Friday, April 03, 2009

The New Global Economy is Local

It's pretty obvious by now (at least, I think so) that modern capitalism is in the process of failing. There are a number of good reasons for this, some to do with greed and short-sightedness, others to do with the strange idea that infinite growth is possible. That latter has always been a strange idea to me; not just unintuitive, but demonstrably wrong. However, the major concern now seems to be that money is essentially fictional, on a worldwide basis.

For most of human history, money - currency - has represented something real. Sometimes it was gold, sometimes grain, and there have been currencies backed by things as diverse as beef and beer. Modern money, though, is backed by... nothing much. Agreement, between national banks, that we might as well jst pretend there's something there, and as long as nobody stops pretending, we're all fine. The trouble of late seems to have been that many of the people working in and around these banks had too much imagination, and a truly stupendous amount of pretend money went into circulation.

There was an occasion last year in the US in which the imaginary money had to be reined in. Had it not, we're told, the US economy would have completely vanished down an equally imaginary plughole, leaving rather a vaccuum - all, essentially, by agreement.

Anti-globalist protestors have been pointing out the flaws of modern capitalism for more than a decade now. The main trouble seems to be that nobody has been able to suggest anything to replace it - nobody seems to be able to conceive of a global system that will work, be reasonably fair, and not subject to abuse by any party involved. I'm beginning to suspect that this is because we're looking in the wrong places - or, rather, the wrong place.

We're not finding a global solution because there is no global solution. We need local solutions, and each local solution needs to be able to negotiate exchanges with other local solutions, situation by situation. Different areas worldwide have widely different priorities. 

Look at real estate, for instance. In Ireland, despite recent falls in house and land prices, you still need to go into debt for, essentially, the rest of your life in order to own a piece of ground. There are exceptions; I know of a site in Wicklow which you could probably have for about 33% of a year's average pre-tax salary, rather than the 1000% you'd pay for a house near Dublin. Unfortunately, it's boggy, isolated, you can't buy it unless you have ancestors who were born in Wicklow, and in any case, planning permission will never be granted on it becase it's right beside the Wicklow Way.

On the other hand, in Detroit, you can buy a house - with some land - for less than a month's take-home pay. At the moment, these two situations exist in the same economy. There are all kinds of reasons for this, but look: it makes no sense. It's perfectly reasonable for land prices to vary based on location, quality, accessibility, and even historical notability, but these places in Detroit are not very different to the ones in Dublin that are selling for more than three hundred times the price. The prices are instead determined by... the prices, in a self-referential spiral.

It would make a lot more sense to decouple these. If you break the global system up into national, or even regional chunks, deliberately isolate them so that they have to make sense internally first, and only then permit an interchange, there will be more stability. No region, having to keep its own books straight first, is going to tangle with regions who don't have things settled - and that's good.  

Let me pull out an analogy here. If you need a huge amount of computing power, you don't try to build a single supercomputer. Nobody has tried to do that in years. Instead, you build hundreds of smaller, reasonably powerful computers, and then connect them together sensibly. You get a lot of computation, your whole system can no longer break down at a single point of failure, and the whole thing works better. And, obviously, anyone attempting serious computing with imaginary cycles is going to crash into reality rather quickly - as should have happened to the global economy years ago.

The best thing about this idea, I think, is that it will probably happen on its own. Sooner or later, some nation or region is going to look at its own economy, and say "Look, we can basically be self-sufficient. Take your fictional debts and credits and shove them; we're going our own way for a few years, and you can come back and talk to us when you have real goods and services to trade." Certainly, they'll need to import things - I don't think there's anywhere in the world that produces all the raw goods it needs, and very few regions can produce all the pharmaceuticals their population requires. But as long as the trade for such goods happens in real rather than imaginary terms, it will work.

Labels: , ,

Friday, November 14, 2008

Recession Era Supplies

I've been debating for a few days where to post this article - here, on my house-and-garden blog, or on my livejournal. I've eventually settled, as you can see, on posting it here, and I'll probably link to it from LJ, because I want to hear people's opinions on this.

