In her email, below, Natalia Kuzmyn calls for:
Devising educational models that does not support the virtual economy that
condones greed and high expectations.
Putting less money into industrial and scientific research geared towards
corporate profit, homeland security, finite energy ventures, etc.
Re-structuring the system to reflect needs and creative capacity of the human
mind.
Educating towards value and stewardship of the land and waters rather than
the training practices of reaping for maximum profits.
Redefining value and preventing people to be educated by media, controlled by
corporations yet licensed by gov't, to worship diamond wedding rings, without
being taught about blood diamonds or humane alternatives.
Etc.
The posting also points out that NGOs that promote the kinds of changes that
are needed in order to repair society are growing at 4X the rate of most
economies, and employ more as well even though they are chronically
short-funded.
In general, it urges that we de-commodify structures that should remain social,
cultural or health related, and remake the economy into a tool that improves
the well being of everyone.
It would be very difficult to disagree with what Natalia proposes. If it were
done, we could find ourselves living in a much more pleasant world than the one
we are in.
However, it does raise the huge question of how to make the kinds of changes
she suggests. How would we go about persuading our governmental, corporate and
educational sectors to transform themselves into institutions that operate with
much more sensitivity to human needs and the continuity of society? How would
you persuade the public away from wanting diamond wedding rings, fast cars and
beautiful homes that they can't afford?
Frankly it may not be possible on a scale larger than the occasional 'back to
the land' movement or other small scale movements that emphasize self-sacrifice
for the common good.
But wait, I may be forgetting something. The current oil disaster in the Gulf
or Mexico came under discussion at a luncheon today. Rather timidly, I ventured
that the disaster was a good thing. As expected, I was immediately pounced on
and asked to explain. What I said was that when it comes to major changes in
the way we go about things, a major driver is the catastrophe that result from
hitting some kind of wall. A wall has been hit in the Gulf of Mexico and we
will have to do things differently when it comes to deep water offshore
drilling.
It's an argument I've used before, pointing out that there probably wouldn't be
a Jewish homeland, Israel, unless six million Jews had died during WWII, that
there wouldn't be an International Criminal Court if there hadn't been criminal
wars in the Balkans and Africa, and that Russia and Poland would not have had
the opportunity to soften their relationships and show compassion toward each
other if the aircraft carrying Polish leaders hadn't crashed and thus enabled
the rediscovery of the horror of Katyn. In other words, societies do no learn
by persuasion, they learn because some catastrophic event or some catastrophic
set of circumstances make them learn.
So, perhaps there is a possibility of achieving Natalia's ideal world, but I'm
not sure we'd be willing to pay the price to do it.
Ed
----- Original Message -----
From: Darryl or Natalia
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION
Sent: Monday, May 24, 2010 7:06 PM
Subject: [Futurework] Was: Restoring the old economic model, Is now Essential
Education & Economies
If today's problems are just behavioural, then education should be the
solution. Obviously current educational models have been devised to support the
virtual economy that condones greed and high expectations. Past models
eventually led us to today's system. All past civilized systems, excepting
ancient economies, failed to factor in ecology and include natural world
sustainability. The task of education today is to debunk the myth that we are
what we own. New economies must tighten restraints on wealth creation that
threatens societal needs.
Education cannot afford to stop at graduation, or else we grow stagnant
waiting for the next generation to perform feats which may not be possible,
given the unpredictability and finite resources of our changing world.
Governments must put more funds and effort into their own learning and also
public education rather than into the costs and costly learning curves of
industrial and scientific research geared towards corporate profit, homeland
security, finite energy ventures, etc.
One idea is to re-structure the system to reflect needs and creative capacity
of the human mind. Creativity is as important as literacy, and it is only
creativity that will get us out of this mess.
Another idea is to educate towards value and stewardship of the land and
waters rather than the training practices of reaping for maximum profits.
