anglophone westerners) view China, it seems to me very sensible that we should wish to understand something about the optical properties of that lens. Does it distort? Of course it does; it could not but distort, could not but offer only a partial and selective view—this mere few score of reporters trying to present a picture of the world's most populous nation as it hurtles ahead with unprecedented force (in the f=ma sense).
This is not an indictment. These are people who I very much respect—indeed, the very people who these days comprise most of my personal circle of friends—and they are people who have my sympathy for what they must often endure in reporting from China. It's not an easy place to report from, especially if you're reporting on things that the Chinese government, or someone at least, doesn't want reported—and what else, after all, really qualifies as news reporting? They are subjected to some pretty shabby treatment, everything from the talk-to-the-hand they'll get from government ministries, to veiled and not-so-veiled threats related to visa renewals, to roughing-up by local thugs or plainclothes cops or even uniformed ones, to surveillance and harassment. I think if there's a source of bias with which I'd start my list, it's this. Seems only natural that this kind of treatment of a journalist anywhere would beget less than rosy coverage of the institutions doling it out. Negative coverage begets more of that nasty treatment, and so on in a most un-virtuous circle.
Should the journalists be faulted for focusing on the things that power, whether political or corporate, wants to hide? No, I don't think so. Rightly or wrongly—and I'm unambivalent in my personal belief that it's "rightly"— this is what gets the journo juices flowing. Journalism is not about the quotidian.
The historian Will Durant once wrote in The Age of Faith, "We must remind ourselves again that the historian, like the journalist, is forever tempted to sacrifice the normal to the dramatic, and never quite conveys an adequate picture of any age." I would note that while the historian can write enormously lengthy monographs in which some of that normal can be restored and that picture made more adequate, the journalist just doesn't have that leisure, and his sacrifice of the normal is more forgivable.
And yet it has an impact on perception; it's still a source of distortion, of bias. This failure to focus on the more "normal" is, I would assert, one of the major reasons for the disconnect at the heart of the original question: the prevalence among Americans of "Why don't you hate your government as much as I think you ought to?"
One of the more regrettable outcomes of this particular bias in the way China is reported reflects in the (notional, educated, mainstream-media-consuming) American public's understanding of the Chinese intellectual. Reporters tend to focus not just on critical intellectuals but on the more outspokenly critical ones, on the full-blown dissidents, on the very vocal activists, on the writers who challenge the establishment on human rights issues, on freedom of speech, on rule of law, on religious policy, on minority nationality policy and so forth. Of course they focus on these people; they're "the dramatic," in Durant's phrase. They set out to excite so no wonder that many of them are exciting. They play to the American love of the underdog. They flatter American values.
It's right, I believe, to focus on intellectuals. One could make a very serious argument that China's history is at some important levels driven by the dynamics of the relationship between intellectuals and state power, whether dynastic or Party. Dissidents and the more stridently critical intellectuals certainly are part of that dynamic. But I would submit that it's actually more important to understand another type of intellectual, and another mode of relations between the intellectuals and state power, between, if you will, the pen and the sword: the "loyal opposition," who during most times—including this time—comprise the real mainstream, and who see it as their role to remonstrate and to criticize but not to fully confront. It's these voices, a kind of "silent majority," to use an apt phrase whatever its connotations in the American polity, who go too often ignored in our reporting. Because "Noted Chinese scholar is basically okay with the government, though he thinks it could be improved in X, Y, and Z" is not a particularly grabby headline or a compelling read.
There's also a kind of source bias that's related to this and it's regrettably caught in a bit of a feedback loop, too. The general impression is that Anglophone media is pro-dissident, and so dissidents will tend to go on record with or speak at greater length with Anglophone reporters; moderate or pro-Party intellectuals will tend to decline interviews and comment, and the impression that Anglophone media is biased in favor of the dissidents gets reinforced: the narrative that they want is buttressed while the other is marginalized or weakened.
Another almost ineradicable bias in Anglophone media reporting, so prevalent that it's almost not worth pointing out, is bias in favor of democratic polities. Authoritarian states like China tend to get reported on unfavorably because they behave like authoritarian states. They don't allow, by definition, rival political parties to freely form. They don't allow a free press. They censor the Internet. And of course journalists in the Anglophone world are themselves on the front lines of these speech and press issues. It's almost tautological that the press of the free world would want to free the press of the world.
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UniSyn: The Pyramid Scheme That Colonized Half a Galaxy and Funded the Most Destructive War in History