Ireland officially entered a recession a couple of months back. So far, this has made little enough difference in areas immediately visible to me - one friend was made redundant, another was refused a car loan, and that's been about it. But assuming this continues - and it almost certainly will - there will be changes in the local economic landscape. The main one, I think, is not going to be in terms of money coming in, but in terms of what you can get for it, and how much what you can get costs.

I grew up in a recession, one in which Ireland was, to all intents and purposes, a second-world country. I didn't actually realise this until I was in my twenties; it was just how things were. There were a few things that were markedly different about that era and now, and some of them will return. First and foremost, we have access today to a vast range of goods. Many of these goods are imported. I'm not going to look at consumer goods or clothes here, just food. For an agricultural country, Ireland imports a frightening amount of food. Second, we don't have to go far to get those goods. Most people in Ireland, even in rural areas, can buy Parmesan cheese and out-of-season strawberries within, say, five miles of their homes. I'm pulling that figure out of the air, but considering Ireland's population density, and the distribution of Spars, Centras, Supervalus, etc, it seems reasonable.

These two things are going to change. First, importing food is expensive. It may not look like it, but that's because each step in the process has been optimised until it can't be optimised any more. To get to your table, the following things have to happen to food: it has to be grown, harvested, transported to a storage facility, if imported it's flown or shipped to another storage facility, distributed to the retailer, and then you go in, buy it, and bring it home. Each stage of that process involves a cost - in many cases, it's the cost of fuel, but there's also rental on storage locations and shelf space, and the credit facilities that all the companies involved make use of. Fuel costs will rise. Rentals will rise. Credit facilities will not be available. Each of these will impose an increase in the eventual retail price of food. And when food prices rise, and people cut down on what they can buy, retailers will go out of business.

The result of this will be that people will have to travel further to get their food, and when they get there, they'll get less for their money. As a corollary, fuel prices may rise enough that running cars becomes too expensive for everyday use, and then people are confined to the walkable (or cyclable, or ridable) distances - but that's outside the scope of this current set of thinking. 

So, what can people do to cope with these new circumstances? Here's a list of things my folks did when I was a kid.

Store Cupboards: When you DO get to a retailer, buy large amounts of storable food. Bread goes off within days, but flour keeps for months. Fresh vegetables are unusable after a few days as well, but canned goods last for years. Smoked fish and meat keeps longer, and frozen goods will last better as well, assuming you can rely on not having many power cuts. Rice and pasta keep better than potatoes. 

Grow Your Own: My grandfather grew about an acre of vegetables every year. I don't know if we ever bought vegetables; they certainly don't appear on the lists of groceries my mother kept. There's been a movement toward growing food lately anyway, for entertainment and health reasons more than economic ones, but it still works. I don't have an acre, but I'm willing to bet that will careful planning, I can supply all the vegetables we use for about 75% of the year from the space I do have.

Local Co-operatives: Somewhere near you (unless you're right in the middle of Dublin, and sometimes even then), there is someone who has the space and knowledge to keep a couple of pigs, and a number more who can keep chickens, ducks, or even quail. If you can offer some money to contribute to feeding these, or vegetables in exchange, you're on your way to having meat that hasn't come through the retail chain. It may involve a local retailer, certainly, but the butcher may well be happy to deal with the raw materials in exchange for a share.

Planning: This is something that plenty of people do anyway, but more of it is needed if you have limited resources. You can't rely on buying what looks good when you do get to a stocked supermarket; you need to go out with a list of goods, and a set of planned meals that will last until you're next out. If the market is offering special deals, you can adjust your plan on the fly, but arriving home with goods that won't last you until the next trip, or will go off before they can be used, is no longer a viable option. You can only change the plan if you have a plan to begin with.

Deliveries: For something that's seen as a bit of a luxury now, deliveries will become a lot more useful. In plain old cost terms, both in time and money, it's a lot more efficient for a retailer to send out one driver with boxes of goods on a round trip to multiple customers than it is for each customer to drive in, select their own goods, and drive back again. Deliveries work well with planning.