Capitalism is self-defeating by thinking it will have anything left to sell if
we don't grow from sustainable practices. Scarcity will defeat capitalism,
according to Paul Hawken, author of "Natural Capitalism"; we must restore the
natural capital, worth 10's of trillions per annum, and from there create an
economy around basic services. He believes we can bring 100X more worth to each
unit of energy, redesign production to practically eliminate waste and
toxicity, and recapture as profit 99% of waste of 1/2 trillion tons/annum. He
is inspired by the model of a solutions economy that delivers continuous flow
of values services rather than one based in selling goods at reduced costs. He
believes profits should be reinvested in nature.
Value of meaningful work must be redefined, and meaningfully compensated.
Some are inclined to call this welfare, particularly where the sub-category of
Basic Income factors in, but few of these take time to consider the double
standard of simultaneously praising corporate ingenuity, though the feds
subsidize corporate ventures without conscience. Speculators come from this
sector, as well as from government, yet gambling with virtual or real tax-payer
money is also acceptable because wealth, in spite of its typical source, is
respected for being able to replicate without much effort beyond qualifying for
the right account. If the feds lose, well, tax-payers must be educated to
understand that it was individual greed that prompted federal speculative
investment, and the public must be more heavily taxed, but if corporations
lose, well, the public must be educated to see that it was their fault for
being greedy, and be more heavily taxed for bailouts.
Value itself must be redefined. If the system finds value in petroleum-based
products over more environmentally friendly products, then education is
essential to curb these unnatural expectations. We do not need polyester, nor
do we need landfill sites full of wall-to-wall carpeting or huge plastic toys.
Men and women alike have been educated by media, controlled by corporations yet
licensed by gov't, to worship diamond wedding rings, without being taught about
blood diamonds or humane alternatives. People have been taught that corporate
farming is cheaper than organic, and that intensive livestock farming is
sensible. Prices ideally need to reflect real human and environmental costs.
The democratic process should be taught and practiced at school and practiced
in current government to curtail future victimization. If the only participants
are corporate experts offering ever more corporate-driven ideas that confuse
the real issues and cover their destructive tracks, the people who actually
perform the work and/or are affected by these actions get left out of the
solution. Without democracy, we also have no accountability. We also have no
fair trade or micro enterprises. We must claim back democracy.
Maude Barlow, Council of Canadians, urges that we de-commodify structures
that should remain social, cultural or health related. As Joanne Kleijunas,
executive director of Redefining Progress put it, the economy must become a
tool to improve the well being of everyone.
Today, our NGO's make up about 1/8 of our global economy. They are growing at
4X the rate of most economies, and employ more too. Chronically short-funded,
they go on. They are fast organizing as a single force, yet staying diverse,
restoring democracy to communities, and serving both community and the world.
This is an example of meaningful work, once funded by the feds, needing
re-evaluation and compensation. But with or without, they will prevail.
Survival of the fittest was not a tribute to opportunists, but to those
capable of preserving life. Genes v. memes.
Other thoughts?
Natalia Kuzmyn
**********************************************
Ed Weick wrote:
I see the present financial mess as a problem based on conditions. As a
problem, action needs to be taken to make corrections in monetary, banking and
fiscal systems if the economy is to continue to meet peoples' expectations,
which may also need to be reduced. However, the problem arises out of age-old
human behavioural conditions of entitlement beliefs, greed and exploitation.
Because the conditions exist, the problem will recur again and again.
It has certainly done that historically. I'm trying to read Reinhart's and
Rogoff's "This Time is Different" which deals with the many many times the
kinds of problems we are experiencing now have recurred in history. While the
settings in which the problems have occurred may have been very different, the
behaviour that led to them and what actions needed (if not always taken) to
resolve them were not all that different.
To absolve ourselves of the problems, we would have to make some pretty
fundamental changes in the way we live. In other words, we would have to
change the conditions which govern the way we live -- at some point, we might
all have to commit to living like poor monks in bleak monasteries.
The introduction of digital technology, while of tremendous benefit in many
ways, has increased the rate at which problems will occur. It has also made it
far more difficult to ascertain responsibilities for them.
