MetaFilter posts tagged with Economics and Culture

sea & sky

kliuless — Mon, 18 Mar 2013 20:11:11 -0800

seaQuest: what if we could learn to live on/underneath the oceans (or in orbit)? [prev iou sly(er)] also btw... -Why Utopia? -Envisioning Real Utopias -Utopianism, Conservatism, Ideal Theory: Who is Trying to Get Where, From Here?

You mean they sat on the platform with you?

clarknova — Fri, 26 Oct 2012 21:31:48 -0800

In the spirit of the Nobel season, Yasha Levine discusses the history of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel as a PR gimmick for laissez-faire economics, and how its existence is an affront to the Nobel legacy.

use value vs. exchange value

kliuless — Sat, 01 Sep 2012 00:12:16 -0800

What Is Value? What Is Money? (via via)

What is value about? and how do we measure value? Traditionally, the way of measuring value has been not been through measures of value, but actually through measures of appropriation: measures of the amount of money that you can appropriate through that business, not the value that it generates in society. We're starting to see this difference.

Reinventing Society In The Wake Of Big Data

With Big Data we can now begin to actually look at the details of social interaction and how those play out, and are no longer limited to averages like market indices or election results. This is an astounding change. The ability to see the details of the market, of political revolutions, and to be able to predict and control them is definitely a case of Promethean fire -- it could be used for good or for ill, and so Big Data brings us to interesting times. We're going to end up reinventing what it means to have a human society.

more on 'data science' -No, Really, Some of My Best Friends Are Data Scientists -Data Science: The Problem Isn't Statisticians, It's Too Many Poseurs more on 'big data' -Moving from Big Data to Smart Data -Top 10 categories for Big Data sources and mining technologies -Hadoop 2.0 -Grid computing -NSA Overview of Cloud Computing When Central Is Essential - "economist Glen Weyl* views changes in technology as leveling the playing field between central governments and free markets"

In his famous 1945 article, "The Use of Knowledge in Society," F. A. Hayek argued that despite their inequity and inefficiency, free markets were necessary in order to allow the incorporation of information held by dispersed individuals into social decisions. No central planner could hope to collect and process all the information necessary for social decisions; only markets allowed and provided the incentives for disaggregated information processing. Yet, increasingly, information technology is leading individuals to delegate their most "private" decisions to automated processing systems... While these information systems are [currently] mostly nongovernmental, they are sufficiently centralized that it is increasingly hard to see how dispersed information poses the challenge it once did to centralized planning.

The Optimist's Case For Information Technology

Schools have poured a ton of money into ICT and tech-focused startups are circling the education sector aiming to disrupt it. Something's going to change here. IBM built a supercomputer that can win at Jeopardy which is cool but useless and now they're trying to turn it into a medical diagnostic engine. Computer-driven cars are already a real thing. Right now, price is a big barrier to adoption but if there's anything we know about ICT hardware it's that the price will fall... I don't know that doing a medical consult with your home computer and then having your prescription automatically disatched by autonomous vehicle equals a change comparable to indoor plumbing, but it's a big deal.

Two Types of Knowledge: Human Capital and Information - "Human capital is knowledge that is hard to transfer. Information is knowledge that is easy to transfer." Desire Modification: the ultimate technology - "With humanity divided into clades by motivation and personality type, evolution would be very important." [1,2] --- *The Situation Bears Watching - "Hermann Weyl, the mathematician who was Einstein's friend, was a great uncle."

the dawn of a Star Trek generation

kliuless — Fri, 22 Jun 2012 05:43:20 -0800

In Praise of Leisure - "Imagine a world in which most people worked only 15 hours a week. They would be paid as much as, or even more than, they now are, because the fruits of their labor would be distributed more evenly across society. Leisure would occupy far more of their waking hours than work. It was exactly this prospect that John Maynard Keynes conjured up in a little essay published in 1930 called 'Economic Possibilities for Our Grandchildren.' Its thesis was simple. As technological progress made possible an increase in the output of goods per hour worked, people would have to work less and less to satisfy their needs, until in the end they would have to work hardly at all... He thought this condition might be reached in about 100 years — that is, by 2030." (via)

Making money cannot be the permanent business of humanity, for the simple reason that there is nothing to do with money except spend it. And we cannot just go on spending. There will come a point when we will be satiated or disgusted or both. Or will we? ... Keynes thought that the motivational basis of capitalism was "an intense appeal to the money-making and money-loving instincts of individuals." He thought that with the coming of plenty, this motivational drive would lose its social approbation; that is, that capitalism would abolish itself when its work was done. But so accustomed have we become to regarding scarcity as the norm that few of us think about what motives and principles of conduct would, or should, prevail in a world of plenty... Why, despite the surprising accuracy of his growth forecasts, are most of us, almost 100 years on, still working about as hard as we were when he wrote his futuristic essay? The answer is that a free-market economy both gives employers the power to dictate hours and terms of work and inflames our innate tendency toward competitive, status-driven consumption. Keynes was well aware of the evils of capitalism but assumed that they would wither away once their work of wealth creation was done. He did not foresee that they might become permanently entrenched, obscuring the very ideal they were initially intended to serve... The irony, however, is that now that we have at last achieved abundance, the habits bred into us by capitalism have left us incapable of enjoying it properly... If scarcity is always with us, then efficiency, the optimal use of scarce resources, and economics, the science that teaches us efficiency, will always be necessary... scarcity, as most people understand it, has diminished greatly in most societies over the last 200 years. People in rich and even medium-rich countries no longer starve to death. All this implies that the social importance of efficiency has declined, and with it the utility of economics... the problem is that a competitive, monetized economy puts us under continual pressure to want more and more. The 'scarcity' discerned by economists is increasingly an artifact of this pressure. Considered in relation to our vital needs, our state is one not of scarcity but rather of extreme abundance.

How Much Is Enough? What Is It For? "It was the shift to a market-based philosophy of growth that inflamed the insatiability of wants -- by abandoning any interest in the social outcome of growth. The market was bound by the rule of law, but there was no longer any moral, political or cultural restraint on the individual pursuit of wealth. Keynes's notion of satiety had no place. Such a system cannot work according to plan. It is both economically and morally inefficient. The Anglo-American system of the past 30 years, dominated by the financial-services industry, has been retained for the benefit of a predatory plutocracy that creams off the riches in the name of freedom and globalization. So, what intellectual, moral and political resources still exist in Western societies to reverse the onslaught of insatiability and redirect our purposes toward the good life?" Saving State Parks: The End Of Public Funding? "[A]cting one by one by one, they set into motion this dynamic... where suddenly we're not acting collaboratively or collectively as a public. We're acting individually as philanthropists to benefit the thing we're most passionate about. And suddenly we don't have a civic sphere anymore. We don't have political participation. We don't have an 'us.' We have a bunch of 'I's.' "

"And by the way, your kid's stroller sucks."

zarq — Thu, 14 Jun 2012 22:55:51 -0800

The Mommy-Fight Site. What does it mean to raise a child in "America’s highest-income, best-educated Census area? D.C. Urban Moms and Dads might be as close as it gets to a field guide to parentis Washingtonianis" The "Mommy-Fight Site" article appeared in January 2011. The DCUM site owner then posted a thread for discussion amongst their members. ABC News: Upper-Middle Class Parents Clash Over Parenting Advice

sovereignty and taxation

kliuless — Fri, 08 Jun 2012 14:46:51 -0800

David Graeber: Of Flying Cars and the Declining Rate of Profit (via)

Mandel had argued that humanity stood at the verge of a "third technological revolution," as profound as the Agricultural or Industrial Revolution, in which computers, robots, new energy sources, and new information technologies would replace industrial labor – the "end of work" as it soon came to be called – reducing us all to designers and computer technicians coming up with crazy visions that cybernetic factories would produce. End of work arguments were popular in the late seventies and early eighties as social thinkers pondered what would happen to the traditional working-class-led popular struggle once the working class no longer existed. (The answer: it would turn into identity politics.)

