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Posts Tagged ‘economics

“What is missing from the policy analyst’s tool kit – and from the set of accepted, well-developed theories of human organization – is an adequately specified theory of collective action whereby a group of principals can organize themselves voluntarily to retain the residuals of their own efforts”*…

Locals at the Marienfluss Conservancy in Namibia meet to discuss conservation

Further to yesterday’s post on privacy as a public good, a revisit of an apposite topic, the destructively-problematic concept of “The Tragedy of the Commons“…

In December 1968, the ecologist and biologist Garrett Hardin had an essay published in the journal Science called ‘The Tragedy of the Commons’. His proposition was simple and unsparing: humans, when left to their own devices, compete with one another for resources until the resources run out. ‘Ruin is the destination toward which all men rush, each pursuing his own best interest,’ he wrote. ‘Freedom in a commons brings ruin to all.’ Hardin’s argument made intuitive sense, and provided a temptingly simple explanation for catastrophes of all kinds – traffic jams, dirty public toilets, species extinction. His essay, widely read and accepted, would become one of the most-cited scientific papers of all time.

Even before Hardin’s ‘The Tragedy of the Commons’ was published, however, the young political scientist Elinor Ostrom had proven him wrong. While Hardin speculated that the tragedy of the commons could be avoided only through total privatisation or total government control, Ostrom had witnessed groundwater users near her native Los Angeles hammer out a system for sharing their coveted resource. Over the next several decades, as a professor at Indiana University Bloomington, she studied collaborative management systems developed by cattle herders in Switzerland, forest dwellers in Japan, and irrigators in the Philippines. These communities had found ways of both preserving a shared resource – pasture, trees, water – and providing their members with a living. Some had been deftly avoiding the tragedy of the commons for centuries; Ostrom was simply one of the first scientists to pay close attention to their traditions, and analyse how and why they worked.

The features of successful systems, Ostrom and her colleagues found, include clear boundaries (the ‘community’ doing the managing must be well-defined); reliable monitoring of the shared resource; a reasonable balance of costs and benefits for participants; a predictable process for the fast and fair resolution of conflicts; an escalating series of punishments for cheaters; and good relationships between the community and other layers of authority, from household heads to international institutions.

When it came to humans and their appetites, Hardin assumed that all was predestined. Ostrom showed that all was possible, but nothing was guaranteed. ‘We are neither trapped in inexorable tragedies nor free of moral responsibility,’ she told an audience of fellow political scientists in 1997…

Far from being profoundly destructive, we humans have deep capacities for sharing resources with generosity and foresight. Michelle Nijhuis (@nijhuism) explains: “The miracle of the commons.”

Elinor Ostrom (who received the 2009 Nobel Prize in Economics for her work)

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As we come together, we might recall that it was on this date in 1908 that a Conference of Governors, convened by President Theodore Roosevelt and focused on the issue of conservation, opened in Washington. The brainchild of Gifford Pinchot, Chief Forester of the U.S., it was attended by the governors of the states and territories, the members of the Supreme Court and the Cabinet, scientists, and other national leaders. Seven days later, the governors adopted a declaration supporting conservation. One result was The National Conservation Commission, appointed by Roosevelt later that year, which prepared the first inventory of the natural resources of the United States with chairmen for water, forests, lands, and minerals. The conference also led to annual governors’ conferences, and the appointment of 38 state conservation commissions.

Roosevelt and Pinchot

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“Everyone should be able to do one card trick, tell two jokes, and recite three poems, in case they are ever trapped in an elevator”*…

Two things make tall buildings possible: the steel frame and the safety elevator. The elevator, underrated and overlooked, is to the city what paper is to reading and gunpowder is to war. Without the elevator, there would be no verticality, no density, and, without these, none of the urban advantages of energy efficiency, economic productivity, and cultural ferment. The population of the earth would ooze out over its surface, like an oil slick, and we would spend even more time stuck in traffic or on trains, traversing a vast carapace of concrete. And the elevator is energy-efficient—the counterweight does a great deal of the work, and the new systems these days regenerate electricity. The elevator is a hybrid, by design…

The history, design, economics, and psychology of the technology that made modern cities possible– the lives of elevators: “Up and Then Down.”