Ed
----- Original Message -----
From: Arthur Cordell
To: 'Keith Hudson' ; 'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION'
Sent: Sunday, May 23, 2010 9:55 AM
Subject: Re: [Futurework] Restoring the old economic model
A very long time ago I did some consulting work for a futurist. He used
to say that when he encountered a new situation he tried to determine whether
it was a problem (that could be fixed) or was a condition (that would have to
be lived with). He said that we waste too much time trying to fix conditions.
So the issue is: Is the present financial mess a problem or a condition.
If the latter, then it is a condition made possible by the introduction of
digital technology into an old established business, trading.
I don't know the answer. But if it is a condition then we have to wait
until the situation has been made so difficult for people that great trade offs
will be made and tolerated to allow us to somewhat modify the condition so that
it comes to resemble a problem..
Winter is a condition. Aging is a condition. What I have for supper is
a problem, something I can do something about. I can ameliorate the condition
of winter by going to a sunny clime in the winter season. I can do something
about aging by working out, nutrion, etc. I can ease many aspects of a
condition but can't solve it as I could a problem. Both involve trade offs to
make the condition easier to live with. What I have for supper is a problem
which lends itself to an easy solution.
The financial mess might just be a condition of humankind. Something
like war. Why not control the outbreak of wars? Easier to do than fix the
financial markets. But we don't, even though it seems that we can or maybe
it's a condition. Is war a problem or a condition? Is the quest for financial
stability and predictability a problem (with 50 year fixes that depend on
technology and geo-politics) or is it a condition (same answer: with 50 year
fixes that depend on technology and geo-politics.but for which there is no
permanent solution available).
Thoughts??
Arthur
From: [email protected]
[mailto:[email protected]] On Behalf Of Keith Hudson
Sent: Sunday, May 23, 2010 3:55 AM
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION'
Subject: [Futurework] Restoring the old economic model
Last week, the well-respected Bloomberg website ran a story about the
most successful investment bank in the world today -- Goldman Sachs (GS). In
the first quarter of this year GS made a profit on every trading day. Yet,
during the same period, 9 of its 11 published forecasts to its own
investor-clients turned out to be wrong. (Those two figures might be slightly
wrong here -- it could have been 7 out of 9. I'm relying on memory. I should
have kept a copy but I didn't realize at the time that my subconscious mind
would be working on this astonishing fact.) Needless to say GS clients are
pretty upset by this revelation.
Now, in the conventional way of the frequent buying and selling shares or
currencies, any investment manager will tell you that the odds against being
able to do this profitably over as long a period as a quarter year in non-boom
times are very great. To do this on every working day of that period, the odds
approach infinity.
The only possible way that this can be done is by being able to survey
every potential price movement that is available at any instant of time during
the 24 hours and to pile-in on the slightest evidence of an upturn or a
downturn. If the investment is large enough -- relative to the size of the
object item (the shareholding of a business or a tranche of currency) -- then
the effect can only be to enhance the initial movement.
Once the price of the object item has moved up or down sufficiently to
exceed the difference between the bid price and the offer price (commissions
charged by intermediaries in the transaction) then the original transaction can
be reversed and a profit made. If enough transactions are being made
simultaneously, even if only a miniscule profit is made on each in-and-out,
then a consistent, failure-proof cumulative profit can be made.
This strategy could even be enhanced if, for example, a client of GS asks
them to make a purchase or a sale. On balance, this decision is likely to be
slightly more informed by expert knowledge (perhaps by an insider?) than
otherwise. Once again, if such a transaction is judged sufficiently large to
potentially nudge the market, even if ever so slightly, then GS can pile in
with additional money of its own. However, unlike its client, GS would
immediately follow with a reverse transaction of its own money as soon as a
profit was realized.
I also remember reading somewhere that such is the intensity of
transactions on the shares or money markets these days that object items can be
bought and sold in 11 seconds!
