The New Bazaar

At first it was just Bitcoin. Now when someone refers to crypto, they might be talking about ethereum, NFTs, ICOs, smart contracts, DAOs, and a whole bunch of other technologies too numerous to mention. 

Stacy-Marie Ishmael, managing editor for crypto at Bloomberg, joins the show to un-befuddle Cardiff and explain the implications of this suite of technologies. 

Among other topics, they discuss: 

• How a novice can begin learning about crypto
• Whether crypto goes too far towards decentralization
• The inflexibility of smart contracts and algorithms 
• The correlation between cryptocurrencies and risky asset classes
• How crypto can evolve in societally beneficial ways 

And more!

Related links: 

• Stacy's page at Bloomberg
• Bloomberg's Crypto page

John Kemp is senior market analyst at Reuters, where he specializes in oil and energy systems. Having covered these systems for the past quarter-century, John now publishes a newsletter, which happens to be Cardiff's favorite way to keep up with trends in global energy markets.

This episode, recorded on the morning of Monday, February 28th, does touch on the astonishing and fast-moving events in Ukraine and Russia, but it is not principally about them. Nor is it mainly about the economic sanctions against Russia by the US and Europe, or their likely effects. The episode is about the latest trends and possible futures for the markets in oil, gas, renewable technologies, and other parts of the energy landscape.

But the chat also couldn’t avoid talking about geopolitical events like what’s happening with Russia and Ukraine because one of the themes of this episode is how energy markets have increasingly globalized in recent decades. What’s happening in Russia has big effects on what’s happening in Europe, which itself has a big effect on what’s happening in American energy markets. And what happens in East Asia, in Africa, and Latin America – especially in developing nations in those regions – also affects energy markets everywhere else. 

Related links: 

• John Kemp’s newsletter 
• John Kemp on Twitter

Max Frumes and Sujeet Indap are the authors of the book The Caesars Palace Coup: How a Billionaire Brawl Over the Famous Casino Exposed the Power and Greed of Wall Street. 

And the story they tell in the book is intense. Back in the mid-2000s, a private equity firm called Apollo bought Caesars, the company that owns casinos and hotels all over the country, like Caesars Palace in Las Vegas. The deal to buy Caesars was a leveraged buyout, also known as an LBO. Which just means that Apollo borrowed money through loans and bonds to buy it. And then after the deal, Caesars itself was on the hook to pay back those loans and bonds. This is all quite normal -- it's just how these deals work. 

But the timing was awful. Soon after, the financial crisis of 2008 collapsed the economy. Caesars really struggled because people weren’t gambling anymore, and because its customers were no longer booking big conventions and events in its hotels. And so it was inevitable that Caesars would struggle to pay what it owed on all that new debt. 

And so a bunch of distressed debt investors, including the hedge funds Oaktree and Apaloosa, bought the Caesars debt from the investors who owned it before. So now Caesars owed them the money. So those are the two sides... And they ended up waging an utterly brutal fight in the legal system for control of Caesars, the company. 

This is a story that raises all kinds of fascinating questions about how finance actually works in the real world. Whether this kind of antagonistic, adversarial system is in the best interest of the capital markets, the economy, society. And whether it’s the best way for all these brilliant financiers and lawyers and others to spend their time. But also, if you have any interest in finance, it’s just one helluva suspenseful tale.

Related links:

• The Caesars Palace Coup (Amazon page)
• Sujeet Indap and Max Frumes on Twitter

Logan Mohtashami is the lead analyst at Housingwire, where he writes about the housing market and the US economy. And before that, he spent a few decades as a senior lending officer at a real estate company. 

Well before the pandemic, Logan was arguing that during the years 2020 to 2024, housing prices in the US would climb to troubling levels, the result of various coinciding trends in the economy. And that is exactly what's happened. In his chat with Cardiff, Logan explains the forces that have been driving up home prices, and what might happen in the next few years. And he and Cardiff also talk about the ways that housing is such a different, even unique, kind of asset -- and why policies towards housing are so often full of contradiction.

Related links:

• Logan Mohtashami's author page at Housingwire

Tara Watson is an economist and the co-author, with Kalee Thompson, of a new book, “The Border Within: The Economics of Immigration in an Age of Fear”. 

The "border within" refers to how immigration laws are applied to undocumented residents already living inside the country. And it also refers to how immigration laws, and how these laws are applied and enforced, can also create borders between people. Between neighbors. Between residents. Even between husband and wife, between parents and their children.

In her chat with Cardiff, Tara explains why policies that affect undocumented immigrants also affect the places where they live and the economies in which they work. And since most undocumented residents have lived inside the country for more than a decade, these policies also have big consequences for the families and communities in which they are rooted. Tara also surveys what the economics literature shows about the economics of immigration -- bringing needed clarity and nuance to a conversation that so often features little of either.

Links:

• The Border Within: The Economics of Immigration in an Age of Fear
• Tara Watson's home page

Shira Ovide writes the excellent On Tech newsletter at the New York Times. On this episode of The New Bazaar, Shira tells Cardiff about the technology she wants to see in 2022, and whether the potential for technology to better connect the world was oversold. And they chat about the metaverse -- as Shira says, "What if we just called the ‘metaverse’ ...the internet?" -- and the lingering questions about its future.