* Daniel Handler

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As we press the button, we might recall that it was on this date in 1527, during the War of the League of Cognac, that an estimated 20,000 mutinous troops of Charles V, Holy Roman Emperor (angered over unpaid wages) carried out the Sack of Rome (which was then part of the papal States). For three days, they pillaged the city, grabbing valuables and demanding tributes. They overpowered (and killed most of) the Swiss Guard, and took Pope Clement VII hostage (in Castel Sant’Angelo); he was freed only after a hefty ransom was paid. Benvenuto Cellini, witnessed the Sack and described the it in his works.

In the aftermath, Rome– which had been the center of Italian High Renaissance culture– never recovered its momentum. Indeed, many historians consider the Sack of Rome the end of the Renaissance.

The Sack of Rome, by Johannes Lingelbach (17th century)

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“What is it that happens in an inflation? The unit of money suddenly loses its identity.”*…

Today the Bureau of Labor Statistics releases its Consumer Price Index for the month of March. Here is some important context to help understand the figures…

When inflation numbers come out on April 13, they will likely look very high. And measured annually, inflation will probably rise further over the next few months. These headline numbers will be used to argue against the American Jobs Plan and future infrastructure investments, and even to advocate austerity.

But this response will be wrong, for three reasons:

1) The high year-over-year inflation of the coming months will reflect the falling prices of a year ago, whether or not prices are rising more rapidly today.

2) Achieving the Federal Reserve’s price-stability goals requires a period of above-trend inflation; if inflation, correctly measured, rises modestly in the coming months, that’s a good thing.

3) Even if inflation is a genuine problem, scaling back infrastructure investment is not the solution. It might even make the problem worse…

The full explanation at “The Illusion of Inflation: Why This Spring’s Numbers Will Look Artificially High.”

(Image above: source)

* Elias Canetti, Crowds and Power

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As we steel ourselves, we might spare a thought for James Buchanan “Diamond Jim” Brady; he died on this date in 1917. A businessman and celebrity in the Gilded Age, he made his fortune semi-scrupulously in the rail industry and less scrupulously in stock trading and fixed bets.

His appetites for indulgences of all sorts were legendarily huge; but his nickname was a nod to the main among them– to his obsession with jewels, especially diamonds. He amassed stones worth $2 million (equivalent to approximately $61,464,000 in 2019 dollars).

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“To pay attention, this is our endless and proper work”*…

The Attention Economy…

“Attention discourse” is how I usually refer to the proliferation of essays, articles, talks, and books around the problem of attention (or, alternatively, distraction) in the age of digital media. While there have been important precursors to digital age attention discourse dating back to the 19th century, I’d say the present iteration probably kicked off around 2008 with Nick Carr’s essay in the Atlantic, “Is Google Making Us Stupid?” And while disinformation discourse has supplanted its place in the public imagination over the past few years, attention discourse is alive and well…

Attention discourse proceeds under the sign of scarcity. It treats attention as a resource, and, by doing so, maybe it has given up the game. To speak about attention as a resource is to grant and even encourage its commodification. If attention is scarce, then a competitive attention economy flows inevitably from it. In other words, to think of attention as a resource is already to invite the possibility that it may be extracted. Perhaps this seems like the natural way of thinking about attention, but, of course, this is precisely the kind of certainty [Ivan Illich] invited us to question…  

His crusade against the colonization of experience by economic rationality led him not only to challenge the assumption of scarcity and defend the realm of the vernacular, he also studiously avoided the language of “values” in favor of talk about the “good.” He believed that the good could be established by observing the requirements of proportionality or complementarity in a given moment or situation. The good was characterized by its fittingness. Illich sometimes characterized it as a matter of answering a call as opposed to applying a rule. 

