Wednesday, March 6, 2013

Peter Bakker — Accountants Will Save the World

...we need to ensure that corporate reporting makes clear how a company is making its money, not just how much money it has made. For every robust, time-tested measure of return on financial capital, we need another for social capital — the economic benefits that derive from cooperation among groups, and yet another for natural capital — the supply of natural ecosystems (think forests, oceans, mineral deposits) that we turn into valuable goods or services future.
Make no mistake, I am a capitalist: Someone who puts capital to work, and wants something back. But where we've lost the plot is that we only demand — and manage — a return on financial capital. In order to address current economic crises in a systematic way, we must begin to demand a return on social and natural capital as well. That's where we need to change the rules of the game.
Harvard Business Review — HBR Blog Network
Accountants Will Save the World
Peter Bakker | formerly CEO of TNT N.V., now president, World Business Council for Sustainable Development

Greg Palast dishes on the plot against Hugo Chavez

Venezuelan President Chavez once asked me why the US elite wanted to kill him. My dear Hugo: It's the oil. And it's the Koch Brothers – and it's the ketchup.
Greg Palast
Vaya con Dios, Hugo Chàvez, mi Amigo
Chavez himself told me he was stunned by Bush's attacks: Chavez had been quite chummy with Bush Senior and with Bill Clinton 
So what made Chavez suddenly "a dangerous enemy"? Here's the answer you won't find in The New York Times 
Just after Bush's inauguration in 2001, Chavez' congress voted in a new "Law of Hydrocarbons." Henceforth, Exxon, British Petroleum, Shell Oil and Chevron would get to keep 70% of the sales revenues from the crude they sucked out of Venezuela. Not bad, considering the price of oil was rising toward $100 a barrel. 
But to the oil companies, which had bitch-slapped Venezeula's prior government into giving them 84% of the sales price, a cut to 70% was "no bueno." Worse, Venezuela had been charging a joke of a royalty – just one percent – on "heavy" crude from the Orinoco Basin. Chavez told Exxon and friends they'd now have to pay 16.6% 
Clearly, Chavez had to be taught a lesson about the etiquette of dealings with Big Oil.
On April 11, 2002, President Chavez was kidnapped at gunpoint and flown to an island prison in the Caribbean Sea. On April 12, Pedro Carmona, a business partner of the US oil companies and president of the nation's Chamber of Commerce, declared himself President of Venezuela – giving a whole new meaning to the term, "corporate takeover. 
U.S. Ambassador Charles Shapiro immediately rushed down from his hilltop embassy to have his picture taken grinning with the self-proclaimed "President" and the leaders of the coup d'état. 
Bush's White House spokesman admitted that Chavez was, "democratically elected," but, he added, "Legitimacy is something that is conferred not by just the majority of voters." I see.
With an armed and angry citizenry marching on the Presidential Palace in Caracas ready to string up the coup plotters, Carmona, the Pretend President from Exxon returned his captive Chavez back to his desk within 48 hours....

Tuesday, March 5, 2013

Stealing back the commons: Citizen economics beyond capitalism

Michael Jacobs, an ex-SpAd to Gordon Brown, has recently written in the New Satesman that ‘green social democracy can save capitalism’. Well, not everyone agrees. For some, the ‘green social democracy’ experiment has, thus far, not worked, and indeed, might be running out of time. 
And as for capitalism – or at least capitalism1.0, it’s no longer heresy to question its infallibility. Since we last blogged about capitalism, a host of mainstreamers like the BBC’s Stephanie Flanders, the FT’s Martin Wolf, UBS’s George Magnus, Joseph Stiglitz and Nouriel Roubini, have started questioning our growth-obsessed, capitalist economics and calling up Karl Marx from his grave.
And, as a search of Amazon will show you, there’s no shortage of recent books both questioning capitalism and laying out ideas for its updating or replacement.
But why might we have to consider alternatives to capitalism and what might an alternative look like?
Resilience
Stealing back the commons: Citizen economics beyond capitalism
Jules Peck | Citizen Renaissance

Dirk Ehnts — In the long run we are all – what?!