Daron Acemoglu: The world our grandchildren will inherit - "The last century has been the age of political rights. Never in our history have so many people taken part in choosing their leaders and having a say in how their societies are governed. To be sure, this unparalleled expansion of civil and political rights remains incomplete. Yet it is profoundly significant, not only due to its transformative impact on the lives of billions, but also because so many other phenomena in recent history are connected to it. The rights revolution is intertwined with diverse trends such as the development of technology; sustained yet uneven economic growth; a general decline in war within recent decades; and a population explosion placing new pressures on our resources and environment." Anatole Kaletsky: A New Capitalism

Seabright engages in some fascinating speculations on anthropology and biology. He posits a form of "group selection" – natural selection operating within entire societies rather than individuals... His conclusion – which is quite pessimistic – is that over millions of years humans have evolved to operate quite successfully in limited and well-defined groups. But we're now moving into a world where the social group that is relevant to the future success, maybe even survival, of humanity is no longer a tribe, a city or a nation. It is the world as a whole. Once humanity is operating on a global level, people have to cooperate on a far broader scale, and the mechanisms for cooperation which have evolved over thousands of years may break down. He gives the financial crisis and the inability of nation states to control it as one example of this breakdown. Others are climate change, nuclear proliferation, energy depletion and environmental destruction. These are all global challenges for which cooperative social mechanisms have not had time to evolve... If you go back to the roots of the monetarist revolution in the 1970s, you find that all its conclusions depend on the assumption that profit-motivated individuals operating in free and competitive markets will make the best possible decisions about the allocation of resources. Frydman and Goldberg explain that this claim of optimal decisions by the markets is simply untrue, unless we also assume that perfect knowledge of reality is possible, at least in theory – and not just about the present, but about the forces shaping the future. If such perfect knowledge does not exist, even in theory, then the claims about self-stabilising markets at root of most economic policy since the early 1980s are false. And if perfect knowledge did exist, then ironically Communist central planning would work as well as a market system. All you would need is a computer large enough to take into account all this knowledge, and it would be able to plan the economy. The reason you need markets is precisely because it's impossible to know what the future will hold. Therefore, markets are a system of experimentation – and they will only work properly if non-market decisions, made by regulators and ultimately by politicians, set some bounds within which market prices can be allowed to freely fluctuate.* This is a very important and profound insight which will ultimately undermine not just the structure of academic economics, but also the way in which people think about the relationship between markets and government.

Capitalism's risk manager: The philanthropic complex - "We envision a society that values more of what matters – not just more... a new emphasis on non-material values like financial security, fairness, community, health, time,** nature, and fun." The Progressive Consumption Tax - "By pulling a simple tax lever, we could reduce the costs of growing income disparities, while at the same time freeing up several trillion dollars of additional resources each year – more than enough to pay down the federal debt and rebuild our crumbling infrastructure – all without requiring painful sacrifices from anyone." Beyond scarcity: The parable of water - "Yet if water abundance is great enough people will look around and see there is no scarcity. They will see they are better off than they have ever been. Eventually, they will understand all the scarcity is artificial. They will also realise they have no need for receptacles, because receptacles have no value. You can live directly off the source. As those with receptacles adjust to the realisation that they have no advantage over those with no receptacles, there is a crisis in the old system. Ultimately, however, more people are provided with access to a constant supply of water than ever before, and on equal terms. The crisis is only for those who used to have an advantage in the system." The end of artificial scarcity - "Without something like a war — or an extra-terrestrial pursuit*** — the system can only be rebalanced by a boom in credit supply and/or artificial scarcity enforced by manufacturers themselves." Debunking goldbugs - "Unlike the gold system, which asks you to put your faith in an inanimate shiny object, a paper 'fiat' system asks you to put faith in relationships, in your neighbours, your community. It asks you to believe that society will honour its debts because it doesn't make sense for it not to – largely because it is just as dependent on you honouring your debts to it, as you are on it honouring its debts to you. It's a system based on quid pro quo relationships. A symbiosis based on trust." Gold's Anti-Social Behaviour Order - "So while gold may be a workable underlier for a redemption option, this doesn't change the fact that at the heart of the system it is faith and faith alone which holds everything together. Whether that faith is reflected in a sovereign's ability to manage the economy on behalf of the group, in the sovereign's guarantee to honour a gold option, or faith in the gold god himself... faith is the constant. Not gold. What's more, while gold encourages anti-social behaviour and hoarding in individuals, a fiat-based system encourages the very opposite: sharing, distribution, collaboration and cooperation." Space opera, beyond finance edition

That includes the notion that in the future there will likely be more currencies not less. "Perhaps even billions of currencies," he says, sketching out a world where every individual and every human network boasts its own unit of exchange. He believes that city-states will become more relevant than nations. And that communities and networks will take control over their own units of account. Virtual currencies such as BitCoin or Facebook credits or others not yet invented, meanwhile, could well start to rival established state-issued money both in private exchange and international trade. And community-led Peer2Peer networks will run alongside more established currency systems. If you thought exchange rates might pose a problem here, Park says technology will provide us with something akin to a "universal translator" for establishing relative values. Real-time and cost efficient. The concept of pricing, meanwhile, will likely to be turned on its head entirely. That's because in the future Park believes prices will become a function of who you are just as much as broader supply and demand fundamentals. One reason why reputation tracking will once again become critical to business, investment and even daily exchange of goods. Just like when a gentleman's word used to be his bond.

previously :P --- *gzip the universe: "I feel we look at matter and information and we see the dichotomy because it's semiotcratic to do so. Just as we look at particles and see fermions (things that can't be in the same place at the same time) and bosons (things that can be so). Perhaps it's just an artefact of our measuring equipment. It's all string vibrations, further down. And rooms and corridors. Buildings and streets (tell that to those in Catalhoyuk!). And objects and textures, of course, animate/inanimate, background/attended. Mesh/tree, mesh-becoming/tree-becoming, branching/canalising, push/pull. But we've talked about that, or we will. We've created an arboreal world, we've also been created. We can't assign causality, only proximity. Does it makes sense to talk about any thing if everything is every thing?" or look at the world in terms of affordances, viz. Hans Rosling: Religions and babies **Paul Ford: 10 Timeframes - 'we're asking people to spend their heartbeats on things we make'

The time you spend is not your own. You are, as a class of human beings, responsible for more pure raw time, broken into more units, than almost anyone else. You spent two years learning, focusing, exploring, but that was your time; now you are about to spend whole decades, whole centuries, of cumulative moments, of other people’s time. People using your systems, playing with your toys, fiddling with your abstractions. And I want you to ask yourself when you make things, when you prototype interactions, am I thinking about my own clock, or the user’s? Am I going to help someone make order in his or her life, or am I going to send that person to a commune in Vermont? There is an immense opportunity—maybe it’s even a business opportunity—to look at our temporal world and think about calendars and clocks and human behavior, to think about each interaction as a specific unit, to take careful note of how we parcel out moments. Whether a mouse moving across a screen or the progress of a Facebook post through a thousand different servers, the way we value time seems to have altered, as if the earth tilted on its axis, as if the seasons are different and new. So that is my question for all of you: What is the new calendar? What are the new seasons? The new weeks and months and decades? As a class of individuals, we make the schedule. What can we do to help others understand it? If we are going to ask people, in the form of our products, in the form of the things we make, to spend their heartbeats—if we are going to ask them to spend their heartbeats on us, on our ideas, how can we be sure, far more sure than we are now, that they spend those heartbeats wisely?