There are a few things that are going to make things easier, though, than it was in the 80s. First, we have computers,  the internet, and mobile phones. This makes many things easier - planning, deliveries, running a co-op, and managing your stores. Second, we have better public transport now, and that's going, of necessity, to see more use. Thirdly, more people can work from home now than ever before. And fourthly, the whole how-do-I-deal-with-all-this question is much easier to answer when you can hit the internet for information than when you were reliant on books and occasional phone calls.

So - am I overthinking all this? Or do you agree, and have more coping strategies in mind? Or do you think that none of this is going to happen? Let me know, in comments or emails.

Labels: , ,

Thursday, October 16, 2008

Economies after the Decline of Capitalism

There have been predictions for years of the crash of civilisation, due to running out of oil, catastrophic climate change, or even epidemics. Few enough people have taken seriously the idea of a crash due to capitalism failing, though. 

For what it's worth, I don't think it's likely, even with panicky stock markets, falling currencies, banks in trouble, and so on, that capitalism will fall. It's enshrined in the entire legal system of the West, in our habits and livelihoods, and the vast majority of us literally have some investment in it, be it savings, land, loans, or whatever.

There is a rising opinion, though, with government bailouts of large financial institutions happening worldwide, that capitalism has now been, for want of a better word, broken. Some people will say it was broken to begin with, others will say it was greedy banks who broke it, and some few will hold the perverse opinion that the bailouts are the breakage, not the fix. 

The problem is: even if we acknowledge that capitalism is broken, what can we replace it with?

I don't think it's possible, or even desirable, to replace capitalism overnight with anything else. We'd need to rewrite our laws, change large chunks of infrastructure, and everyone would need to undergo fairly extensive re-education.

Instead, I'm thinking of the current economic climate as being like an ebbing tide. It has covered over all the underwater mountains of other systems and ideas for some centuries now, but that doesn't mean that they're gone, or that people can't build on them as the decline of capitalism turns them back into visible islands. And new ones may be revealed as well, because who knows what's been going on under the surface?

So here are two things that may happen, on a small or local scale, which can partially replace capitalism.

Small Scale Socialism

This is most visible at the moment in Credit Unions - there are probably similar institutions elsewhere, but that's what we call them here. These are essentially small, community owned banks, which do not (as far as I'm aware) have external debts. They take in savings, give out loans, and pay interest on savings from the interest on the loans. They pay no heed to external credit records, and are very flexible about repayments. These already exist, and they shouldn't be harmed much, if at all, by the damage to larger financial institutions.

The idea of the cooperatives is another sub-surface practice that is going to come into its own again. During the lates 70s and early 80s, when Ireland was in a depression that essentially made it a second-world country, small co-ops sprang up all over. Some still exist as Farmers Co-ops, which sell hardware and farm supplies in rural towns, but there were other, far more local ones where one household kept a couple of pigs, another chickens, another goats for milk, and so on, and the goods were divided up between the participants. And, of course, everyone grew their own vegetables, and when there was a glut of some produce, it got shared with the neighbours. We have the internet and mobile phones now, so this kind of thing should be far easier to arrange.

Small Scale Feudalism

Economic feudalism has never completely gone away. It'll take a greater decline in capitalism to bring it to light, but there are small bits still there. Anyone who pays attention in rural areas of Ireland or the UK knows of a farm where there are labourers who have lived and worked on that farm all their lives, in a house owned by the landholder, and who inherited that position from their parents, grandparents, and so on. Some of these will pass it on to their children. They may receive a paycheck, and pay rent (sometimes nominal) to the landlord, but these people are effectively living in a feudal situation. 

It's hard for many of us to see a feudal situation as being good, but imagine this: you have a situation where your job in a bank has disappeared, and there's no sign that you can get another one that will even pay the rent and bills. Your partner is similar straits; maybe they worked for an insurance company that's gone bust. You're renting an apartment, and while you have some savings, they're not going to last long. And someone comes along and says, "Here, I have a big farm. I need someone to do some numbers, and help with running the place. And maybe drive a tractor, or help with lambing, when the need arises. I'll give you a place to live with heating and water and so on, provide food, and pay you a bit as well. I need people who aren't going to jump ship, and you need some security. How about it?"

And suddenly, feudalism looks a lot more reasonable.