I welcome the fact that the European institutions start to incorporate Keynes and his ideas into their speeches and policies (see Mr Rehn’s recent comments), but I have yet to read a single sentence in which someone from the troika makes sense of Keynes and his ideas. Until now, it all comes down to: “see, we are Keynesians, too, so there is no alternative.” The Spanish newspaper EL PAIS calls it smearing Keynes(ianism). And Europe continues to fall apart because its policy elite has lost its ability to discuss and evaluate ideas.
econoblog101
In the long run we are all – what?!
Dirk Ehnts | Berlin School for Economics and Law

Daan Bauwens — Japan accentuates the social side

After two decades of economic stagnation and serial natural disasters, a growing number of young Japanese believe social entrepreneurship is the best way to rebuild their society....
"After the financial crisis we have seen a return to traditional values," says Japan's leading business analyst Kumi Fujisawa. "People aren't looking for short-term gain but concentrating on long-term perspectives. There's a return to idealism, people want to contribute to society again." 
According to polls organized by the Japanese government, the value of work is being reconsidered in Japan since the start of the financial crisis. The number of people that answered that they wanted to work "to contribute to society" rose sharply after the burst of the asset bubble, from 46% to 64% in 1991. That number is above 65% at present.
Asia Times Online
Japan accentuates the social side
Daan Bauwens


Joshua Jacobs and Eftychis Mourginakis — China robots signal US challenge

A little over two years ago Terry Gou the CEO of Foxconn announced that over the next three years his company was going to begin phasing in up to 3 million industrial robots with an eye towards increasing efficiency and reducing labor costs. This announcement, from the world's largest electronics contract manufacturer, sent waves through the media and business community. Foxconn employs over 1.5 million people in China, in hundreds of plants and facilities, scattered around the country. 
The prospect of Foxconn shifting towards robotic labor has enormous implications for the future of not just the Chinese, but also global labor markets. This is primarily because of the type of work that the robots engage in is the assembly of complex electronics, an area previously thought beyond the capabilities of commercial robotics and left presumably to human hands. So far, the robots seem more than up to the job. 
While the headline grabbing prediction of "millions of robots" does not seem to have panned out in the time frame that Gou predicted, Foxconn has nevertheless managed to deploy significant numbers of its new robotic workers. Over the course of last year, Foxconn managed to install 30,000-50,000 new robots in its factories, and is aiming for 300,000 more by 2014. 
What is astounding about this information is the impact it already has had. According to Liu Kun, a spokesman for Foxconn, "We have canceled hiring entry level workers, a decision that is partly associated with our efforts in production automation."...
The fear in China is that the Lewis Turning Point, the point where rural laborers moving to urban manufacturing loses its value, is being accelerated by the mass adoption of industrial robotics that reduce the value and efficiency of new human labor. 
Asia Times Online
China robots signal US challenge
Joshua Jacobs and Eftychis Mourginakis

Interesting article, but written by conservative authors, so no mention of negative externalities, unemployment, or effective demand. This is going to be the push of firms globally, however, and the article sets forth the corporate strategy.

Noam Chomsky: Can Civilization Survive Capitalism?

Capitalism as it exists today is radically incompatible with democracy.
AlterNet
Noam Chomsky: Can Civilization Survive Capitalism?
Noam Chomsky | Emeritus Professor of Linguistics and Philosophy, MIT

Merijn Knibbe — Fighting FIRE with fire? According to Richard Wood we indeed do need more ‘debt free’ money


Radical proposals for the EZ. Basically an admission that the EZ has failed as currency union in that the euro is not doing its job of carrying the economy and needs a rescue from outside. The EZ has to get its act together economically and financially in terms of the euro, or it will come apart politically.
For MMT-ers: Woods himself already gives the apt Keynes/Lerner/Friedman/Buiter/Bernanke references. Yes, Friedman and Bernanke too. To be complete: one of the main arguments of Wood is that we are, at the moment, confusing two very important discussions and kinds of policy, one being about the apt size of the government and the other about the level of government debt and deficits. It’s all about priorities: banks or households, dignity or trash can cuisine.
Real-World Economics Review Blog
Fighting FIRE with fire? According to Richard Wood we indeed do need more ‘debt free’ money
Merijn Knibbe | Wageningen University, Netherland
(h/t David in the comments)

Rick Ungar — GOP Senator Knowingly Distorts GAO Report He Commissioned To Launch Most Dishonest Attack On Obamacare To Date

Last week, the right-wing blogosphere gleefully erupted in response to Senator Jeff Sessions’ (R-Ala.) disclosure of a newGovernment Accounting Office report that, according to the Senator, reveals that the Affordable Care Act will increase our national debt by a stunning $6.2 trillion.
Speaking at a Budget Committee meeting, Sessions announced—
“According to GAO, under a realistic set of assumptions, the health care law will increase the deficit by…roughly $6.2 trillion over the next 75 years.”

Take note of the Senator’s statement that the finding is based on ‘a realistic set of assumptions’ as this is, as you will see, at the very heart of Senator Sessions’ extraordinary deception—one designed to purposefully and cynically mislead the American public....
Forbes
GOP Senator Knowingly Distorts GAO Report He Commissioned To Launch Most Dishonest Attack On Obamacare To Date
Rick Ungar

It's called making shit up. This isn't even spin, putting a good face on bad news. It's sophistry that amounts to carefully planned and orchestrated deception aimed at influencing public opinion through political propaganda.
Individuals such as Jeff Sessions have no place in public office because they have no legitimate interest in solving problems—they only seek to create them.
 Amen.

