Coase teaching us about PhD desk allocations

A furor has erupted at RMIT University in Melbourne over PhD desk allocations. Administration is swiftly moving from a ‘personal’ desk allocation system towards ‘hot desk’ access and many of these students are unhappy. But some students remain indifferent — it is with these students where the solution lies.

It is ironic that a ‘college of business’ is ignoring basic economic theory about how to solve this problem: Coasian bargaining.


Many students prefer to use their desk each day while others decide to work from home. From the perspective of the university, however, all of the students have homogeneous preferences. Or, more accurately, each doctoral fee is associated with a bundle of services (a desk, internet access, a supervisor, and so on).

I propose that these services should be un-bundled and traded. Continue reading

New ride-sharing alliance shows network effects

Uber’s rivals are now teaming up in a new effort to overtake the ride-sharing giant. We’re witnessing a fundamental shift in the way the ride-sharing game is played. This change demonstrates the importance of both local knowledge and the network effects of the sharing economy.


An article in The Australian today told of the joint venture between the US-based Lyft and the new Chinese Didi Kuaidi:

Continue reading

Turnbull innovation policy must focus on economic freedom

There is talk new Prime Minister Malcolm Turnbull will do good for innovation, start-ups and entrepreneurs.

But understanding what good innovation policy looks like entails more than owning an Apple Watch or praising the sharing economy.

Good innovation policy is about entrepreneurship. And entrepreneurs need economic freedom.

The new PM is right to point out the importance of collaboration with universities, that disruption is our friend, and creating a nation “that is agile, that is innovative, that is creative“.

But what entrepreneurs really want is economic freedom — lower taxes, strong rule of law, and limited government.

Innovation policy is too often captivated by doing things, rather than not doing things. We can only hope that Turnbull does not create an innovation policy full of subsidies (like most before him have.). Continue reading

Links – Book Review, Opinion Piece and Cover Article

I received a few comments regarding my previous post, ‘Greek cryptosecession as positive political anarchy‘, specifically about ‘positive political anarchy’. Here is my recent book review of Anarchy Unbound (by Pete Leeson) in the IPA Review. You can read it here.

I had an opinion piece in The West Australian last week on the recent WA crackdown on Uber. WA regulators have released a tender calling for private investigators to undertake ‘covert operations’ to enforce outdated regulations. You can read the text of my article, ‘Public taken for a ride by government crackdown on Uber‘, at this link.


I also co-authored the most recent IPA Review cover article with my IPA colleague Patrick Hannaford. You can read the article, ‘Freedom Works’, at this link.


Greek cryptosecession as positive political anarchy

The recent Greek referendum returned a resounding ‘no’. But this wasn’t the only way Greek citizens voted. In the preceding month there was clear trend in the price of bitcoin (see below). My proposition is that this appreciation can (at least somewhat) be explained through cryptosecession in the context of positive political anarchy.

I propose Greek citizens are revealing their institutional choice between an inefficient state-run financial system or the increasingly efficient anarchist crypto-institution (i.e. bitcoin). My aim here is not to fully explicate the current bitcoin trend (nor the complex Euro-zone and Greek situation). Rather it is to introduce some comparative institutional conjectures.

Clearly some of the bitcoin appreciation is the result of speculation. And we will never be able to tease out what portion of the appreciation is a result of Greek buy orders. However on anecdotal evidence (e.g. tweets by bitcoin exchanges) there has been a particularly sharp increase in bitcoin interest from Greece. This increase in interest is clearly from a low base, but let’s assume that that’s actually a result of the current political context.The interesting question is about why individuals would secede from state-run institutions to anarchistic institutions.

Positive political anarchy is a research program stemming largely from of George Mason BTC_30DayUniversity. Scholars in this field profess positive comparative institutional analysis between governance forms. Two of the best examples are Pete Leeson’s Anarchy Unbound and James C Scott’s The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia. This is distinct from old-school normative anarchy. These scholars intentionally step away from normative arguments for anarchy and focus on new-style ‘positive’ explorations. That is, can anarchy present an efficient solution to particular problems? This is an empirical endeavor that seeks to discover where and when anarchic forms of governance outperform state-enforced regulation.

The underlying logic of positive (or analytical) anarchists is fairly simple: we too often compare perfect forms of government (i.e. omnipotent and benevolent states) with chaotic anarchy (i.e. violence and disorderly individuals). Beginning with these assumptions will always yield the same outcome: governments outperform individuals. However if we assume we are somewhere in the middle—a much more accurate representation of reality—then anarchy may outperform state coercion in efficiency terms.

Cryptosecession is a term coined by my BTC_TWEETcolleague Trent MacDonald (see here). It is the phenomenon of individuals seceding from state-run institutions (and thus jurisdictions) not by physically leaving, but by virtually choosing crypto-technologies such as bitcoin. This has only recently been a possibility — for much of history individuals who wished to escape government-run institutions were forced to physically leave. The costs to physically leave a nation state clearly very high (often prohibitively high). But recently, as Trent proposes, we have seen the rise of crypto-technologies (such as bitcoin) enabling citizens to virtually escape governments while physically remaining within the same jurisdictional borders. This is an effective decrease in the transaction costs of changing institutions.

My proposition is that the current Greece situation is partially explained by cryptosecession in the context of citizen choice over efficient institutions. That is, Greek citizens are seceding from the Greek financial system to the blockchain and bitcoin. From the perspective of positive political anarchy, Greek citzens have a choice between a terribly inefficient government-run financial system and an alternative ‘anarchic’ system of bitcoin. For a rational Greek citizen they will choose the comparatively efficient one. And if bitcoin exchanges are an indication of this choice, then Greeks have chosen to cryptoseceed.

