Monday, October 31, 2011

Pirates And #Occupants

Phil Hunt asks if #Occupy should be forming an alliance with the Pirate Party.

I'd suggest that spontaneous, ad hoc co-operation is probably better for all concerned.

I joined the Pirate Party because I saw Pirates tweeting from and about #occupylsx; plus a couple of posts on the consultation that were sufficient to convince me that Pirates were, generally, well disposed towards #occupy.

The PP should take that as an example of success. It doesn't really need to be more than that. Internet culture is all about loose coupling and simple protocols.

Heart Of Darkness

Monbiot :
It's the dark heart of Britain, the place where democracy goes to die, immensely powerful, equally unaccountable. 

Sunday, October 30, 2011

Where Does Money Come From? (Revisited)

I just came back from the excellent Positive Money conference today and can highly recommend that everyone take a serious look at their site, their analysis and their suggestions.

Here's the basic outline of the Positive Money analysis (which they've undertaken with the help of some economics professors and one guy from the Bank of England).

Q: Where does money come from?

Largely money is created by banks making loans. That is, you ask the bank if you can borrow some money; the bank says yes, and credits your account with the money and their balance-sheet with the asset of your debt to them.

That's it. That's how money is made in the economy. The money the bank lends to you DID NOT have to come from a deposit that someone else made with the bank.

Most people (including economists, bankers and politicians) find this incredibly hard to believe and assume it must be wrong. But no-one can give any other explanation for where money actually comes from. (Well, some is made by, say Quantitative Easing, but that's just small proportion of the total money in the economy.)

Q2 : What restrictions are there on banks creating money this way?

There *used to be* restrictions that said banks could only create some multiplier of the deposits they held.

And you can still read this story on some websites and even economics textbooks. Positive Money's assertion is that various deregulations since the 1970s have effectively removed these constraints. (There are still some, but they're mainly around the "clearing" of different banks' debts to each other. And, as long as all banks are not getting into serious debt with each other, it seems there's no real constraint on how much new money they can create.)

Furthermore, nowadays banks have adopted a sales culture where everyone is incentivated to sell as many loans as possible and, until the crash, this is what banks tried to do.

That's why your bank was always trying to get you to take out a second mortgage to go on holiday or buy a new sofa.

Q3 : So what's the problem?

Well, the first problem is that every pound created this way is "debt money" ie. when the pound is created, the person who receives it receives a debt. Mostly the debt is a pound + interest.

In other words, when money is created by loans, it means debts are also created. And because the debt includes extra interest, the size of debt created is *bigger* than the quantity of money.

So there is always MORE debt in the economy than there is money to repay it.

And that's why most people in the country have such a debt problem. It's not even economically *possible* to pay off all the debt. The money for it doesn't exist. And you can't create more money without creating more debt.

Q4 : Is that the only problem?

No.

The banks like to make loans because they make their income from the interest on loan repayments. But they prefer some kinds of loans to others.

In particular, they prefer *secured* loans. That is, loans which, if you don't repay, they have something to repossess.

So, they don't like lending to businesses with limited liability because if the business goes bust most of money was probably spent on wages and materials anyway, and the capital equipment is probably not worth that much when sold second-hand.

On the other hand, they LOVE lending to individuals to buy houses ie. giving mortgages, because if the individual can't repay, the bank repossesses the house which, normally, has held / increased its value.)

Positive Money estimate that of all the billions of pounds that banks create, only about 8% is lent to businesses that create jobs and produce goods and services in the economy, and the other 92% goes into the mortgage market or other financial products with "known" risk profiles.

And that's why :

a) house prices have increased much faster than wages in recent years (ie. lots of newly created money went into bigger mortgages for more expensive houses) and you can't get on the housing ladder.

b) it's been so hard to finance your usefully productive company (unless you have something to repossess like land or intellectual property)

c) banks bought so many packages of collateralized debt.