***cf. John Hodgman: Design, explained & Reggie Watts disorients you in the most entertaining way

Executive Compensation

kliuless — Tue, 03 Apr 2012 04:32:10 -0800

The Incentive Bubble (ungated pdf) - "The fraying of the compact of American capitalism by rising income inequality and repeated governance crises is disturbing. But misallocations of financial, real, and human capital arising from the financial-incentive bubble are much more worrisome to those concerned with the competitiveness of the American economy."

An economy can be only as strong as the allocation mechanisms that ensure that capital of all types moves toward its highest social use. When risk is repeatedly mispriced because investors enjoy skewed incentive schemes, financial capital is being misallocated. When managers undertake unwise investments or mergers in order to meet expectations that will trigger large compensation packages, real capital is being misallocated. And when relative compensation is as distorted as it has been by the financial-incentive bubble over the past several decades, one can only assume that human capital is being misallocated, to a disturbing degree. Awakening our monitors to their responsibilities and to the flaws of market-based compensation provides the best hope for correcting these misallocations and strengthening the U.S. economy for the challenges of this century.

Satyajit Das: ~~Pravda~~ The Economist's Take on Financial Innovation - "There is no acknowledgement that much of what is called financial innovation is economic rent extraction, exploiting lack of transparency as well as information and knowledge asymmetries. There is no discussion of the destructive bonus culture which encourages certain behaviours in financial institutions... The unpalatable reality that few, self interested industry participants and their cheerleaders are prepared to admit is that much of what passes for financial innovation is specifically designed to conceal risk, obfuscate investors and reduce transparency. The process is entirely deliberate. Efficiency and transparency is not consistent with the high profit margins on Wall Street and the City. Financial products need to be opaque and priced inefficiently to produce excessive profits." Wall Street's Broken Windows - "James Q. Wilson was a political scientist who often studied the government response to blue collar crime. The public knows him best for his theory called 'broken windows...' Wilson took social norms, community, and ethics seriously. He argued that as community broke down fewer honest citizens were active in monitoring and policing behavior. The breakdown in community was criminogenic – it led to widespread serious blue collar crime. He urged us to take even minor blue collar crimes and breaches of civility seriously and to demand that they be contained through social pressure and policing... Similarly, corruption that is excused and tolerated by elites is unlikely to remain at the level of 'a few deals.' Corruption is likely to spread in incidence and severity precisely because it undermines community and the rule of law and it is likely to grow more pervasive and harmful the more we tolerate it."

The Extractive Institutions in US

kliuless — Thu, 15 Mar 2012 06:54:25 -0800

Why Nations Fail - In a nutshell: "Proximately, prosperity is generated by investment and innovation, but these are acts of faith: investors and innovators must have credible reasons to think that, if successful, they will not be plundered by the powerful. For the polity to provide such reassurance, two conditions have to hold: power has to be centralised and the institutions of power have to be inclusive."

Their explanation is that if the institutions of power enable the elite to serve its own interest – a structure they term "extractive institutions" – the interests of the elite come to collide with, and prevail over, those of the mass of the population. So, if inclusive institutions are necessary, how do they come about? Again, Acemoglu and Robinson are radical. They argue that there is no natural process... Rather, it is only in the interest of the elite to cede power to inclusive institutions if confronted by something even worse, namely the prospect of revolution. The foundations of prosperity are political struggle against privilege.

also see... Daron Acemoglu on Inequality - "When political power is very unequally distributed, it will inevitably be the case that those who have the political power will start using it to create a non-level playing field for themselves... money has started becoming much more important in politics. Politicians have become much more responsive to the wishes and the views and the voice of the very wealthy... by getting rid of regulation, by reducing their tax rates, by getting subsidies for their businesses and so on. That's the big picture. The finance industry is the best exhibit for that story... What's to blame are the institutions. We have let our institutions fail." Francis Fukuyama on Governance - "I would argue that the quality of governance in the U.S. tends to be low precisely because of a continuing tradition of Jacksonian populism. Americans with their democratic roots generally do not trust elite bureaucrats to the extent that the French, Germans, British, or Japanese have in years past. This distrust leads to micromanagement by Congress through proliferating rules and complex, self-contradictory legislative mandates which make poor quality governance a self-fulfilling prophecy. The U.S. is thus caught in a low-level equilibrium trap, in which a hobbled bureaucracy validates everyone's view that the government can't do anything competently." Matthew Yglesias on Rents - "I've come to think that we're more broadly transitioning into a rentier economy in which metaphorical intellectual property rents, literal land rents (which though not relevant for the purposes of the book also involve natural resources like oil and gas), and the quasi-rents associated with air pollution and too big to fail banking are immiserating both capital and labor."

The Failure of Judges and the Rise of Regulators

kliuless — Thu, 23 Feb 2012 06:54:39 -0800

The Control Revolution And Its Discontents - "the long process of algorithmisation over the last 150 years has also, wherever possible, replaced implicit rules/contracts and principal-agent relationships with explicit processes and rules."

And we know that everything falls to dust...

bubukaba — Wed, 28 Sep 2011 03:44:02 -0800

Are small theaters punching a ticket to oblivion? Radical changes in the traditional structure of the lab processing and exhibition sides of the film industry have been filling the lives of small theater operators with uncertainty and worry for the last few years. Will filmstock be the next Kodachrome? (And what will that mean for the future of film preservation?) From the address by Jonas Mekas - Lithuanian survivor of World War II, ebullient émigré to New York City, and groundbreaking maker of films and videos - in the last link. The sound of his voice adds a great deal to it, but some may appreciate a transcription of part of it: "Cinema, filmstocks will disappear - fading out within five.. maybe a little bit longer. But whatever has been made on film should remain and be screened in certain, special places - institutions, museums - only as film. Therefore, every country should build a lab.... Labs made, sponsored by their governements that should continue production of film stocks. All the necessary equipment to develop, to produce prints and projection methods and technology so that films can be projected as films. I'm not [saying] that there should be labs and filmstocks produced for continuation of making films on film. I know that that is not going to happen. But whatever has been produced as film should be always projected, shown, and seen as film. Not as videos. It's completely different. There is a different energy - a different medium. That will have to happen, because what's recorded on film has been recorded during [the] last hundred and some - decades. It's part of our history, of our culture, of our memory. It just cannot be replaced. We have to experience it, see it, live with it. I realize - [this] human obsession to keep everything into eternity. Everything has to survive, everything has to be seen 500 years from now, 1000 years from now. It is a beautiful obsession. And we know that everything falls to dust. Dust. What remains - the whole history of art - is just what is left after all the armies when through, all the disasters, all the dictators, all the fanatics. So whatever is left from past centuries, we treasure, we keep in the museums, and protect, we write dissertations about them. It's only fragments of what humans have left. The same will be with film, the same will be with cinema. Because it's so rare, what is still left. And so many films have disappeared. And it's so precious, what we still have, that we have to do everything to protect it as long as we can."

