This isn't a game design post.
There's been a growing stream of news about people organizing themselves. It's becoming more and more easy. Things like AirBnB and Uber are one example. People organizing to evade import taxes and tariffs are another example. The new tone of socially-aware political protests are a third example.
But even you, personally, have probably noticed how easy it is to organize people. When each side has a smartphone, messages and internet maps make it very easy for any two people to quickly negotiate a time and place to meet. Even if you don't want to meet up, talking via messages allows for easy, asynchronous, searchable communication. It's easier and easier to communicate.
Most of the organizations arising in this space are "trust brokers" - their job is to insure that the people communicating are both trustworthy. Like all middlemen, I expect these organizations to be replaced by something a lot flatter and more public, but it'll be a while before that happens.
Anyway, anyone with a smart phone is exercising powers that used to be held only by corporations, governments, and the extremely rich. Buying from abroad used to be limited to those categories - companies would buy or manufacture abroad, then ship it home. "Globalization", we called it. Governments stepped in to regulate it, some more than others. But individuals were not usually very carefully regulated.
If person A wanted to buy jeans from America, person A would have to fly to America, buy them, and fly home. Obviously a huge expense and waste of time. Instead, person A would buy jeans from a company that specialized in importing jeans. And they would pay the middlemen and the government to do so.
Now, however, person A can buy jeans via person B, who happens to already be in America and wouldn't mind doing your shopping for you. This is a literal middleman - not an organization, but a specific person. You don't even have to know them - they have a 5-star rating from everyone that's come before, so you can trust them to get the job done.
This may sound pretty familiar, because its not exactly a new idea. People have been noticing this kind of thing growing for quite a while. But I want to talk about the cultures surrounding it in a bit more depth, because I have Opinions.
Let's state the idea clearly:
Ad-hoc cooperation is the future.
It's a carefully chosen phrase, because there is a lot of political chaff floating around. If I say "individuals will create the new economy", it won't go across right. Even though it technically means what I'm trying to say, it is already associated with a particular political group - the Libertarians - and therefore people will naturally think of Libertarian philosophies.
So, let's be clear: this is not a Libertarian thing. This is not about independence, but interdependence. It is not about supply and demand, markets, or abusively externalizing your costs. In fact, it's basically the opposite of those things.
We're talking about arranging to cooperate in a limited fashion so fluidly that everyone stops thinking "I'm going to do this" and starts thinking "we're going to do this". It's not about an economy or brokering of trust, because that implies some kind of buying and selling of trust. It's about sharing resources and skills so fluidly it's almost unconscious.
If I were to create a science fiction setting around this idea, I'd have to be careful. It would be too easy to simply treat things as a hive mind.
But I'm actually talking about the reverse of a hive mind! I'm talking about a frothing mix of very diverse people naturally finding others that are complementary. Others that are interested in doing the same things, or whose activities perfectly line up with the activities you need. This is not a method to make people all the same: it is a method to leverage the fact that there are so many different people.
Because that's what's happening. Humanity is diverse, and growing more so.
Our ability to connect through the noise and chaos and distance is growing even faster.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Monday, June 16, 2014
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.
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.
Thursday, September 01, 2011
Inverted Economics
Thought experiment time!
I'm sick of thinking about economics in terms of how goods are distributed. Instead, I'd like to try thinking of them in terms of how people organize to create goods.
As a quick example, in most ancient societies, local lords held control over the peasants and organized them into farm lots. The majority of people were on these farm lots, usually paying taxes in food.
There are a few competing theories as to exactly when and why cities arose, but it is relatively clear that the local lords had a tough time controlling cityfolk in the same way as rural farmers. If you think about it in terms of organizing people instead of distributing goods, cities allowed people to organize a lot better, but there was no suitable structure to help them organize.
A hodgepodge of approaches were tried, including limiting merchants to specific cities/zones, enforcing family businesses, supporting unions for craftsmen, and so on. But these methods were not really very good at organizing cityfolk, and cities had limited economic potential for a long time - springing up to support the local lords, or to support a mining operation, or as a trade region, or in support of some other pursuit that was not fundamentally about being organized cityfolk, but about supporting another kind of organized operation.
We like to use terms like "capitalism", but the term has no any precise meaning when you think of them in these terms. Instead of talking about how people organize to create goods, it talks about how goods are distributed.
If you look at what we have called "capitalism", you can see several underlying organizational methods.
If we start with the industrial revolution, we can see that the technologies of the revolution had been knocking around for a while. It was only when the culture figured out how to organize people to use them efficiently that we saw the era change. People began to organize into hyper-local groups near a specific factory or machine.
The need for people to be super local finally made cities useful in and of themselves, rather than as support for other pursuits. People produced large amounts of goods this way, whereas fifty craftsmen in the same building before the industrial revolution would not be significantly more effective than fifty craftsmen in fifty different buildings.
After not too terribly long, this simple focus slowly shifted into a new "develop/distribute" method of organization. While there are factories aplenty, they are not the driving method of organization. Instead, a factory is simply a chip in the pile of a corporation: a group of people who manage supply lines, distribution channels, product development, and so on.
A corporation is not hyper-local. While it has components that are quite local (offices), it also has quite a lot of travel as people move products, ideas, and employees around the world. I might call it "dendritic" rather than "local".
It makes sense that we, coming out of a develop/distribute era, think of economics in terms of development and distribution of goods. That's why we have terms like "communist" and "capitalist". But I don't see that it's a particularly fundamental approach to economics.
I'm not judging: the dendritic approach has allowed for science to flourish, which I consider a major, major plus. However, it has also allowed us to do some pretty outlandishly horrible things.
Nowadays we're still in that dendritic system. However, our "always on" communication grid (cell phones, internet, twitter, etc) is becoming more and more pronounced.
It's clear to me that we'll enter a new phase, a method of people organizing that would be considered odd and unlikely if we look at it right now. I'll call it "maelstrom" organization, although only because we're not actually in it yet, so we don't understand it very well. It is people organizing rapidly and (usually) temporarily to deploy a specific product in specific amounts to specific markets.
Exactly how it ends up working will depend on how technology progresses. If robotics become more standard and more useful, I can see a huge number of the jobs we have these days becoming fully automated. Starbucks is one human with five robotic baristas. His job is to make friendly with the customers and to maintain the robots.
Even our desk jobs will become obsolete as expert data systems and scrapers mean we can do a week of market research in ten minutes.
I think this is why we have this "new low" of economic production. Our economy is still stuck in its dendritic form, but that form is no longer very useful, because the people that normally organized at the heart of those nodes have been replaced by technology, or at least by people from far, far away.
Our economists all throw their hands up and talk about how goods are distributed, how money flows through markets...
But it's an interesting thought experiment to think, instead, about how people organize. Let the distribution and markets take care of themselves for a bit, and think about how people organize.
Edit: since writing this, I've decided to call the new kind of thing I'm talking about "laminar organization/economics" rather than "maelstrom organization/economics".
I'm sick of thinking about economics in terms of how goods are distributed. Instead, I'd like to try thinking of them in terms of how people organize to create goods.
As a quick example, in most ancient societies, local lords held control over the peasants and organized them into farm lots. The majority of people were on these farm lots, usually paying taxes in food.
There are a few competing theories as to exactly when and why cities arose, but it is relatively clear that the local lords had a tough time controlling cityfolk in the same way as rural farmers. If you think about it in terms of organizing people instead of distributing goods, cities allowed people to organize a lot better, but there was no suitable structure to help them organize.
A hodgepodge of approaches were tried, including limiting merchants to specific cities/zones, enforcing family businesses, supporting unions for craftsmen, and so on. But these methods were not really very good at organizing cityfolk, and cities had limited economic potential for a long time - springing up to support the local lords, or to support a mining operation, or as a trade region, or in support of some other pursuit that was not fundamentally about being organized cityfolk, but about supporting another kind of organized operation.
We like to use terms like "capitalism", but the term has no any precise meaning when you think of them in these terms. Instead of talking about how people organize to create goods, it talks about how goods are distributed.
If you look at what we have called "capitalism", you can see several underlying organizational methods.
If we start with the industrial revolution, we can see that the technologies of the revolution had been knocking around for a while. It was only when the culture figured out how to organize people to use them efficiently that we saw the era change. People began to organize into hyper-local groups near a specific factory or machine.
The need for people to be super local finally made cities useful in and of themselves, rather than as support for other pursuits. People produced large amounts of goods this way, whereas fifty craftsmen in the same building before the industrial revolution would not be significantly more effective than fifty craftsmen in fifty different buildings.
After not too terribly long, this simple focus slowly shifted into a new "develop/distribute" method of organization. While there are factories aplenty, they are not the driving method of organization. Instead, a factory is simply a chip in the pile of a corporation: a group of people who manage supply lines, distribution channels, product development, and so on.
A corporation is not hyper-local. While it has components that are quite local (offices), it also has quite a lot of travel as people move products, ideas, and employees around the world. I might call it "dendritic" rather than "local".
It makes sense that we, coming out of a develop/distribute era, think of economics in terms of development and distribution of goods. That's why we have terms like "communist" and "capitalist". But I don't see that it's a particularly fundamental approach to economics.
I'm not judging: the dendritic approach has allowed for science to flourish, which I consider a major, major plus. However, it has also allowed us to do some pretty outlandishly horrible things.
Nowadays we're still in that dendritic system. However, our "always on" communication grid (cell phones, internet, twitter, etc) is becoming more and more pronounced.
