Libertarianism vs an RBE

http://managainstthestate.blogspot.co.uk/2012/07/2nd-post-to-ben-mcleish.html

Ben McLeish of the Zeitgeist Movement and Graham Wright, author of the above blog, are having an interesting debate on the merits (or not) of an RBE cf the libertarian Austrian Economics model.

There are surprising points of agreement, which make me wonder whether AE isn't closer to an RBE than the current economic system.

But I have lighted on Wright's response to a comment on his blog, here separtaed into individual points with my thoughts:

•  "Economics is the study of the logical consequences of human action". Maybe. As many know, economics is more literally something like household management, and I prefer that as a definition or starting point.
  
• "Political philosophy is about devising a set of principles for ownership (i.e. who has ultimate decision-making jurisdiction over which resources)". In an RBE there is no need for ownership, only access. As to decision-making, decisions would be arrived at by applying the scientific method.
• "economics can teach what consequences we can expect from different ownership principles being used in societies". Maybe it can, but in an RBE we are not interested in "ownership models".
• " Economics is the body of knowledge that can tell us whether resources will be used more efficiently for satisfying human desire [in one or another system]". In economics the word 'want' covers what would commonly be distinguished as 'need' and if 'desire' is used in the same sense as 'want' it has the same problem as far as I am concerned.

What is the overarching aim of a system for operating planet earth (which is what economics should be about)? Ownership isn't a first principle. You own something so that you can exclusive and unlimited access it - thus access underlies ownership and it is what an RBE seeks to optimise.

Somewhere in their discussion, McLeish differentiates 'good' growth from 'bad' growth and Wright asks him to explain/clarify. I don't know if he has done so, but Robert Kennedy's critique of GDP/GNP will serve (see http://www2.mccombs.utexas.edu/faculty/michael.brandl/main%20page%20items/Kennedy%20on%20GNP.htm):

"Our gross national product ... counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. .... Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile."

So, we are looking for growth in the good things Kennedy lists here. I'm sure that's a close enough description of 'good growth' for McLeish.

As appealing as quality of life and/or happiness are as indicators, they are tricky to enumerate. If you are healthy and happy you will presumably live longer. Maybe life length is a good enough proxy for 'good growth'. That said, if people live longer there will be more of us on the planet. Maybe populatiin is the simplest proxy for good growth? Obviously, there is a limit to how many people the planet can sustain. If our resource efficiency is optimal, we will be sustaining as much population as those resources can allow.

The lights in the tunnel

I have read Martin Ford's book with considerable interest. His main thesis is that technological unemployment will pervade and that we should plan for it.

Where I must part company with him is in his view that consumption and capitalism are sine qua non. He rejects Marx's idea of a planned economy (and I'm not here to defend it) yet at the same time posits an economy where the government arranges for the consumer to have the money he needs to keep consumption going by taxing consumption(!) and levying business taxes. This is also a planned economy.

He accepts that the planet has finite resources, but predicts that nano-technology will radically increase what we can do with available materials. I have no reason (or knowledge) to doubt or question his prediction about nano-technology, but he cannot brush away the finiteness of resources by saying we can exploit them more effectively/efficiently

He is silent on the subject of advertising, which is a key driving force in a consumption based economy. He wants to incentivise people to improve themselves and society by offering what amounts to wages for doing these things. I don't disagree with financial incentives being used to create social / environmental benefits, but presumably Ford's system will have to incentivise people to consume goods and services - that is basically advertising/marketing. As he foresees a world in which most work is done by machines, I assume that advertising will be similarly cybernated.

But in missing out advertising as a subject area, Ford has overlooked a huge gap in his thought process. We can find it by consiering what modern advertising does. It seelks to persuade you that such and such a product will make you a better, more attractive, essentially happier, healthier person. Paradoxically, advertising knows what Ford has omitted. Our true motivation is to be happy and healthy. Advertising couples that motivation to consumption to keep the economy going, because our economic system is basically one of consumption. Ford sees this, but does not challenge it - in fact it is his start point, even though he accepts that the free market is an intellectual construct. It has no physical referent.

It is the supreme and truly immutable fact that we have finite resources to work with. That, combined with the urge of humans, like any species, to survive and thrive, produces the essential train of thought of a Resource Based Economy, in which we apply the scientific method and technology to bear on the issue of how we as a species can survive and thrive on 'spaceship earth'.