Grouponomics

kliuless — Thu, 05 May 2011 14:56:15 -0800

The Sharing Economy (via) BONUS -Rachel Botsman explains how technology is enabling trust between strangers -Lisa Gansky talks about the future of sharing -Grouponomics -The overpayers' club: we underutilize equity arrangements at every level of our society

We have made an error, from which we need to backtrack, that can be summed up by the word 'commodification'. In the name of a false efficiency, we have struggled to cram everything from corn to cars to financial and legal relationships into the mold of widgets that can be competitively produced, objectively characterized, and then priced in fixed numeraire at arms-length by open markets. If only this could work... But it can't work. Pretending is killing us. Commodification is a reasonable framework for managing trade in corn and manufactured goods, but is an inappropriate for anything or practice whose quality is revealed over time. Commodities are appropriately priced in money and financed by debt. Goods and services that are not commodities require more complex forms of exchange than what's imagined by an introductory economics textbook. What we must 'buy and sell', most of what matters, is relationships. Managing relationships is mysterious, a difficult problem. But we know more than nothing. Just as commodities are naturally exchanged for debt and money, relationship finance naturally takes the form of equity arrangements, in which cash flows are contingent upon variable outcomes.

brittle efficiency and shallow triumphalism

kliuless — Sun, 17 Apr 2011 13:23:14 -0800

Fareed Zakaria: Are America's Best Days Behind Us? - "We have an Electoral College that no one understands and a Senate that doesn't work, with rules and traditions that allow a single Senator to obstruct democracy without even explaining why. We have a crazy-quilt patchwork of towns, municipalities and states with overlapping authority, bureaucracies and resulting waste. We have a political system geared toward ceaseless fundraising and pandering to the interests of the present with no ability to plan, invest or build for the future. And if one mentions any of this, why, one is being unpatriotic, because we have the perfect system of government, handed down to us by demigods who walked the earth in the late 18th century and who serve as models for us today and forever. America's founders would have been profoundly annoyed by this kind of unreflective ancestor worship." [for/against]

Futurama, baby

kliuless — Thu, 19 Aug 2010 09:56:20 -0800

Goodwill: Monetary policy for the 21st century
Here's my proposal. We should try to arrange things so that the marginal unit of CPI is purchased with "helicopter drop" money. That is, rather than trying to fine-tune wages, asset prices, or credit, central banks should be in the business of fine tuning a rate of transfers from the bank to the public.

[R]outinizing transfers from the central bank to citizens might reshape society. "Free money" would certainly carry consequences, both good and bad, foreseeable and unforeseeable. My suggestion would be that the central banks should make equal transfers to all adult citizens irrespective of income, job, or tax status. That would be simple to understand and administer, and it is "fair" ... flat transfers are guaranteed to put money in the hands of cash-constrained people who will spend it. Flat transfers are much more effective... The most obvious hazards of monetary policy transfers have to do with dependency and incentives to work. If people grow accustomed to getting sizable checks from the central bank, that would change behavior. But not all changes are bad... Employers would undoubtedly have to pay people who work unpleasant jobs more than they currently do. But that's just another way of saying that workers would have greater bargaining power in negotiating employment, as their next best alternative would not be destitution. ...it is possible that too many people would choose to "live off the dole", or that people would come to depend upon income from the central bank, limiting the bank's flexibility to reduce transfers when economic conditions called for that. So here's a variation. Rather than distributing cash directly, the central bank could make transfers by giving out free lottery tickets. The winnings from these lottery tickets would constitute transfers from the central bank to the public. But the odds that any individual would win in a given month could be made small, in order to prevent people from growing dependent on a regular paycheck from government. Plus, it would be easier for the central bank to reduce the "jackpot" offered in its free lottery than to scale back payments that people have come to expect... I know this all sounds a bit crazy, a new normal under which central banks would print money to fund lottery payouts and then fake an asset on their balance sheets to offset the spending. But these are perfectly serious proposals.

BONUS unemployed = 21st century draft horse? - "In one of the most thought-provoking economics books of our times, A Farewell to Alms, Gregory Clark, discusses the concern that improved machines would reduce demand for labor." What's the actual problem in the labor market? - "The overriding impression is of most Americans actually doing OK, with an unemployable underclass bearing the brunt of the recession... think of these unemployed individuals as having gone down economic corridors which are no longer promising and not facing any easy adjustment to set things right again." Zero marginal product workers - "the complementarity view leads one to ask how we might mobilize positive complementarities (rather than leaving orphaned factors of production) more quickly" All the king's horses and all the king's men - "In a highly specialized modern economy, it is much easier to prevent jobs from being destroyed than to create them again, at least assuming those are 'good' jobs in the first place. (Yes, people thought they knew this but it's an even stronger difference than had been believed.) The U.S. auto bailout, for instance, worked better than did most of the stimulus program." The crisis of middle-class America - "Most families in the US have been struggling with flat incomes for more than a generation. The story is not about the recession, but a long-term decline in fortunes."

What, then, is the future of the American Dream? Michael Spence, a Nobel Prize-winning economist, whom the World Bank commissioned to lead a four-year study into the future of global growth, admits to a sense of foreboding. Like a growing number of economists, Spence says he sees the Great Stagnation as a profound crisis of identity for America. For years, the problem was cushioned and partially hidden by the availability of cheap debt. Middle-class Americans were actively encouraged to withdraw equity from their homes, or leach from their retirement funds, in the confidence that ¬property prices and stock markets would permanently defy gravity (a view, among others, promoted by half the world’s Nobel economics prize winners, Spence not included). That cushion is now gone. Easy money has turned into heavy debt. Baby boomers have postponed retirements. College graduates are moving back in with their parents. The barometer is economic. But the anger is human and increasingly political. "I have this gnawing feeling about the future of America," says Spence. "When people lose the sense of optimism, things tend to get more volatile. The future I most fear for America is Latin American: a grossly unequal society that is prone to wild swings from populism to orthodoxy, which makes sensible government increasingly hard to imagine. Look at the Tea Party. People think it came from nowhere. While I don’t agree with their remedies, most Tea Party members are middle-class Americans who have been suffering silently for years." Spence admits he is thinking aloud and going "way beyond the data". And he concedes that America probably still retains its most vibrant strength in its still world-beating capacity for technological innovation. Most economists are not as bleak as Spence. But it is in the neighbourhoods among ordinary Americans that his pessimism gets its loudest echo. "To be pessimistic about the future is so new for Americans and so strikingly un-American," says Spence. "But most people grasp their own situations way better than any economist."