Richard Wilkinson: How economic inequality harms societies (TED)



Richard Wilkinson: How economic inequality harms societies
(h/t Dan Lynch in the comments)

Wild! The US is off the charts — in the wrong way.
"If Americans want to live the American dream, they should go to Denmark."
"General social dysfunction is related proportionately to inequality." 
The data is rather shocking. But the causality involved, which Wilkinson elaborares at the end, is encouraging. Inequality is not only correlated with social and psychological dysfunction, it is found to be a cause of it.

Decreasing inequality within a group improves social and psychological functioning. This provides a strong argument for adopting progressive social, political and economic principles for achieving the good society.

John Robb — Here’s How to Build an Engine of Prosperity in Your Community


Here’s something EVERY community should have, but almost none do.
This isn’t a picture of a factory or cubicles in an office building.
It’s a makerspace. In this case, it’s the Artisan’s Asylum in Somerville, MA.
What is a makerspace? It’s a place where people in the community can go to make things....
Resilient Communities
Here’s How to Build an Engine of Prosperity in Your Community
John Robb

Link to makerspaces worldwide at bottom of post. There are a lot of them! Similar to makerspaces are tool libraries, which are now proliferating, too.

Reminds me of the free universities in the Sixties when all sorts of free courses where given by volunteers.

Lars Syll — Paul Krugman on gold buggism – so right, so right

The “gold bugs” seem to forget that we actually have tried the gold standard before – in the era more or less between 1870 and 1930 – and with disastrous results!
Lars P. Syll's blog
Paul Krugman on gold buggism – so right, so right
Lars P. Syll | Professor, Malmo University
(h/t Ralph Musgrave via email)

Clint Balinger — Towards A Pure State Theory Of Money

MODERN MONETARY THEORY (MMT) notes correctly that money is a creature of the state, and that important macroeconomic and policy conclusions follow from this understanding, e.g., sovereign states are not revenue constrained and spending is primarily limited by inflation. Taxes give value to state money and maintain its value (i.e., inflation can be controlled through taxes).
One (among many) key policy insight is that a job guarantee is possible. A job guarantee not only achieves what many think should for myriad social reasons be a primary goal of macroeconomics but also further creates a buffer stock that achieves an additional primary macroeconomic policy goal – stability.
However, most of the world does not operate under pure state systems of money. Most of what serves as money in most banking systems in the world is privately created credit money.
We can compare the current most common banking system with a pure state system of money:....
Clint Balinger
Towards A Pure State Theory Of Money

How to Tune Our Economy? Practice, Focus and Coordinated Policy Development Effort

Commentary by Roger Erickson

"Much current analysis centers on the use of organization and communication of information to improve operational efficiency. For corp. management this could be useful. It is of no interest to too many in political office. Their minds are already made up and more information is superfluous." John Lounsbury, GEI

John's comment accurately drives home the point that it is our political policy methods that are completely obsolete and dysfunctional - regardless of the operational details. We have to change our policy development methods. That simple point has to be faced. Without it, we're wasting our time with all other "investing" issues.

How do we invest in improved policy development methods? If we don't find a way, no amount of investment in strategy and/or tactics will matter.

If the minds of our politicians are already made up, and immune to further information or feedback, that simply means that the same holds for the minds of most of our electorate. What do we do about that stark fact? How does a recombinant system that is that badly out of tune repair itself? For a start, it's hard to imagine 315 million people exploring emerging options if they're not yet aware of how many group options they have or how to find them, let alone how to adaptively explore those options.

There is endless literature on how increasingly complex systems are continuously tuned, year after year, decade after decade, millenia after millenia. The records of key steps are legion, from physics to chemistry to geology to biology to culture - and some key principles are easily discernable.

So why don't we bother to prepare our electorate to utilize those easily visible organizational principles? Why do we struggle to maintain an adequately informed electorate? Look in the mirror. The answer is a distributed one, requiring constantly evolving methods just to maintain the same enduring principles. Do YOU even want more information, or is YOUR mind already made up, rendering even you immune to additional information? If you're not immune, please read on, leave your comments, and/or write to me at rge (aat) OperationsInstitute (dott) come on!

Difficult organizational tasks are always solved through some version of the following process.

Eventually, via accumulated feedback, a process map becomes apparent, visualizing all the "places to intervene in a system." The control points. And with every step of growth, even that list changes and grows, every day! Plus, even keeping up with the growing list of supposed control points isn't even half of the task! [Once you read the list of "clutch, brake, accelerator, gear-shift, steering wheel" - you're fully capable of safely driving a car, right?]