It's clear to me that we'll enter a new phase, a method of people organizing that would be considered odd and unlikely if we look at it right now. I'll call it "maelstrom" organization, although only because we're not actually in it yet, so we don't understand it very well. It is people organizing rapidly and (usually) temporarily to deploy a specific product in specific amounts to specific markets.
Exactly how it ends up working will depend on how technology progresses. If robotics become more standard and more useful, I can see a huge number of the jobs we have these days becoming fully automated. Starbucks is one human with five robotic baristas. His job is to make friendly with the customers and to maintain the robots.
Even our desk jobs will become obsolete as expert data systems and scrapers mean we can do a week of market research in ten minutes.
I think this is why we have this "new low" of economic production. Our economy is still stuck in its dendritic form, but that form is no longer very useful, because the people that normally organized at the heart of those nodes have been replaced by technology, or at least by people from far, far away.
Our economists all throw their hands up and talk about how goods are distributed, how money flows through markets...
But it's an interesting thought experiment to think, instead, about how people organize. Let the distribution and markets take care of themselves for a bit, and think about how people organize.
Edit: since writing this, I've decided to call the new kind of thing I'm talking about "laminar organization/economics" rather than "maelstrom organization/economics".
Monday, December 14, 2009
Hand me that Apple Crate
I'm gonna talk about something besides game design. You probably don't want to read this post.
Some of you might realize that as I've gotten older, I've gotten steadily more anti-corporate. I think this is probably the opposite of a normal progression, where a college student is anti-corporate and, as he gets older, he realizes corporations are an important part of blah de blah de blah.
I'm the opposite. I thought that they were part of blah de blah in college, and now I think corporations are tied for the second worst thing on the planet. The reasons I think so are complex, and since it's such a common sentiment, I won't go into them. But I will talk about the issue most people have with naive, anti-corporate college students. That is, that they are naive.
After all, we all use corporate goods every day. The clothes we wear, the water that we drink, the computer you're reading this on, everything is brought to us by our complex web of corporations. So how can you be anti-corporate?
But that's a bad argument. After all, it's the same argument slave owners made about their slaves. How can a slave be anti-slavery? Everything he has is provided by his owner. He would be starving and dying of malaria in Africa without us! How hypocritical!
The question is not whether or not I use corporate goods, but is whether or not there is a better solution. Not some pie-in-the-sky solution that requires all humans to act inhumanly good and caring and perfect. Some solution that understands that even decent humans are dicks.
I think there are a variety of partial solutions. Like any paradigm shift, I think the future will be made of a patchwork combination of these new solutions burning away the old guard.
One solution is that it is growing ever more possible for corporations to transform into very transparent entities. For some corporate-like entities, this is a huge advantage. The recent climate change email scandal would never have happened if the scientists were publishing all their emails publicly at all times. Not because they would have avoided conspiracy - there was no conspiracy. But because the emails would be part of a clear context chain that is openly available to anyone. The "conspiracy" vanishes when you realize that these emails are cherry-picked, out of context, and rely on a misunderstanding of scientific terms and data sources.
Other corporate entities would be slaughtered by this change, or at least whine. For example, a transparent news room would reveal the sordid underbelly of what stories get shown in what light, and why. A transparent bank would reveal what advantageous trades they're going to perform, when.
But these are businesses that exist specifically in the cracks of imperfect information. They make money not by providing value, but by wedging themselves into any gap they see and pulling as hard as possible. In many ways, they make money specifically by reducing value. This is not a method of doing business I find ethical or sustainable - the steady increase in connectivity and information processing has put them on a path of leveraging ever smaller and riskier information gaps to make their money, since the largest gaps have been erased due to other people's enhanced information processing.
Obviously, transparency is a difficult thing. If a government required emails to be published, then a lot of people would simply gather in person to discuss their shady deals. But I'm not suggesting that the government step in. After all, governments are tied for second worst thing on the planet, and are already too buddy-buddy with these monsters. I'm simply suggesting that in the upcoming years, some small corporations are going to begin publishing a lot of details about the internal workings of their company and technology, especially in fields where leveraging information inequalities isn't the point of the business. These businesses will be more successful for two reasons. A) talking about stuff openly always generates more good ideas and more energy. B) your prospective customers and clients will feel they can trust you.
Because these open businesses are more successful, they will begin to dominate their field, slowly spreading a "transparency movement" where any business that does not publish is considered untrustworthy.
I think this is very likely as we enter a world where information is so easy to discover, so tightly integrated, and so carefully parsed. Imagine walking into a store and looking at fifteen brands of toilet paper. Up pops your AR: this brand is a company that is rated as 57% transparent by DougsTransparencyIndex, that one is rated 12% transparent. While neither have any grossly immoral acts proven, Doug says, the one that is more transparent will have fewer swept under the rug. Which toilet paper will you buy?
No need by the consumer to actually go out and research these companies. The computer collects and displays information automatically.
And if you think that's unlikely, stop reading this blog and go start reading on technology trends, because you're about to become painfully obsolete. It's not only going to happen, it's happening already.
That's just one solution - transparent companies. I think it's important to remember that the growth of this information web in which we live in also enhances several other methods of creating wealth.
The most famous is the start-up, which is a risky proposition but can be extremely lucrative. A relatively small group of people pitch in to deliver a new product that makes them all rich. I think that start-ups are just starting to enter their really powerful phase, and I think that over the next twenty years, start-ups will be the name of the game. After that, I think that they might start to decline, because start-ups actually operate on information inequality, and I think that twenty years from now we'll start to see the information web becoming so efficient that even the kind of inequality start-ups use will be corrected away.
That's a little hard to imagine, so let me explain. Remember that this is in your old-and-gray years.
I've worked for three start-ups now. Each was built on the expert knowledge of two or three people, leveraged together to create a product that provided value that didn't exist on the market. For example, the one I currently work for is leveraging a combination of solar thermal expertise with data mining expertise to provide some ridiculously overpowered and easy to use analysis systems for green energy installations.
The reason that the start-up is possible is because the expertise can't be effectively applied without a start-up. Once we've done this, the expertise will be available for anyone to see and use (and duplicate). However, we'll have developed further expertise we can leverage and so on and so forth. That's the theory. But the point is that start-ups exist specifically to make your expertise/genius/skill available to the market in an efficient manner.
In twenty years most of us will be deeply immersed in an ambient data network. Distributing expertise will be extremely easy. I think that start-ups will begin to find more and more of their opportunities are made too trivial by the network. You don't need a start-up to do something if you can just go out and do it.
In addition to the transparent-corporation and start-up paradigms, there is one more method I can think of that supports my theory that being anti-corporate is viable. That is the personal work theory.
As mentioned, our network is getting stronger and smarter every year. It is getting easier for an individual to self-employ. Or, if the product she wants to distribute is too big for her alone, she can form a temporary group to release a single product. You see this enabled by the network more and more. We have things like Etsy and Kickstarter that are just coming into their own. I can foresee a time not too far in the future where the structure and safety a corporation provides will be replaced by the ambient structure-forming nature of the network.
This will make things like ZipCar obsolete. I love the company, but it exists on a mountain of data imbalance. Specifically, it exists because there aren't loads of cars just lying around for you to borrow. ZipCar will find itself competing with a steadily rising number of free and easy solutions that help people find rides/cars just out of nothing. The advent of a widespread set of reputation systems and a connective "friend-net" will give us the power we need to automatically determine whether someone can borrow our car or tag along for a ride. The seeds of this required data underlayer can clearly be seen in things like Facebook.
Now, to some extent it might sound like I'm talking about some kind of socialist fuzzy-wuzzy paradise, but I'm not. I think life will be better and richer because, historically, life has been getting better and richer with every generation, although not always by the same measures. That doesn't mean there will be no hardships. I expect reputation will come to be as important as money for many people, and that raises its own sticky questions. Depending on what kind of projections you make, it could be that many of the people in question will be pretty poor, although somewhat alleviated by their strong network of connections that they rely on.
I'm trying not to make any specific predictions about the future outside of the ones specifically related to my anti-corporate stance. I don't want to predict the world will be glorious. I just want to point out that the rise of a dense and intelligent data network is making the staple of corporate evil - maintaining and abusing information imbalance - increasingly tenuous. Simultaneously, it is promoting some alternate ways of getting things done. I expect the transition will not be sudden, and it will probably be economically bloody. But it's going to happen.
Some of you might realize that as I've gotten older, I've gotten steadily more anti-corporate. I think this is probably the opposite of a normal progression, where a college student is anti-corporate and, as he gets older, he realizes corporations are an important part of blah de blah de blah.
I'm the opposite. I thought that they were part of blah de blah in college, and now I think corporations are tied for the second worst thing on the planet. The reasons I think so are complex, and since it's such a common sentiment, I won't go into them. But I will talk about the issue most people have with naive, anti-corporate college students. That is, that they are naive.
After all, we all use corporate goods every day. The clothes we wear, the water that we drink, the computer you're reading this on, everything is brought to us by our complex web of corporations. So how can you be anti-corporate?
But that's a bad argument. After all, it's the same argument slave owners made about their slaves. How can a slave be anti-slavery? Everything he has is provided by his owner. He would be starving and dying of malaria in Africa without us! How hypocritical!
The question is not whether or not I use corporate goods, but is whether or not there is a better solution. Not some pie-in-the-sky solution that requires all humans to act inhumanly good and caring and perfect. Some solution that understands that even decent humans are dicks.
I think there are a variety of partial solutions. Like any paradigm shift, I think the future will be made of a patchwork combination of these new solutions burning away the old guard.
