Who Pays?

I don’t like it when Governments lower interest rates to support weak economies. The interest rate is the price of money. The price of money is the salary paid to money for working. Money should cost something. When interest rates are lowered, borrowers benefit and lenders suffer. So Gran and Grampa who conservatively hire their money out to others, get paid less. Those buying second, and third, and fourth properties, pay the lower salary of the money they are borrowing to empire build. Still receiving the higher rent. Money is lent to those who can prove they don’t need it. Money is made by solving the problems of those with money. One way to strengthen the economy rather than transferring money from lenders to borrowers would be a Universal Basic Income. Get money to people who need it, and allow people to solve their problems. Interest rates are money’s salary. If you are wondering who pays when they are lowered, visit your Gran.

My Gran always gave me a Lemon Cream

Voluntary

I am in favour of Constitutional Democracy. Not majority rules. I like the kind of rules that can be agreed upon as a 'way to play'... but not rules that impose control on individuals and communities. Partisan Democracy is a zero-sum game that flip flops between sides undoing each others work, and throwing stones. Instead of imposing on each other, in a liberal democracy, you should be able to largely crack on with whatever projects you want to do together. More than 65.8 million people voted for Hillary Clinton in the US election. If those people believe taxes should be 10% higher, that could probably (thumb suck) fund a single payer health system. They don't need permission. They could do it. Voluntary Associations and Community Building don't need votes. They need people willing to do. Perhaps it isn't fair if the burden isn't shared, but is that more important to you then the cause you are voting for? If it matters to you, and you can do it, do it.

Local v Self

Local governance becomes more practical. There can be relationships involved. Mayors can have grown up in the area they are in charge of. They can have a sense of the community dynamics and how they are being affected by change. They can balance the pleasure of progress with a nostalgia for the what the character of the place has been. Local governance allows for tacit knowledge - the stuff we know but can't explain.

Local-Governance is not 'Self'-Governance. My issue with 'Self' is that it starts to create an exclusive community, set apart. The seeds that built Nation States, and self-determination may have had positive intent in terms of Imperial Governments forcing controls from a distance, but there have also been unintended consequences.

Self-Governance (rather than Local-Governance) without the Four Freedoms is Apartheid.

Apartheid limits freedoms

Three Challenges

I am working on an idea of building a community of 150 people. I want to simplify what seems like a bottomless pit of issues to something that feels manageable. Here are three challenges I am chewing on.

1) Scalability

The traditional tool to solve big problems has been Government. I have grown a little cynical at our ability to gain consensus for big groups. We don't come at the problem with a recognition that we are searching for common ground. Instead, voting tends to be about picking the candidate who represents our view, and mandating them to fight for our interests. As soon as groups become very big, this becomes incredibly difficult. That is why I like the idea of focusing on a small, holey group. However the idea takes shape, it still needs to be easy to copy, and likely to be copied, for it to be of 'big' value. The benefit of Big Government is its scale. It might be slow to move, but when it does, it can have a big impact. For better or worse. A bottom up idea can better control for unintended consequences, but needs to be catchy and easy to spread.

Holey

2) Common Ground

Most communities grow around a feeling of having deep common ground with people. There are lots of examples of functional communities that are incredibly powerful. My concern is the lack of understanding, conflict between, and inequality of opportunities between communities. If what I want to build is, by definition, a community that is built on the idea of challenging a lack of common ground, then that becomes incredibly difficult to build around. Poking our bubbles is uncomfortable, and something that requires deep wells of discipline. There may be some people who push deep into stressful territory to build strength, but most people take the path of least resistance. For ideas to spread, they can't just be the right thing to do. They also have to be a nice thing to do. The preferred thing to do. Easy common ground feels good.