Inside the Tatian Conspiracy’s highly illegal, genius, and unrivaled-in-scope galactic pyramid scheme

Over the course of only about 35 years, the Tatian conspiracy changed the galaxy forever. Ishga lost its massive empire and learned to work with other planets, the entire galaxy industrialized practically overnight, the Man of Light and Shadow was reinstated after a 4,500-year hiatus, millions of Squidians were sold into slavery, and the planets of Eaglypt, Aztlan, Caput Tatiium, Vigam, and others experienced genocides. But through all this, one question remains: how did the Tatian Conspiracy fund itself? Where were they getting the quadrillions of galactic credits and octillions of tons of resources needed to take over the galaxy? The answer is: UniSyn.

What is UniSyn and where did it come from?

UniSyn had its origins as the brainchild of Tate himself and Sir Will of Cole, a disenchanted noble-turned-smuggler who Tate met while in jail on Ishga for contempt of court. While he was the weakest of Tate’s recruits magically speaking, he had access to one thing Tate needed desperately: money. Sir Will of Cole had access to the Black Market, a secret hideout located in the middle of the desert on the planet Awal Kabab, and is where the galaxy’s best criminals meet and sell their illegal wares for high prices.

After inducting Will into his secret organization known as the Cabal, Tate made a deal with him: if Tate gave Will what money the Cabal had left, Will would use it to restart his drug-selling operation at the Black Market and give Tate half of his profits. While this seems like an extremely risky move on the surface, Tate knew Will would follow through because they shared one thing: hatred of the Ishga Empire and its tyrannical government. Within a month or so, Will caught the eye of Ali Baboon, a master thief who controlled several dozen of Awal Kabab’s gangs. The two met in a cantina on the planet, where they discussed a possible merger. Ali Baboon, as stated above, already controlled several dozen gangs, and had a team of 40 of the most skilled thieves in the entire galaxy at his disposal. However, Will had access to thousands of smugglers and illegally-acquired ships. As a result, the two decided to merge their criminal enterprises, and thus UniSyn was born. Ali Baboon and his gangs and thieves would focus on illegally procuring the goods from their sources, while Will and his smugglers would distribute them.

When Tate learned about this, he immediately called for a meeting between himself, Will, and Ali. The three met in that same cantina later that week, where the group had a realization: such a huge criminal enterprise would catch Ishga attention very quickly and would soon be shut down as a result. To prevent this, the group came up with the idea of registering UniSyn as a business name and then figuring something out to disguise this crime empire as a legitimate company. However, the group had extreme difficulty coming up with something for this fake company to sell.

Eventually, however, Tate realized he could kill two birds with one stone. There were hundreds of uninhabited star systems all across the galaxy that he wanted to settle, and he needed a way to disguise UniSyn. Now, he had come up with one of the most genius plans in galactic history: UniSyn would be a company that sold land on uninhabited planets. However, it would not just be any company: it would be a company that encouraged its customers to recruit more people to buy land.

The Façade

UniSyn’s business model first relied on this one fact: this land was not sold in a traditional way. The land in this case was more like the poker chips in a casino: it was simply the way money changed hands. This way, UniSyn could say it was providing a good/service to its customers, while the customers were really just people working for them. The way this whole thing worked was that everyone who bought land from Tate was told to recruit more people to buy land and then they would supposedly get rich off of the people who they recruited when they bought in. One of the reasons why this plan worked so well is because land on literally uninhabited planets had a profit margin of 100% since there was literally no cost to produ`ce the land or buy it since nobody even owned it (despite Tate’s propaganda claims that the Ishga Government owned the land).

However, to sustain itself this business model had to rely on two things: keeping the profits going to Tate and the Cabal at the top while keeping the lemmings at the bottom feeling like they have a real shot to strike it rich colonizing faraway planets. As Tate’s financial advisor, a Bisoux Chief named Standing Buffalo, once said, “the key to success is when recruits feel like striking it rich is only a month or two away and they’ve felt like that for ten years.”