One solution is that it is growing ever more possible for corporations to transform into very transparent entities. For some corporate-like entities, this is a huge advantage. The recent climate change email scandal would never have happened if the scientists were publishing all their emails publicly at all times. Not because they would have avoided conspiracy - there was no conspiracy. But because the emails would be part of a clear context chain that is openly available to anyone. The "conspiracy" vanishes when you realize that these emails are cherry-picked, out of context, and rely on a misunderstanding of scientific terms and data sources.
Other corporate entities would be slaughtered by this change, or at least whine. For example, a transparent news room would reveal the sordid underbelly of what stories get shown in what light, and why. A transparent bank would reveal what advantageous trades they're going to perform, when.
But these are businesses that exist specifically in the cracks of imperfect information. They make money not by providing value, but by wedging themselves into any gap they see and pulling as hard as possible. In many ways, they make money specifically by reducing value. This is not a method of doing business I find ethical or sustainable - the steady increase in connectivity and information processing has put them on a path of leveraging ever smaller and riskier information gaps to make their money, since the largest gaps have been erased due to other people's enhanced information processing.
Obviously, transparency is a difficult thing. If a government required emails to be published, then a lot of people would simply gather in person to discuss their shady deals. But I'm not suggesting that the government step in. After all, governments are tied for second worst thing on the planet, and are already too buddy-buddy with these monsters. I'm simply suggesting that in the upcoming years, some small corporations are going to begin publishing a lot of details about the internal workings of their company and technology, especially in fields where leveraging information inequalities isn't the point of the business. These businesses will be more successful for two reasons. A) talking about stuff openly always generates more good ideas and more energy. B) your prospective customers and clients will feel they can trust you.
Because these open businesses are more successful, they will begin to dominate their field, slowly spreading a "transparency movement" where any business that does not publish is considered untrustworthy.
I think this is very likely as we enter a world where information is so easy to discover, so tightly integrated, and so carefully parsed. Imagine walking into a store and looking at fifteen brands of toilet paper. Up pops your AR: this brand is a company that is rated as 57% transparent by DougsTransparencyIndex, that one is rated 12% transparent. While neither have any grossly immoral acts proven, Doug says, the one that is more transparent will have fewer swept under the rug. Which toilet paper will you buy?
No need by the consumer to actually go out and research these companies. The computer collects and displays information automatically.
And if you think that's unlikely, stop reading this blog and go start reading on technology trends, because you're about to become painfully obsolete. It's not only going to happen, it's happening already.
That's just one solution - transparent companies. I think it's important to remember that the growth of this information web in which we live in also enhances several other methods of creating wealth.
The most famous is the start-up, which is a risky proposition but can be extremely lucrative. A relatively small group of people pitch in to deliver a new product that makes them all rich. I think that start-ups are just starting to enter their really powerful phase, and I think that over the next twenty years, start-ups will be the name of the game. After that, I think that they might start to decline, because start-ups actually operate on information inequality, and I think that twenty years from now we'll start to see the information web becoming so efficient that even the kind of inequality start-ups use will be corrected away.
That's a little hard to imagine, so let me explain. Remember that this is in your old-and-gray years.
I've worked for three start-ups now. Each was built on the expert knowledge of two or three people, leveraged together to create a product that provided value that didn't exist on the market. For example, the one I currently work for is leveraging a combination of solar thermal expertise with data mining expertise to provide some ridiculously overpowered and easy to use analysis systems for green energy installations.
The reason that the start-up is possible is because the expertise can't be effectively applied without a start-up. Once we've done this, the expertise will be available for anyone to see and use (and duplicate). However, we'll have developed further expertise we can leverage and so on and so forth. That's the theory. But the point is that start-ups exist specifically to make your expertise/genius/skill available to the market in an efficient manner.
In twenty years most of us will be deeply immersed in an ambient data network. Distributing expertise will be extremely easy. I think that start-ups will begin to find more and more of their opportunities are made too trivial by the network. You don't need a start-up to do something if you can just go out and do it.
In addition to the transparent-corporation and start-up paradigms, there is one more method I can think of that supports my theory that being anti-corporate is viable. That is the personal work theory.
As mentioned, our network is getting stronger and smarter every year. It is getting easier for an individual to self-employ. Or, if the product she wants to distribute is too big for her alone, she can form a temporary group to release a single product. You see this enabled by the network more and more. We have things like Etsy and Kickstarter that are just coming into their own. I can foresee a time not too far in the future where the structure and safety a corporation provides will be replaced by the ambient structure-forming nature of the network.
This will make things like ZipCar obsolete. I love the company, but it exists on a mountain of data imbalance. Specifically, it exists because there aren't loads of cars just lying around for you to borrow. ZipCar will find itself competing with a steadily rising number of free and easy solutions that help people find rides/cars just out of nothing. The advent of a widespread set of reputation systems and a connective "friend-net" will give us the power we need to automatically determine whether someone can borrow our car or tag along for a ride. The seeds of this required data underlayer can clearly be seen in things like Facebook.
Now, to some extent it might sound like I'm talking about some kind of socialist fuzzy-wuzzy paradise, but I'm not. I think life will be better and richer because, historically, life has been getting better and richer with every generation, although not always by the same measures. That doesn't mean there will be no hardships. I expect reputation will come to be as important as money for many people, and that raises its own sticky questions. Depending on what kind of projections you make, it could be that many of the people in question will be pretty poor, although somewhat alleviated by their strong network of connections that they rely on.
I'm trying not to make any specific predictions about the future outside of the ones specifically related to my anti-corporate stance. I don't want to predict the world will be glorious. I just want to point out that the rise of a dense and intelligent data network is making the staple of corporate evil - maintaining and abusing information imbalance - increasingly tenuous. Simultaneously, it is promoting some alternate ways of getting things done. I expect the transition will not be sudden, and it will probably be economically bloody. But it's going to happen.
Wednesday, July 22, 2009
Uniques Economies
I've been thinking about game economics, specifically in massively multiplayer games. They suffer from a host of problems, but the situation gets infinitely more confusing and muddy if you begin to talk about large numbers of unique items, like we will certainly see in the relatively near future.
The whole point of MMORPG economics is that everything is fungible. That is, there is no difference between this gold piece and that gold piece, and there is no difference between this Codpiece of Flugorth and the other Codpiece of Flugorth. Demand varies, of course. Over time, space, and between items, demand varies wildly. Today the Codpiece of Flugorth is worth 10,000 gold, tomorrow only 150. When combined with the various other bits of Flugorth, the price becomes ten times that of the pieces individually, because they form a set, but even that set can be considered perfectly identical and interchangeable with other sets of the same components.
This interchangeability is the cornerstone of MMORPG economics, both the good and bad elements. However, it can't last. As time marches on, more and more massively multiplayer games are going to feature more and more customized content. Even if they take the cheap route and allow for only small amounts of customization on top of solid fundamental blueprints, that small customization will change the value in chaotic ways. Even just letting you die your gear various colors will make the price vary wildly, often with the expensive variants costing more than double the cheap variants.
With true variation between objects you can end up with something more like SecondLife. One detail worth noting is that SecondLife allows for very easy mass production, however, so it is possible for many people to have the exact same product. To a large extent this focuses and centralizes the production of goods so that many of the people in SecondLife own the same sets of goods, even though there are technically an unlimited number of unique variations they could use instead.
However, SecondLife's economy is not suitable for other massively multiplayer games (and is arguably not suitable for SecondLife), so their method of mass production and weekly dole isn't one that should be adopted willy-nilly. I personally would prefer to think of a system where all the players tended to create uniques, rather than a few players creating uniques and everyone else buying them.
In such a system, the economics would be very different and would need to be carefully planned. For example, what purpose is there behind trading? Are some uniques flat-out better than others (IE a unique wooden sword versus a unique flaming sword of badassium)?
An economy of uniqueness seems to require a few rather unusual attributes in the rest of the game.
First, there seems to be a need for an unlimited number of "slots". If someone can only equip one weapon, one hat, one suit, then there are only so many unique things they'll want. They may end up with ten or fifteen hats, if they're obsessive, but they'll usually only wear one of perhaps two favorites. To encourage people to gather uniques, it is important that a large number of uniques be simultaneously viable for play without sorting through them every time.
One example of this would be a wardrobe that the character would automatically dress from, picking random (perhaps themed or otherwise fashionable complements) pieces. This would allow you to see a variety of uniques over time, meaning that none of your uniques get forgotten in the back of some closet somewhere.
However, this is only one step in the right general direction. You're still limited by the number of clothes your character can wear. equally important is increasing the number of slots. For example, your players may want to collect houses, NPCs, dance moves, poetry - things we can't even think of. It's important to allow this to (A) exist in multitudes during gameplay and (B) vary such that no uniques get lost in the closet.
Once this basis is set up, we can talk about the actual economy of uniques. Without this kind of revolving, wide-spectrum use, an economy of uniques would simply be a stilted and clumsy normal economy.
One aspect of any economy is how difficult it is to manufacture wealth. Most MMORPGs have various means of manufacturing wealth, but the biggest is through killing monsters. This automatically scales with your level, meaning that you generate much more wealth if you are higher level and killing nastier monsters.
A uniques economy could have the same basic philosophy - perhaps the components of the uniques are collected from the corpses of monsters - but it doesn't really fit the needs very well. The reason for the monster farming is to create a treadmill, but when uniques get involved there are a lot of other ways to suck down player time, and level-based treadmills should be easy to play down without losing players.