Deep Well

3) Selection

Who gets help when so many need help? I find the Universal part of the idea of Universal Basic Income very appealing. It is a bit of a misnomer in the sense that the target is not people with money already. It is universal because 'means testing' (1) costs/wastes money, and (2) adds a stigma with recipients having to prove they need help in order to get help. If I manage to figure out how to fund 150 UBIs, the vast majority would not getting anything. It could be funded in part through Capital and in part through voluntary contributions. For the idea to be scalable, how that money is raised has to represent willingness of people to be a part of the idea. Otherwise it is just a vanity project. For something to truly be universal, it needs to be very simple and be something we recognise, and buy into. Selecting those in need may be easy, but selecting those who will help can't give false hope.

Means Testing

Welfare States provide a support net to catch people, should they fall. If able to look after themselves, they are not targeted. Tests are applied to see if people have the means. Support focuses on the young, old, sick and those who are supporting others (e.g. parents and care givers). This means testing itself costs money. One argument for a Universal Basic Income is that the cost of the infrastructure to decide if people deserve help may be more than the cost would be to help everyone unconditionally. The basic nature of the income means traditional incentives remain in place for people to aspire to more. Means Testing is the opposite of a Job Interview. You have to prove desperation. Unconditional security means all people can look towards a future beyond panic. Replacing a conditional safety net with permanent buffer is a catalyst. Don't just support people in weakness... see their strength.

Releasing Value (with Piet)

Piet Viljoen and I met via Twitter through a shared interest in art, investment and South Africa. First contact was extended from digital to written with a little book. 'Learning from George' is a beautifully written envelope sized book by Adrian Hornsby. Short enough to have heard the writer read the whole thing in 15 minutes. That letter was followed by a coffee in Cape Town and a breakfast in Langa, that led to Piet signing up for the 2017 Unogwaja Team. The focus of Unogwaja is about searching for, finding and celebrating the light that fires people up. Seeing value. This is something both Piet and I have a professional interest in, in a different context. I had a chat to him to see if there were dots we could connect.

Piet

Trev:
Hayek argued that value is too subjective to determine what the 'right price' is for something. A lot of people get very frustrated that their salaries don't reflect the value they are adding. The horrible truth is that isn't what salaries do. They just reflect how much will keep someone in the job. Hayek's answer was that we should create frameworks that are liberal enough to permit creativity, stable enough to reward creativity and constraining enough to steer creativity to wealth creation rather than wealth capture. Basically, the answer to what something is worth is 'we don't know', but if we focus on trades (i.e. relationships) where both people are happy with the exchange, things will bubble in the right direction. Value is personal. Price is a cold 'somewhere in between'. With businesses, investors know that they have to detach from where the money goes. Some businesses are too hard to value. It feels like the economics that work for investing capital simply don't work for paying people? Capitalism is good at creating wealth, but awful at distributing it.

Piet:
On the contrary, Adam Smith's “invisible hand” distributes economic gains efficiently – on average. Yes, when an enterprise is successful there are inevitable winners and losers. But the gains of the winners far outweigh the losses of the losers. You need to reward the winners – that is how society progresses. No incentive, no progression. In specific instances, the distribution might not happen fairly. But the commonwealth is better off. I think one way of trying to understand this is through the difference between price and value. Price is the markets way of equating demand with supply. The price of an apple at the supermarket is low enough so that everyone who likes apples enough to pay that price can buy an apple. It is also high enough to encourage farmers to produce enough apples to satisfy the demand. But the value of an apple differs among individuals. I don’t particularly favour apples – for me the value of the apple is less than the price. You might love apples, and see the price as a bargain. Undervaluing the apple, so to speak. But, on average, everyone is satisfied. By disentangling price from value we can now begin to look at how the world works without the emotional baggage of what is fair at the individual level, and rather focus on what is fair on average.

Trev:
Smith's writing on the "invisible hand" is beautiful. It matches closely with the point Hayek is trying to make. Smith was arguing against the prevailing Mercantilism of the time which believed in Zero-Sum games and strong nation states. He was arguing for Free Trade. He was arguing for creating frameworks which allowed for trades people to focus on areas where they had strong knowledge of the communities where they worked. Hayek argued we should focus on how people coordinate in intricate and mutually considerate ways. We should focus on relationships. This releases the magic of the invisible hand to shift resources around as you say. The example you give of apples is true... if everyone can vote for apples. If there are people without any money or any form of generating money (not enough jobs), then they can't vote for apples. You may not favour apples because you have had your fill, or can afford something a little fancier. People will naturally change their diet as they can. Without money to vote, the price of apples (or bread) will be too low. On average, everyone isn't satisfied.

