Friday, 31 August 2012

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.

Saturday, 11 August 2012


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.

Wednesday, 1 August 2012

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.