A uniques economy could also have the opposite philosophy, where you can build anything you want whenever you want, like in SecondLife. A newbie can theoretically build anything that an experienced player can. However, this also has problems, largely in the proliferation of non-unique uniques (I call them "hello world" uniques).
A middle ground can be reached by allowing users to literally grow their content. Real-world time is spent while their character manufactures or tends a given product. The next iteration(s) of the product naturally descend from that, allowing the users to tweak their products to their own desires, rather than programming them from the ground up.
This middle ground has a lot of advantages, but the biggest is that the amount of uniqueness between player content will be much, much higher. Even just a few days in, newbies will have manufactured suitably unique newbie gear. After a few months, two players will have developed such radically different equipment that trade becomes useful. Crossing two "lines" of unique content could also be fun...
This method of growing content does result in a huge number of "spares", so you need to take some pains to eliminate them. This can be done through making things wear out, or through making them break when you descend from them, or from selling them to NPCs, or any number of other means. However, at some point some players will be producing literally hundreds of times more stuff than they can use, and this is a serious threat to the economy because they will flood the market.
Therefore two things must happen. One is that those players should have some recourse for all their spares (perhaps donating them for prestige). The second is that there must be a difficulty in marketing. It must be hard for a player to mass market goods (or even give goods away to many people).
There are a lot of ways of doing these things, but thiey all have ramifications on the overall nature of the economy. For example, if it is difficult to mass market goods, then the economy is hugely fragmented, which will result in a large number of players who specialize in moving goods from one fragment to another. These brokers will probably use out-of-game channels to organize and, in time, they will flat-out replace your implemented market with third-party market(s) that unite the fragments into one, more smoothly-operating economy. You can inhibit them to some extent, but doing much inhibiting will make the players angry.
It is still important to prevent an in-game smorgasborg of uniques, though. Players routinely encountering lists of hundreds or thousands of unique items will cause problems with swamping. There are various means of dealing with this, too, such as a central market that randomly segments, or having players rigidly separated into shards.
These are some of the difficulties a uniques economy will cause, I think. But I also think it's inevitable. How about you?
The whole point of MMORPG economics is that everything is fungible. That is, there is no difference between this gold piece and that gold piece, and there is no difference between this Codpiece of Flugorth and the other Codpiece of Flugorth. Demand varies, of course. Over time, space, and between items, demand varies wildly. Today the Codpiece of Flugorth is worth 10,000 gold, tomorrow only 150. When combined with the various other bits of Flugorth, the price becomes ten times that of the pieces individually, because they form a set, but even that set can be considered perfectly identical and interchangeable with other sets of the same components.
This interchangeability is the cornerstone of MMORPG economics, both the good and bad elements. However, it can't last. As time marches on, more and more massively multiplayer games are going to feature more and more customized content. Even if they take the cheap route and allow for only small amounts of customization on top of solid fundamental blueprints, that small customization will change the value in chaotic ways. Even just letting you die your gear various colors will make the price vary wildly, often with the expensive variants costing more than double the cheap variants.
With true variation between objects you can end up with something more like SecondLife. One detail worth noting is that SecondLife allows for very easy mass production, however, so it is possible for many people to have the exact same product. To a large extent this focuses and centralizes the production of goods so that many of the people in SecondLife own the same sets of goods, even though there are technically an unlimited number of unique variations they could use instead.
However, SecondLife's economy is not suitable for other massively multiplayer games (and is arguably not suitable for SecondLife), so their method of mass production and weekly dole isn't one that should be adopted willy-nilly. I personally would prefer to think of a system where all the players tended to create uniques, rather than a few players creating uniques and everyone else buying them.
In such a system, the economics would be very different and would need to be carefully planned. For example, what purpose is there behind trading? Are some uniques flat-out better than others (IE a unique wooden sword versus a unique flaming sword of badassium)?
An economy of uniqueness seems to require a few rather unusual attributes in the rest of the game.
First, there seems to be a need for an unlimited number of "slots". If someone can only equip one weapon, one hat, one suit, then there are only so many unique things they'll want. They may end up with ten or fifteen hats, if they're obsessive, but they'll usually only wear one of perhaps two favorites. To encourage people to gather uniques, it is important that a large number of uniques be simultaneously viable for play without sorting through them every time.
One example of this would be a wardrobe that the character would automatically dress from, picking random (perhaps themed or otherwise fashionable complements) pieces. This would allow you to see a variety of uniques over time, meaning that none of your uniques get forgotten in the back of some closet somewhere.
However, this is only one step in the right general direction. You're still limited by the number of clothes your character can wear. equally important is increasing the number of slots. For example, your players may want to collect houses, NPCs, dance moves, poetry - things we can't even think of. It's important to allow this to (A) exist in multitudes during gameplay and (B) vary such that no uniques get lost in the closet.
Once this basis is set up, we can talk about the actual economy of uniques. Without this kind of revolving, wide-spectrum use, an economy of uniques would simply be a stilted and clumsy normal economy.
One aspect of any economy is how difficult it is to manufacture wealth. Most MMORPGs have various means of manufacturing wealth, but the biggest is through killing monsters. This automatically scales with your level, meaning that you generate much more wealth if you are higher level and killing nastier monsters.
A uniques economy could have the same basic philosophy - perhaps the components of the uniques are collected from the corpses of monsters - but it doesn't really fit the needs very well. The reason for the monster farming is to create a treadmill, but when uniques get involved there are a lot of other ways to suck down player time, and level-based treadmills should be easy to play down without losing players.
A uniques economy could also have the opposite philosophy, where you can build anything you want whenever you want, like in SecondLife. A newbie can theoretically build anything that an experienced player can. However, this also has problems, largely in the proliferation of non-unique uniques (I call them "hello world" uniques).
A middle ground can be reached by allowing users to literally grow their content. Real-world time is spent while their character manufactures or tends a given product. The next iteration(s) of the product naturally descend from that, allowing the users to tweak their products to their own desires, rather than programming them from the ground up.
This middle ground has a lot of advantages, but the biggest is that the amount of uniqueness between player content will be much, much higher. Even just a few days in, newbies will have manufactured suitably unique newbie gear. After a few months, two players will have developed such radically different equipment that trade becomes useful. Crossing two "lines" of unique content could also be fun...
This method of growing content does result in a huge number of "spares", so you need to take some pains to eliminate them. This can be done through making things wear out, or through making them break when you descend from them, or from selling them to NPCs, or any number of other means. However, at some point some players will be producing literally hundreds of times more stuff than they can use, and this is a serious threat to the economy because they will flood the market.
Therefore two things must happen. One is that those players should have some recourse for all their spares (perhaps donating them for prestige). The second is that there must be a difficulty in marketing. It must be hard for a player to mass market goods (or even give goods away to many people).
There are a lot of ways of doing these things, but thiey all have ramifications on the overall nature of the economy. For example, if it is difficult to mass market goods, then the economy is hugely fragmented, which will result in a large number of players who specialize in moving goods from one fragment to another. These brokers will probably use out-of-game channels to organize and, in time, they will flat-out replace your implemented market with third-party market(s) that unite the fragments into one, more smoothly-operating economy. You can inhibit them to some extent, but doing much inhibiting will make the players angry.
It is still important to prevent an in-game smorgasborg of uniques, though. Players routinely encountering lists of hundreds or thousands of unique items will cause problems with swamping. There are various means of dealing with this, too, such as a central market that randomly segments, or having players rigidly separated into shards.
These are some of the difficulties a uniques economy will cause, I think. But I also think it's inevitable. How about you?
Friday, February 27, 2009
Fun with Anticorporatism
Like many people, I have a bit of an anticorporate streak. Like most of us, I feel this way largely because corporations tend towards making money by screwing people over rather than by providing valuable goods or services in the most efficient manner.
I'm not naively anticorporate, though. Instead, I like to study and think about things. And one thing that's worth looking into are the various anticorporate subcultures that have arisen.
My interest is only in the cultures that have arisen organically from technological advances. Centralized anticorporate movements based around "ideals" have no interest to me because they are inherently doomed and transient. On the other hand, the following subcultures can teach us something about the fundamental transitions we're seeing as technology advances.
Of course, my definitions and examples are going to be based on my personal experiences/research, and I'm sure many other people will have other views on the matter. Similarly, cultures are fuzzy and always changing, so in five years none of this will be relevant. But it's a fun thought experiment.
Pirates
The most commonly referenced anticorporate culture in America, this term is extremely fuzzy. Whatever it may have meant in the past, it has now come to mean people who illegally duplicate data for personal enjoyment.
This cultural label grew out of the fact that we would call illegally duplicated stuff "pirate". Today we may still refer to those cheap, illegal knockoffs as pirate goods, but we understand that it isn't what the culture is really about these days: modern software pirates have no interest in physical goods when they can simply get everything off the internet digitally.
While pirates often share media, it's not usually about making money. It's more about not spending money, and pirates often have very strong views about the companies attempting to lock the data away from them. While the majority of pirates simply get songs and videos in this way, many pirates also download software or crack existing software to add illegal functionality. In nearly all cases, the pirate culture is about disabling the restrictions on data (including software).
The companies complaining most about piracy are in industries that were initially about enabling new capabilities for their customers. Initially, you bought an album because it let you listen to your favorite artist. You bought a copy of Excel because it let you do spreadsheet stuff. These were not capabilities that were otherwise easy to come by.