Piet:
You are 100% right - if (too many) people have no money the price of apples will be too low. People will vote for apples, but only for free apples. Free apples is a powerful concept. Those who desire power will use that concept to get the most votes.  Once in power, they will make apples free. While people are focused on enjoying their artificially free apples, the powerful will help themselves to the reserves of the system. Of course, because the price of apples is now too low - i.e. the value of apples is far higher than the price, too many will be consumed, and not enough will be produced. Free apples have a habit of ending up to be scarce. Misappropriated by both the poor and the powerful. Eventually, the system breaks down. To prevent this process from happening,  poor people have to be in the minority. 

Smiths invisible hand is dysfunctional in the presence of price manipulation. Price manipulation is welcomed by those with nothing to lose, and encouraged by those who wish for power. The powerful use price manipulation - “free” - to drive a wedge in between those who have and those who don’t have, and in so doing, entrench their power.  It would seem a simple solution would be to aspire to the equality Marx proposed. Where the communities that Hayek envisaged  placed an appropriate value on their relationships. Where the value of a product was equal to the value of the labour that went onto producing it. But human beings are not wired that way. Profit - or surplus value appropriation - is a strong incentive for us all. In practice we don’t want to be equal, however attractive that sounds in theory.

Trev:

A big part of how we value ourselves is in relativity. Someone living at the American Poverty Line is in the wealthiest 14% in the world. The median annual household income worldwide is about $10,000 (R140,000 or £7,500). The minimum wage in the US is $7.25 which is about R100 an hour. Many domestic workers in SA get paid R150-R250 a day. That doesn't leave much scope for voting for apples, and yes... if people are poor, they become far easier to manipulate. This goes back to the power of empowering people at the grassroots. Not giving them 'free apples', but giving them votes. I think the simplest solution is a 'Capitalist path to a Communist Utopia'... not equality of outcome, but equity of opportunity. I am in favour of a Universal Basic Income, that ensures that the market works because it ensures that the framework can't be manipulated. Enough is less than we think. We will still be incentivised by having more than enough. Our relative drivers will ensure that, but if people don't have a roof over their head, security, and the opportunity to participate in building those relationships and trades, we are also wired to rise up and get angry.

Piet:
Your concept of a universal basic income is superficially attractive, as it allows everyone to exercise a vote of some kind. And in so doing seems to enable the “invisible hand” Yet a society with such a structure in place would lack incentives for a large part of the population – the part that would otherwise have been worse off. In effect the price of their input into the economy would be artificially high. This effectively removes the creation of a surplus that would help create more business and more jobs, and yes, even better pay for some of the participants. I would argue that a better way to create “equality of opportunity” would be to use some of the surplus not to pay a universal income, but to spend it on (targeted) free education, free heathcare and possible even free housing. As long as these free items are of high enough quality, they would act as strong enablers for those who want to create further surpluses in the economy. The downside of a universal basic income is that it potentially creates a class of freeloaders, while the risk of free enablers is that some outside of the target group try to benefit from the system. The second risk is covered by the potential upside.