I've no doubt there are other systems I haven't thought of, more equitable ones, or those that use modern technology better. I'm looking forward to finding out about them.

Labels: , ,

Thursday, October 02, 2008

Secret Suffrage in an Era Without Privacy

My new job has led me into all kinds of interesting fields of research and thinking. One of these fields is eGovernment, and I was involved in running a conference dealing with advances in eGovernment earlier this week. 

One of the speakers observed that the generation currently coming to voting age have completely different expectations with regard to privacy. They fully expect anyone in public life to have a visible profile somewhere - not necessarily Facebook, or social networks, but a profile page on a local council website, or an election site, or the like - which would include various personal details, pictures, and so forth. Having been exposed to 'fake' personalities as marketing tools all their lives, they're perfectly ready to conclude that if they can't find this information online, these public figures don't actually exist, any more than Ronald McDonald exists. The concept that the public figure might not want those details online is completely incomprehensible to them; they happily put up all their own details, and privacy simply is not an issue for them.

The next step is that they fully expect to see voting records for public figures. This makes sense in many ways, and indeed, voting records can be found for some bodies. It's the next step which gets interesting in this context - are these people going to comprehend a secret ballot? Is it going to be something alien to them? With that level of secrecy, how do you know that a given person is voting Labour? Might he not just say he's voting Labour, and then tick all the boxes for Sinn Fein when nobody can see him? Of course he might, and according to the original thinking, that's a strength and virtue of the system. But I'm starting to wonder if that won't be seen as a flaw.


Friday, August 08, 2008

Oil Prices

There's an article on the BBC saying that oil prices could hit $200 within 10 years. Thing is, I think that's really, really optimistic. Look at this: in late February, oil prices hit $103. In July, they hit $147. That's not going to stop, and there are a few reasons for this.

First and foremost, there's simple supply and demand. China and India are still on the upward part of the curve with regard to oil use, and all the environmental policies in the world are not going to change that; industrialisation needs oil, and the Western-style status symbol of the car needs oil. So demand will go up. Supply - unless massive reserves are found under the Arctic ice - is going to go down, because there's a limit to the amount of oil that's there, and a limit to how fast it can be pulled out of the ground.

Second, the oil producers can see that they're onto the last of a good thing here. At this stage, with the peak of production either here, or already past, their livelihood is going to be gone in, say, twenty years' time. None of them are going to cut the prices much, and even if oil is a commodity, there are still people who can say "I'm not selling for less that $145, and that's final". And it will still sell, even as they up the price.

What the really sensible oil producers will be doing around now is gouging the oil industry for every cent they can get out of it, and pouring that money into developing solar and wind power, and ever-more-efficient batteries - and particularly, getting patents on the cutting edge technology in those areas. Once they have those nailed down, they'll be sorted for income for good.

Labels: ,

Thursday, May 22, 2008

The Lisbon Treaty

I've been asked - like, actually, seriously asked - for my opinion on the forthcoming Lisbon Treaty referendum in Ireland, by three separate people now (and jokingly by half a dozen more). So here goes - this was originally a comment on someone else's blog, edited here for usefulness.

It's a treaty, so of course it's complicated. It's a treaty which is catering to special circumstances of 27 participant countries, so of course it's even more complicated. Nobody else is having a referendum about it, because everyone else in Europe has real governments, and constitutions that aren't made of 19th century wishes and conservative horse glue.

I've read the Referendum Commission's leaflet, and done some more research. It's pretty much unreservedly useful, and should go straight ahead. They've even made special provision for us in the various military aspects.

There are two referenda we actually need to have:

On that excises all the nonsense about neutrality - at the moment, we're hanging onto it for historical romance and a feeling of "ah, sure, who'd invade us anyway" - and

One that leaves us with a situation where the government can do what we're paying them to do, instead of spending ludicrous amounts of money asking the whole damn voting population about a multi-hundred-page treaty. It's closer to democracy in the proper sense of the word, but until it's all online - and everyone has access to it - it's not practical in terms of cost.