In conclusion :

Banks have been given the monopoly on creating money.

There is no oversight.

They have incentives to create as much money (sell as much debt) as they can.

There is always more debt in society than money to repay it.

Because money is created by and in private banks, they choose how it is allocated in the economy.

Because the banks prefer secured loans, the new money goes mainly to places we don't want it to go (ie. to  inflating house prices and speculating on financial products) and doesn't go where we do want it to go (ie. to financing expansion by businesses that create jobs, goods and services.)

Economists, politicians, most bankers themselves, and certainly the general public have no fucking idea that this is how the system works, and most of them can't believe it when you tell them.

Q5 : So what can we do?

Positive Money's recommendation is as follows :

1) Take the power to create money (ie. to loan money that you don't have) away from private banks, and give it to the Bank of England.

2) Because you don't want the Bank of England to print money whenever it suits politicians, give the power to decide **when** to create the money to an independent committee. Probably with some fairly stringent criteria for when they should. Positive Money's own suggestion is that every month when inflation is around 2%, they should authorize the creation of new money. If inflation creeps above 2%, they shouldn't create more that month.

3) Rather than the new money being given to government or banks to allocate it should be given directly to the public in a slightly *progressive* form :

a) as VAT cuts. (Everyone benefits and you stimulate more economic activity)

b) by raising the threshold at which people start to pay income tax. (So the lowest wage earners benefit.)

I have to say, I think this is an absolutely brilliant blend of radicalism and realism. They've spent a lot of time thinking about this. (The analysis / book has taken their team about 18 months to put together, based on about 500 different documents. Apparently they asked the Bank of England for its own training manuals / documentation on how money is created and were told that there is none.)



Wednesday, October 26, 2011

Economic Complexity And Development

This is a rather fascinating talk by Ricardo Hausmann on his measurement of Economic Complexity in terms of "personbytes" and its predictive value.

There's a lot I want to question and challenge. But well worth thinking about.

 The basic idea is to measure the complexity of an economy by looking at both the range of things it exports (the more, the more complex) and the number of other countries who export the same thing (the fewer others per-product, the more complex it's meant to be).

Overall, this statistic is a good predictor of income and future growth. Some papers with his collaborator here.

Actual Examples Of Unintended Consequences

This Quora question is worth a read.

A Decent Standard Of Living

Vinay Gupta :

But there's no way around this: we're at four times consumption in Europe, and something like eight times consumption in America. Can you imagine us cutting our consumption, on average, by 80%? That's what we need to do. Maybe we'll get the Hail Mary pass on Nanosolar or Konarka, I think there's a very good chance we're going to get to the Cheap Energy, Cheap Information future, but even then, it's still going to be about a nine billion person split. I think we can produce a very good hexayurt out of about 100 lbs of paper and thick aluminium foil, all recycled and recyclable. I think the biosand filter and the rocket stove are pretty much ready for prime time technologies for our basic human needs, and the toilets are only a little further behind. And that's a standard of living, that and a cheap Android tablet that's been engineered to last for three decades, that's a standard of living which you can make sense of at nine billion, which is our likely peak population. We're going to hit seven billion right around the time this piece is published, and it's important to think about it in these big number terms, because that's the world we really live in.

Saturday, October 22, 2011

Austerity Has Failed

Robert Peston :
"The situation in Greece has taken a turn for the worse, with the economy increasingly adjusting through recession and related wage-price channels, rather than through structural reform-driven increases in productivity". 
Or to put it another way, Greece's austerity programme is succeeding in impoverishing Greek people with little in the way of discernible benefits to the Greek private sector and the capacity of Greece to start earning its way in the world. 
The protesting mob in Athens would probably not dissent from that view.
You think this might be a wake-up call to the ConDem coalition?

Thursday, October 20, 2011

Wednesday, October 19, 2011

Julian Assange vs. Mark Zuckerberg


Who Says Folk Rituals Are Dead?