Trev:
I haven't met someone who has been enabled in some way. I see the idea of Privilege as the sum of years of hereditary entitlement. The (targeted) free education, healthcare and housing provided by parents and our inherited network/community. We are comfortable with hereditary wealth but over time much of our wealth is social capital. The lottery of birth means the biggest drivers of your success are where you are born, and who your parents are. That isn't meritocracy. Unravelling that through messing with private property is messy, but a UBI provides the opportunity for a dividend on our common wealth. If it is true that money earned by others is a negative, then we shouldn't provide for our children and should bury all the wealth we create in our tombs. Instead of acting as custodians and handing things over better than we got them. Societal compound interest. Since a UBI covers just the 'Basics' and doesn't stop the standard capitalist incentives from working, people will still be able to participate in the normal way. They will just be driven more by the carrot of higher desires like self actualisation, and less by the stick drivers of hunger, fear and cold. Centralising the decision in state provision of welfare adds an expensive layer of bureaucracy and pushes the decisions away from the mechanics that make the Invisible Hand work. Neither Smith nor Hayek loved 'big plans'.

Hereditary Wealth

Piet:
As far as big plans equate to big government, I would fall in the Smith/Hayek camp as well, mainly because big government tends also to be a corrupt government. But it is not certain that instituting targeted enablers would lead to big government. But it would need to be a well thought through process – otherwise bureaucracy will take over. Just as a UBI system would need to thought through properly, as a tax and spend type environment generally leads to more government over time. I don’t think that there is one neat and tidy solution that can tick all boxes. As far as systems go, I believe the one that provides the best incentives will work. I believe Munger said (or possibly paraphrased someone else): if you want to persuade someone, it is better to appeal to incentives than to reason. Targeted enablers are incentives based system, whereas a UBI is a reason based system, which assumes everyone is rational and acts accordingly.

I think the fatal flaw lies in your departure point - that the lottery of birth somehow needs to be corrected.  Poverty isn’t distributed along a normal curve, i.e. there are more people below the average income than there are wealthy above. Politicians know this, so anything that promises to redistribute plays very well at a political level. It also leads to more, not less inequality. The ratio of the wealth of the richest Zimbabwean or Venezuelan to the average is much higher that in the USA or Switzerland. This leads to far too much attention and effort being spent on redistribution than on education and health, which will make more of a difference to the broad population – and equality - over time.

Trev:
The beauty of a free market is the ability to carry information organically. The last 100 years since the first world war was a battle of various ideologies, but one of them was the idea of Scientific Management. That you can reduce things to numbers, and centralise decisions amongst a bunch of experts. The problem is that you can find Nobel prize winning experts on both sides of arguments. The problem is any power you give to the President you love will be power the next President has. We like democracy when we like the government. We like technocracy when we think the mob has lost its mind. Targeted enablers require a target. A target decided on by central decisions from the top. The great information bubbles up from the bottom.

When our side wins

A UBI would be the fire that bubbles understanding up from the front lines. Organisations like GiveDirectly (recommended by GiveWell) have shown how efficient small, regular, dependable, cash injections are at providing that golden incentive. It removes the costs of means testing, while enabling people to look up from hand to mouth survival. To think of the future. The same incentives that keep people looking for better or higher paying jobs remain. In the same way as breaking monopolies improves competition, breaking monopolies on poverty would do the same. An unconditional, universal income is far harder to manipulate by politicians. It can be run independently and simply. Targets enablers on the other hand are the bread and butter of corruption.

Give Directly

Piet:
To grow an economy, you need/want individuals to take risks. The reason most people are risk averse, is that they need to make sure they can pay for their kids schooling, that they can pay for any health issues, and make sure they have a roof over their head. My view is that if you can provide for these things, a huge wave of risk taking and value creation can take place. I agree, that there is a risk that the frictional costs imposed by human interference can be high - in this system, and in any other redistributive system. But in an age where AI is coming into its own, the decisions of who what and where can be implemented by incorruptible machines. Having said all that, your exposition of UBI makes good sense. The main problem I see is getting from here to there. Finally free market systems, with all their attendant faults,  have proved - in practice - to be far superior to socialist or redistributive systems in increasing the median wealth in the system over time.

Unogwaja Team 2017

Central African Republic

The Central African Republic (CAR) was third in 2016 on the Fragile State Index published by the Fund for Peace. The twelves indicators used are demographic pressure (too many people v resources), refugees/internally displaced people, group grievances, human flight/brain drain, uneven economic development, poverty/economic decline, state legitimacy (e.g. corruption), public service, human rights/rule of law, security apparatus/use of force, factionised elites, and external interventions. 

