Author: Andrew Sullivan

The oldest Bitcoin exchange has gone offline and appears to be insolvent. The crash has cast doubt on the crypto-currency’s future, but Patrick McGuire downplays the event:

For those who are taking the long-view of Bitcoin, this is a large speed bump that will cause a lot of people grief for a long time; but there are bigger and better services on the way that will be able to learn from this crucial example of how not to run a Bitcoin exchange.

Brian Doherty puts the crash into perspective:

A reminder: if you had invested $1,000 in the horrible mistake of Bitcoin five months ago, that thousand would be worth about four times that today. After this Mt. Gox news.

Certainly, that huge value increase is not proof of Bitcoin’s eternal value as either investment or currency (and inflation in the former isn’t that healthy for use as the latter). But it is a sign that “it’s over, man” seems doubtful. People still believe. And that’s important when it comes to either investment or currency.

Kadhim Shubber bids the exchange good riddance:

Mt. Gox has become a gangrenous limb, infecting the wider bitcoin community with fear, uncertainty, and doubt.

Its reputation has been in a slow decline for some time now—toward the end of last year, news emerged that $5 million of Mt. Gox’s cash had been seized by the U.S. government. The revelations appeared to explain why withdrawals from Mt. Gox had been slow since June 2013, when the seizures occurred. As new and better-run exchanges sprung up, Mt. Gox increasingly became a burden, a holdover from bitcoin’s teenage years.

McArdle thinks the Mt. Gox crash makes Bitcoin regulation inevitable:

I’ve never been very bullish on Bitcoin, because ultimately, the better it performs at evading government surveillance of currency transactions (and government ability to manage debt loads via inflation), the harder those governments are going to try to shut it down. And it turns out that governments are very good at shutting down these sorts of … call them financial workarounds … because they can order the banks and payment networks that service the vast regular economy to refuse to take Bitcoins or take payments from companies that do take Bitcoins. What governments have done to online poker and offshore banking havens, they can do to Bitcoin vendors.

What happened at Mt. Gox only helps the government make its case for much tighter regulation of these networks.

Heather Timmons notes that some Bitcoiners are coming around to the idea of regulation, at least from within:

A growing number of participants believe the nascent bitcoin industry needs to accept the fact that expanding beyond the fringe comes with some some trappings of accountability.

“Nowadays, all bitcoin exchanges are very seriously considering and implementing compliance requirements based on their local jurisdiction’s rules,” said Eddy Travia, chief start-up officer of Seedcoin, a bitcoin company incubator. His firm’s investments include MexBT, a Mexican Bitcoin exchange, where “a large part of the resources…are invested into compliance-related activities,” he said, mostly based on self-imposed rules that are “a kind of self-regulation in anticipation of any potential concerns from the local authorities.”

Felix Salmon assesses the situation:

I actually do believe Coinbase and other next-generation bitcoin companies when they say that they’re much more robust than their predecessors. But I don’t believe that regulators, and the public at large, will believe them. Bitcoin is based on mistrust, which makes it almost impossible for this circle to be squared. There is a small number of cryptogeeks who really love the paradox that they can trust the protocol precisely because they don’t need to trust any given institution. Regulators, it’s fair to say, tend not to be among them. And neither are normal people, who don’t understand the math behind bitcoin, and who have no real ability to secure their coins on their own, and who thereforeneed to be able to trust whatever institution they’re using to store their bitcoin-denominated wealth.

In order for the end of Mt Gox to be a blessing for bitcoin, we’re going to need to see an influx ofnew entrants into the asset class — people who never trusted Mt Gox, but who are happy to trust (say) Coinbase.

A Salt Lake City school got national attention last month for refusing to give meals to students with outstanding lunch bills, following similar decisions in Texas and New Jersey. Patricia Montague of the School Nutrition Association calls the rise of lunch debt “a broad and growing national problem”:

School meal programs are self-sustaining and financially independent of a school district’s education budget. However, federal regulations prohibit school meal programs from carrying debt from unpaid meal charges from one school year to the next. So when parents don’t pay the balance, and meal programs are unable to cover the costs, school districts are forced to pick up the tab. As a result, many school meal programs have been forced to institute controversial charge policies governing whether, and what, their school cafeterias will serve to students who are unable to pay for a meal.

Research indicates that an increasing number of children arrive in the cafeteria unable to pay for their meals. A 2012 SNA survey of school meal program directors found that 53 percent of school districts were experiencing an increase in unpaid meal charges. Of those facing the increase, 56 percent anticipated that the accumulated debt from those charges would be greater at the end of the school year compared with that of the previous school year. Thirty-three percent anticipated a significant increase in debt. Some meal programs acquire thousands, even hundreds of thousands, of dollars in debt from unpaid meal charges. New York City’s public schools reportedly incurred $42 million in unpaid meal debt between 2004 and 2011.

A reader asked in the context of the Venezuela unrest, “Do you really think that every regime that you don’t like is necessarily illegitimate?” Another reader replies:

Egypt is probably the best example here. Mubarak was pro-Western but was very clearly illegitimate and undemocratic. Morsi was popularly elected and certainly had more legitimacy than Mubarak, but also had his authoritarian streak. We can rightly condemn Mubarak’s regime for its lack of legitimacy and then turn around and criticize Morsi and the Muslim Brotherhood for attempting to consolidate power and its increasing authoritarianism. And we can now be wary that the army that replaced Morsi may not guide the country back to democracy.

Venezuela, where I lived for 9 years in the ’80s and early ’90s, is a similar story. The country has had a reasonably democratic, albeit very corrupt, government for many years. It could rightfully be criticized for enriching the elite and ignoring the country’s poor and sowing the seeds for its own electoral overthrow by Hugo Chavez. On the other hand, Chavez, whether you agree with his policies or not, became increasingly un-democratic.