They're just being radically mashed up with 80s pop trivia and video-game characters. Check out this guy proposing to his girlfriend.

What is it, exactly? It's not folk. It's not pop. It's not kitsch. It's some weird pidgin amalgam.

Monday, October 17, 2011

Kubler-Ross and #OccupyWallStreet

Venkatesh Rao writes a barnstormer of an article taking in everything from life-style design to #occupiers to Bruce Sterling's Dark Euphoria.

It is very, very clever. And pretty amusing. And, I'm sure, it's going to be a major meme all over the web for months to come.

Pirate Party

So, I just joined the UK Pirate Party.

I did it for two reasons. First, this month they are having an open consultation, calling for policy suggestions in areas outside the core intellectual property / internet freedom agenda that originally motivated them. Secondly, I saw one of them tweeting from OccupyLSX.

Of course, it's great fun for me to make a bunch of proposals. Here they are if you want to vote / argue for or against them.

Get the money out of politics

Full disclosure of government deals with corporations

Teach entrepreneurial skills in schools

Remove commercial restrictions on suburbia

Mandatory carbon footprint labelling for "big ticket" items

Create a framework for "Traditional Cities" (Yeah, I know, this is a personal obsession, but you know I believe in urbanism as a fundamental quality of life issue.)

A "Personal Investment Allowance"

Mandatory energy / effect labelling for common household appliances

Put the Treasury's models online

More soon when I think of them ... :-)

Sunday, October 16, 2011

Why Occupy London Stock Exchange?

Must read article, lots of good stories :


Goldman Sachs wanted to employ London staff through a subsidiary firm in the British Virgin Islands tax haven. In April 2010 Goldman lost a legal action, leaving the government in line to collect £30.8 million plus £10 million in interest. But in a private meeting between Goldman Sachs and the permanent secretary of HM Revenue and Customs, Dave Hartnett, the £10 million in interest was simply waived, in what the Metro described as a, 'sweetheart deal.' Mr Hartnett, Goldman Sachs and HMRC have all declined to comment on the allegations although HMRC has said it 'could not respond to incomplete and therefore fundamentally flawed' accounts of arrangements.

One demand, I think, should be that the minutes of ALL government deals with private corporations should be publicly viewable online.

Scandalous BBC Reporting

Here's a picture of this morning's BBC main page (click to enlarge) :


Notice the absence of any reference to last night's successful continual occupation of Saint Paul's while top billing is given to some princess in Wootton Bassett. (Bleah!)

I went down there to take food to the occupiers, but was kept outside by the police cordon. I hung around with the crowd outside for a few hours while the police

  •  a) forced a line of helmeted riot police through the crowd, up to the back of the steps. Ostensibly to "protect St. Paul's" from damage. Actually to encircle those on the steps. 
  •  b) brought in a number of vicious looking dogs to bark at the occupiers in a scary way. They didn't actually DO anything with the dogs. And clearly they weren't there for purposes of sniffing etc. Just to menace the occupiers. 
  •  c) fairly skilfully (I have to say), started reducing the occupied space. Pushed those of us in the outer ring into the road. Then pushed us all out of the road. I left soon after, as it looked like the police were very much in control of the space. 


Seems, though, that that the occupiers survived the night and the vicar of St. Paul's has asked the police to back off. Now there's a call for donations from anyone who can get down there today.

Here's some video (someone else made) of earlier yesterday :


A Movement in Slow Motion from Studiocanoe on Vimeo.

Thursday, October 13, 2011

Fox News Lies :-)

Probably quite disturbing for the poor Fox journalists but amusing for the rest of us. Crowd chanting embarrasses Fox News and prevents them (mis)reporting Occupy Wall Street.

Watch Jeffrey Sachs!

Just watch him now!

RIP Dennis Ritchie

Forget Steve Jobs, the guy who invented C has died!