Another asset Tate had to encourage this operation, especially later on in the war, is his propaganda department. Conservative estimates claim that even at the height of the war, 20% of Tatian propaganda was dedicating to marketing UniSyn. The propaganda repeatedly told new recruits that they were not customers, but they were “pioneers” and “small business owners” selling land to help the colonization effort. This both minimized UniSyn’s legal liability in the eyes of the Ishga Government it was exploiting, and increased the believability of this whole thing. It is also worth noting that Sir Will of Cole was officially in charge of UniSyn since he was an Ishga citizen, but Tate was the one who really made all the decisions and kept all the profit. UniSyn kept its advertising and propaganda focus on young people and the poor, since younger and poorer people were naïve, gullible, and likely to buy into the massive scam, while as Standing Buffalo once said, “Rich people don’t buy into pyramid schemes. They start them.”

Poorer areas like Aurea’s rural areas, lower-class Ishga neighborhoods, Planet Squid, Caput Tatiium, and Ryu 108 were virtually bombarded with advertising, while richer areas such as Rinascita or Ishga’s upper echelons had barely heard of UniSyn at all.

In order to help perpetuate the scam, Tate made sure to keep tabs on the very, very few people who had actually gotten rich off of colonizing planets. Tate and his agents bribed these people to give massive speeches to other UniSyn recruits, encouraging them to stay in and keep getting other people to buy in, because they were proof that “anyone could make it”. As Standing Buffalo once said, “Get the winners, prop them up on stage in front of a bunch of lemmings, and let the survivorship bias do the talking.” After these people had given their speeches, Tate would usually bribe them to go somewhere and do some random thing, and then set a trap wherever he told them to go so his agents could kill the winners and take all their money back into UniSyn. To avoid suspicion, the winners’ deaths were either made to look like accidents or they were replaced with doppelgänger androids.

Before long, however, the Ishga media began giving UniSyn terrible press, attempting to expose it as the sham that it was. In response (thanks in no small part to the brilliant Standing Buffalo), UniSyn adopted a way of dealing with this called, “Accept, misdirect, and discredit.” For example, UniSyn ran ads saying things like, “Long ago, people thought Ishga was flat. Sounds ridiculous, right? But at the time, nobody knew any better. The same can be said for direct-selling and multilevel marketing businesses like UniSyn. Comparing direct-selling companies to pyramid schemes or any other type of scam will seem as ridiculous as Ishga being flat.”

The Criminal Empire Under the Surface

Before long, UniSyn and its massive pyramid scheme disguised as a legitimate business was making far more money than the criminal enterprise it was covering for. However, Tate still allowed UniSyn’s criminal departments to exist. These criminal departments would meet and conduct business in restricted rooms of UniSyn offices, marked with “Biohazard” or other warning signs to keep laypeople from stumbling in. To avoid Ishga inspectors discovering these criminal enterprises, the UniSyn secretaries simply kept calendars and timed the clandestine meetings away from inspections.

At the company’s peak, UniSyn employed millions of smugglers, thieves, and their ships, with Ali Baboon and his forces forming the nexus of the operation. This criminal enterprise trafficked in everything from slavery to political assassinations to weapons to drugs to insider trading to money laundering, with half the profits going directly to Tate. In fact, many of UniSyn’s own assassins in its Criminal Department were tasked with “taking out” scam winners who had outlived their usefulness. This Criminal Department was codenamed the “Sanitation Department”.

Decline and Fall of UniSyn

However, this business model had one weakness: its exponential growth made it inherently unsustainable in the long-term, no matter what Tate did. New recruits found themselves having to recruit more and more people in order to advance, and before long, the colonized planets found themselves running out of unsettled land. Soon, people found themselves being given tiny plots of land in inhospitable locations, such as deserts or the middle of the ocean. These people were driven into poverty and began giving UniSyn bad press. While UniSyn’s propaganda department was able to deal with this bad press at first, so many people found themselves being given useless land that the wave of negative press began to drown out UniSyn’s propaganda. The Tatian Empire as a result had to devote more and more of its propaganda to keep UniSyn going, meaning less and less of it was going towards exerting its control over the South Galaxy. This is in part what led to the revolts in the north that formed the Aurean Alliance. While this increase in propaganda saturation was able to stem UniSyn’s collapse for a few years, it was only a matter of time before some of the new planets began filling up completely.

