Saturday, December 10, 2011

New Economies

So, everyone's talking about how we're entering a "post job" economy, and how we need to grow a new economy because this one's broken.

I agree, so here's an easy-peasy crash course on a few aspects of the situation.

An economy isn't. There is no such thing as some kind of monolithic entity known as "economy". The thing we think of as an economy is a diverse set of very different things which happen to share some common reference points (money).

As people are aware, what we normally call "the economy" is faltering pretty badly. A combination of super-effective mechanization/outsourcing and corporate greed has led to massive and seemingly unending unemployment. A lot of people are languishing with no cash, even becoming homeless.

Of course, as many people point out, the factories and farms and homes are all still there, ready to house, produce, and distribute goods. The problem is that the control systems have gone haywire, denying access to those goods.

Some people would claim this is why we need to centralize control over these - to guarantee people don't fall through the cracks.

Personally, I disagree. While I think some things should be centralized, "the economy" is much too large and complex to manage centrally. Something like health care can be centralized, because humans are humans everywhere: if you get cancer in Texas, you need the same kind of care as if you got cancer in Taiwan.

But if you have an economic depression in Texas and Taiwan, the solution may be very, very different. Economies are far more different from each other than people are.


A lot of people have basically given up hope, insisting either that there is no economy capable of keeping everyone participating well, or that there is no point in looking because we'll all be dead in 2020 due to global warming.

Well, let's look at a few kinds of "economies". Or, more accurately, a few ways to try to manage the production and distribution of goods.

One way is the classic ultralarge marketplace, which is more or less what we have now (although it comes in some variations). Regardless as to whether it's capitalist or socialist or whatever, the structure of an ultralarge marketplace is that the strongest members are the largest members, and they can use their clout as they see fit.

A plus side of this is that you can really get an economy of scale going - find the best places to generate the things you need, organize the production line for maximum efficiency, and so on. You can also externalize the costs really easily, since you can destroy people or places on one side of the planet to maximize profits on the other side.

To me, the big problem with ultralarge markets is that when the big players start getting controlling, there's nowhere else to go. If they decide to fuck you, you get fucked. It doesn't even have to be a centralized set of authorities: the big players are strong enough, and have enough shared concerns, that even without a concrete central authority they will just automatically collude to screw over whoever they decide to screw over.

Ultralarge markets are enabled by global currency (and global currency exchanges), as well as the ease of transporting goods from nation to nation. There's nothing inherently bad about these things, but it's worth mentioning.

Now that the ultralarge market is starting to fuck us over, some people are thinking of self-sufficient markets. These are basically where you try to build yourself a farm and get ready for the coming apocalypse, your intention being to be as self-sufficient as possible while still allowing for some trade between you and your neighbors.

It may be technically possible to live this way, but it's not a way which is very comfortable or good. Putting aside the lack of variety, the lack of economic "slack" will kill you. If you get sick, what happens? No doctors. If there's a drought, what happens? No foreign food imports. If a bandit shoots you, what happens? No cops.

This kind of economy isn't an economy at all. It's desperate subsistence farming with the help of some vaguely modern practices and technologies.

However, there are plenty of other kinds of methods to use!

Local markets are a fairly well proven method. A local government (such as the town) prints up local scrip and sets it at a specific conversion rate to the national currency. This encourages locals to buy and sell from other locals. It is critical that the local scrip have a specific conversion rate, which is why this is typically backed by a local government, often with the help of a bank: it is quite similar to the idea of a bank lending out cash, and it is possible to have a 'run' on the scrip if you're too clumsy about it.

The reason a scrip is preferable to a simple "buy local" campaign is because it exerts far more pressure to buy local, to the point where locals can begin setting up or expanding local businesses due to their advantage over non-local businesses who will typically not accept the scrip.

Local markets are rarely as efficient or diverse as larger markets. However, when the large market is abusing you, a less efficient positive number is better than a more efficient negative number!

Local scrips are already beginning to bloom here and there, but they have a fundamental weakness. Well, two, if you count the fact that the federal government doesn't much like them. The actual, non-legality flaw is that they are only really useful when the larger economy is screwing you over. The efficiency of the modern workplace is high enough that once you get back on your feet, your local currency will not guarantee jobs. There's only so much business you can do locally, and the number of people it takes to do that business will steadily decline as the local economy becomes better established and begins to polish its performance.

The underlying problem we face is that all the jobs we used to do can be done more effectively by machines and software. Well, we could therefore try a protectionist economy, where advanced robotic labor and outsourcing to other nations is outlawed.

I consider this to be a terrible idea. Not only does it mire us in the nineteenth century, it actually doesn't protect us from the economies of other nations which run at a full robot-powered sprint. This means you have to put huge import tariffs on their goods to keep your local economy competitive, and that can easily lead (I would say "always leads") to isolationism, instability, and general governmental foolishness.

Well, is there an economy which allows everyone to participate while allowing for hyper-efficient production and service?

Sure: create a bevy of new categories of goods and services.

It's uncomfortable, depressing, and sometimes dangerous to lose your job, but that is made a hundred times worse if you lose your job because the whole industry you worked in is being automated away.

And don't think anyone's immune. Virtually every current industry is slated to be automated away, from construction to accounting. The seeds are there, it's just a matter of how fast they bloom.

The question is: how can you help someone who was fired from a dying industry to transition to a growing one?

Well, the answer is easy: make it a service. You can embed it in the unemployment office, you can make it an internet forum, you can do a social network for it. It doesn't have to be government-powered, it doesn't have to not be. As long as it is something that a 45-year-old factory worker knows exists and is willing to use, it'll really help. Adult education.

Of course, one issue is that growing industries these days aren't growing as fast as the old ones are being automated/offshored. However, that's a disconnect that doesn't have to exist. There are plenty of industries which could explode... if we wanted them to. We could repair all the roads. We could install solar panels everywhere. We could create a Citizens' BioBrigade which monitors and catalogs the local ecosystems and bacteria.

The real question is, of course, "where does the money to do that come from?"

Ahhhh. Now we're getting to the crux of the matter. Money.

The reason our economy is in the shitter is because of the companies that control the money. All our currencies are tied into the same network, and therefore whenever anyone rips out a part of that network, the backlash gets felt by everyone, everywhere.

So... maybe what we need isn't a new kind of economy, but a new kind of money. Or, at least, a new method of distributing money, since there are plenty of people who are doing reasonably well and are happy to help fund new markets.

Anyway, I don't have the answers. But I think it's time to start talking and trying everything we can.

And if you're a mayor looking for a solution, I strongly recommend looking into local scrip.

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