It is important to understand when cryptosecession would be expected to emerge. Cryptosecession becomes a more attractive option for institution-choosing individuals (i.e. more likely) as either: (1) state based institutions become more costly and inefficient; or (2) as alternative crypto-technologies become more efficient. It is the interaction between the efficacy of the institutions that determines the individual choice.

What is interesting about the Greek financial situation is that both sides of this are clear: (1) the financial system is Greece is all but broken and currencies are presenting an ever-uncertain store of value; and (2) as individuals move towards bitcoin it becomes increasingly efficient (it is well known that currencies become more efficient through network and liquidity effects).

My suggestion here is that Greek citizens are effectively performing calculus over potential efficiency losses in their currency choice. And as the Eurozone becomes more politically and economically uncertain—and states become less trustworthy through debasing a currency or defaulting on debt—the possibility of cryptosecession becomes comparatively attractive. Greeks are weighing up the various costs and benefits of remaining in the current financial system against placing their trust in the underlying cryptography and mathematics of bitcoin.

The surge in interest and price for bitcoin is a revealing changing preferences of Greek citizens. Bitcoin may seem a little crazy within a sound financial system and stable currency, but it is a legitimate institutional choice in the Euro-zone.

While this is exiting it is not particularly surprising. We have seen similar dynamics before following the cyclical hyperinflation through the debasing of currency in Argentina. In the words of James C. Scott what we’re witnessing here is a crypto ‘shatter zone’. A place where individuals secede from state power. The shatter zone may not be perfect, but it represents an attractive alternative to the corrupt and coercive governments. This was recently suggested by Jason Potts here.

What is most interesting about this dynamic is that bitcoin (and the blockchain more generally) becomes seemingly more efficient the more individuals join. That is, as individuals escape the Greek financial system in favour of bitcoin, the ‘shatter zone’ only becomes more shiny and attractive as network effects and liquidity take hold.

As new market applications for bitcoin continue to be discovered (e.g. smart contracts and micro payments — see Bitnation) the ability of individuals to escape inefficient state institutions only become more attractive. These are exciting times for crypto-technologies. They are worrying times for the scrambling heavy hands of state power. They’re losing their grip.

My RMIT colleagues, including Jason Potts and Trent MacDonald, are currently working on a project titled the positive political economy of cryptoanarchism. Please feel free to contact me at

Can we privatise town planning?

The answer to this question is predictable: ‘Of course not, that is why we have town planning in the first instance. Private individuals cannot be trusted to take into account those around them. We should leave the decision to experts.’ These are legitimate concerns—cities are complex creatures. Cities suffer from knowledge coordination problems on multiple levels and at multiple scales through time. But the very fact they appear as complex adaptive systems implies the importance of contextual knowledge in their design. And that knowledge rests in the minds of individual citizens; not in the dictates of governments. 

We are continually told that town planning is the task of government. But the question of planning has long been: at what level does planning take place? Privatizing town planning is the process of returning the  planning to where it began: the individual. 

One cannot quickly rule out the capacities of private citizens in favour of some omnipotent (and supposedly benevolent) top-down planner. There are costs and benefits in operating either through bottom-up or top-down institutions. Although the conventional wisdom is that experts can do what individuals cannot, for a brief moment let us assume that the experts are not so benevolent nor the private sector so helpless? Who, then, should be the ‘planner’?

The planning of cities began with governments laying out sewage systems, roads and public transport. This top-down planning was necessary for very basic economic reasons—large efficiency gains come from the ‘optimal’ layout of a city (e.g. if all sewage systems line up). These were not aesthetic or environmental policy concerns—they were economic concerns. These were legitimate because it is difficult to argue that individuals would be able to coordinate on such a broad scale to achieve such objectives. This is the logic of collective action—the idea that many individuals (with diverse interests and high transaction costs) will find it prohibitively difficult to coordinate their actions.

But the role of planners—from heritage overlays to restrictive zoning—has far exceeded their ‘knowledge coordination’ role. These are aesthetic, civic, environmental and political goals. Governments are constantly impeding on localised issues. And as we move further towards more localised problems the ability of individuals to solve the problem quickly begins to outweigh the ability of governments to do so. There are two main reasons for this.

First, on a local level it is individuals with the knowledge about their particular circumstances (a la Hayek 1945). And it is individuals who are best placed to make these decisions. By placing decisions in the hands of ‘experts’ we are quickly losing all of the important data in the system—the knowledge that individuals hold over their own situation, street, and neighborhood. To argue that individuals do not care for their city is tantamount to arguing they do not care for the neighborhood, or street, or home.

And second, designing cities from the bottom-up is a much more flexible, organic and adaptable process. It is this process of spontaneous order and sorting that enables cities such as Houston, Texas to organically create ‘zoning’. This zoning is not of the top-down variety (i.e. governments dictating ‘this is a commercial building’, ‘this is a house’, and so on). The ‘zoning’ emerges from the decisions of individuals taking into account network effects and externalities they pour on each other (i.e. cafes want to be near other cafes).

Thus the ‘planning question’ is whether that discovery process of an optimal city design should be placed in the heavy hand of governments or in the hands of individuals. The first is a series of sporadic inflexible decisions inherently resistant to change. The second is a bottom-up organic process that generates order through the decisions of individuals.

The Innovation Commons: Latest Working Paper on SSRN

Our most recent working paper, The Innovation Commons — Why it Exists, What it Does, Who it Benefits and How, is now up on SSRN here. The paper was recently presented at the International Association for the Study of the Commons (IASC) in Edmonton, Canada.


We propose a new type of commons – an ‘innovation commons’ – that is an emergent institutional solution to ‘the innovation problem’ (defined as a collective action problem, not a market failure problem). In an innovation commons entrepreneurs pool innovation resources Continue reading