However, as technology advanced, these capabilities became very easy to come by, to the point where it's actually easier to get them for free instead of paying. The corporations, in an attempt to save their business model, began to prosecute anyone who distributed the capabilities they specialized in. This often required rewriting the laws of the nation to make duplicating data illegal.
Both sides have ethical arguments - one side claims it's stealing, the other side claims the first side is oppressive and driving would-be customers away. The truth is that these simplistic justifications are a product of the situation, rather than any kind of actual morality, and are all irrelevant in the long run.
As time goes on, we can probably expect to see pirates win. Data is fundamentally impossible to restrict, after all. This means that the industries that were originally about providing this data will have to change their business strategy or go out of business. The latter is dramatically more likely, as this kind of data is becoming easier and easier to produce as well as distribute.
Shanzhai
Ah, China. Land of the cheap knock-off.
Shanzhai stands for "mountain village", and is a reference to the idea of lawless, bandit villages. It is therefore vaguely similar in tone to our term "pirate".
Classically, shanzhai knockoffs have been pretty depressingly bad, largely about tricking people into buying them. If you get a shanzhai shirt, it's going to be a lot crappier than the name-brand shirt its pretending to be. Actually, it'll often be a lot worse quality than a generic shirt, since it's relying on camouflage, not quality.
However, in modern China "shanzhai" is slowly making the transition to a different meaning. Modern technological devices such as cell phones and MP3 players can be put on the market for half to a third the cost of their name-brand equivalents. Their functionality is typically in the same ballpark if you know what non-brands to buy, and in many cases is flatly superior because the name brand items are full of corporate crippleware or are missing expensive, patented codecs or functions that shanzhai products have no problem putting in.
This is not some shiny never-never land of joy, of course: shanzhai products are still made with bottom-dollar components and are made to make money. If you know what you're looking for, you'll probably get something that works as well as the original, although with a shorter lifespan... but it's pretty easy to get scammed. Worse, the lack of restrictions and keen eye on the bottom dollar leads to many products being actually poisonous or otherwise dangerous.
You can even consider the pseudo-researched medical procedures to be shanzhai in that manner, although I'm sure city teens would dismiss them as being some other subculture.
There are ethical arguments for and against shanzhai culture, and they are fundamentally the same as the arguments for and against piracy. They have the same causes and, ultimately, the same result. However, shanzhai culture is unlikely to start appearing in western nations unless the economy gets REALLY bad.
Makers
Instead, western nations are developing a subculture of makers.
Makers focus on build-it-yourself technologies, and can get some surprisingly high-quality end products: some makers even build bipedal robots. Makers are not about making cheap knock-offs, makers are really about creating customized items, usually using high-tech tools.
Unlike piracy and shanzhai, making things in this way is usually pretty close to legal, depending on how well-paid the prosecution lawyers are. So it doesn't really have any ethical combat going on with the corporations. Yet.
But it shows signs that it will develop these conflicts for the same reason the other examples already have them. Corporations ideally exist to give out capabilities efficiently: a corporation makes cars, cars let you drive around, people buy cars because it's better than walking.
Corporations have shown that they always, without fail turn to attacking movements that grant people the same basic capabilities they grant. So, once makers become common enough that people are driving maker cars or wearing maker clothes, we'll probably see corporations suddenly coming up with ethical reasons that DYI culture is evil.
And it will go that way, because technology will continue to advance. In fact, with the economy being somewhat dented, I expect to see a rise in DYI culture in general - more people with gardens, for example. While growing a garden is probably not considered part of maker culture, the two are synergistic, and as one rises so will the other.
At least, that's my theory.
What do you think?
I'm not naively anticorporate, though. Instead, I like to study and think about things. And one thing that's worth looking into are the various anticorporate subcultures that have arisen.
My interest is only in the cultures that have arisen organically from technological advances. Centralized anticorporate movements based around "ideals" have no interest to me because they are inherently doomed and transient. On the other hand, the following subcultures can teach us something about the fundamental transitions we're seeing as technology advances.
Of course, my definitions and examples are going to be based on my personal experiences/research, and I'm sure many other people will have other views on the matter. Similarly, cultures are fuzzy and always changing, so in five years none of this will be relevant. But it's a fun thought experiment.
Pirates
The most commonly referenced anticorporate culture in America, this term is extremely fuzzy. Whatever it may have meant in the past, it has now come to mean people who illegally duplicate data for personal enjoyment.
This cultural label grew out of the fact that we would call illegally duplicated stuff "pirate". Today we may still refer to those cheap, illegal knockoffs as pirate goods, but we understand that it isn't what the culture is really about these days: modern software pirates have no interest in physical goods when they can simply get everything off the internet digitally.
While pirates often share media, it's not usually about making money. It's more about not spending money, and pirates often have very strong views about the companies attempting to lock the data away from them. While the majority of pirates simply get songs and videos in this way, many pirates also download software or crack existing software to add illegal functionality. In nearly all cases, the pirate culture is about disabling the restrictions on data (including software).
The companies complaining most about piracy are in industries that were initially about enabling new capabilities for their customers. Initially, you bought an album because it let you listen to your favorite artist. You bought a copy of Excel because it let you do spreadsheet stuff. These were not capabilities that were otherwise easy to come by.
However, as technology advanced, these capabilities became very easy to come by, to the point where it's actually easier to get them for free instead of paying. The corporations, in an attempt to save their business model, began to prosecute anyone who distributed the capabilities they specialized in. This often required rewriting the laws of the nation to make duplicating data illegal.
Both sides have ethical arguments - one side claims it's stealing, the other side claims the first side is oppressive and driving would-be customers away. The truth is that these simplistic justifications are a product of the situation, rather than any kind of actual morality, and are all irrelevant in the long run.
As time goes on, we can probably expect to see pirates win. Data is fundamentally impossible to restrict, after all. This means that the industries that were originally about providing this data will have to change their business strategy or go out of business. The latter is dramatically more likely, as this kind of data is becoming easier and easier to produce as well as distribute.
Shanzhai
Ah, China. Land of the cheap knock-off.
Shanzhai stands for "mountain village", and is a reference to the idea of lawless, bandit villages. It is therefore vaguely similar in tone to our term "pirate".
Classically, shanzhai knockoffs have been pretty depressingly bad, largely about tricking people into buying them. If you get a shanzhai shirt, it's going to be a lot crappier than the name-brand shirt its pretending to be. Actually, it'll often be a lot worse quality than a generic shirt, since it's relying on camouflage, not quality.
However, in modern China "shanzhai" is slowly making the transition to a different meaning. Modern technological devices such as cell phones and MP3 players can be put on the market for half to a third the cost of their name-brand equivalents. Their functionality is typically in the same ballpark if you know what non-brands to buy, and in many cases is flatly superior because the name brand items are full of corporate crippleware or are missing expensive, patented codecs or functions that shanzhai products have no problem putting in.
This is not some shiny never-never land of joy, of course: shanzhai products are still made with bottom-dollar components and are made to make money. If you know what you're looking for, you'll probably get something that works as well as the original, although with a shorter lifespan... but it's pretty easy to get scammed. Worse, the lack of restrictions and keen eye on the bottom dollar leads to many products being actually poisonous or otherwise dangerous.
You can even consider the pseudo-researched medical procedures to be shanzhai in that manner, although I'm sure city teens would dismiss them as being some other subculture.
There are ethical arguments for and against shanzhai culture, and they are fundamentally the same as the arguments for and against piracy. They have the same causes and, ultimately, the same result. However, shanzhai culture is unlikely to start appearing in western nations unless the economy gets REALLY bad.
Makers
Instead, western nations are developing a subculture of makers.
Makers focus on build-it-yourself technologies, and can get some surprisingly high-quality end products: some makers even build bipedal robots. Makers are not about making cheap knock-offs, makers are really about creating customized items, usually using high-tech tools.
Unlike piracy and shanzhai, making things in this way is usually pretty close to legal, depending on how well-paid the prosecution lawyers are. So it doesn't really have any ethical combat going on with the corporations. Yet.
But it shows signs that it will develop these conflicts for the same reason the other examples already have them. Corporations ideally exist to give out capabilities efficiently: a corporation makes cars, cars let you drive around, people buy cars because it's better than walking.
Corporations have shown that they always, without fail turn to attacking movements that grant people the same basic capabilities they grant. So, once makers become common enough that people are driving maker cars or wearing maker clothes, we'll probably see corporations suddenly coming up with ethical reasons that DYI culture is evil.
And it will go that way, because technology will continue to advance. In fact, with the economy being somewhat dented, I expect to see a rise in DYI culture in general - more people with gardens, for example. While growing a garden is probably not considered part of maker culture, the two are synergistic, and as one rises so will the other.
At least, that's my theory.
What do you think?
Monday, February 09, 2009
Futurist Economics
Hey, it's nutball pseudoeconomics!
So, this recession's got everyone in an uproar. It's pretty severe, to the point where calling it a recession is pretty optimistic. Per capita, it's not particularly notable on most axes when compared to the various other recessions we've had, but there are some unique factors.
Chances are, if you're a big geek, you've seen some of these figures. I've got half a dozen blogs on my feed that like to wax poetic, and any time I see their figures, I feel sick. Not because their figures are disheartening, but because they're always so shallow.
For example, this recession shows an unusual characteristic (according to one feed): it's the first one where we've lost more private-sector service jobs than manufacturing jobs. This could be a sign that this recession is going to have a different kind of result than usual.