The area was one of the earliest mixing point of the expanding Bantu, Nilo-Saharan and Afroasiatic speaking groups. The expansions were slow, with lots of space and a history of farming people settled, grew a little, pushed on a little, probably (we think) fought a little. 16/17th slave trading and colonialism sped things up. Kingdoms rose up off the back of trade, but you wouldn't have wanted to be close to enemies or you became the product. The 'civilising mission' that came with colonialism and the end of slavery didn't mean the end of forced labour (e.g. mandatory cotton cultivation and building of railways). The first of (or continuation of) several forceful take-overs followed 1960 independence. Despite an abundance of natural resources, CAR remains one of the poorest countries in the world.

Fragile States

Bouar Megaliths - date back to 2700-3500 BCE

Equatorial Guinea

Equatorial Guinea is the only sovereign state in Africa where Spanish is the national language. Spain's power had already started to dwindle by the time Europe turned its eyes to expanding in the Old World. After the oil boom of the mid-1990s and with a population of just 1.2 million people, Equatorial Guinea is the richest country in Africa if measured by GDP/capita (36th in the world). At $43,500, that is just ahead of old colonial powers France and the United Kingdom. Despite that, less than half the population have access to clean drinking water. As of February 2016, President Obiang has been in power the longest of any African head of state. This places him 8th in the world behind the leaders of Cameroon, Sweden, Denmark, Oman, Bahrain, Brunei and the globes longest reigning leader Queen Elizabeth II (who heads 16 governments).

Wealth (measured by GDP) per person

Cooperation v Ideology

Partisan politics presumes the division is permanent. The stated goal is to represent everyone. The reality is a school debate where your side is picked in advance, and then you argue for it. Someone wins, and someone loses. Government is more boring than elections. Long after the soundbites fade, there is hard, complicated, nuanced policy to wade through. Partisan politics forces you to start with the answer, then find a path to it. It starts with interest groups. There is no smooth path when you realise you disagree with your team. Without a team, you can't get anything done. Team building takes time. A system that focused on co-operation independent of ideology would make changing views easier. The engine of the enlightenment was admitting ignorance. Politics needs the same.

Elections are the start of the process. Not the end.

Rising v Listening

Thomas Hobbes was a 17th century philosopher who lived through the English Civil War. Masses of people died on both sides in the fight of the King's men versus those supporting Parliament. The question he spent most of the latter part of his life looking at was how much we should obey rulers. If they are rubbish, should we start revolutions and depose them? See the Book of Life chapter on Hobbes. Once people stopped believing in the 'Divine Rights of Kings', the relationship with authority started to wobble. But the price of revolution is chaos and bloodshed.

I don't much about all the Civil Wars that have been going on (before and) since the end of World War II. I know that in going down the rabbit hole of trying to understand the relationship between Christianity & Islam, and the impact of Colonialism and Globalisation - most of the conflicts ended up being 'proxy wars'. Wars of ideology. Wars of religion. Wars of ethnicity.

I am eternally grateful to have never learned to kill. Never to have had to. South Africa avoided Civil War. Just. Take a look at the 'list of Civil Wars' on wikipedia. The length of the conflicts. The decrease in population because of people fleeing. The death tolls. Revolution is nuts. Oppression is nuts. 

Violence and poverty are being defeated. It isn't a case of rising up. It is a case of listening. We can and are doing better. We can build communities rather than looking to impose ourselves.

Happy 22nd Birthday South Africa

On our 22nd birthday, I will admit that I am trying to deconstruct my South Africanness.  In 1994, I was a true believer. I believed in forging a rainbow identity. I am more scared of that now. To construct any identity, by definition, means excluding others. That was what the birth of a new South Africa was supposed to end. I prefer the idea of discovering different flavours. Different ideas. Different tastes. Constantly adding as each year passes. Constantly learning. Learning as deconstructing barriers.