It is a pity, because Ford goes so far towards deriving an RBE by his own sound reasoning, yet stops short because of assumptions about money and the "invisible hand" idea of Adam Smith which leaves the latter's ideas exposed to the criticism of being more systematic theology than a plan for how humanity can survive and thrive.

Ford has great expectations of what technology can/will achieve, and I'm not disagreeing, but another omission, and a key building block of an RBE, is applying the technology to knowing what useful stuff we have on the planet, how much of it we have, and where it is. Ford scoffs at the idea of knowledge being on the web and not in people's heads:This rather goes against his high view of artificial intelligence, but surely he must accept by his own logic that an inventory of the earth's resources would be the ultimate application for technology, and the starting point of a properly planned - I assume he does not object to all planning - approach to our survival on this planet.

Nationalism

I don't want to take anything away from the athletes/performers in the London 2012 Games. I share in the emotion of the winners and losers and marvel at the skill, strength, speed and acuity of these young men and women.

Am I jealous/envious? Yes, of the youth and suppleness and the fact they have found something to excel at, persevered and excelled. They may well be inspirational role models and I take my hat off to them.

There's a Mitchell and Webb sketch in which the former mocks the latter for identifying with the football (soccer) team he supported as if he were actually a contributor, by use of "we" rather than "they" to reference them.

By comparison with many a football supporter, I suppose those of us who were born, brought up, have lived, or have been naturalised in Britain have a strong case for identifying with Team GB. I don't know about you, however, but my part in any success of the team is entirely negligible. So how can I identify with Team GB as "we"? The only connection I can claim is that I was born in Britain - and that is not my achievement in any sense.

The same goes for any achievement or failure of someone British. Only those who had a direct part can / should take any credit/blame. Of course it is convenient and therefore likely that teams will be formed of people based near to each other, and being born near to each other is going to lead to that propinquity.

Well done Olympians all - fantastic, amazing. Well done Britain? Not especially.

Different kinds of money

It is reasonably well-known that banks create money to lend to their customers. Someone in the blogosphere said this can't be true because Northern Rock went bust. But he's wrong. The money that banks lend each other is a different type of money. Clearly, the other banks wouldn't have accepted money created out of thin air by Northern Rock it settlement of their debts, anymore than NR would have accepted money that I create out of thin air as a deposit.

These different types of money are all denominated in the same currency name (eg pounds) but the 'terms and conditions' attached to them are different. You can't spend government bonds in Tesco's.

Daily life reveals examples of types of money that we understand or at least get along with. Money off coupons are an example. They are very restricted as to where, when, and on what youi can spend them, but they are money of a sort. Oyster Pay-as-you-go credit is another example. In practice, you can only spend it on bus and train journeys. You can't readily spend it as freely as cash, but it is denominated in pounds.

Mobile phone companies use this phenomenon. They make it easy to buy the special money that lives on your phone and can only be spent on calls, SMS and data, but converting it back or spendiong it on anything else is difficult if not impossible. O2 offers me a "free" £1 top up when I put £10 on my phone. I have to accept the offer, but it is largely meaningless as this is in effect O2 creating money for me to spend with them.

But because it is not part of daily life for most people, they don't tend to think, I suppose, of the different types of money used in banking. I'm going to try for a generalised list of "Ts and Cs" of types of money to draw this out:

1) Who may hold the type of money. Day to day example - money on a PAYG mobile phone may be held by anyone with a SIM card on the appropriate network. Banking example: Only banks can hold the interbank money that they use to settle net transactions between them.

2) With whom the money may be spent. Day to day example - a money off coupon is typically limited to a particular supermarket. Banking example - the clearing banks and Bank of England have a kind of money that they accept amongst themselves. This is the kind of money created by quantitative easing (I think).

3) On what the money may be spent. Day to day example - Oyster PAYG may only be spent on train / bus fares. (It may be possible to get stored value refunded, but only in special circumstances). Banking example - Government Bonds. Apart from trading the bonds themselves, they are pretty much restricted to buying currency for the banks to circulate amongst themselves (I think).

4) By when the money must be spent. Day to day example - a money off coupon will usually have an expiry date after which it is useless. Banking example - can't think of one.

Bank of Dave

It's hard not to admire Dave Fishwick, the eponymous Dave in 'Bank of Dave' the TV series and "Bank on Dave" (aka Burnley Savings and Loans) the company that he founded to provide banking services to Burnley, Lancashire, England and the area, but which he wanted to be a bank.