That may be true, but to imply that this recession is preferentially affecting service jobs is just a total fabrication. The simple truth is that we now have an order of magnitude more service jobs (technically, MY job is a service job!) than ever before and far fewer manufacturing jobs, both per capita and in absolute.
Understanding this is important, and it's important to realize that this is probably also a factor in the slower recovery times associated with more modern recessions: I could make the argument that the service industry recovers slower, adds jobs more slowly, than the manufacturing industry. So a weaker manufacturing industry would therefore slow recovery time.
But that's not a judgment. Even if I were to say that, I certainly wouldn't argue in favor of an increased manufacturing sector. I would instead argue that this trend is moving us rather unavoidably into an ever more info-heavy economy.
Our current economy isn't really built for that. It's definitely a manufacturing economy, and it served us fairly well when we were a manufacturing country. It's served us less well as we've transitioned to an "information-centric" country. Its instability and slowing recovery times may also be side effects of this transition.
When the pundits talk about the economy dipping and resetting, I think they're probably right... but I'm not sure I agree that the economy... well, is the economy.
Please take this pet theory into consideration. I am not arguing that we should put effort into transitioning into a new kind of economy. I am instead arguing that we will slide into a new kind of economy without trying. In fact, I expect we will try very hard to not slide.
I am not arguing for any particular market or any particular theory of economics. I am arguing that our technology has become so powerful that we will see - slowly, unless viewed through a historical record - a tipping.
Our economy currently views everything as if it were a manufactured good, whether it actually is a manufactured good or whether it's a music file or a news report. I think we'll see a slow transition to viewing everything as if it were information, whether it is information or a manufactured good.
You can already see it beginning. Apple is one of the kings of this. It's true that they sell computers of various kinds and purposes, but their company focuses on the design, branding, and market penetration aspects. The hardware is designed with these things in mind. The hardware is subservient to the information elements.
This is inherently a luxury economy, at least by the classic definition of "luxury". The whole point of this system is that information is more important and more prevalent than food. Or, at the very least, that food (and manufactured goods, etc) is somehow bound to information so tightly that it makes more sense to buy and sell that information instead of directly buying and selling food.
Banks already do this, obviously. I'm arguing it's going to become more common. It's already pretty common, actually: we waste a hell of a lot of cash on food that's been "info-ed up" for our easy consumption. McDonalds, Starbucks, "organic" produce, these are all things where the physical food is wholly subservient to what they mean, where they position themselves in culture, and how they sling information.
Despite how "bad" things are, the truth is that this is still a luxury economy. As blue-collar workers turn out their pockets to find the cash to pay for their cable bill, their car payments, their heating bill, we need to realize that those are all luxuries. Most people - even those who are out of work and gnawing on their fingers in stress - are living in luxury.
Luxury is strangely fragile in our new world. Today, a comfortable life either shatters completely, leaving you utterly destitute and with absolutely nothing, or it remains pretty comfortable. The issue at hand is that "luxury" is not significantly more expensive than "baseline survival". If you have a family, your monthly bill for your internet connection is less expensive than a day's food. Canceling it isn't make-or-break. Even if you did cancel it to save money, your life would still be full of books, food, heat, cars, and probably more TV than can possibly be healthy.
So, even though an information economy is inherently a luxury economy, we're still living in a luxury economy. Even if we stop being consumerist in terms of forking over cash, we're still consumerist in terms of watching TV, sending text messages, and reading some ivory-tower idiot blather about economics. That's not going to change, because these activities are so cheap, and they're only getting cheaper. Even if you're starving and have your gas cut off, you can still pop over to the library for free internet! Luxury is CHEAPER than survival!
I think it's inevitable that our economy, as it recovers, will begin to put its emphasis more on information, and less on manufacturing. I mean on a very fundamental level, not just in terms of percentages.
Well, I might be biased.
Did that make any sense to anyone?
So, this recession's got everyone in an uproar. It's pretty severe, to the point where calling it a recession is pretty optimistic. Per capita, it's not particularly notable on most axes when compared to the various other recessions we've had, but there are some unique factors.
Chances are, if you're a big geek, you've seen some of these figures. I've got half a dozen blogs on my feed that like to wax poetic, and any time I see their figures, I feel sick. Not because their figures are disheartening, but because they're always so shallow.
For example, this recession shows an unusual characteristic (according to one feed): it's the first one where we've lost more private-sector service jobs than manufacturing jobs. This could be a sign that this recession is going to have a different kind of result than usual.
That may be true, but to imply that this recession is preferentially affecting service jobs is just a total fabrication. The simple truth is that we now have an order of magnitude more service jobs (technically, MY job is a service job!) than ever before and far fewer manufacturing jobs, both per capita and in absolute.
Understanding this is important, and it's important to realize that this is probably also a factor in the slower recovery times associated with more modern recessions: I could make the argument that the service industry recovers slower, adds jobs more slowly, than the manufacturing industry. So a weaker manufacturing industry would therefore slow recovery time.
But that's not a judgment. Even if I were to say that, I certainly wouldn't argue in favor of an increased manufacturing sector. I would instead argue that this trend is moving us rather unavoidably into an ever more info-heavy economy.
Our current economy isn't really built for that. It's definitely a manufacturing economy, and it served us fairly well when we were a manufacturing country. It's served us less well as we've transitioned to an "information-centric" country. Its instability and slowing recovery times may also be side effects of this transition.
When the pundits talk about the economy dipping and resetting, I think they're probably right... but I'm not sure I agree that the economy... well, is the economy.
Please take this pet theory into consideration. I am not arguing that we should put effort into transitioning into a new kind of economy. I am instead arguing that we will slide into a new kind of economy without trying. In fact, I expect we will try very hard to not slide.
I am not arguing for any particular market or any particular theory of economics. I am arguing that our technology has become so powerful that we will see - slowly, unless viewed through a historical record - a tipping.
Our economy currently views everything as if it were a manufactured good, whether it actually is a manufactured good or whether it's a music file or a news report. I think we'll see a slow transition to viewing everything as if it were information, whether it is information or a manufactured good.
You can already see it beginning. Apple is one of the kings of this. It's true that they sell computers of various kinds and purposes, but their company focuses on the design, branding, and market penetration aspects. The hardware is designed with these things in mind. The hardware is subservient to the information elements.
This is inherently a luxury economy, at least by the classic definition of "luxury". The whole point of this system is that information is more important and more prevalent than food. Or, at the very least, that food (and manufactured goods, etc) is somehow bound to information so tightly that it makes more sense to buy and sell that information instead of directly buying and selling food.
Banks already do this, obviously. I'm arguing it's going to become more common. It's already pretty common, actually: we waste a hell of a lot of cash on food that's been "info-ed up" for our easy consumption. McDonalds, Starbucks, "organic" produce, these are all things where the physical food is wholly subservient to what they mean, where they position themselves in culture, and how they sling information.
Despite how "bad" things are, the truth is that this is still a luxury economy. As blue-collar workers turn out their pockets to find the cash to pay for their cable bill, their car payments, their heating bill, we need to realize that those are all luxuries. Most people - even those who are out of work and gnawing on their fingers in stress - are living in luxury.
Luxury is strangely fragile in our new world. Today, a comfortable life either shatters completely, leaving you utterly destitute and with absolutely nothing, or it remains pretty comfortable. The issue at hand is that "luxury" is not significantly more expensive than "baseline survival". If you have a family, your monthly bill for your internet connection is less expensive than a day's food. Canceling it isn't make-or-break. Even if you did cancel it to save money, your life would still be full of books, food, heat, cars, and probably more TV than can possibly be healthy.
So, even though an information economy is inherently a luxury economy, we're still living in a luxury economy. Even if we stop being consumerist in terms of forking over cash, we're still consumerist in terms of watching TV, sending text messages, and reading some ivory-tower idiot blather about economics. That's not going to change, because these activities are so cheap, and they're only getting cheaper. Even if you're starving and have your gas cut off, you can still pop over to the library for free internet! Luxury is CHEAPER than survival!
I think it's inevitable that our economy, as it recovers, will begin to put its emphasis more on information, and less on manufacturing. I mean on a very fundamental level, not just in terms of percentages.
Well, I might be biased.
Did that make any sense to anyone?
Saturday, October 11, 2008
Money
This is a repost. I originally took it down due to its flaws, but someone wanted it back up. This is a long, vaguely futurist rant.
I've seen this video a few times, now. It's informative, but... there's an irritating undercurrent. Here, watch it first: Money as Debt.
Once you've watched the video, you'll probably understand a lot more about the weirdness of modern money. And, if you think about it a bit, you can see why capitalism and consumerism are core aspects of modern economy. This isn't the only reason that alternative methods fail, but it is a major reason.
However, the video itself is painfully... mired in its own views? It is not so much a description of what's going on as an advocacy for a specific kind of sustainable economy. I have a few problems with this particular form of sustainable economics.
First, a more logical issue: he takes affront to the idea of interest. The fact that banks loan at interest means that banks will have control over an ever-increasing fraction of the money, even if they aren't allowed to manufacture debt. Unfortunately, banning interest is not going to stop this. Instead, what we'll see is banks turning to alternate methods of making money. Methods which will serve the exact same purpose.
Banks not allowed to charge interest will not be able to pay interest, and therefore we would have to return to a system where the bank charges a fee from your account to keep your money safe and easily accessible. This would give them control over an ever-increasing percentage of the money.
Loans would need to make money in some other way, so the bank would, instead of charging interest, have to charge in some other way. "Service fees" are likely, which would have the same exact result as interest. Also likely is disguising loans as investments, which would have particularly disastrous effects on student loans.