Once planets began filling up, this was the beginning of the end for UniSyn. However, it did not instantly collapse, since it had a backup plan in mind: instead of selling land on uninhabited planets, UniSyn changed its business model and started selling various amenities to people already on those planets to help flesh out the colonization. While this solved UniSyn’s immediate problem of running out of land, it was simply never the same. These new amenities and resources cost money to produce, drastically lowering the profit margins. As such, millions of recruits stopped convincing new recruits to join UniSyn. For the next 15 or so years, UniSyn remained alive but in a slow, continuous decline.

In order to make enough money to keep UniSyn going, Tate resorted to ramping up the activities of UniSyn’s Criminal Department drastically. Smugglers found their slave quotas rising, as well as their quotas for everything else. This increase in the slave quota led to severe depopulation in certain regions of Planet Squid, as people from the jungle kingdoms were especially targeted in slaving raids. This led to many of its higher-ups making mistakes, such as a smuggling episode that landed Ali Baboon in Ishga prison until Tate had to personally break him out.

Once the Aurean Alliance retook Aurea, everything changed. Sir Will of Cole had been killed during the attack on Vigam, meaning his shoes had to be filled by Lord Etbo. His status as one of the last two remaining Eaglyptians drew far too much attention and scrutiny to UniSyn, and the Ishgas, who were now far more removed from the front lines and had more time to spend on such things, began cracking down on this suspicious company. They began doing inspections on UniSyn offices without warning, which inevitably resulting in them catching a clandestine “Sanitation Department” meeting red-handed. The meeting was a low-level affair between two smugglers, but the damage had been done: UniSyn’s Criminal Department had been discovered.

UniSyn was immediately shut down by the Ishga Government, and all of its leaders and executives were arrested (except for Lord Etbo and Tate, who escaped). This event, more so than even the capture of Aurea, is viewed as responsible for Tate losing the war.

Despite UniSyn being dismembered suddenly and swiftly, its thousands of tentacles and remnants would take decades for the Ishga Government to clean up, and even today, clandestine traces still remain, although deep in the shadows.

Although UniSyn itself is gone, the thousands of star systems it helped colonize are not. While many of these decided to join the Galactic Union after the war, many of them were occupied by Rahasian forces, leading to the standoff between Rahasy and the Ishga-Aurea-Arturia-Paxica axis that defines the galaxy today.
submitted by LordWeaselton to worldbuilding [link] [comments]

Bitfinex Margin Trading, COVID-19 Country Data, Cancel all Alerts

Bitfinex Margin Trading, COVID-19 Country Data, Cancel all Alerts
Read this on the Cryptowatch Changelog.
Cryptowatch has introduced margin trading for all Bitfinex pairs that support leverage. We've updated our alerts service, adding a Cancel all feature that lets you clear alerts across all markets. On our COVID-19 tracker, you can now sort all data by country, view the chart with either a linear or logarithmic axis, and switch between daily and total data.
The Cryptowatch Marketing team also recently posted a comprehensive reading list from our very own The Dude, who spent over a decade yelling and screaming in the NYMEX and COMEX trading pits, as well as an interview with @lowstrife and a report on Bitcoin spot market growth.

Bitfinex Margin Trading Enabled

Bitfinex margin pairs now have their available leverage options in the trading form:
We’ve also added a refresh button in the top-right of the trading form that will re-synchronize Cryptowatch to the market’s exchange. The trade settings menu is also conveniently relocated to the top-right corner of the trading form as well:


You can now view more detailed data on the COVID-19 page. The changes we’ve implemented are as follows:
  • Added log scale to the COVID-19 chart
  • Tracker can now be sorted by country, or as aggregated values (all COVID-19 data)
  • Refreshing the page defaults to the daily view
  • Now you can change the compared asset from BTC to:
    • ETH
    • USDT
    • XTZ
    • XRP
    • BCH

Cancel all alerts

We’ve added a Cancel all button to the alerts menu and the trade-settings menu so you can clean your slate quickly and easily:

Markets Navigator

In the markets navigator, you can now sort markets by:
  • Performance
  • Number of Pairs
  • Alphabetical order
  • Volume
Each of these sorting parameters can be listed in ascending or descending value using the button left of the drop-down menu:

Portfolio positions

You can now track your open positions across all exchanges from the Portfolio tab. Navigate to the Positions tab for an at-at-glance view of your open trades. Clicking on a position in the list will open its summary. From there you can use the View chart button to go directly to that market's chart.
submitted by kraken-lloyd to cryptowatch [link] [comments]

Policy Proposal: Carbon Taxation


As I write this, I am living in Canada in the last few days before our 2019 federal election (this post happened to come out on election night), and while since the start of the campaign there have been twists and turns that any election has, the main issue has been climate change. Being in the rural area that I am in, the Liberal Trudeau government's carbon taxation program is very unpopular. Even among progressive young people it's viewed as a half-measure compared to the option of various command-and-control regulations. With this first-hand experience with the policy and a general sense of frustration with extremely sociology undergrad voice "the discourse" surrounding climate change policy, I'm putting forward a defense of carbon taxation and a proposal for what it would look like in the United States.


Fundamentally, an economic externality is something tangible that people have preferences about, but aren’t involved in the market transactions between a producer and consumer. Therefore, its cost or benefit is not properly included in existing exchange. These externalities can be positive or negative, both are market failures. Positive externalities are not properly incentivized by market forces, and negative ones are not properly punished for generating negative effects. Climate change is caused by perhaps the most obvious negative externality one can think of in carbon emissions. Carbon emissions from energy generation are something tangible, people have preferences about it (namely, to have less of it), and because it affects literally everyone on earth, its true cost isn’t properly reflected in the price of exchange involving it.
Let’s be more specific though and build a proper theoretical microeconomic model of negative externalities to give us a framework for which to actually examine this through. Basic ideas for this come from my intermediate micro textbook (Varian, 2014), but the context of its usage is different. Using an Edgeworth Box here1, we can illustrate a situation in which negative externalities exist, and a plausible way markets could be set up to avoid them. Normally if the trade-off is of a product and some other product, or for the sake of this situation money, between people competitive markets will result in a Pareto efficient outcome. In theory, this could include carbon emissions if someone could simply pay fossil fuel companies/consumers of them to not emit fossil fuels, you could likely set something like this up on a small scale with university roommates arguing over the degree of marijuana smoke that is acceptable in the dorm. Two big problems with this market-based view exist however, first the exact efficient outcome being taken in a general equilibrium model depends on the initial endowments of goods, and in a situation where it is the proverbial little man vs the largest oil company, there’s a power imbalance that it wouldn’t be unreasonable to sacrifice some efficiency by using some government power to try to equalize. That’s an issue of wealth distribution though, and outside the scope of this post. The second problem and one of interest to us here is the fact that by definition there is no market for externalities, and that because carbon emissions affect everyone in a small amount, there is no motivation for straight-up bribery of the angry roommate kind just mentioned. This means that the Pareto efficient outcome is not reachable using energy markets as they exist without government intervention, but also makes it clear the paths of policy that can be taken to fix this, design a market in which energy producers must take into account not only their marginal private cost of emmissions but the social cost of carbon. There are two main ways to attempt to internalize this externality and both take a different approach. One is to set up defined property rights for carbon emissions and create a market for a defined maximum scarce amount of that property. This is cap and trade, a policy that has been used with effectiveness in some areas and likely sits better with many conservatives politically than the second policy approach, but I will not be talking about it much here not out of a deep dislike but because A, someone already did a post about that and B, that’s not the policy up for debate in the current Canadian election so it’s not on my mind. The second approach is to directly impose an estimate of the social cost of carbon on emissions. This is carbon taxation, and I will now be investigating it in detail here.