Reseeding the Economy - "let's discuss the third bullet point in what you might call an agenda for 21st century capitalism: recapitalizing the economy. (The first being having an economic purpose and the second creating higher quality demand*) ... The real problem's deeper than fixing a handful of today's broken industries. It's in the institutional structure of the economy ... Yes, we've got to recapitalize the economy. But not with low-potential capital, like cash and machines. With higher order (more productive, more enduring, and more fundamental) kinds of capital." cf. Why Economic Recovery Hinges on Values Cutting the corruption tax - "Many of us take it for granted that government officials will obey the law. In the US, news that the police department in New Orleans committed and covered up crimes like rape and murder reminds us that this needn't be the case. It also reminds us that living with the lawlessness of a weak state might be better than living under a strong state that officials can abuse." Health Care, Uncertainty and Morality - "Uncertainty and asymmetry of information about the quality of goods or services being traded is not, of course, unique to the medical care market. It is ubiquitous in modern economies that trade in highly complex goods and services. We find these characteristics, for example, in financial transactions... How society responds to this flaw in markets depends on the severity of its consequences." cf. Is Health Care Special? & Chinese Hospitals Are Battlegrounds of Discontent - "In 2006, patients or their relatives attacked more than 5500 medical workers, reflecting wide discontent with China's public health care system." Emergence of collective memories - "We understand the dynamics of the world around us as by associating pairs of events, where one event has some influence on the other. These pairs of events can be aggregated into a web of memories representing our understanding of an episode of history. The events and the associations between them need not be directly experienced-they can also be acquired by communication. In this paper we take a network approach to study the dynamics of memories of history. "First we investigate the network structure of a data set consisting of reported events by several individuals and how associations connect them. We focus our measurement on degree distributions, degree correlations, cycles (which represent inconsistencies as they would break the time ordering) and community structure. We proceed to model effects of communication using an agent-based model. We investigate the conditions for the memory webs of different individuals to converge to collective memories, how groups where the individuals have similar memories (but different from other groups) can form. "Our work outlines how the cognitive representation of memories and social structure can co-evolve as a contagious process. We generate some testable hypotheses including that the number of groups is limited as a function of the total population size." --- *A Deeper Kind of Joblessness - Dogs improve office productivity! Bring your dog to work every day :P - Unlimited Vacation Time Not A Dream For Some - Across America: The Urban and the Natural -- nice listening paired w/ (ambient) epic pop :P cheers!

The Woman Who Just Might Save the Planet and Our Pocketbooks

kliuless — Sun, 11 Apr 2010 09:41:13 -0800

What if our economy was not built on competition? Nobel Prize winner Elinor Ostrom talks about her work on cooperation in economics. No Funny Business: Social Norms and Joke Theft

Rules are ideas about how people interact with each other. They are the formal laws and social norms that govern daily life. The legitimacy of formal laws often depends on their compatibility with social norms. Social norms can complement formal laws and, in some cases, stand in when formal legal enforcement is absent or inefficient. In a guest post for the Freakonomics blog, Kal Raustiala and Chris Sprigman write about social norms among stand-up comedians... In a related post, Rajiv Sethi explores other situations in which social norms operate as substitutes for formal laws. He points to Elinor Ostrom's work on self-governance among groups of people with collective rights to natural resources... Sethi also points out that social norms can enforce bad equilibria, citing oppressive attitudes about race, gender, or caste. A related issue is the extent to which formal laws and enforcement can change social norms about acceptable attitudes and behavior.

Social Capital and Community Governance

Social capital generally refers to trust, concern for one's associates, a willingness to live by the norms of one's community, and to punish those who do not. While essential to good governance, these behaviors and dispositions appear to conflict with the fundamental behavioral assumptions of economics whose archetypal individual--"Homo economicus"--is entirely self-regarding. We regard these behaviors and dispositions as aspects of what we term community governance. We suggest that (i) community governance addresses some common market and state failures but typically relies on insider-outsider distinctions that may be morally repugnant; (ii) the individual motivations supporting community governance are not captured by either the conventional self-interested preferences of "Homo economicus" or by unconditional altruism towards one's fellow community members; (iii) well-designed institutions make communities, markets, and states complements, not substitutes; (iv) with poorly designed institutions, markets and states can crowd out community governance; (v) some distributions of property rights are better than others at fostering community governance and assuring complementarity among communities, states, and markets; and (vi) far from representing holdovers from a premodern era, the small-scale local interactions that characterize communities are likely to increase in importance as the economic problems that community governance handles relatively well become more important.

To come up with new policies aimed at widely shared prosperity

His academic work is focused on identifying government's appropriate role — through regulations, taxes, or spending — in a market economy. He is currently engaged in a project to estimate the economic costs of climate change and has worked extensively on the Clean Air Act. He argues that government environmental regulation has improved air quality, leading to reductions in infant mortality rates and higher housing values, while also imposing costs through reducing the scale of manufacturing activity. Greenstone also has done research on topics ranging from the beneficial impacts of mandatory disclosure laws on stock prices to the role of antidiscrimination laws in reducing African-American infant mortality rates.

Complexity and doom

Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn't these societies just re-tool in less complex ways? The answer Tainter gives is the simplest one: When societies fail to respond to reduced circumstances through orderly downsizing, it isn't because they don't want to, it's because they can't. In such systems, there is no way to make things a little bit simpler – the whole edifice becomes a huge, interlocking system not readily amenable to change. Tainter doesn't regard the sudden decoherence of these societies as either a tragedy or a mistake—"[U]nder a situation of declining marginal returns collapse may be the most appropriate response", to use his pitiless phrase. Furthermore, even when moderate adjustments could be made, they tend to be resisted, because any simplification discomfits elites.

Do we need a bubble? There are two sorts of world. In a normal world, the equilibrium rate of interest is above the growth rate of the economy. In a weird world, the equilibrium rate of interest is below the growth rate of the economy. What's weird about a weird world is that it needs a bubble, a Ponzi scheme, a chain-letter swindle, for the economy to work well. Utility, The Deus Ex Machina of Economics Nicholas Bernoulli came up with the St. Petersburg Paradox, a position that stands in stark contradiction to Pascal's Wager, arguing that there is no limit to the amount you should be prepared to gamble in quest of a greater fortune... The classical solution to the paradox was proposed by Daniel Bernoulli who argued that the problem was that a dollar isn't a dollar for everyone. What he suggested was that the value of any given amount of money reduced as you became richer... He called this relative value 'utility'. Taking Hope in the Long View For the first time, more than half of the world will have enough food not to be hungry, enough shelter not to be wet, enough clothing not to be cold, and enough medical care not to be worried that they and most of their children will die prematurely of micro-parasites. The big problems for most of humanity will be to find enough conceptual puzzles and diversions in their work and leisure lives to avoid being bored, and enough relative status not to be green with envy of their fellows... How did this miracle come about? The World's Free Virtual School: an interview with Salman Khan Salman Khan is the man behind Khan Academy, a 2009 Tech Award winning site with 12+ million views and 1200+ 10-minute "videos on YouTube covering everything from basic arithmetic and algebra to differential equations, physics, chemistry, biology and finance". We talked with him about building "the world's free virtual school", the potential of open-access learning, using the format for sustainability debates, and challenges in growing a non-profit from zero to global impact. A Short Survey of Network Economics This paper surveys a variety of topics related to network economics. Topics covered include: consumer demand under network effects, compatibility decisions and standardization, technology advances in network industries, two-sided markets, information networks and intellectual property, and social influence. Trust networks The general idea is that there are numerous examples of networks of people who share substantial interests in common, and who have a high level of trust in one another that permits them to undertake risky joint activities. Privilege Is Driving a Smooth Road And Not Even Knowing It People with more privilege, in contrast, can easily imagine that they are independent. A big mark of privilege is that social and economic networks tend to facilitate goals, rather than block them. This makes it easier to ignore the social and economic networks around us; and it makes it easier for the privileged to imagine their accomplishments are the result of their own pure merit... No one is independent; we all rely on a network of social and economic ties to tens of thousands of strangers, just to get through a single day. What the Founding Fathers Really Thought About Corporations Brian Murphy, a history professor at Baruch College in New York, knows a whole lot about corporations in the early days of the American republic. When the Supreme Court struck down restrictions on political spending by corporations in January, the ruling struck him as dramatically at odds with how the Founding Fathers saw the role of the corporation. Objects into people, people into objects, business value That is: your species has another skill. Just like you're good at turning objects into people, you're good at turning people into objects. It's easy for you to subordinate actual humans to the beauty of a System. You're terribly prone to slip into ideology, to elevate objects to totems-to-be-deferred-to. "Business Value" is, I fear, becoming one such totem. The Natural World Vanishes: How Species Cease To Matter Once, on both sides of the Atlantic, fish such as salmon, eels, and, shad were abundant and played an important role in society, feeding millions and providing a livelihood for tens of thousands. But as these fish have steadily dwindled, humans have lost sight of their significance, with each generation accepting a diminished environment as the new norm. The Future of Cities We live in an urban age. The Future of Cities is a series in which the FT explores the appeal of the city and the problems that come with rapid urbanisation, such as health challenges, conflict, development and conservation. The determinants of state fragility The causes and implications of state fragility – also known as state failure – are not yet well understood. This column explores the determinants of state fragility in sub-Saharan Africa and finds that institutions – as measured by civil liberties and the number of revolutions – are the main drivers. It says institutions trump economic, geographic, and historical factors.