Secondarily, further trial and error feedback indicates a sub-map, visualizing all the "methods for gracefully intervening in known control points." That's where inter-dependency maps start to be appreciated. Such maps are less easily described, and require experience, not just data. Total surprises are the norm. And, this map too changes continuously, even faster than the first map. That's why KM (knowledge mgt) specialists agree that over 70% of how all human systems work and continuously adapt is never explicitly written down. Instead, cultural operations, large and small, are only implicitly passed on, via "monkey see / monkey do" emulation or on-site experience. We all spend our lives embracing and extending muddle-through. Half the genius of our Constitution is it's brevity and focus on principles, and it's disregard for unpredictable details. Changing our Constitution neither precludes nor guarantees adaptive change in our culture. Only altering the cultural methods which we focus on will help us.

There is no other way. It's hard enough to write down parts lists, so any attempts to list or even describe the permutations of parts-list interactions and interdependencies that can occur in different situations immediately gets out of hand. It's simply not productive to even bother writing down all the past, present and emerging interdependencies. It's literally far faster to explore which subset are currently emerging, rather than try to read about the near-infinite super-set of inter-dependencies that could be but isn't currently occurring - at least not predominantly.

We could easily get lost in this necessary introduction, so let's arbitrarily focus, and bring the topic back to maintaining the policy space and policy agility of the USA. That's certainly a complicated task with attributes that change rapidly and continously. We've established that our task cannot be dismissed as either simple or easy. It requires actual thought.

Where are, say, the 50 most fundamental places to intervene in a policy apparatus that scales from local to national policy offices?

What are, say, the 5 most fundamental methods for gracefully intervening, in that diverse policy apparatus? Our goal is to produce desired outcomes by adroitly tweaking all our emerging policy control points both differently and simultaneously. We want to be better at that than any other nation on earth.

Again, we could be at this forever, so let's jump to a focus on changing the electorate's mind about minimum thresholds for what US politicians should be interested in. Does our electorate even understand the paragraphs above? Are our policy staff capable of maintaining our policy agility? When you're done laughing .. to tears ... we'll continue.

Ready yet? Take your time. Come back tomorrow if necessary - or even next week. It's a sobering thought, so if necessary, go get inebriated before returning.

Let's face it. An uninformed electorate isn't likely to elect useful politicians. We can't even predict the growing number of things an electorate should know, to maintain just-adequate Situational Awareness. Nor could we even list those things even if we could predict them!

Yet we can review and focus on key emerging methods that will allow us to regain adequate Situational Awareness, on-demand. After that, we still need the discipline to demand that those methods be used, practiced widely enough to matter, and constantly reviewed and adjusted further. Perhaps we need to focus on our own group agility, and prepare our students to keep that ultimate prize in mind as their #1 goal? We can leave them complete freedom to discover how, as their situations change. If we don't make them aware of why group agility matters, it won't matter how hard our disorganized individual offspring work at uncoordinated tasks.

There's a simple fact we keep coming back to with large economies and populations. "The more degrees of freedom a population has, the more organizational discipline it needs." If a focus on the emerging, key principles required for new situations isn't found ... the bigger organizations fail faster.

It's easier to man and operate a small boat than an aircraft carrier or cruise ship. Without a helluva lot more policy discipline - at least about key principles - an larger crew on a larger boat is dead in the water, and can quickly become a stinking mess. Witness the recent cruise line debacles.

Evolution is an iterative process, involving ways of selectively implementing succeeding layers of unpredictable methods. The key methods that matter are those that allow scalable discipline to be focused on the few things that will deliver access to additional degrees of freedom - i.e., expand our options. There's a needle in every every layer of every growing haystack.

To evolve, we need to focus on finding those needles - not the infinite list of things that are resource sinks but offer no additional degrees of freedom. To even be capable of evolving our culture, we need citizens prepared to pursue that goal, and practiced at the pursuit. If we don't prepare, we're deluding ourselves about our chances, and those we leave for our offspring.

This isn't rocket science. An ignorant electorate absolutely limits our degrees of freedom. Distributed ignorance drastically reduces our group options. A prolonged period of population ignorance absolutely precludes our survival.

So, how do we continually update the very methods groups use to continuously grow organization even as group size and capabilities grow? Sports coaching methods help a little, but they maintain fixed team sizes, so don't answer enough of our questions. Clues from all existing and emerging disciplines must be sifted and combined, just to keep up with demand to optimally organize all interdependencies.

Here's one example of what's being discussed in just one field tasked with constantly increasing demand for more group agility and more distributed group organization. In warfare, the quality of distibuted decision-making means life and death for entire militaries.