Who are you?

Growth through deconstructing identity

A 22 year old is often starting to make their way in the world of work. I am also less convinced about the value of specialising in any one type of work. Particularly if that means diminishing your circle of competence in the process of excelling. I think we need be able to do the small stuff. If we only focus on the grand goals, we can lose track of the simple things. We can form little habits that help build a life. Cook meals for each other. Remember to stay in touch. Pick things up. Patch things up. We can build friendships outside our bubbles. 

A 22 year old starts having to adjust to being an adult. To looking after the admin of life. Bills. Responsibilities. Mundane stuff. I think that is what politics and government should be about. The boring stuff. The bricks. The exciting stuff should be up to us. Ungoverning. Releasing. Getting on with it. Education years are often all about finding yourself, and when you shift to work you start looking after others. You build something bigger. South Africa is part of something bigger. It is not separate. We are Global Citizens. We can learn from others and teach others. Walk together. See each other.

2015 - Happy 21st Birthday South Africa

My South Africa

South Africa - Westville - Cape Town - Johannesburg

Birthday Reflections

Catalyst for Wonder

The Oracle's and Gurus in old stories are seldom the ones on street corner and pedestals shouting loudly. They live simply, or hidden, and have to be sought out. When they are found, they end up doing more listening than speaking. Finally they give some sort of cryptic message that is more question than answer. The seeker leaves with their mind boggled, wondering deeply about the meaning of what has been said. I think that is the point. A catalyst for wonder.

Carl XVI Gustav is the King of Sweden. I am not a fan of the idea of hereditary monarchy, but I must admit to having softened to Queen Elizabeth as she has become more of a Granny figure. Grannies are awesome. The Swedish King has spent most of his life in study for the role as head of government.  He has spent time looking at history, sociology, political science, tax law, and economics. He followed a broad program looking at the court system, social institutions, trade unions and employer organisations. He has spent time in factories, banks and at the UN. He was born to be King. He spent his life preparing. He has no power, but a lot to offer. I haven't read a lot about him, but the little bit I have suggests this is the kind of King I could like. 

Me and my awesome Gran

We talk of the idea of Servant Leaders. People who are there to give rather than take. I don't like the idea of just flipping the hierarchy. I don't like the idea of seeing clients, or citizens or anyone as King. I prefer the idea of partnership, but partnership that changes the rules of how we engaged. 

Most times we meet with someone and give something, there is an exchange. 'Giving' builds an expectation of something in return. We want things to be fair. But there are lots of types of fair. Does everyone give an equal amount? Do we give according to our means? What if we don't want to give? Is it fair to force me to do something I don't want to do? What if someone takes more they receive, and aren't grateful? What if someone gives a lot, but then Lords around with inferred power? 

Fairness requires accounting. Accounting requires something to be reduced to a number. Reducing something to a number removes the flavour.

Independence is powerful. You can give with zero expectation of return. No expectation, no disappointment. Everything received is a gift. Initially democratic politicians used to take turns, without pay, to run things. Pay was introduced because people without money couldn't afford to not work. Professionalising politics meant that it could be democratised. It would be fantastic if one day, when we have enough, people could start taking turns.

The Independent King or Queen is the one who can gain wisdom and have no power. They can live simply and have to be sought out. They can spend a life in study, be fantastic at listening, ask the occasional beautiful question and be a catalyst for wonder. 

Agreeing to an additional Gran

Up To Us

Liberal Constitutional Democracies and their Citizens are similar to the News and Social Media. The Government can only really do a limited amount of stuff because they aren't dictators. We made it that way. Many of us disappeared off to the New World and set up new ways of doing things. We made a hash of it initially and those of us who were there already often got the short end of the stick. But we got, and we are getting better. 

In many countries in the world, if we want to do something, we don't have to wait for the Government to do it. A Liberal Constitution gives you the right to do something unless it obstructs someone elses liberty. It doesn't stop you from helping people. If there are poor people in a rich country, I don't think you can blame it on the government. You don't need to get consensus, raise taxes, and redistribute. If there are poor people in a rich country, it is because not enough of us are doing something about it. 