Whence Altruism?

zarq — Mon, 22 Mar 2010 12:43:13 -0800

A new study suggests that humanity's sense of fair play and kindness towards strangers is determined by culture, not genetics. Speculation: the finding may be directly related to the rise of religion in human history, as well as more complex economies. (Via). On the other hand, perhaps we learned it from dogs. :)

Be it resolved that financial 'innovation' does not boost economic growth

kliuless — Tue, 02 Mar 2010 06:24:34 -0800

Basicland vs. Sorrowland
A parable about how one nation came to financial ruin by Charles Munger. For extra colour there's... ...a debate on the merits of financial innovation; Jeremy Grantham writes "Beware the Financial Industrial Complex"

Clients can't easily distinguish talent from luck or risk taking. It's an unfair contest, nothing like the fair fight assumed by standard Economics. As we add new products, options, futures, CDOs, hedge funds, and private equity, aggregate fees per dollar rise. As the layers of fees and layers of agents increase, so too products become more complicated and opaque, causing clients to need us more. As total fees in the past grew by 0.5%, we agents basically reached into the clients' balance sheets, snatched the 0.5%, and turned it into income and GDP. Magic! But in doing so, we lowered the savings and investment rate by 0.5%. So, we got a short-term GDP kick at the expense of lower long-term growth. This is true with the whole financial system. Let us say that by 1965 – the middle of one of the best decades in U.S. history – we had perfectly adequate financial services. Of course, adequate tools are vital. That is not the issue here. We're debating the razzmatazz of the last 10 to 15 years. Finance was 3% of GDP in 1965; now it is 7.5%. This is an extra 4.5% load that the real economy carries. The financial system is overfeeding on and slowing down the real economy. It is like running with a large, heavy, and growing bloodsucker on your back. It slows you down. For 100 years the GDP Battleship grew at 3.5%. (Even the Great Depression did not change that trend.) But after 1965 the GDP growth rate ex-finance fell to 3.2% a year. After 1982 it fell to 3.1%, and after 2000 to 2.5%, with all of these measurements to the end of 2007 before the current crisis. From society's point of view, this additional 4.5% burden works like looting or an earthquake. Both increase short-term GDP through replacement effect, but chew up capital. All of the extra financial workers might as well be retirees or children, in that they are supported by the rest of the workforce, but they are much, much more expensive.

BONUS(es) Bonuses boost activity, not quality Bonuses and pay-for-performance are a risky business:

First, it can be hard to see whether employees make the right decisions; superiors do not hold the same information, and the results of decisions play out years later. Second, performance pay will attract exactly those who are willing to take on more risk. People interested in high but steady income will choose other careers. Third, to get their pay, employees may manipulate the system, against the interests of those who set up the incentives: like teachers who are threatened with losing their jobs and teach to the test. Finally, and most perniciously, performance pay can crowd out intrinsic rewards, as when children, having received gold stars for drawing pictures, later draw less than before in their own time. Why draw without getting paid? In organisations that work well, employees identify with their work and their organisations. People want to do a good job because they think they should and because it is the right thing to do... Why then, we ask, do traders and bankers need outsize bonuses and performance pay to get them to do their jobs?

CAUSES So What Exactly Caused the Financial Crisis? [1,2,3] Lessons from the crisis How financial innovation causes bubbles A special report on financial risk: Financial risk got ahead of the world's ability to manage it, cf. Mark-to-Make Believe – Still toxic after all these years, viz. When Goldman Sachs hates marking to market Are Derivatives the Real Problem? "it's the underlying 'business purpose' of transactions. Hedging has a legitimate business purpose. Making markets, speculation, and financing projects have solid business foundations as well. But entering into transactions that serve to hide or obfuscate economic reality work against this principle... let's be clear. The issue isn't derivatives; it's all financial transactions whose objective is to deceive or to weaken financial transparency." FIXES Breaking the Banks: "they promote a noncompetitive industrial organization. They do that by, among other things, creating informational asymmetries. The innovative products they promote -- both derivatives and consumer products -- give them an informational edge over their customers." Maybe it's time to bank simple? The Big Bank Fix:

...many countries with integrated banking systems did not have to bail out any of their financial institutions. Canada's banks were not too big to fail – just too boring to fail. There is nothing in Canada to rival the power of Wall Street or the City of London. This enabled the government to swim against the tide of financial innovation and de-regulation. It is countries like the US and Britain, with politically dominant financial sectors competing to take over financial leadership of the world, that suffered the heaviest losses. This is the point that the well-intentioned regulators miss. At root, the battle between the two approaches is a question of power, not of technical financial economics...

cf. Douglass North POLITICS Business interests and democracy, cf. Persistence of bad governments Were the US & UK central banks complicit in robbing the middle classes? Elizabeth Warren Does The Daily Show Again, cf. Parametric estimations of the world distribution of income The Market's "Howard Beale" Moment How Should We Reform Taxes? [1,2,3] A government that works well is a government that taxes easily [1,2,3,4] CULTURE Institutional failure Double Down Institutional Investing: "Are we the double-down society as far as investing goes? It's sad to see this phenomenon reappearing. Don't we ever learn?" Interview with Raghuram Rajan: "Private sector—yes, it can take care of itself, but its incentives may not be in the public interest; may not even be in the corporate interest if corporate governance is problematic. So the trader could fail the corporation, could also fail society." Power: "The scientists argue that power is corrupting because it leads to moral hypocrisy. Although we almost always know what the right thing to do is - cheating at dice is a sin - power makes it easier to justify the wrongdoing, as we rationalize away our moral mistake." Does feeling like a victim make you selfish? The corporate conscience Ten things that influence conformity: "People use conformity to ingratiate themselves with others... Have you noticed that nonconformers are less likely to care what other people think of them?" Beliefs Conform To Cultural Identities: "an experiment that demonstrates that people don't put as much weight on facts as they do their own belief about how the world is supposed to work" The arts are far more than just another industry: "After gravity, culture is the thing that holds humanity in place." ACADEMIC A financial system ill-equipped to serve the purpose to which it is addressed: "Real market institutions seem designed to hide information and shift consequences rather than reveal outcomes and allocate costs and rewards." [1,2] Market Failure: "I want to propose a new definition of market failure. For me, market failure exists to the extent that innovation is blocked by incumbents. If innovators can succeed by out-competing incumbents, then the market is working. If incumbents have a self-reinforcing system that keeps out innovators, then we have market failure." [1,2] Winding up economists: a research methodology

Q: What is a market? A: it's an institution Q: who owns it? A: often nobody, sometimes a private company Q: so is it a private asset or not? A: not really. Even if it is owned, it has considerable positive externalities. It's what we call a 'public good'. Q: what is a 'public good'? A: It's one of the four varieties of 'market failure'. Q: So you're telling me that a well-functioning market is a 'market failure'.

The disciplines of economics [1,2] High modernism and expert knowledge -- Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed OVERVIEW What Is the "New Normal" for Global Growth? Your undivided attention for the full 90 seconds

To begin with, let's get reacquainted with the fundamental economic problem of our age – lack of global aggregate demand – and how we got to where we are today: (1) Twenty years of accelerated globalization incrementally undermined the real incomes of most developed countries' workers/citizens, forcing governments to promote leverage and asset price appreciation in order to fill in what is known as an "aggregate demand" gap – making sure that consumers keep buying things. When the private sector assumed too much debt and asset prices bubbled (think subprimes and houses, or dotcoms/NASDAQ 5000), American-style capitalism with its leverage, deregulation, and religious belief in lower and lower taxes reached a dead end. There was a willingness to keep on consuming, there just wasn't the wallet. Vigilantes – bond market or otherwise – took away the credit card like parents do with a mall-crazed teenager. (2) The cancellation of credit cards led to the Great Recession and private sector deleveraging, the beginning of government policy reregulation, and gradual deglobalization – a reversal of over 20 years of trade policies and free market orthodoxy. In order to get us out of the sinkhole and avoid another Great Depression, the visible fist of government stepped in to replace the invisible hand of Adam Smith. Short-term interest rates headed to 0% and monetary policies of central banks incorporated new measures labeled "quantitative easing," which essentially involved the writing of trillions of dollars of checks to replace the trillions of dollars of credit that disappeared after Lehman Brothers. In addition, government fiscal policies, in combination with declining revenues, led to double-digit deficits as a percentage of GDP in many countries, a condition unheard of since the Great Depression. (3) For awhile it seemed that all was well, that the government’s checkbook could replace the private market’s wallet and credit cards. Risk markets returned to normal P/Es as did interest rate spreads, and GDP growth resumed; it was only a matter of time before job growth would assure the world that we could believe in the tooth fairy again. Capitalism based on asset price appreciation was back. It would only be a matter of time before home prices followed stock prices higher and those refis and second mortgages would stuff our wallets once again. (4) Ah, but Dubai, Iceland, Ireland and recently Greece pointed to a potential flaw in the model. Shaking hands with the government was a brilliant strategy in 2009 when it was assumed that governments had an infinite capacity to leverage themselves. But what if they didn't? What if, as Carmen Reinhart and Kenneth Rogoff have pointed out in their book, "This Time is Different," our modern era was similar to history over the past several centuries when financial crises led to sovereign defaults or at least uncomfortable economic growth environments where real GDP was subpar based on onerous debt levels – sovereign and private market alike. What if – to put it simply – you couldn't get out of a debt crisis by creating more debt? You are now up-to-date and I've used up all of my 90 seconds...

The Ring of Fire: "These red zone countries are ones with the potential for public debt to exceed 90% of GDP within a few years' time, which would slow GDP by 1% or more. The yellow and green areas are considered to be the most conservative and potentially most solvent, with the potential for higher growth." Forward Don Quixote, the windmills are in sight:

Quixotic journeys often make for great literature, but by definition are rarely productive. I am, after all, referring to windmills here – not their 21st century creation, but their 17th century chasing. Futility, not productivity, was the ultimate fate of Cervantes' man from La Mancha. So it is with hesitation, although quixotic obsession, that I plunge headlong into a discussion of American politics, healthcare legislation, resultant budget deficits and – finally – their potential effect on financial markets. There will be windmills aplenty in the next few pages and not much good can come of these opinions or my tilting in their direction. Still, I mount my steed, lance in hand, and ride forward. Question: What has become of the American nation? Conceived with the vision of liberty and justice for all, we have descended in the clutches of corporate and other special interests to a second world state defined by K Street instead of Independence Square. Our government doesn't work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people. Washington consistently stoops to legislate 10,000-page perversions of healthcare, regulatory reform, defense, and budgetary mandates overflowing with earmarks that serve a monied minority as opposed to an all-too-silent majority. You don't have to be Don Quixote to believe that legislators – and Presidents – often do not work for the benefit of their constituents: A recent NBC News/Wall Street Journal poll reported that over 65% of Americans trust their government to do the right thing "only some of the time" and a stunning 19% said "never." What most politicians apparently are working for is to perpetuate their power – first via district gerrymandering, and then second by around-the-clock campaigning financed by special interest groups. If, by chance, they're ever voted out of office, they have a home just down the street – at K Street – with six-figure incomes as a starting wage. What amazes me most of all is that politicians can be bought so cheaply. Public records show that combined labor, insurance, big pharma and related corporate interests spent just under $500 million last year on healthcare lobbying (not much of which went to politicians) for what is likely to be a $50-100 billion annual return. The fact is that American citizens have never been as divorced from their representatives – and if that description fits the Democratic Congress now in control – then it applies to Republicans as well – past and present. So you watch Fox, or is it MSNBC? O'Reilly or Olbermann? It doesn't matter. You're just being conned into rooting for a team that basically runs the same plays called by lookalike coaches on different sidelines. A "ballot box" pox on all their houses – Senators, Representatives and Presidents alike. There has been no change, there will be no change, until we the American people decide to publicly finance all national and local elections and ban the writing of even a $1 check for our favorite candidates. Undemocratic? Hardly. Get on the internet, use Facebook, YouTube, or Twitter to campaign for your choice. That's the new democracy. When special interests, even singular citizens write a check, it represents a perversion of democracy not the exercise of the First Amendment. Any chance that any of this will happen? Not one ghost of a chance.

