An agent suing people in small claims court

Many features of our society are an arbitrage at an equilibrium where the opportunity cost of human attention and shrewd judgement is playing a critical role in maintaining the status quo. Agents dropping that cost to zero could be comically disruptive for a time, at least for the slice of people smart enough to leverage it. In the financial press, one which is already being worried about is “agentic cash management”, ie: banks (~20% of the US economy) exist mostly because people are too lazy to collect the spread between 0%+fees and index returns. However one can identify a long list of systems which rely on “basic agency & intelligence opportunity cost” which will be arbitraged over the next couple years, and possibly collapse until they are “Captcha’d” by a new type of opportunity cost. I found it amusing to think about the list… anything which is essentially a thinly veiled lie revealed by first order logic.

The list

  • The legal notion of an “unregulated supplement”
  • Choice of commoditized job (Costco checkout vs. 7-11 checkout)
  • Internal Revenue Code Section 852(b)
  • The notion of an “independent contractor” in the tax code
  • Every form of forgotten subscription you should cancel
  • Every arbitrage of fungible value stores (gold vs. cash vs. bank deposit vs. durable goods vs. airline miles vs. crypto)
  • Every form of penalty which is so limited it makes the crime profitable (MANY TYPES OF SECURITIES, AND MONOPOLY LAW)
  • Every type of toothless penalty (parking tickets in Austin etc.)
  • Arbitration courts
  • The entire system of court filings, and contracts
  • Most forms of “carry trade”, ie: arbitrages of international law, previously only available to international entities
  • Every type of “low effort encryption” (ancient computer languages, law, medical coding, etc.)
  • Advertising (ie: the avoidance of, pi-holes, ad-skips etc.)
  • Every form of “expertise” besides those based on charisma
  • Every type of contestable bill
  • Every type of media publication (arXiv, journals, books - ofc this is just the slop phenomenon)
  • Every “free to enter” or arbitrageable contest
  • Cash management
  • Credit card incentive programs
  • Every form of ineffective upsell
  • Basically every form of secondary market (cars, houses, etc.)
  • Mortgage refinancing / reverse mortgage selling
  • Medicare coding frauds
  • Contracting frauds on home improvements
  • Every type of PE arbitrage on plumbers/HVAC etc.
  • Every “management fee” on a commoditized service (ETFs etc.)
  • Every type of grant application
  • Bankruptcy
  • Salary re-negotiation
  • Obtaining a prescription for a desired medication
  • Claiming lost assets
  • Arbitrage of physical goods and the barter economy (cash4gold, pawn shops etc.)
  • Prospecting mineral rights
  • Agentic narcotics dead drops
  • Marriage contracts (my agent made a homeless guy a justice of the peace, and he married a lot of people)
  • The US electoral system
  • Every form of local government pork (TIF financing, etc.), every form of state and federal pork not needing a human lobby
  • Every system of paper application, consisting of claims cheaper to make than to verify
  • The market for tokens of intelligence themselves! (ie: tokens themselves destroy the brand premium on tokens, recursively accelerating the entire phenomenon)
  • The gaping loophole in the US legal system which is corporate tax treatment & personhood
    • This one is quite funny because it’s basically the pre-tech version of “Agentic Arbitrage”.
    • Over the last 30 years society basically bifurcated into people literate enough for “corporate personhood arbitrage”, and everyone else.
    • The openness of this arbitrage, despite thousands of videos on YouTube explaining how corp law lets people avoid penalties individuals must face, says something dark about the future of humanity.
    • Anyways, for our purposes let’s call this “agentic incorporation”.
  • Every systematically mispriced asset! (0DTE options, etc.)

Re-Captcha-ing

This is a tiny fraction of the space of possibilities, and I doubt I have hit on the precise example which will make this a political issue by being auspiciously abused. I also doubt that this era will be very long; the problem itself is easy enough to understand, and politicians will re-Captcha the entire thing quite soon lest they drop the bag. Like many arbitrages whose continued reasons for remaining open are byzantine, I wouldn’t claim to know exactly how the whole thing goes down; it’s an avalanche problem. It’s really a problem of human behavior after all, but it will be quite funny to watch.

If you think about how these will be re-Captcha’d, in every case it’s quite easy. You merely require a human face-to-face event with a human whose personhood must have some minimal collateral value, acting as a vessel of consequences. That last bit is really going to be the sticking point, because merely requiring counterparties to be human will not be enough. The richest country in the world is literally filled with people who would sell their blood for a hamburger. Merely “harness-ing” these people (pun intended!) would pierce the veil of equal treatment under the law. Ie: we are headed into an era much like when the country was settled, when you could lie about who you were in the old country, but you couldn’t vote unless you were a landowner. The only thing which makes fixing this sticky is that you will once again need to assert the unpleasant truth: that the law exists to sustain the rights of property owners (which isn’t quite comfy for social cohesion). The fact that the lie persists, despite the fact that we require more education from a hairdresser than from a person making an LLM, is sad in itself.

Harnessed humans

I do predict however that there will be a temporary period of “harnessed humans”, where an initial solution that attempts to avoid perturbing the “equal opportunity under the law” lie will be attempted. This will be something like the emergence of Uber, which itself was several of the arbitrages above: that there was no way to enforce breaking taxi medallion laws en masse, and the independent contractor lie. I guess the other possibility would be for these “harnessed serfs” to actually be given the upside of closing the arbitrage, which could go some way towards repairing the inequality plaguing our society. As a person whose family’s history of bootlegging (an example of re-Captcha-ing such an arbitrage) remains in verbal memory, perhaps that’s the outcome I prefer. A related datapoint for handicapping that outcome would be: “Did Uber actually keep some drivers from becoming homeless?” I don’t know the answer.

Well. Back to work.

- John