Misinterpretation and Confusion: What is Mission Command and Can the US Army Make it Work

That title raises an obvious question for US citizens. "What is Cultural Adaptive Rate, and Can the US Democracy Make it Work?"

Your feedback is needed. By everyone.


Monday, March 4, 2013

G. William Domhoff — Wealth, Income, and Power


Detailed investigation of distributive inequality.

Who Rules America?
Wealth, Income, and Power
G. William Domhoff | Professor of Sociology, UC Santa Cruz
(h/t Clonal in the comments)

See also the work of Emmanuel Saez, Professor of Economics 
Director, Center for Equitable Growth, UC Berkeley

Larry Hatheway — Understanding Europe's "Austrian" Solution - The 'Merkel-Draghi' Wager


Explains the EZ dynamic based on "purging inefficiency and increasing competitiveness" aka cramming down labor. Why the eurocrats think it is working.

Zero Hedge
Understanding Europe's "Austrian" Solution - The 'Merkel-Draghi' Wager
Larry Hatheway | Managing Director, Chief Economist & Chief Strategist at UBS Investment Bank



Lord Keynes — The Financial Revolution in Medieval and Early Modern Europe


For the monetary history buffs.

Social Democracy for the 21st Century: A Post Keynesian Perspective
The Financial Revolution in Medieval and Early Modern Europe
Lord Keynes


The Huffington Post— Wealth Inequality Video Highlighting Difference Between Perception And Reality Goes Viral 




The Huffington Post | Business
Wealth Inequality Video Highlighting Difference Between Perception And Reality Goes Viral 

Abolish all Taxes on Income, FICA and Medicare, and Let Our Public Spend to Provision Itself. No Treasury Bonds at All.

Commentary by Roger Erickson

We could do all that, easily. It's only a question of getting the practice to actually manage the altered but drastically simplified operations involved. Can we get to near-zero taxes and near max Output, Innovation and novel Capacity Addition? Let's find out. As far as I know Australia is the only country in recent memory to forego Treasury Bonds. Bill Mitchell discussed that in private email, and it's buried somewhere in one of his blog entries. The currency issuer only has to choose some other reference interest rate which all subsidiary bond issuers, buyers and traders can orient to.

Just use VAT (value-added or sales-taxes) to finely regulate both net and patterns of Aggregate Demand.

Marriner Eccles published some papers on some of those very topics while USA Fed Chief, in 1944.

February 8, 1944 - Possibilities of postwar inflation and suggested tax action
Address at the Tax Institute Symposium in New York City

November 16, 1944 - The post-war price problem - inflation or deflation
Address at Meeting of National Industrial Conference Board, New York City

"Curbing inflation through taxation", by Marriner S. Eccles (1944)

Scratch Jeb...


Jeb Bush was apparently interviewed in the MSM lately story at WaPo.
Former Florida governor Jeb Bush (R) said Monday that revenue increases could be a part of a budget deal with President Obama, provided the president is willing to do big things to get the deficit under control.
During an appearance on NBC’s “The Today Show,” Bush said it’s not the time to talk about increasing taxes after what he called the biggest tax hike in American history two months ago following the fiscal cliff deal.
But he also wouldn’t rule out the idea that revenues could be part of a package — something Republicans in Congress have said is off the table. “There may be (room for revenue) if the president is sincere about dealing with our structural problems,” Bush said.
Sounds like he has all of the Peterson talking points down cold... too bad for him.

Matthew McOsker — How money enters the economy through deficit spending





Angry Bear
How money enters the economy through deficit spending
Guest post: From reader McWop who has been a constant for a number of years, aka Matthew McOsker

Government spending does not "crowd out" private sector investment. Here...


Replacing the Imaginary Fear of Fiat Currency Inflation, with Confidence in the Return on Coordination

Commenatary by Roger Erickson

Successful outcomes can always be interpreted in short, medium and long-term metrics.* For more pragmatic monitoring of cultural outcomes, how about promoting more distributed understanding of the following methods?

.. fiat currency accounting?

.. proportional population employment?

.. survival of the country (capabilities, affinity, options & output of the USA).

Yes, there are measures that let the public track success, but that doesn't mean that they're used. Most of our current cultural problems were very directly addressed by the Automatic Stabilizers enacted during the 1930s-1940s (social security, FDIC, unemployment benefits, etc). The first cultural method to be sysematically undermined was regulation of Control Fraud - despite the myth of the SEC, DoJ District Attorneys and the FBI actions against White Collar Crime - (google William K. Black), and that's only because we let absolute crooks and traitors like Alan Greenspan, Robert Rubin and Larry Summers bribe, sweet talk and BS our Congress into gradually deregulating financial crime, right up to repealing Glass-Steagall.