When it comes to the News, if we want to hear about stories that really matter, we don't have to wait for the News to cover it. Social Media means we are in charge of the content that gets put out. There is no one stopping you from participating in the conversation. If the quality of discussion is poor, we can't blame any Media companies.

News stories tend to focus on 'News worthy' items. They talk about deaths due to shark attacks and murders, not deaths due to diarrhoea or malaria. Something is newsworthy if it is out of the ordinary. It is not the job of the media to tell us stories that resonate more closely to our lives. The description of ordinary peoples lives. We don't tend to talk about the stuff that matters to us in the open. So we only hear from celebrities and writers. We don't hear from each other.

source: NEWS!!! Florida led the world in Shark Attacks in 2013

One thing I like about the blogging medium is that when I speak to friends who read my blog, we get straight to something that matters to both of us. Most of us only have a few areas of interest that overlap and we are very busy. We don't get to see each other that often. Often a catch up ends up being small talk for a while before perhaps by chance you stumble on something that matters. With blogs, the friend may have skimmed stuff that doesn't interest them and read the ones that did. The trigger of seeing you may bring back that post and you can chat about it. Even better, I have found the trigger of seeing the blog post actually leads to more face to face time. With so much going on, sometimes we need triggers to remind us what is important to us. 

In my ideal world, we would all write blogs. Clearly public comments descend quickly, but if one persons post triggers you to write something etc. the world will be more full of things that matter to us.

At some point, if things aren't the way we want them, but we have the power to change that - it is up to us and we need to get on with it.

A Game of Thrones - War and Peace

Like many, I am hooked on the book & TV series 'A Game of Thrones'. Somewhat differently, I am attempting to take advantage of the liberating character of audio books which allow you to maintain your concentration for longer (because you entertaining the elephant) to listen to some books which I have 'wanted' to read but in reality haven't had the will power. One of those books is 'War and Peace'.

The one is more obviously not based on reality than the other, but the sad truth is that the benefits that come from monopolising violence fall aside when leaders start to play games with who is in control. The glad truth is that our current generations leader's playing of 'the Game of Thrones' is significantly less violent, and more and more people are left to get on with their lives.

I feel pretty lucky to be living in a country with rule of law and no need to stand before someone with a sword to dispense Kings justice if I frustrate them. I am glad the Queen of England is more like a granny. Granny's are cool.

Creative Destruction & Infallible Ships

After reading Fen's comment on `Creative Destruction' I purposefully held back on responding until Stu did.

Fen:

If left to right itself a year ago ,the sub prime problem would have swallowed most financial institutions in the US. Lehmans!!

stu:

You talk about the peculiar belief that we could build something infallible, but in the next paragraph you imply that if we intervened we could stop these bad things from happening.

Of the two scenarios (intervention/non-intervention), intervention seems to me to be a much clearer example of us believing we can make something infallible.

I find the image of the Titanic a useful one. But for different reasons. If the titanic had been save by an intervention... say, a chance passing ship, perhaps another 20 titanics would have been built. Maybe... and this is not a nice thing to think of, the tragedy of the failure saved us. Unsafe ships sink, people re look at the model and build something that works. That is where I think Capitalism is at its best.

Perhaps the lesson here is that we shouldn't be building titanics.

As for the systemic risk of the Financial system, I can't comment. Despite 8 years of studying Finance and Economics, I can't claim to understand how the financial system works. Banks are opaque beasts at best.

This ogre of systemic risk I feel is perhaps an excuse used to justify intervention. Intervention that keeps the Titanic afloat.

Long enough for more titanics to be built and more people to die?

I don't think this crisis is an example of failed Capitalism. I do think it is an example that there isn't any obvious answer as to how to intervene when periods of destruction happen.

Thoughts on Recent Debate

The debate from `Flirting With Communism' carries on on Stuart's blog for those who are interested