The problem isn't with interest: it's with the fact that banks are a creature of money. They don't deal in anything else. So they inherently break the system. Lemme describe:
When you charge money for an apple, you get an apple. Next year, if apples are more plentiful, the same amount of money might buy an apple and a peanut. In this way, the money serves only to grease the wheels of the economy. However much money actually exists is secondary to the goods and services being distributed: if there's more money, goods cost more. If there's less money, goods cost less. Whether an apple costs a penny or ten dollars is almost irrelevant, so long as everything scales at the same rate. 'S why Japan can get away with their "dollars" (yen) being worth so little individually: just print a bigger number on your coins and bills.
However, banks are charging money for money. They are completely immune to that growth: a dollar will never be worth more or less than a dollar, and although they can dabble in currency exchanges and investment, at worst a dollar is always worth a dollar. And they charge money for money. There is simply no way you can fail to gain more and more money if you can keep doing that. A bigger cut of the pie with every month.
The problem is that banks will ALWAYS accrue more and more money. It's the nature of the beast.
The video suggests that money should be a public service.
However, I'm not a fan of his ideas. Let me argue against them:
The core of his ideas are to create money as value rather than debt. The government creates real money and spends it on, say, infrastructure. Thus paying a few thousand blue-collar workers and letting their money trickle into the economy.
This is a flawed idea for a few reasons, one of which being that it would simply create the same situation (a rapid growth of money supply) because there's no government on the planet that could resist printing massive amounts of new money. The new Democratic line would be "why tax when we can just print cash?" and the new Republican line would be "of course we can afford two or three more wars, we'll just print the cash!"
Again, the flaw is not in the fact that the system is based on debt/interest. The flaw is the fact that the system is governed by human beings, who will happily destroy it to make a bit of cash. If humans could be trusted, then a debt-based economy would be perfectly fine anyway.
... but, believe it or not, that's not my big problem with the video.
My big problem is the idea of a sustainable economy.
I hate to burst your bubble, ladies and gentlemen, but a sustainable economy (in this sense) is impossible. Physically, technically, and socially impossible.
Lets look socially: a sustainable economy means a specific set of resources are constantly being cycled/provided. Unfortunately, however nice that might sound, specific humans would take control over those resources (solar energy arrays, plastic recycling plants, etc) and use them as leverage to gain further control over the economy. We would be like dogs fighting for scraps.
Let's look physically: it's physically impossible to recycle everything.
More than that, it seems obvious to me that opportunities arise every day - bounties and dearths and accidents and ten thousand other chaotic day-to-day details. Claiming to keep the economy at a specific level is a polite fiction at best: what happens if a major city is destroyed by earthquake or flood? You'll need to rebuild, which will require you to build up your economy. To the precise same level? How? That's not going to happen without artificially crippling your economy. "No, you can't make it any better than it was before!"
Let's look technically: science is always advancing. We can't have a sustainable economy because I'll invent a better strain of wheat, even if nobody else wants to. Now what? Do you insist that those who grow the new wheat grow LESS, even though it means leaving unnecessarily fallow fields?
What a waste: technology creates new wealth every day, and I would never see that stop. That would be stagnation of the worst kind.
Investing in research and development creates wealth. It makes the world a better place to be. A lot of people argue that new technologies are the problem with the world, that they are hard on the ecosystem and blah de blah blah. These people haven't actually looked into the matter.
The vast majority of new technologies use LESS resources than old technologies, with the exception being when a new technology becomes so widely adopted that it uses more resources because people demand more of it.
Computers require way fewer resources than rooms full of secretaries and pneumatic message tubes! That's why we all have computers, but in the 1800s most people did not have dedicated rooms of secretaries and runners.
The argument is that we should be content with a lower quality of living so as not to disturb our precious sustainability. Even if that were acceptable, it's impossible: try arguing that only giant corporations should be allowed to have a laptop, and not more than one or two laptops per headquarters. You think we'd be in a better situation?
No! Technology creates and creates. Ever more wealth, ever cheaper.
And this will continue. Every new advance creates more wealth at less cost. Better living. Even automation, which "costs jobs", actually creates more wealth in the long run as it allows for a dramatic reduction in price.
People seem to forget this. They seem to forget than our standard of living has increased a thousandfold in the past three hundred years, most of it in the past fifty years. That's because of technology.
I think it's really silly to try to plan out an economy without taking the rapidly increasing increase in technology into account.
For example, let's assume we do everything that video suggests and we magically get a perfect sustainable economy with everyone joining hands and dancing from coast to coast, singing the Smurfs theme.
I will break that.
I will release a web-distributed video game for $10 a pop. People will buy it.
This costs me nothing. I just get money. And, if my game is any good, people will buy it in sufficient numbers that I will make a profit above the cost of the time investment. IE, I will get free money.
Whoa! I just destroyed that carefully balanced economy!
The only way to prevent that would be to come down on me like a hammer. "You're not allowed to make a profit! You have to eke out a living just like everyone else!"
No, that's crap. It's impossible to sustain even if you wanted to. It's easy to create a second money and use it for goods and services that the government does not moderate. I can name fifty of them, but here's the simplest: World of Warcraft gold coins.
When you're designing your future, you need to take this into account. This new and bizarre development where I can distribute information for free to any number of people, and charge them money, and everyone feels like they got a great deal.
It's only going to get more common. It's already putting a strain on our old-fashioned economy...
The way forward is not to turn around and go back to printed cash only. There's no question things are going to change, but they're not going to go back to a government-prints-the-money system. It wouldn't work very well in this era: too much interconnectivity.
I've seen this video a few times, now. It's informative, but... there's an irritating undercurrent. Here, watch it first: Money as Debt.
Once you've watched the video, you'll probably understand a lot more about the weirdness of modern money. And, if you think about it a bit, you can see why capitalism and consumerism are core aspects of modern economy. This isn't the only reason that alternative methods fail, but it is a major reason.
However, the video itself is painfully... mired in its own views? It is not so much a description of what's going on as an advocacy for a specific kind of sustainable economy. I have a few problems with this particular form of sustainable economics.
First, a more logical issue: he takes affront to the idea of interest. The fact that banks loan at interest means that banks will have control over an ever-increasing fraction of the money, even if they aren't allowed to manufacture debt. Unfortunately, banning interest is not going to stop this. Instead, what we'll see is banks turning to alternate methods of making money. Methods which will serve the exact same purpose.
Banks not allowed to charge interest will not be able to pay interest, and therefore we would have to return to a system where the bank charges a fee from your account to keep your money safe and easily accessible. This would give them control over an ever-increasing percentage of the money.
Loans would need to make money in some other way, so the bank would, instead of charging interest, have to charge in some other way. "Service fees" are likely, which would have the same exact result as interest. Also likely is disguising loans as investments, which would have particularly disastrous effects on student loans.
The problem isn't with interest: it's with the fact that banks are a creature of money. They don't deal in anything else. So they inherently break the system. Lemme describe:
When you charge money for an apple, you get an apple. Next year, if apples are more plentiful, the same amount of money might buy an apple and a peanut. In this way, the money serves only to grease the wheels of the economy. However much money actually exists is secondary to the goods and services being distributed: if there's more money, goods cost more. If there's less money, goods cost less. Whether an apple costs a penny or ten dollars is almost irrelevant, so long as everything scales at the same rate. 'S why Japan can get away with their "dollars" (yen) being worth so little individually: just print a bigger number on your coins and bills.
However, banks are charging money for money. They are completely immune to that growth: a dollar will never be worth more or less than a dollar, and although they can dabble in currency exchanges and investment, at worst a dollar is always worth a dollar. And they charge money for money. There is simply no way you can fail to gain more and more money if you can keep doing that. A bigger cut of the pie with every month.
The problem is that banks will ALWAYS accrue more and more money. It's the nature of the beast.
The video suggests that money should be a public service.
However, I'm not a fan of his ideas. Let me argue against them:
The core of his ideas are to create money as value rather than debt. The government creates real money and spends it on, say, infrastructure. Thus paying a few thousand blue-collar workers and letting their money trickle into the economy.
This is a flawed idea for a few reasons, one of which being that it would simply create the same situation (a rapid growth of money supply) because there's no government on the planet that could resist printing massive amounts of new money. The new Democratic line would be "why tax when we can just print cash?" and the new Republican line would be "of course we can afford two or three more wars, we'll just print the cash!"
Again, the flaw is not in the fact that the system is based on debt/interest. The flaw is the fact that the system is governed by human beings, who will happily destroy it to make a bit of cash. If humans could be trusted, then a debt-based economy would be perfectly fine anyway.
... but, believe it or not, that's not my big problem with the video.
My big problem is the idea of a sustainable economy.
I hate to burst your bubble, ladies and gentlemen, but a sustainable economy (in this sense) is impossible. Physically, technically, and socially impossible.
Lets look socially: a sustainable economy means a specific set of resources are constantly being cycled/provided. Unfortunately, however nice that might sound, specific humans would take control over those resources (solar energy arrays, plastic recycling plants, etc) and use them as leverage to gain further control over the economy. We would be like dogs fighting for scraps.
Let's look physically: it's physically impossible to recycle everything.
More than that, it seems obvious to me that opportunities arise every day - bounties and dearths and accidents and ten thousand other chaotic day-to-day details. Claiming to keep the economy at a specific level is a polite fiction at best: what happens if a major city is destroyed by earthquake or flood? You'll need to rebuild, which will require you to build up your economy. To the precise same level? How? That's not going to happen without artificially crippling your economy. "No, you can't make it any better than it was before!"