The Twilight of the Guilds? "The biggest bubble in the United States is the upper-middle class professional bubble; for the last generation the incomes of Americans with professional degrees continued to rise, sharply in many cases, even as incomes for blue collar workers steadily fell... This can't and won't go on." Towards A Vocation Nation The cost of doing nothing [1,2,3] The Real Roots of the Crisis

Macroeconomists argue that the roots of the crisis are in imbalances: asymmetries in the flow of trade between nations. But those imbalances themselves are just effects. A current account deficit is a symbol: just numbers that point to a deeper reality. The real roots of the crisis aren't about liquidity requirements, reserve ratios, or monetary transmission mechanisms. No amount of regulation or rule-making can fix it. And mere "growth" in GDP, as we're discovering, isn't a cure for it. What really caused the crisis was the fact that we didn't care. Bankers didn't care about the loans they issued. Boards didn't care about bankers. Shareholders didn't care about boards. Markets didn't care about shareholders. Communities didn't care about markets. Society didn't care about communities. No one cared much about society. The fundamental question, then, is this: why not? My answer's simple — and probably even simplistic. But it will serve well enough to make a point. We didn't care because we were chasing stuff. The real crisis is a crisis of nihilism: the belief that apart from stuff, nothing else matters economically. In the name of stuff, we sacrificed what mattered: people, community, comity, trust, education, skill, quality, happiness — and tomorrow itself. It is those institutions — not mere stuff — that underpin authentic value. Stuff is just window dressing. In Wall Street's parlance, we got blown up by a bad trade. Trading stuff for institutions was a bad idea. The real crisis is inside us. It's how we make sense of the world, what motivates us, and in what we value. It is, in short, culture. And it is culturally that we have lost our way.

cf. The Rules Have All Changed: "Julian Sanchez, criticizing guru Umair Haque and his manifesto[s]" [1,2,3,4,5]

funemployment

kliuless — Thu, 11 Feb 2010 13:49:10 -0800

How a New Jobless Era Will Transform America
The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come. (via rw)

American declinism

kliuless — Sun, 31 Jan 2010 12:34:17 -0800

The End of Influence - the latest in a long series documenting the US' relative decline (esp wrt China 1 2 3 4 5) Brad DeLong and Stephen Cohen reflect on what has brought us to our past, but now fast-fading glory: "Roosevelt's strategy [entering WW2] was to make Britain broke before American taxpayers' money was committed in any way to the fight against Hitler." Before delving into our present predicament, however, it might also be useful to briefly consider some of the lessons from Bretton Woods and what the wealth of nations is really built upon.

"The Plague of Free."

joetrip — Sun, 22 Nov 2009 04:17:38 -0800

Doug Rushkoff throws down the gauntlet in his “Radical Abundance” speech at the O’Reilly Web 2.0 conference. Some highlights of the speech: “The only real possible competition to Google and their economy of faux openness would be peer-to-peer exchange.” “As a result of all this freedom the abundance of genuine creative output is declining. We are actually getting the scarce market place demanded by our currency legacy system. The same way the early Renaissance got a scarcity by killing off half the people with the plague.” Some Alternatives: 1: The development of a digital culture that actually respects the labor of individuals. 2: The creation of new modes of currency based in abundance rather than scarcity.

Peak Rock was reached in 1965

acb — Wed, 11 Nov 2009 16:20:26 -0800

US Crude Oil Production vs. Rock Music Quality, by year. Is Rockism the cultural equivalent of Hubbert Peak Theory?

On use vs. exchange value: we must be careful about what we pretend to be

kliuless — Sat, 31 Oct 2009 08:24:13 -0800

Asset inflation, price inflation, and the great moderation
Economists ~~as penance~~ have been trying to locate the origins of the great chain of causation that has led us to our present situation -- the worrying conclusion is that problems remain -- imbalances precipitated by a labour supply shock [1,2] and/or (the rise of) machines [1,2] have not gone away and continue to persist in decimating the ('developed world's) middle class, as evidenced by high and rising unemployment, which has led to a crisis in central banking itself. moreover, paraphrasing george washington, "the government's entire strategy now is to cover up how bad things are." iow, if there isn't a middle class 'civil rights' movement already, there should be...

On this labour day...

kliuless — Mon, 07 Sep 2009 09:13:11 -0800

Social mobility, income inequality and wealth disparities. BONUS

After a 30-Year Run, Rise of the Super-Rich Hits a Wall: Over the last two years, the rich became poorer, and they may not return to their old levels of wealth anytime soon.
Household Debt to Net Worth Ratio Spiking - "While the richest were impacted the most in $ terms, the lower to middle class tend to have more of their net worth stashed in real estate (i.e. their home). Thus, while the financial markets rebounded in 2009, it is likely that the lower to middle class didn't reap the reward (housing has continued to fall). Thus, when data is updated for 2008 and 2009 (though too early to judge where we'll end up this year), expect the discrepancy to be even wider."
Poverty, growth, and sustainability - "Getting out of poverty means, among other things, having access to more of society's resources for the sake of consumption: better diet, healthcare, education, transportation, housing, clothing, and other goods... Now consider the environmental side of the coin."
Thin Value, Thick Value - "Profit through economic harm to others results in what I've termed 'thin value'. Thin value is an economic illusion: profit that is economically meaningless, because it leaves others worse off, or, at best, no one better off. When you have to spend an extra 30 seconds for no reason, mobile operators win -- but you lose time, money, and productivity. Mobile networks' marginal profits are simply counterbalanced by your marginal losses. That marginal profit doesn't reflect, often, the creation of authentic, meaningful value. Thin value is what the zombieconomy creates."
Life Inc. - "about money as a medium, and the way centralized currency and corporate capitalism were accepted as given circumstances of business, rather than inventions of particular people at a particular time... how the world became a corporation"
The Size of the Bush Tax Cuts vs. the Cost of Health Care Reform - "Tax cuts for the wealthy come before health care for the uninsured."
Health Care That Works - "Until the mid-19th century, firefighting was left mostly to a mishmash of volunteer crews and private fire insurance companies. In New York City, according to accounts in The New York Times in the 1850s and 1860s, firefighting often descended into chaos, with drunkenness and looting. So almost every country moved to what today’s health insurance lobbyists might label 'socialised firefighting'. In effect, we have a single-payer system of public fire departments... Throughout the industrialised world, there are a handful of these areas where governments fill needs better than free markets: fire protection, police work, education, postal service, libraries, health care. The United States goes along with this international trend in every area but one: health care."
Professor Paul Krugman at war with Niall Ferguson over inflation - "One of them is a 'poseur'. The other is 'patronising'. One suffers from 'verbal diarrhoea'. The other is a 'whiner'... Those accusations were slung round in an increasingly bitter public row between two of the world’s most distinguished commentators on global finance and economics, professors Paul Krugman and Niall Ferguson, of Princeton and Harvard, respectively. It started as an argument about bond prices. But last week it blew up into a row about racism, printing money, spending our way out of recession, and the fate of the global economy." [1,2]
Why the Growing Level of U.S. Debt May Not be Inflationary - "The future level of the debt in the U.S. is not a worry if we get effective health care reform (rising health care costs are the major source of projected future deficits)."

btw, labor day (American) "originated in Canada [...President Grover] Cleveland was also concerned that aligning a US labor holiday with existing international May Day celebrations would stir up negative emotions linked to the Haymarket Affair."

Tyler Cowen on why it's OK to pay for sex

reenum — Wed, 22 Jul 2009 15:18:25 -0800

Tyler Cowen on why it's OK to pay for sex The rest of the debate can be found here.

For kids

kliuless — Sun, 19 Jul 2009 19:43:25 -0800

The story of stuff and how it's currently being played out between the political economies of China and the US (G2 'Chimerica') in an illuminating Fallows vs. Ferguson cage match. + B O N U S SAGAN

What Would It Look Like?

netbros — Thu, 18 Jun 2009 09:13:44 -0800

The Global Oneness Project is exploring how the radically simple notion of interconnectedness can be lived in our increasingly complex world. They travel the globe gathering stories from creative and courageous people who base their lives and work on the understanding that we bear great responsibility for each other and our shared world. They hope that by showing the diverse ways oneness is expressed—in the fields of sustainability, conflict resolution, spirituality, art, economics, indigenous culture, and social justice—others will be inspired to create solutions to personal and community challenges from their own lived understanding of oneness.