Everything else is policy war between local vs long-distance merchants** over currency supply, either restricting it to preserve the buying power of hoarded cash, or letting it depreciate to scale net national liquidity with national growth. Let's see how many people can grasp the following, dynamic systems argument.

How do we afford to pay the "fiat interest on fiat bonds."

If carried far enough, that discussion eventually leads to 2 points.

First, we can't fail to pay the interest, since we can always generate as much fiat liquidity units as we want.

So, second, the argument reduces to either

a) arbitrarily maintaining the purchasing power of previously hoarded fiat (liquidity units), by progressively depriving an increasingly complex economy of both relative liquidity AND return-on-coordination [That is, pay the fiat interest by draining private savings of previously issue currency; even though population, capabilities and cultural options are all increasing. Even fools don't want that, when faced with a choice. Only pure sociopaths do.]

or

b) Enlarge the fiat currency base [# of liquidity units] with expanded public spending initiative, thereby SUPPOSEDLY diluting the buying power of yesterday's liquidity units. Why? TO PROVIDE ENOUGH LIQUIDITY TO RAPIDLY EXPLORE THE EXPANDING OPTIONS FACING TOMORROW'S POPULATION! More people, more capabilities, more options worth exploring = better/faster/cheaper new stuff to buy with old liquidity units.

To be blunt, social species - and modern economies - work because Return-on-Coordination far outraces inflation. Inflation is just one - faux - aspect of the always affordable cost-of-coordination. There's only one return that exceeds the cost of coordination, and that's the immense return on coordination. Luckily R-on-C far outstrips C-of-C, always, if we just let it.

Our task is to scale liquidity proportionally with the product of population-x-capabilities, so that we can rapidly explore all our emerging group options.

That, in a nutshell, is the "SOCIAL-SPECIES OPTION." It's an easy choice for those with the brains to sense dynamic incentives. Chase the biggest return, dummy! It's a dilemma only for overly-isolated Luddites. Our task is evolve and stay in the adaptive race, by organizing on a larger scale ... or else become a has been culture, either extinct or a domesticated lunch source for some other, more rapidly adapting culture - i.e., one optimizing it's liquidity in order to explore it's expanding options faster than our culture does.

People who save static assets excessively, including hoarding fiat, aka, hoard public initiative, are constraining today's dynamic output and thereby depriving their grandchildren of expanded options.

Our granchildren's options are reduced without our full investment in generating those options. Our Output Gap => grandchildren's Options Gap, and the relationship is not linear, but exponential.

If our output gap is "j", their options gap is [j(e)], i.e., "j" to some unpredictable exponential "e".

That's how evolution has worked since the dawn of time. We die & get out of the way so that our descendents can be far more than we were. It's called sexual recombination, or cultural recombination, or - in general form - Options Recombination. If we don't allow our own culture to reconfigure as fast as it could - we preclude it from exploring it's exponentially expanding options.

(see the "Traveling Entrepreneurs Task")

This all follows from the simple, bottom-up dynamics of adaptive systems.

Walter Shewhart: "In all complex systems, the highest cost, by far, is the cost of coordination."

Obvious corollary: "In all complex systems, the highest RETURN, by far, is the RETURN on coordination."


* This previously appeared as a comment at Seeking Alpha, and a longer, discussion at Economic Intersect.

** Actually, the clan-war between long distance & short distance merchants is unnecessary. It's a non-cooperative battle to tilt policies to favor one or the other, beyond adaptive utility. Policies favoring long-distance mercantilism over local resiliency can easily spill over into reduced Adaptive Rate. Yet that happens only if we let it happen. Systems tilt into maladaptive process patterns only in the absence of adequate public discourse. We're not all stupid, just ignorant - and above all else, unpracticed - when it comes to grasping all the changing nuances of emerging Situational Awareness.