Labels: , ,

Wednesday, April 23, 2008

Last Feudal Government in Europe Falls

Being as there are only 600 people on the island of Sark, one of the Channel Islands, their move from what was essentially a feudal system to a democracy didn't get much news coverage. I'm amused to note, though, that since the old ruling body had 52 members, and the new one 28, the proportion of representation has gone down. I don't imagine that in what's essentially a large village, a change in the exact rules by which they operate will make much difference, though.

Food Shortage & Western Impacts

It's been a busy few months for me, so while I've been keeping track of the news - and taking more interest than usual in the US presidential elections - I haven't had much time to post here.

However, an article about people not being able to buy rice in California is so unexpected that it's making me sit up and take notice. This is one of the wealthiest states in one of the world's wealthiest countries. The notion that global food shortages are already at the point where people are noticing there means that things are already pretty bad, even if it's just an inconvenience, rather than starvation. And this whole thing centres on rice.

It's not easy to point at any one cause, but there are a few likely culprits here. First, the last year's incredibly poor rice harvest in Australia has a lot to do with it. Second, the desire in many parts of the developing world to eat more meat reduces the land that can be used for rice, giving it over instead to pasture. There's also land being devoted to biofuel production, and finally, the rising price of oil is having an impact on transport and agricultural machinery use.

A few months back, I wrote a short piece elsewhere on what I thought I'd be doing in ten years' time. A lot of that basically said, I'm going to be taking a mild survivalist tack. I'm going to plant vegetables, get in touch directly with people who have farms, and make sure I'm living well above sea level, and not in a major city. I'm sure a number of people saw it as being a bit on the crazy side, but this is exactly the kind of event that makes me think I'm on the right track.

Wednesday, January 16, 2008

The Modern Eye

It has often been remarked upon that we have difficulty seeing events through the eyes of another culture. However, I've rarely seen such a classic case of this as one LTG H Steven Blum, of the US National Guard, who visited Masada in Israel. His first quote is a little odd, but I can forgive it; he's explaining to an audience who may not know of much outside the US:

"Masada is roughly analogous in importance to the Israelis as the Alamo is to Texas”.

However, it's with his second quote that I have to stop and scratch my head and wonder if he understood any of what he was seeing there:

"It really helps you understand the history of this region, the millennium-long struggles that have gone on for democracy and individual rights and freedoms".

I really can't comprehend the mindset that would lead him to say that. Does he really think Masada was about "democracy"?

Monday, November 12, 2007

Royal Put-down

Apparently, King Juan Carlos of Spain recently told Hugo Chávez, the president of Venezuela, to "shut up". I don't know whether I'm more amused by the event itself, or Chávez' response, in true esprit de l'escalier, of "The king is a head of state like me, only that I have been elected three times with 63% support."

There's a whole raft of clichés and archetypes in here; mannered Old World vs. brash New World, noble privilege vs. democratic rabble, and I can't help a feeling that King Juan Carlos got the better of the exchange. Chávez does rabbit on, and he does interrupt other people, and that would bug me as much as it did the King.

I'm still not sure where I stand on the notion of monarchy as a form of government. On the one hand, it's outdated, undemocratic, archaic - and on the other, I have a sneaking liking for it, and a notion that democracy isn't all it's cracked up to be.

Thursday, October 11, 2007

Turkey, Armenia, and the US

There is a vote by a US congressional committee recognising as genocide the 1915-17 mass killings of Armenians by Ottoman Turks.

Apparently a sizable group of people of Armenian ancestry has been lobbying for this in the US for some time, and the Turks are furious about it, and moving towards cooperating less with the United States.

I do not get this. Or rather, I do, but surely an event nearly a hundred years ago is a matter for historians, rather than modern politicians? There can't be many people who were involved still alive. So the congressional committee, the resolution, and the reaction all mystify me.

Can we get something done about the Potato Famine in Ireland? How about a congressional investigation of the Moorish Occupation of Iberia? Maybe one to find out what happened to the Neanderthals?

Wednesday, October 10, 2007

China Miéville: Anti-Libertarianism At Sea

One of my favourite authors, China Miéville, is also a fairly active figure in socialist politics. In this article in On These Times, he's going all-out on the notion of libertarian seasteading - the notion of ships and artifical islands as offshore tax-havens. It's an interesting read.