Links to Consider, 11/10/2024

Nathan Pinkoski on the state/society fusion; Matt Levine on Michael Saylor; Alberto Mingardi on media and democracy; Aaron Renn on the decline of local business leadership

Nathan Pinkoski writes,

The central drama of the last three decades has been the fusion of state and society. The ’89ers ushered in actually existing postliberalism, a society in which governmental power, cultural power, and economic power are coordinated to buttress regime security and punish the impure. 1989 heralded not the triumph of liberalism but its downfall. However, many refuse to recognize—or cannot recognize—how profoundly the West has changed. Our task is to live in the world into which we are thrown, to see it accurately, and to push it in a better direction.

That is the conclusion, which I jumped to after skimming the essay. Otherwise, TL;DR

Matt Levine writes,

MicroStrategy is primarily a pot of Bitcoins, though it also has a software business that is grudgingly acknowledged in its earnings release.[3] The pot of Bitcoins is worth about $18 billion, according to that earnings release, and is funded partly with debt; MicroStrategy reports about $4.2 billion of long-term debt.[4] This suggests a net asset value of, you know, $14 billion? Plus or minus 50%? Its market capitalization is about $50 billion.

To put this another way, if you have $18 of Bitcoin, then you would probably value your Bitcoin as $18. If you have shares in MicroStrategy backed by $18 of Bitcoin, then the market values it as $50 billion. The market is clearly behaving oddly.

MicroStrategy is headed by Michael Saylor, who is sort of the Lyndon LaRouche of finance. He can talk for hours, sounds very intelligent, and has acquired a cult following.

Twenty-five years ago, long before Bitcoin, MicroStrategy also was a high-flying stock, based on Michael Saylor sounding very intelligent and acquiring a cult following. But in March of 2020, some accounting problems were discovered, the stock crashed, and soon the entire DotCom bubble went down with it.

Don’t use for me for a financial advisor, but it seems to me that there is an obvious bet to make: buy Bitcoin and sell MicroStrategy stock short. That is what Levine syas that MicroStrategy is doing, as it has filed to sell a ton of stock. The bet is saying, “Michael Saylor does not add value to Bitcoin, so sooner or later the stock price will converge to what it should be, based on the value of Bitcoin.” If instead the market increases the “Saylor premium” so that $18 of Bitcoin becomes worth, say, $60 when it is owned by MicroStrategy, the bet will lose money.

Alberto Mingardi writes,

Individual liberty and limited government are fragile, as the American Founders understood well. They rest on a complicated nexus of ideas and institutions and are challenged, daily, both by special interests and by the challenges we all share in grasping the complexity of an order of freedom. It is very easy to grow impatient with it, as it often fails to deliver “solutions”, quick and dirty, to whatever problem of the day.

But it would be disingenuous to conflate the fragility of freedom with our perplexities with technological evolution, particularly in the realm of communication and media.

…The rules and institutions of limited government were conceived thinking of our limited cognitive abilities, which may have been affected negatively by the Internet or TV, but they were not great to begin with.

If technology and communication magnify our cognitive limits, then the case for limited government is stronger than ever. Limited government means it is not only the voters’ cognitive abilities that are limited, but their governors too. It is an exercise in building trust through rules.

Aaron Renn writes,

today the majority of American cities no longer have civic elites who both have real corporate or institutional power, and economic interests aligned with the prosperity of their city. One result is that they advocate essentially the same viewpoints and policy set as national and global elites, regardless of what would be best for their own community. This is largely not a cynical or even conscious choice. They are caught up in the groupthink of their class. In some cases they work for those national elites and so have no choice.

St. Louis, where I grew up, used to have a business elite. But McDonnel Aircraft, General Dynamics, and other corporate headquarters are no longer there. Even the giant brewery, Anheuser-Busch, is now foreign owned. A journalist once remarked to me that St. Louis has been reduced to the status of a colony.

As Renn points out, interstate banking was effectively outlawed until the 1980s. While this was inefficient, it had the effect of ensuring that every state had at least one major bank. Now there are only a handful of major banks in the entire country, and they do not have the same stake in local economies.