Pigouvian Taxation

Arthur Pigou was an English economist who in the 1920s wrote about this mismatch between the marginal private cost of production with negative externalities and the marginal social cost of said production (Pigou, 1920). Somewhat obviously, given the time of writing this was written without much mathematical rigor, but the basic theory remains true, and he too saw the possibility of using a tax to correct this. The exact math here can be done without too much difficulty if you’re willing to indulge me on overuse of the term “marginal” to avoid having to do partial derivatives. Make those producing the emissions have a cost function that takes into account the direct energy production cost and the carbon emissions, where increasing emissions makes it easier to produce the energy. Then you define other people’s production functions (of what doesn’t matter, make it magical utility points if you must) as taking into account the direct cost of producing that good, and also the carbon emissions caused by the energy company, with the emissions causing the production of the other people’s good to be more costly. In a world where there is no direct private cost on the energy company for producing more pollution, it will simply generate emissions to make it such that that the returns have diminished to the point where increasing emissions make it no easier to produce energy and the marginal cost of the emissions has gone back up to zero. In equation form, an unregulated emissions producing company would have a profit maximizing amount of emissions of the relative cost (that is, one price divided by the other) of the cost of producing energy with more emissions and marginal amount of emissions equalling zero as opposed to being negative as it is usually.2 If one introduces a carbon tax, a type of Pigouvian tax, into this equation that properly takes into account the marginal social cost of producing magic utility points with respect to an increase in emissions, which is positive, you change the equation from the previous one into an equation that requires the sum of the marginal private cost and marginal social cost being equal to zero, and as the social cost is positive and the private negative, you get some smaller amount of emissions, and a Pareto efficient one at that, the externality has been internalized.
Now, this does not make carbon taxes or Pigouvian taxes in general perfect in every way on a theoretical level. The main issue is that one needs to know the social cost of carbon to get this efficient result. Furthermore, within the simplified world of this model where the assumptions are all true and the marginal tax must equal the negative of the marginal private cost to emit carbon to the energy company, which of course equals out to zero. This means you must know the exact amount of fewer emissions that can be made relative to the unregulated state of affairs due to also knowing the social and private costs at their exact amounts, it would be some quick calculus to take the marginal social cost and get the exact efficient amount of carbon emissions out of that, so you could just set that as a hard limit by fiat. I would say those concerns aren’t dealbreakers though. We do have existing estimates of the social cost of carbon that depend on how much one wishes to discount the future.3 And while the idea of just setting the hard cap makes sense if one takes the model as a given, nobody will ever be able to calculate the true economic costs of something this broad, and setting a hard cap on something as important as energy with a fuzzy estimate sounds like it opens a whole lot more openings for political abuse than a tax that just sticks on top of existing markets.

Empirical Results of Carbon Taxation

Enough theory, carbon taxation is a real thing that has existed in various forms throughout the world, it's probably worth looking at evidence from said real world examples. One of the first, and the most aggressive carbon taxation scheme is in the country of Sweden. They have a price on carbon of $139/ton (Funke and Mattauch, 2018) and have had a 25% decrease in total carbon emissions since then while still having large economic growth.
Similarly to Sweden, the Canadian province of British Columbia has had a very successful (though significantly less aggressive) carbon tax scheme that has had the same results, lower CO2 emissions and still economic growth.4 The success stories have something in common that the biggest failure does not have, careful political consideration. Australia briefly had a carbon pricing scheme in the early years of this decade, but because of poor political selling of the policy it got killed as soon as the next government took office. The stories of carbon taxation/carbon pricing schemes more broadly not making it far are because of politics more than anything.

Some Notes on the Political Consequences

This means some special considerations have to be taken to politics if one wants to actually turn this into policy from economic theory. One that has worked well and is also useful for blocking the worst impulses government might have to abuse a carbon tax is a commitment to keeping the carbon tax revenue neutral and divvying up the money not on existing government spending, but cuts on existing taxes or a straight up rebate. BC’s provincial example used it to cut other taxes, and the current Canadian federal scheme uses a rebate that gives a flat rate to families of a given size regardless of how much carbon intensive products they consume. The rebate solution feels (and we’re delving into prax territory here because this can only be political speculation) like the best way to market it to a general audience. Particularly if you phrased it as a “people’s carbon fund” or something along those lines to try to lessen the left’s (legitimate) concerns about it being inequality increasing to poor people in rural areas. In general free money is a popular policy, and I personally feel like the Liberals probably should have spent more time emphasizing its existence in their campaign for it, because the Conservatives are basically pretending the rebate doesn’t exist in their anti-carbon tax campaign material.
The revenue neutral solution can also help to stop government abuse of carbon taxation as a political bargaining chip in funding discussions, making the setting of the price detached from any reasonable estimates of the social cost of carbon, obviously the price is still subject to political machinations as it stands, but that gives it some independence. More broadly, I’d argue that this is a strength of carbon taxation over cap and trade, because the exact cap set by the government in a given year is subject to constant lobbying and some less than savory types might be trying to violate it under the table. Finally, it is important to note that a carbon tax could be easily undermined via the government giving certain groups exemption from it because they politic-ed hard enough, and that should be avoided at all costs for hopefully obvious reasons, rent seeking is bad.5