Marjorie Kelly — The Economy: Under New Ownership

Here’s the problem: The very aim of maximum financial extraction is built into the foundational social architecture of our capitalist economy—that is, the concept of ownership.
If the root of government is sovereignty (the question of who controls the state), the root construct of every economy is property (the question of who controls the infrastructure of wealth creation).
Many of the great social struggles in history have come down to the issue of who will control land, water, and the essentials of life.
Ownership has been at the center of the most profound changes in civilization—from ending slavery to patenting the genome of life.
Throughout the Industrial Age, the global economy has increasingly come to be dominated by a single form of ownership: the publicly traded corporation, where shares are bought and sold in stock markets. The systemic crises we face today are deeply entwined with this design, which forms the foundation of what we might call the extractive economy, intent on maximum physical and financial extraction.
The concept of extractive ownership traces its lineage to Anglo-Saxon legal tradition. The 18th century British legal theorist William Blackstone described ownership as the right to “sole and despotic dominion.” This view—the right to control one’s world in order to extract maximum benefit for oneself—is a core legitimating concept for a civilization in which white, property-owning males have claimed dominion over women, other races, laborers, and the earth itself. 
In the 20th century, we were schooled to believe there were essentially two economic systems: capitalism (private ownership) and socialism/communism (public ownership). Yet both tended, in practice, to support the concentration of economic power in the hands of the few.
Emerging in our time—in largely disconnected experiments across the globe—are the seeds of a different kind of economy. It, too, is built on a foundation of ownership, but of a unique type. The cooperative economy is a large piece of it. But this economy doesn’t rely on a monoculture of design, the way capitalism does. It’s as rich in diversity as a rainforest is in its plethora of species—with commons ownership, municipal ownership, employee ownership, and others. You could even include open-source models like Wikipedia, owned by no one and managed collectively.
These varieties of alternative ownership have yet to be recognized as a single family, in part because they’ve yet to unite under a common name. We might call them generative, for their aim is to generate conditions where our common life can flourish. Generative design isn’t about dominion. It’s about belonging—a sense of belonging to a common whole.
AlterNet
The Economy: Under New Ownership
Marjorie Kelly | YES! Magazine | fellow with the Tellus Institute and is director of ownership strategy with Cutting Edge Capital consulting firm. She is author of the new book, Owning Our Future: The Emerging Ownership Revolution. She was co-founder and for 20 years president of Ethics magazine.
The cooperative economy—and the broader family of generative ownership models—is helping to reawaken an ancient wisdom about living together in community, something largely lost in the spread of capitalism. Economic historian Karl Polanyi describes this in his 1944 work, The Great Transformation, tracing the crises of capitalism to the fact that it “disembedded” economic activity from community. Throughout history, he noted, economic activity had been part of a larger social order that included religion, government, families, and the natural world. The Industrial Revolution upended this. It turned labor and land into commodities to be “bought and sold, used and destroyed, as if they were simply merchandise,” Polanyi wrote. But these were fictitious commodities. They were none other than human beings and the earth itself.
Generative design decommodifies land and labor, putting them again under the control of the community....
The generative economy finds fertile soil for its growth within the human heart. The ownership revolution is part of the “metaphysical reconstruction” that E.F. Schumacher said would be needed to transform our economy. When economic relations are designed in a generative way, they’re no longer about sole and despotic dominion. Economic activity is no longer about squeezing every penny from something we imagine that we own. It’s about being interwoven with the world around us. It’s about a shift from dominion to community. 
This is really the crux of it. 

Arwa Mahdawi — Bitcoin: more than just the currency of digital vice

Castronova notes that among young people, the mental accounting on different sorts of "money" is already very fuzzy. "Twenty-year-olds don't see any difference at all between dollars, gold coins, GPAs," said Castronova. "They're all just digital score sheets".
The future of money may or may not include a Federal Reserve Bank of Amazon, but it probably does involve the gradual decentralisation and democratisation of currency. Virtual currencies aren't just a new-fangled sort of Monopoly money. Rather, they may just be the thing that ends the monopoly on money.
The Guardian
Bitcoin: more than just the currency of digital vice
Arwa Mahdawi
(h/t Max Keiser)

Update on Bitcoin. Some interesting tidbits.

Seriously Lagging Policy Agility - A Call to Methods

Commentary by Roger Erickson

How do we fail Situational Awareness? Let me only begin to count the ways.

Obama Renews Offer to Cut Social Safety Net in Big Budget Deal

Interviews about Chinese real estate

Neo-Imperialism and the Arrogance of Ignorance

This list is too long to complete. Yet there is a very clear conclusion.

A combination of "massive corruption" / "debt crises" / wrong moves ... points to seriously lagging policy agility in governance structures .... worldwide. [We have corruption in the USA of course, just different permutations than elsewhere. Examples are Control Fraud on Wall St, the MICC, and in political campaign finance - not to mention political strategy itself.]

We're guaranteeing that our kids must live through "interesting times". Why? We have so many huge options ... and instead we're off bombing Afghanistan?  Hell, it'd be cheaper to just bomb Death Valley! And now we're gonna bomb Mali too? And, we're still preparing - and uber preparing - for what - Iran? Is our end game a plan to use drones to assassinate corrupt Communist party members across China, or honest citizens here at home? Go for both? Who's hollowing out whom?

Sounds rather like you can never go wrong underestimating the median intelligence of crowds. Methods for getting their attention have become the dominant catalytic methods for social adaptation. Having a message is necessary, but by no means sufficient - by any stretch of the imagination.