Wednesday, October 12, 2011

Google Turn Evil

Google hand over Wikileaks supporter's gmail to the US government, without a warrant.

It was perhaps inevitable that Google would fall from its ethical aspiration. But the question is, what should I do? I started boycotting Amazon for little more than this : throwing Wikileaks off their servers. But it's not nearly as easy to disengage from Google as it is to stop buying books from Amazon.

I'm heavily entangled with its services. I rely on Gmail, Blogger (where I'm writing this),  Google Calendar, YouTube, Google Application Engine (for Mind Traffic Control), Google search, Google Maps. I have a Google Analytics account and an AdWords account. I was planning to get (and develop for) an Android device at some point. I was just getting into Google Plus. How the hell do I "punish" this creature I've got so symbiotic with?

I can't just cut the knot cleanly. But I hereby announce that I am starting to disengage as and where convenient. And the long term goal will be to reduce my engagement with Google to the same casual occasionality that I deal with other large evil corporations and to attempt to provide them with as little monetary gain as possible.

To start is easy because I have very little monetary interest in Ad Words. I've just removed them from my two "commercial" blogs : Smart Disorganized and Platform Wars. Neither made me any money so it's no loss.

Let's see what I can do next.

Monday, October 10, 2011

The Origin of Money

Gosh, I'm doing a lot of internet surfing today. And it's not like I don't have dozens of other things to do ...

Nevertheless, I'm seriously enjoying David Graeber on the origin of money.

The Radical Technology of Christopher Alexander

The Only Useful Innovation

David Leonhardt :
In finance, trading volumes have boomed in recent decades, yet it is unclear how much all the activity has lifted living standards. Paul A. Volcker, the former Fed chairman, has mischievously said that the only useful recent financial innovation was the automated teller machine. Critics like Mr. Volcker argue that much of modern finance amounts to arbitrage, in which technology and globalization have allowed traders to profit from being the first to notice small price differences.


IN the process, Wall Street has captured a growing share of the world’s economic pie — thereby increasing inequality — without doing much to expand the pie. It may even have shrunk the pie, given that a new International Monetary Fund analysis found that higher inequality leads to slower economic growth.

The Great EU Debt Write Off

Read this :

This website presents the results of a simulation conducted by students at ESCP Europe Business School. The aim was to uncover the amount of interlinked debt between Portugal, Ireland, Italy, Greece, Spain, Britain, France, and Germany; and then see what would happen if they attempted to cross cancel obligations.

The results were astounding:
  • The countries can reduce their total debt by 64% through cross cancellation of interlinked debt, taking total debt from 40.47% of GDP to 14.58%
  • Six countries – Ireland, Italy, Spain, Britain, France and Germany – can write off more than 50% of their outstanding debt
  • Three countries - Ireland, Italy, and Germany – can reduce their obligations such that they owe more than €1bn to only 2 other countries
  • Ireland can reduce its debt from almost 130% of GDP to under 20% of GDP
  • France can virtually eliminate its debt – reducing it to just 0.06% of GDP

There Aren’t Any More Rich Countries

Naomi Klein :


Ten years later, it seems as if there aren’t any more rich countries. Just a whole lot of rich people. People who got rich looting the public wealth and exhausting natural resources around the world.

Saturday, October 01, 2011

Narcissus Search on Ars Electronica Blog

Great! The Ars Electronica blog has added an article on the Narcissus (anti)-Search Engine that I've been working on with Aharon Amir over the last couple of years.

Narcissus takes the results from a search of a site or database but measures the "popularity" of the results (in our first example, by counting the number of times a result is clicked on). It then deprioritises popular results, pushing them first to the end of the page and then into a limbo where they aren't shown at all for a number of searches.

The idea is to make an artistic comment on the positive feedback loops that operate throughout most of our social media to reward success with further success. In contrast, Narcissus rewards failure and so helps searchers explore the shadows : alternative and disregarded ideas and opinions.


Work in Progress :-)