Despite the fact that he used the trappings of democracy, via elections and referenda, he nonetheless became increasingly intolerant of dissent, manipulative of elections, and generally undemocratic, not to mention his economic repression of opponents. This appears to have followed through to the government of Nicholas Maduro. If the opposition does manage to bring down Maduro, there is no way of knowing how things will end up. It could be that a chastened opposition decides that it will govern both effectively and legitimately; it is also possible that Maduro could be replaced with a right-wing dictator, whose policies might be more pro-western but who may be more illegitimate than Chavez or Maduro.

Because there is a gradient in legitimacy from “mostly democratic” to “elected dictatorships,” it is hard to draw a line, especially when an inherently un-democractic means is used to bring about a change in regime. Moreover, as with Egypt, there is no guarantee that the outcome of a popular overthrow of an authoritarian leader won’t lead to his replacement by another authoritarian leader. I didn’t support Chavez in the least, but I thought the military coup against him in 2002 was ill-advised.

But at this point things in Venezuela may have reached a breaking point. It is always my hope that the two sides will seek compromise and that transition from authoritarianism to democracy is (mostly) smooth (and it does happen; for example Augusto Pinochet, perhaps one of the most authoritarian and illegitimate leaders in the Western Hemisphere, nonetheless voluntarily gave up his power and abided by the results of a free and fair referendum on his rule. It is perhaps not surprising that Chile has been a stable Democracy since). I would love nothing more than for Maduro to release political prisoners, loosen restrictions on the press, decentralize power, etc., and for future elections to be completely free and fair. I’m not optimistic.

Richard Obuchi makes related points:

Polity IV is a project of the Center for Systemic Peace, which codifies characteristics of political regimes in order to classify them –in opposite extremes- as “Institutionalized Democracies” or “Autocratic Regimes”. To formulate the indicator, Polity IV considers the election mechanism for the Executive Power (meaning regulations, competition and open participation); institutional constraints on the exercise of power by the Executive Power; and the degree of regulation and political competition.

Even though President Maduro claims that the 19 elections held in Venezuela between 1999 and 2013 confirm Venezuela’s democratic nature, in truth the country’s political system tends toward an autocratic regime.

Rodrigo Linares blames the Venezuelan crisis on institutional decay. He argues that the “rock-bottom-basic institutions a modern country needs – the high school civics triad of the Executive, the Legislature, and the courts – have just plain stopped operating in anything like a recognizable form”:

[I]n theory, there’s supposed to be a National Assembly and an independent Supreme Court in place able to keep an overzealous President in check. That is where Venezuelan institutions, and its politicians, have failed the country. First, in 2004, the Supreme Court was packed with a gaggle of unconditional yes-men (and women), ending any hope for judicial redress. Then our parliament went into a protracted death spiral.

A simplified mission of the Parliament is, of course, to pass legislation, but it is a lot more than that. It is place for different political forces to meet and talk (parler in french). In this space, political forces look for common ground to reach solutions that satisfy all representatives, and through the representatives, the constituents. The Parliament is an outlet for discontent, a space for negotiation where progress is slow but effective.

We talk and argue in Parliament so that we don’t have to do it out in the streets. But we broke Parliament, and turned it into a boxing ring, and we allowed our courts to be packed, breaking the one final check to authoritarian control.

Meanwhile, a reader provides “a personal view of the man Maduro calls a fascist and The Nation considers elitist”:

Leo Lopez and I were roommates in our firstyear at the Kennedy School in 1994. It’s bizarre to seem him branded a right-winger, since his economic views tended to be closer to what The Nation usually supports, which is to say they tended to be a little on the left side of the norm even at Harvard. Those not being my politics, we had some good debates. What I remember clearly is that what he cared about most, and talked about most, was how to improve the lives of Venezuelan people. Never once did he bemoan how the elites in his country needed to take back power. Quite the opposite.

“The very picture of privilege”? Just before school started, when I went to buy furniture for my room, Leo went trolling the streets of Cambridge for discarded junk with which to outfit his bedroom. The desk he made out of an abandoned door was particularly impressive.

Leo stood out in other ways. He was serious in a way that the rest of us weren’t, surely because while all of us cared about public policy (he and I were both in the Masters in Public Policy program) politics in Venezuela mattered to him in a far more profound way than our American debates about whether Tom Foley or Newt Gingrich should be speaker of the house.

Leo’s no elitist. He’s an idealist. He’s not a fascist, he’s a democrat.

Beyond all that, he was also a hell of a nice guy. It’s hard to be that focused on serious matters and still retain a cheerful disposition, but Leo managed it. While we never became close friends, it was pretty much impossible not to like him. Venezuela’s lucky to have him, and I’m sure you’ll join me in praying he stays safe.

(Photo from Getty)

Someone mashed-up Google Street View images with historical paintings:

Redditer shystone remixes old and new London for us in a delightful mash-up that pairs historic paintings of the city with its modern counterpart. A resident of London, they took their love of art and knowledge of the metropolis and found the locations that the 18th and 19th century works depict. Shystone then layered the paintings on top of the contemporary photographs, and often, the two matched up well – even down to a tree or a railing.

More images here. Elsewhere in Street Views, a reader is spurred by the latest VFYW contest to write:

I never did locate the hi-rise in this week’s image, but I was in the general area of southern California. While looking at street views near Long Beach, hoping to spot building in the skyline, I encountered was has to be a first in Google Maps street view. I attached a screen shot for your amusement:

Notice that they did not blur out the face of the pigeon.

Update from a reader:

Similar to the painting Street Views is movie Street Views. Here’s Rocky: