Economy

Vasco Pyjama talks about community finance. The ROSCA is known as a “sou-sou” in west Africa, or at least in Nimba county, Liberia. Sousous run for a fixed term, based on the number of members. If there are 10 members and the contribution is $10, each month one of the members will get $90 (9 other members * $10 each). At the end of ten months, the sousou can either be restarted, or the membership can be renegotiated (for example, to drop people who failed to pay on time during the past sousou period). If the sousou is reconstituted with more or fewer people, it doesn’t really change anything, it just runs shorter or longer until the next restart. Sousous run best when they are between 6 and 12 people for social and economic reasons (a 5x - 11x payoff is manageable in a cash society). The order of the payouts is determined randomly at the startup meeting of the sousou. Sometimes people negotiate to trade their places in the payout order in order to assure that the sousou payout would arrive at a time that was convenient for them. ...

Listen to this Planet Money episode, it’s got a really clear example of how banks are allowed to book profits based on people losing confidence in them. It’s really mind bending, and shows two things: one, how the finance industry is a hall of mirrors, and two, how talented Planet Money is at breaking down the mirrors. Keep up the good work guys, when is the Pulitzer prize coming?

Wow. Here’s an incredible inside view of the piracy business. What’s incredible is that NPR’s Channa Jaffe Walt managed to get a CEO of a shipping company on the phone and hear the inside story of the negotiations. Here’s what’s really interesting. The first thing the CEO says is, “I never thought for a moment that I wouldn’t have to pay anything. The only question was how much, and when.” Channa asks him why and he says, “Look, there’s no one to turn to, we’re on our own out there and that’s all there is to it. You pay.” ...

Overheard here in England (which was, last I checked, a European country): I found a really interesting partnership we could join, but we’d have to make friends with a bunch of Europeans. Insert sound of my jaw dropping the floor here…

What are the economic effects of the repair vs replace decision? Interesting question, that. If you missed “more local employment of the blue collar type”, go read this: There is a slight diversion of purchasing strategy, repair rather than replace. This feeds a blue collar industry in the local region. It used to be, when money was loose, replace with new was the norm. If the repair was 75 percent of the cost of replacement a new motor was ordered, the old motor was scraped, and the country of origin (Mexico, China, Taiwan) benefited. These beautiful USA built, 50 year old, 200 horsepower motors, were going to the scrap heap. ...

Check out the image at the bottom of this post. Obama with a halo. Cute.

Yay for old friends, economics, and technology! All at once! kc wrote a blog posting with her humble ideas on how to use IP address space tax. Wait… there’s a tax on address space? Yes, because it has become a scare quantity, because people are too lazy to move to IPv6, IPv4 address space is running out. The best of all bad ideas about what to do about this is to make an open market for address space, as though network addresses were some kind of useful piece of property with any kind of useful value. (BTW: When the present econolypse is over, and the next bubble starts, it will be an IPv4 address space bubble. Mark my words…) Address space is bits. We can make more bits… Look! I just made some! But because the value of a network exists in everyone who is using it, not just your implementation of the network, you can’t just add bits in your IP stack and get any benefit. So, while bits are free, and address space could conceiveably be free, because we have a network with limited space, we have a scarce asset. And, of course, what do humans do with scarce assets? We make bubbles! Yay for bubbles! ...

Planet Money is talking about the new Systemic Regulator, and also talking about other theoretical ways of regulating the banks. It occurs to me that one thing that’s missing, and not just a little bit missing, but radically missing, from the current system is negative feedback. Wouldn’t it be interesting if we could set things up so that before the next bubble starts, the participants in the market can see that as certain stages of the bubble kick in, as measured by certain predetermined checkpoints, then certain economic brakes will be applied. We’d have to be careful not to take away all the control the Fed has, but perhaps you can invent a new set of levers which fall into this category of automatically triggered negative feedback. ...

This is the scariest evidence yet that this recession is not a normal one: This was brought to my attention by an excellent This American Life episode. The conclusion of Alex and Adam’s story at the top of the program is chilling… there’s several ways to read the tea leaves, and none of them are very good.

I saw this quote in an article on E-Ink: If you ever want to make a billion of anything cheaply, you print it. What an interesting observation! With such interesting far reaching consequences: Nano Solar is on the right track, crystaline solar is not. Diamond Age-style nano-assembly is not quite a sure bet, and mass-customization by table-top fabs will clearly never be able to compete on price with items that are printed. Though another way of looking at nano-assembly is to recognize that nature manufactures far more, far cheaper, than all the printing presses in the world… Things that are flat, flexible, and where the complexity is expressed in 2D will always be cheaper than their competitors which violate one of those constraints of printing presses. It also further informs my day dreaming about clay tablets: a system for preserving data needs to be flat, flexible, and 2D. My “dots on ceramic” design might still be able to fit the bill, but the kind of uber-cheap ceramic I was thinking of (i.e. the same stuff in the 20 cent porcelin plates at Ikea) won’t be the material, something else will be. But what? What can go roll-to-roll in a printing press environment, but has the chemical stability of ceramics? I’m feeling like I really wish there was a layman’s introduction to ceramics on my reading list right now. Anyone? Anyone? Bueller? ...