“The transformation of the good into values,” he answers, “of commitment into decision, of question into problem, reflects a perception that our thoughts, our ideas, and our time have become resources, scarce means which can be used for either of two or several alternative ends. The word value reflects this transition, and the person who uses it incorporates himself in a sphere of scarcity.”

A little further on in the conversation, Illich explains that value is “a generalization of economics. It says, this is a value, this is a nonvalue, make a decision between the two of them. These are three different values, put them in precise order.” “But,” he goes on to explain, “when we speak about the good, we show a totally different appreciation of what is before us. The good is convertible with being, convertible with the beautiful, convertible with the true.”…

Your Attention Is Not a Resource“: L.M. Sacasas (@LMSacasas) wields Illich to argue that “you and I have exactly as much attention as we need.”

(image above: source)

* Mary Oliver

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As we go for the good, we might recall that it was on his date in 1965 that NASA launched Hughes Aircraft’s Early Bird (now known officially as Intelsat I) into orbit. It was the first communications satellite to be placed in synchronous earth orbit– and successfully demonstrated their (subsequently explosively growing) use for commercial communications.

“Early Bird” being prepared

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“If people had understood how patents would be granted when most of today’s ideas were invented, and had taken out patents, the industry would be at a complete standstill today.”*…

From the Wright Brothers’ patent filings (source)

… It’s illuminating to point out that all three transformative technologies of the twentieth century – aviation, the automobile, and the digital computer – started off in patent battles and required a voluntary suspension of hostilities (a collective decision to ignore patents) before the technology could truly take hold.

The Wright brothers won every patent case they fought, and it did them absolutely no good. The prospect of a fortune wasn’t what motivated them to build an airplane, but ironically enough they could have made a fortune had they just passed on the litigation. In 1905, the Wrights were five years ahead of any potential competitor, and posessed a priceless body of practical knowledge. Their trade secrets and accumulated experience alone would have made them the leaders in the field, especially if they had teamed up with Curtiss. Instead, they got to watch heavily government-subsidized programs in Europe take the technical lead in airplane design as American aviation stagnated.

If you are someone who believes that the Internet and computer software are a transformative technology on a par with aviation, you may find it interesting to note that there is now a patent cease-fire in effect in the world of software, the occasional high-profile infringement case notwithstanding. The reason for the cease-fire is simple: if companies like IBM, Xerox, and Sun were to begin fully enforcing their patent portfolios, it would mean an apocalypse of litigation for all software developers. Everyone understands that the health and growth of the Internet are contingent on ignoring the patent system as much as possible.

At the same time, more patents are being granted than ever before, for broader claims, and with an almost complete disregard for prior art. Entire companies – and not just legal firms – are basing business models on extracting money from the patent system without actually creating any products. And the boundaries of patent law are expanding. For the first time in history, it’s possible to patent pure mathematical ideas (in the form of software patents), or even biological entities. The SARS virus was patented shortly after being isolated for the first time.

But if the patent system doesn’t even work for the archetypal example – two inventors, working alone, who singlehandedly invent a major new technology – why do we keep it at all? Who really benefits, and who pays?…

Learning from (the unhappy experiences of) the Wright Brothers– Maciej Cegłowski explains why the U.S. patent system is counter-productive: “100 Years of Turbulence.” Eminently worthy of reading in full.

See also, Bruce Perens: “Software Patents vs. Free Software.”

* Bill Gates, Challenges and Strategy Memo, Microsoft, May 16, 1991

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As we apply our intellects to intellectual property, we might recall that it was on this date in 1976 that Steve Jobs, Steve Wozniak, and Ronald Wayne signed a partnership agreement that established the company that would become Apple Computer, Inc.– a company all about the IP– on January 3, 1977.

Wayne left the partnership eleven days later, relinquishing his ten percent share for $2,300.

Apple in Steve Job’s parents’ home on Crist Drive in Los Altos, California. Although it is widely believed that the company was founded in the house’s garage, Apple co-founder Steve Wozniak called it “a bit of a myth”. Jobs and Wozniak did, however, move some operations to the garage when the bedroom became too crowded.

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