How to Adapt to America

This isn’t a Canadian policy proposal despite the examples that I’ve been drawing from, it’s for America. It’s difficult to know exactly how to adapt it to an American audience, but it will definitely be important to keep in mind two things, the realities of having to argue among the left in a hypothetical Democratic primary scenario (I know the BE running for president thing doesn’t specify running as Democrats, but this would certainly only fly among them as opposed to the GOP lol) where a lot of people might think of carbon taxation as a neoliberal half measure or something. And the fact that the general American population has around a fifth of people who still outright deny human caused climate change as existing means that once you get into the general election you have to pivot hard to make it acceptable to the median voter. That means you need some populist coating, I suggest proposing it as launching the Carbon Social Fund, a direct tax credit/benefit that comes at a flat rate to people depending on family composition (maybe give more to people with more children to get some pro-natalist moderate conservatives on board) which is of course funded by a carbon tax. I also think that the price should be lower than actual estimates of the social cost of carbon, because it’s hard enough to sell it in the first place.6 The exact terminology that I would put in the policy proposal if I were an actual Democratic Presidential candidate might be as follows: “As President of the United States, /badeconomics would introduce the Carbon Social Fund, a tax rebate paid for by carbon taxes on the big polluters.7 Starting at $40/ton of Carbon Dioxide emissions, this will work to take the biggest step our country has taken towards mitigating climate change while also having the Carbon Social Fund pay out equally to families of the same size to benefit those who do not consume from polluting industries and reduce inequality that could be caused by this policy on its own.” Pandering to lefty interests a bit? Yes, but when you’re running for an elected office through a Democratic primary process, that language must be used. Ultimately this is just a carbon tax/rebate dressed up as some broader social program to do whatever we can to avoid the focus on the word “tax”.


I am finishing this post just as the Canadian election results are coming in, and the Green party appears to be doing surprisingly well, in fact as I make the final copyedits to this post the Green party just took the district I live in. Clearly there is a lot of action in the western world towards climate policy progress. A lot of progressives seem to be missing the more elegant economic policy solutions for a sea of command-and-control regulations that do more to make them feel like they’re defeating Big Oil without accomplishing much concretely, especially as many conservatives are still deniers outright. Let’s use a policy agreed upon by economists across the political spectrum from Mankiw to Stiglitz, already in place and various countries, and that when implemented correctly is Pareto efficient. Let us move forward with carbon taxation.


  1. An Edgeworth Box is essentially two consumer theory diagrams stacked on top of each other. One good on one axis, a second good on the other. Indifference curves act as normal but instead of budget constraints you have initial endowments as the baseline, with the relative price of the two goods being its slope. Because of the way the diagram is set up, it shows the distribution of a finite amount of good 1 and good 2 between two people. There is a set of Pareto efficient good distributions along the Edgeworth Box, in which you can’t have one person reach a higher indifference curve without having the other person get booted to a lower one. And a free market will result in one of these Pareto efficient outcomes as equilibrium with the particular outcome depending on initial endowments (assuming competition, convex preferences, no distortionary taxes/regulation, etc.)
  2. Or if you prefer, the point at which the derivative of the cost function of energy with respect to carbon emissions being equal to zero. EnergyProductionCost(Emissions)’ = 0.
  3. Extremely frustrating sidenote here, the EPA used to have a continuously updated social cost of carbon estimate in USD, one that I in fact linked to in the body of this post. However, the EPA more or less stopped doing this once Donald Trump took office as President. They did do one attempt at it about two years ago where they unceremoniously dropped a PDF that contained a ludicrously low estimate of the social cost of carbon and have not attempted to do so since. Therefore the EPA numbers that I am using are somewhat outdated, and are on a subdomain of the EPA website that archives the site exactly as it was literally the day before Trump became President. Which is both fortunate for me that it exists, and extremely frustrating that it has to exist because of the current regime.
  4. There is broader research on the effects of carbon taxation that aren’t just these anecdotes, gone over in (Metcalf, 2019). But with something as macro-level and relatively rare as carbon taxation, there is very little that can be done as identification strategy other than comparing the results of places that did implement carbon taxes with similar but not entirely the same other places that didn’t (eg: BC vs other Canadian provinces). It’s better than nothing, but isn’t as nice as one would like for something for which the theory comes from micro, which usually gets larger samples and more opportunities for different statistical techniques.
  5. Not mentioned in the body of this post because I genuinely don’t know how to feel about it is the idea of a carbon tariff/border adjustment. The idea is that to avoid excessive shifting of creating demand of fossil fuels via imports, one should implement a tariff on entry of said fossil fuels/fossil fuel derived goods commensurate with the carbon tax rate on it if it was being imported from a carbon pricing-less country. I am somewhat dogmatically in favor of free trade, but the argument on this really does make a lot of sense and I think I could be convinced either way, anyway just a note that I am aware of it and am not including it due to my own conflictedness more than anything.
  6. You could also make the take that making the argument for a carbon tax is so hard that you might as well go in for the full $50/ton pricing, I could see either way, Presidential electoral politics tactics can’t really be empirically proven on this sort of thing.
  7. I’m aware legal incidence of a tax has nothing to do with how much of it consumers actually pay, I’m just drawing attention to it for marketing reasons.