So how do we get more institutions, and their methods, to be more agile? Time to pull the fire alarm? Not a call to arms, but a call to methods. Methods for exploring cultural options faster/leaner/better.  We need another George Marshall to clear dead wood from the Pentagon, another Marriner Eccles to clear dead wood from the Fed, another FDR to clear dead wood from the Administration and SCOTUS and ... while we're at it ... another electorate, just to clear dead wood from the POTUS, Congress and all levels of political office.  If you're wondering whose methods are obsolete, look in the mirror.  It's long past time for a complete makeover in the USA.

Do you see any international trends in White Collar criminology and social anthropology to offset all this bad news? We need to damp down the stupid and encourage return-on-coordination - simultaneously. Any methods for actually getting attention? Attention for more distributed, resilient and agile democracy methods? Not yet? Why not? Do you really love your kids?

Capitalists say it all boils down to incentives. Why is it that supposedly educated people can't see the biggest return of all, the return-on-coordination? Can YOU make people see that 500 lb gorilla incentive lurking in the room? It appears to be invisible to most people.  Either that or it's so dynamic that they simply can't sense it fast enough to matter. Perhaps what we really need is ultra-high-speed Optionography - to help slow witted people sense dynamic value incentives, sooner. We used to just call that public discourse and distributed feedback.

Does Cultural AQ* = tPD/tdDF**?

* Adaptive Quotient
** ratio;
tempo of Public Discourse to tempo&distribution of Distributed Feedback;
distribute enough, diverse feedback widely & quickly enough;
then discuss & distill if widely & fast enough - to arrive at the few adaptive principles key to each situation;

Free Copy of Joe Firestone's new book on Kindle Monday and Tuesday


Fixing the Debt without Breaking America: Austerity, the Trillion Dollar Coin, and Ending Debt Ceiling, Sequester, and Budgetary Crises
Joseph M. Firestone

Book Description
Publication Date: March 1, 2013
This book is about a counter-narrative to austerity politics. It exposes its fallacies, and, I hope, its closed-mindedness and futility. It also offers a way out of austerity politics. 
That way out, is through the perspectives and truths developed by the approach to economics called variously Modern Money Theory (MMT), Modern Monetary Theory, or Neo-Chartalism. And it is also through using the method of High Value Platinum Coin Seigniorage (HVPCS).
In this book, I relate neoliberalism, the Washington Consensus, and austerity politics to the perspectives and truths of MMT, including MMT ideas about fiscal sustainability and responsibility, and to HVPCS and its promising application to ending austerity by providing the Treasury Department with the capability to harness the Federal Reserve's power to create Bank Reserves out of thin air. Treasury can use to this capabiliity to repay the national debt, and to deficit spend Congressional appropriations.
If used, HVPCS would end the possibility of repeated and further debt ceiling crises; and would also remove any reasonable justifications referring to the current national debt/deficit situation for the sequester, or for the upcoming budgetary crisis, which the Republicans intend to create at the end of March and then repeat periodically throughout this year and probably next.
In brief, this book offers a solution to the damaging deadlock we see in Congress, and between Congress and the Executive, that periodically hurts our economy and harms our recovery from the crash of 2008. The solution proposed here, $60 Trillion Dollar HVPCS, would be entirely game-changing for Washington politics. It would put the advocates of austerity politics literally out of business, and force them to create a whole new rationale for opposing measures that the economy and the American people need.
The book's contents include: austerity, neoliberalism, and “fiscal responsibility”; a fix the debt narrative and counter-narrative; modern money theory truths; real meaning of “deficit”, “surplus”, "the national debt", and "national savings"; two ways of fixing the debt without breaking america, origin and early history of Platinum Coin Seignorage (PCS); the trillion dollar coin and the debt ceiling crisis: the coin hits the mainstream; incremental vs. small ball vs. game-changing PCS; the $60 trillion plan, policy space, and the end of austerity, is PCS inflationary?; legal, political, economic, and institutional objections, high value coins and MMT, the promise of high value platinum coin seigniorage for america: no more debt ceiling, sequester, or budgetary crises and more . .


Move over big Hoover, there's a big, bad Obamahoover moving in.

Commentary by Roger Erickson

Obama Renews Offer to Cut Social Safety Net in Big Budget Deal

Here we go.


Cognitive Dissonance — The Science Delusion – Reexamining our Worldview Mindset


About construction of worldviews. Highly recommended.

Finishes strong with Rupert Sheldrake's Science Set Free: 10 Paths to New Discovery.

Zero Hedge
The Science Delusion – Reexamining our Worldview Mindset
Cognitive Dissonance

Chris Dillow — On financial balances


Chris Dillow does sectoral balances and speculates on causality.

Stumbling and Mumbling
On financial balances
Chris Dillow | Investors Chronicle (UK)