Overall, how large this consistent (daily) profit can be made by an
investment bank (or hedge fund) depends on how many opportunities can be
surveyed and acted on simultaneously and how much capital it has at its
disposal or can reliably borrow at short notice. Unlike, say, 10 or 20 years
years ago, when sufficiently powerful supercomputers were still few and far
between, this strategy would have been impossible.
Today, however, an investment bank or hedge fund the size of GS can
afford such a supercomputer. All that remains then is to devise algorithms that
will survey hundreds (or thousands) of object items with the slightest sign of
life and then buy or sell them automatically -- and reverse them almost
immediately afterwards once a profit has been made.
This, however, has two problems -- both of a catastrophic nature. The
first is that although the strategy appears to be fool-proof, the algorithms
may not be. It was the simpler and cruder sort of automatic stop-loss
algorithms (program trading) that initiated the stock market crash on Black
Monday, 19 October 1987. Starting in Hong Kong, where shares crashed 45%, it
continued all round the world. The crash was only prevented from going further
downwards when program trading was stopped and normal movements of share prices
resumed. Even so, many economists were afraid that a recession of 1930
proportions would follow. In the event, normal trading resumed but it took two
years before all the paperwork was sorted out and the previous level of share
prices was regained.
This time, however, with larger money markets involved (including
sizeable tranches of government bonds which had previously been the province of
individual investors or investment managers), and highly competitive strategies
between large financial bodies, there is no guarantee that weaknesses in
program algorithms might not recur and something even more catastrophic than
the 1987 event might happen. These days, how many years would it take to sort
out the paperwork? (The paperwork of the 2008/9 credit crunch is still not
sorted.)
The second problem is that by this fail-safe method of aggrandizement,
GS, or perhaps two or three of such sizeable financial bodies, could
theoretically end up owning the whole world! Or, more accurately, the whole of
the Western world. Of course, in practice, bankrupted governments, businesses
and electorates everywhere would have revolted long before this situation could
be reached.
Indeed, it's already the case that there is a powerful general mood at
all levels outside the financial sector of the Western world that many of the
financial operations carried out by GS and large hedge funds must be stopped.
During this very week-end, the future of the Med country members of the
European Monetary Fund might be at stake. (The Sunday Times tells me this
morning that Spain is now as jittery as Greece.)
But what can be done? Apart from tinkering about with regulations
concerning investment banks and hedge funds -- which both the Senate and the
House of the US Congress are now considering -- which can only lead to more
evasion by cleverer people in due course, almost nothing really constructive
can be done. It still remains that our present financial system has already
resulted in all Western governments being deeply in debt -- some irremediably
bankrupt already -- with the prospect of deep deflationary recession or
hyperinflation in the years to come. Orthodox economists can't decide.
The phrase of the moment is "a new model is required". Could it be that
the new model ought to be the old model -- the one that obtained before 1931
and 1971? In 1931 the UK pound (then the predominant trading currency in the
world) was disestablished from real underlying value (which happened to be gold
-- although that particular commodity is not an absolute requirement); and in
1971 the US dollar was similarly disestablished.
Since then, the paper documents of currency have been printed at will by
governments (subject to what their electorates allowed them to get away with by
way of inflation), usually by playing around with central bank interest rates.
Without solid foundations, currency prices have wobbled about -- sometimes
wildly -- against one another. It's no wonder that, since then, following the
fashion set by governments, a whole raft of other financial documents quite
beyond useful insurance policies against risk should have been invented. These
can now ricochet around the world with the speed of an electron so that nobody
can possibly know what the true overall situation really is. We now have CDOs,
CDSs, CDXs, CDO1s, etc and no doubt other derivatives are already forming in
the minds of inventive people in the investment banks and hedge funds.
I won't end with another repetition of the solution that I've make all
too frequently in the last year or two, save to say that it has long been
advanced by what is called the Austrian School of economists. What they write
is usually so convoluted that it's almost unreadable, but they certainly have
the only solution that's possible -- the restoration of the old economic model
which served the world very well for most of the time since the first coin was
minted at around 900BC in order to improve on bartering.
Keith
Keith Hudson, Saltford, England
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