In a Dave v Goliath struggle, the entrepreneur, plain-speaker and shooter from the hip takes on the might of banking law and the Financial Services Authority. He sort of wins out, because by the end of episode 2 of the TV series he is allowed to make loans and take deposits, though he must match them. In six months he makes a profit of £000s which he generously give to charity.

But is this all scaleable? He has to charge interest on his loans, even though he is careful about what he invests in. This is in part because he offers savers 5% pa (with a few sweeeners to early adopters). I think he was (is?) lending at around 8-9% pa.

Where does the money to pay interest come from? Other people - well yes, but where ultimately? Money supply has to increase so that there can be enough money in the system to pay back the interest. If it doesn't, mathematically some people have to go bust. (If it does, some people still do go bust, but not because of  shortfall in all money).

This is a big, big problem for money. The total utility of goods and services increases over time, so money should increase in supply in keeping with it. But how do you quantify it?

Problems of lack of co-operation

A few examples have come to my attention recently:

1) Another car journey sharing venture, gocarshare, to compete with Liftshare and the other very similar offerings.

2) Google's beta test of its cycle route directions on its maps, despite parallel offerings from cyclestreets.net, TfL and others,

3) Qype. I downloaded the Androis app as it had been avourably reviewed in the Webscape segment of BBC TV's Click. One of the first things I found was a reference to a pub that closed ages ago. I entered a 'review' saying this - I could see no other more appropriate facility. There are so many websites / apps holding data about businesses that to tell them all would be a lifetime's work. In Qype, we have an app that cpould be extremely useful, but it can only ever be as useful as the data it is working on and my first experience has put me off.

Money supply

Further to my previous post about the gold standard here, I made a similar point on Facebook alongside a slide published by positive money. I got a reponse - thanks - which I have posted below, interspersed with my further responses:

• Surely the number of people alive is as arbitrary as the amount of gold that has been discovered!

 Not at all. Gold has very little direct use in improving the quality of human life. It's good as an electrical conductor, but I'm unaware of any other day to day use. If all the gold in the world vanished (except what is in practical use) we would be no worse of so far as health and well being were concerned.


I was looking fo some measure of the quality of human existence, or our ability as a society to protect and preserve our own species. Whilst a long life isn't necessarily a good quality life, it is a reasonably good proxy - if you're healthy you live longer. If there's no war, hunger, disease etc, people live longer. It then occured to me that if people lived longer there would be more people alive at any one time, so perhaps population rather than life length would do.

• One third of all the worlds refined gold is kept in one place - around the necks of Indian women. Scott's approach would make India rich!

Depends what you mean by rich. You can't eat gold, you can only exchange it for something that actually sustains life - nutrition, shelter, safety, health care to start with.

• How could we be sure that India, having one of the largest populations, would get it's fair share of the money that is created under your suggestion, any more than it does under the current one? 

My proposal is about money supply, not about its distribution, fair or otherwise. As we know, currently nearly all money is created by banks and lent out at interest to whoever the bank  wants to lend it to to make a profit.Obviously money supply needs to go up and down - but we need sound reasons for that.

Perhaps the Indian Government (or any other government) would be able to create the money that corresponds to India's population, so it would have the money and it could spend it as it chose. What we would have to decide is how many money creating authorities there would be. For example, if the UK created some its per capita money, then England, N Ireland, Scotland and Wales couldn't also do it - this would be double counting.

•  Also, wouldn't it encourage countries to inflate their population?

As population increased there would be more money, but more people too. The amount of money per person alive would stay the same.  Therefore, what you would have to do is be as efficient as possible with the money you have in order to allow population to grow naturally and live longer. I would guess that would involve 'prevention is better than cure'.


What underlies your question seems to be the tacit assumption that more money is better. We are brought up to think/act like this, but what is in fact better? Better health ( longer life) and more happiness (which may be the same as better health). 


The only way to cause population and longevity to rise is to manage physical resources in order to achieve more and longer lives per unit of  resource.

• The Greens wouldn't like you.

The planet can obviously only support a finite population. All the greens are pointing out is that our consumption is currently unsuatainable over time. With the current system we are wasting the planet's resources  and also not distributing them at all fairly. Yet we keep creating more and more money. If we managed the planet's resources properly and fairly we would be able to sustain a greater population than we currently can. We should not equate comsumption with quality of life.

===

 Addendum - what is gold really useful (non aesthetically) for?


1) Its electrical conductivity cf its corrosion resistance makes it useful in electronics
2) Its reflectivity of radiation so for satellites and space suits.
3) Its transparency when thin enables it to be used in heated windscreens in aviation.


Thanks to Wikipedia for information.