Let's look technically: science is always advancing. We can't have a sustainable economy because I'll invent a better strain of wheat, even if nobody else wants to. Now what? Do you insist that those who grow the new wheat grow LESS, even though it means leaving unnecessarily fallow fields?
What a waste: technology creates new wealth every day, and I would never see that stop. That would be stagnation of the worst kind.
Investing in research and development creates wealth. It makes the world a better place to be. A lot of people argue that new technologies are the problem with the world, that they are hard on the ecosystem and blah de blah blah. These people haven't actually looked into the matter.
The vast majority of new technologies use LESS resources than old technologies, with the exception being when a new technology becomes so widely adopted that it uses more resources because people demand more of it.
Computers require way fewer resources than rooms full of secretaries and pneumatic message tubes! That's why we all have computers, but in the 1800s most people did not have dedicated rooms of secretaries and runners.
The argument is that we should be content with a lower quality of living so as not to disturb our precious sustainability. Even if that were acceptable, it's impossible: try arguing that only giant corporations should be allowed to have a laptop, and not more than one or two laptops per headquarters. You think we'd be in a better situation?
No! Technology creates and creates. Ever more wealth, ever cheaper.
And this will continue. Every new advance creates more wealth at less cost. Better living. Even automation, which "costs jobs", actually creates more wealth in the long run as it allows for a dramatic reduction in price.
People seem to forget this. They seem to forget than our standard of living has increased a thousandfold in the past three hundred years, most of it in the past fifty years. That's because of technology.
I think it's really silly to try to plan out an economy without taking the rapidly increasing increase in technology into account.
For example, let's assume we do everything that video suggests and we magically get a perfect sustainable economy with everyone joining hands and dancing from coast to coast, singing the Smurfs theme.
I will break that.
I will release a web-distributed video game for $10 a pop. People will buy it.
This costs me nothing. I just get money. And, if my game is any good, people will buy it in sufficient numbers that I will make a profit above the cost of the time investment. IE, I will get free money.
Whoa! I just destroyed that carefully balanced economy!
The only way to prevent that would be to come down on me like a hammer. "You're not allowed to make a profit! You have to eke out a living just like everyone else!"
No, that's crap. It's impossible to sustain even if you wanted to. It's easy to create a second money and use it for goods and services that the government does not moderate. I can name fifty of them, but here's the simplest: World of Warcraft gold coins.
When you're designing your future, you need to take this into account. This new and bizarre development where I can distribute information for free to any number of people, and charge them money, and everyone feels like they got a great deal.
It's only going to get more common. It's already putting a strain on our old-fashioned economy...
The way forward is not to turn around and go back to printed cash only. There's no question things are going to change, but they're not going to go back to a government-prints-the-money system. It wouldn't work very well in this era: too much interconnectivity.
Friday, May 16, 2008
Knights of the Greenback
I have a long-standing interest in the economies (and cultures) of massively multiplayer games. There are a few things that really interest me about these systems, but a few of the major factors are that (A) they adapt much faster than a real economy and (B) the distribution/creation of goods does not have to follow real-world algorithms.
Of course, to economists, massively multiplayer games are something of a silver bullet. If only they could find a way to load them into their gun, they could really get some great research in!
But, like all games that have a "purpose", games that are economic experiments will pretty much suck. So economists grind their teeth.
To me, the cool thing is not the idea that we could study shadows of real-world economies. I'm of the opinion that such studies would be hopelessly damaged by factor B. It would be equivalent to calculating the optimum approach for the space shuttle with a high school physics textbook. You know, the one that starts every question with "ignoring air resistance, we can calculate the..."
Instead, I'm a big fan of taking factor B and running with it. After all, as technology advances, our method of creating and distributing goods (and what kinds of goods) radically changes. The idea that technological advances are "more of the same, but better" is crap.
A cell phone is not "more of the same, but better" to third world populations. It's "this changes everything!" Similarly, vaccines aren't just "more of the same, but better" medicine. The combustion engine isn't just "more horses, but better". The gun isn't "a bow and arrow, but better". It may appear that way at first blush, but once it's out of the starting gate, it will finish the race before its predecessor even gets in one lap.
My interest is therefore in modeling the effects of this kind of advancement. Since a massively multiplayer game can more or less arbitrarily set the distribution and type of goods (and what those goods can do), I think it would be interesting to create a world to take advantage of that, and get some interesting data on how it affects things.
Specifically, I'm thinking of the idea of many worlds, each of which has different economic and technological underpinnings. For example, a post-apocalyptic world where technology is high enough that people can survive in small enclaves. A world of high fantasy and magic, where monsters run rampant and the economy is largely about how to travel and communicate over distance... a world of tribal plainspeople where gods exist and a major part of the economy is in sacrificing to them and receiving their blessings... there are a million possibilities.
One of the big problems with this is player population. It's almost impossible to guess how much population a game will have, and if you aim for a specific amount, you'll probably either never reach it or blow right past it. This idea of "gated worlds" would allow you to control the population in any given economy by allowing or disallowing players access: if a world is getting too hot, block new players from going there. If a world is too cold, make the player advantages of getting goods from that world higher. Add new worlds (even simple duplicates) as needed.
Of course, you'll still have the problem of a minimum player number you'd have to reach... you need the game to be fun and exciting enough to draw players in. Economies aren't fun and exciting as they stand.
The idea of a bunch of very unique worlds... that's pretty exciting. Especially if there's some kind of advanced crafting system and interpretive transitions: if you're a shaman moving from the tribal world to the future world, you transform into a hacker and all your shamanistic equipment transforms into equivalent hacker tools...
This creates a semi-permeable barrier allowing you to see how things flow between economies, and it also gives the players something really interesting to play around with.
Most interestingly, if you could figure out exactly how, you could actually allow the players to establish and back different kinds of economic models. Not just "pick and choose" from existing models, but actually implement entirely new models. For example, what about an economic model where copyright protects a work from corporate or government duplication, but not from individual duplication? What about an economic model where the primary currency is dragon scales, and they degrade over time? What about an economic model where data is completely free - no copyright, no government-assisted protection... if you can find it, you can duplicate it infinitely? What about an economic model where cash is backed by acres of arable land?
Anyway, that's how I would do it, if someone gave me a few million dollars of grant money. :D
Of course, to economists, massively multiplayer games are something of a silver bullet. If only they could find a way to load them into their gun, they could really get some great research in!
But, like all games that have a "purpose", games that are economic experiments will pretty much suck. So economists grind their teeth.
To me, the cool thing is not the idea that we could study shadows of real-world economies. I'm of the opinion that such studies would be hopelessly damaged by factor B. It would be equivalent to calculating the optimum approach for the space shuttle with a high school physics textbook. You know, the one that starts every question with "ignoring air resistance, we can calculate the..."
Instead, I'm a big fan of taking factor B and running with it. After all, as technology advances, our method of creating and distributing goods (and what kinds of goods) radically changes. The idea that technological advances are "more of the same, but better" is crap.
A cell phone is not "more of the same, but better" to third world populations. It's "this changes everything!" Similarly, vaccines aren't just "more of the same, but better" medicine. The combustion engine isn't just "more horses, but better". The gun isn't "a bow and arrow, but better". It may appear that way at first blush, but once it's out of the starting gate, it will finish the race before its predecessor even gets in one lap.
My interest is therefore in modeling the effects of this kind of advancement. Since a massively multiplayer game can more or less arbitrarily set the distribution and type of goods (and what those goods can do), I think it would be interesting to create a world to take advantage of that, and get some interesting data on how it affects things.
Specifically, I'm thinking of the idea of many worlds, each of which has different economic and technological underpinnings. For example, a post-apocalyptic world where technology is high enough that people can survive in small enclaves. A world of high fantasy and magic, where monsters run rampant and the economy is largely about how to travel and communicate over distance... a world of tribal plainspeople where gods exist and a major part of the economy is in sacrificing to them and receiving their blessings... there are a million possibilities.
One of the big problems with this is player population. It's almost impossible to guess how much population a game will have, and if you aim for a specific amount, you'll probably either never reach it or blow right past it. This idea of "gated worlds" would allow you to control the population in any given economy by allowing or disallowing players access: if a world is getting too hot, block new players from going there. If a world is too cold, make the player advantages of getting goods from that world higher. Add new worlds (even simple duplicates) as needed.
Of course, you'll still have the problem of a minimum player number you'd have to reach... you need the game to be fun and exciting enough to draw players in. Economies aren't fun and exciting as they stand.
The idea of a bunch of very unique worlds... that's pretty exciting. Especially if there's some kind of advanced crafting system and interpretive transitions: if you're a shaman moving from the tribal world to the future world, you transform into a hacker and all your shamanistic equipment transforms into equivalent hacker tools...
This creates a semi-permeable barrier allowing you to see how things flow between economies, and it also gives the players something really interesting to play around with.
Most interestingly, if you could figure out exactly how, you could actually allow the players to establish and back different kinds of economic models. Not just "pick and choose" from existing models, but actually implement entirely new models. For example, what about an economic model where copyright protects a work from corporate or government duplication, but not from individual duplication? What about an economic model where the primary currency is dragon scales, and they degrade over time? What about an economic model where data is completely free - no copyright, no government-assisted protection... if you can find it, you can duplicate it infinitely? What about an economic model where cash is backed by acres of arable land?
Anyway, that's how I would do it, if someone gave me a few million dollars of grant money. :D
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