Print and Academic Citations

Varian, Hal. 2014. Intermediate Microeconomics: A Modern Approach. New York: W.W. Norton & Company.
Pigou, Arthur. 1920. The Economics of Welfare. London: Macmillan.
Funke, Franziska and Mattauch, Linus. 2018. Why is carbon pricing in some countries more successful than in others?. Oxford: Our World in Data.
Metcalf, Gilbert. On the Economics of a Carbon Tax for the United States. Washington D.C.: Brookings Institution.
submitted by papermarioguy02 to badeconomics [link] [comments]

i don't like doing this but here we are

this should be 10 thousand words
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Patch 1.6 "Ironclad" Notes: What They Actually Mean

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How to Trade in commodities with AxisDirect Ledger balance Demo  AxisDirect Axis direct buy and sell shares, Stock Market Trade in currencies with AxisDirect How to do Intraday Trading Using Axis Direct? (Hindi version)

Axis Direct Intraday Brokerage Charges. When it comes to intraday trading, the brokerage charges levied by Axis Direct are in the range of 0.03% to 0.05%, depending on the plan.Having said that, you should try and negotiate as much as you can during your account opening process with the executive. Now create positions in E-Margin with just 25% funds and carry it upto 90 trading days. E-Margin is a unique product where you can buy stocks in delivery with margin as low as 25% and carry it for the next 90 trading days. During the 90 day trading period, you can either square off or take delivery of your position by bringing in the remaining Axis Direct e Margin. For traders into margin trading, Axis Direct e Margin is a product that has been developed just for them. With this, you can invest in around 500 stocks by putting up a margin amount of as low as 25% of the total turnover. Axis Direct special offers, Demat AMC charges and services. Open Demat account and trade now at low brokerage charges in all segments. Axis Direct Margin Calculator is an online tool which will help you calculate Exposure provided by Axis Direct for different segments like Intraday, Delivery, F&O, Currency & Commodity. With the help of this online tool, you will be able to calculate Axis Direct margin funding & also will be able to calculate the total amount of extra shares

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How to Trade in commodities with AxisDirect

Experience a whole new world of investing that's #simplehai with Axis Direct. Know more and earn more in stocks, equity, Mutual Funds, IPOs, NFOs, currency, commodity and much more at Axis Direct. Get info as you trade on Axis Direct - Online Trading simplified. ... E margin trading: stock market - Duration: 5:04. Knowledge Guru M 15,109 views. 5:04. Trading made easier: With this new platform, Get an enhanced trading experience with multiple features like upfront stock eligibility, margin requirement, market depth, . ... Access your recent orders, trades, positions & limits from anywhere within the trading session. Experience a whole new world of investing that's #simplehai with Axis Direct. Know more and earn ... Please check with Axis Direct or any trading platform for the margin or amount that you can buy the shares leveraging the amount provided by the bank. Also for the cut off time please check with ...