Also on the show: Do "bits" technologies like social media get too much attention relative to "atoms" technologies that directly influence the physical world? What's the latest on gaming? What are the psychology lessons of the government's approach to sending out free Covid tests? How do online creators make a living?

Related links:

• On Tech newsletter (main page)
• "The Tech I Want in 2022"
• "With Activision, Microsoft Bets on the Future"
• "Why Not Copy YouTube’s Good Idea?"
• "Why Free Covid Tests Went Viral"

More than two decades ago, economist Tyler Cowen published "In Praise of Commercial Culture" -- his first in a series of books about the relationship between the economy and culture.

The book's thesis was simple, but at the time controversial -- that markets and commerce offer the best societal arrangement for promoting creativity and cultural novelty. The book was initially resisted by popular and academic presses and nearly didn't get published, threatening to undermine its own arguments.

In the book, Tyler argues that markets are not just good for artists themselves and how they make a living, but for the quality and the originality of their work. He responds to right-wing critics who argue that a culture rooted in the artistic creations of markets becomes too permissive, and to left-wing critics who say that the profit motive inherent to markets is bad for artistic purity and integrity. Tyler argues that if you really care about creativity – and about diverse groups having access to becoming creators and artists – then markets are better than previous systems based on patronage, or on the direction of the state or the church.

In his chat with Cardiff, Tyler revisits his original arguments, considering them anew to account for all that's happened in the time since the book was published in 2000. What have been the effects on creativity of the dominance of streaming, the ubiquity of smartphones, and more recently the rise of Tiktok and NFTs?

Also on the show: Why were the Medici overrated and rap musicians underrated? Does the easy reproducibility of historically significant artistic works, made possible by new technologies, threaten to cannibalize emergent artists? Is there a meaningful distinction between high-brow and low-brow art? Where has Hollywood gone wrong? How have sports, cooking, amateur photography and other domains of life become more artistic and creative in recent decades?

Finally, Tyler and Cardiff discuss why it can be seductive and easy to become cultural pessimists -- and why both nonetheless remain cultural optimists.

LINKS:

-- In Praise of Commercial Culture (Harvard University Press)

-- Marginal Revolution (Tyler's blog with Alex Tabarrok)

This week, we're sharing a special episode of a podcast we think you might like. It's called Cautionary Tales, and it's made by Tim Harford and the team at Pushkin Industries. You may remember Tim from our recent episode on economic storytelling. 

On his podcast, Tim draws on history and social science to vividly retell the stories of great crimes, accidents and disasters of the past - pointing out valuable lessons for us all from the dithering, death and destruction.

In this episode, Tim tells the story of Lizzie J. Magie (voiced by Helena Bonham Carter!), who should be celebrated as the inventor of what would become Monopoly - but her role in creating the smash hit board game was cynically ignored, even though she had a patent.

Discrimination has marred the careers of many inventors and shut others out from the innovation economy entirely. Could crediting forgotten figures such as Lizzie Magie help address continuing disparities in the patenting of new inventions?

You can hear more episodes of Cautionary Tales at https://link.chtbl.com/newbazaarcautionary.

Ben Ho’s latest book is called Why Trust Matters: An Economist’s Guide to the Ties that Bind. 

His chat with Cardiff is about exactly that: How the concept of trust applies to all kinds of different economic interactions that we experience throughout our lives. And the research that helps us understand why trust so often breaks down, and potentially how to build it back up. 

For example, how do you write a contract between two people or two companies that enhances trust rather than erodes it. When do prenuptial agreements enhance trust, and when don’t they? What about religion and its role in fostering the kind of trust that matters for the economy? 

Why is gossip actually good for trust? When can we trust our economic policymakers? What affect does social media and tools to monitor online reputations have on our trust in each other? 

All this and much more on today’s episode. 

Links from the episode:

• Ben Ho's website (https://bit.ly/3thfViO)
• Cardiff and Aimee are on Twitter at @CardiffGarcia and @AimeePKeane
• Send us an email! You can write to us at [email protected]

To wrap up 2021, The New Bazaar answers questions sent in by listeners. The episode also features, for the first time in front of the mic, executive producer Aimee Keane!

Aimee and Cardiff take questions about pricing strategies, how they choose topics and guests for the show, the tricky tension between wonky and accessible, the Canadian vs the US economy, why the US economic growth has been weak since the 1970s, and more.

Thanks so much to everyone for listening to us this year! We are taking a short break, and we will be back with the next episode on Thursday, January 12th. Happy New Year!

Links:

• "Some NYC Restaurants Tire of Forking Over Delivery-App Fees" (WSJ)

• "Pricing of Digital Products" (Deloitte)

• "A deluge of data is giving rise to a new economy" (The Economist)

• "Is It Fair to Tax Capital Gains at Lower Rates Than Earned Income?" (WSJ)

• "Life after quitting: What happened next to the workers who left their jobs" (WaPo)

• "Why it's not really a labor shortage" (Insider)