Steve, Yo's-
This is off the top of my head & with less than adequate time for
thought, just before I go AFK for a bit, but:
Yes, there are economists working on valuing "ecosystem services," and
that seems to be having some effect, when, for example, a dollar value
is placed on wetlands or forests.
A potentially simpler approach is to just forbid externalities entirely,
or require internalization of externalized costs (e.g. "clean up your
mess or pay someone else to do it, but no walking away from it"). This
has the benefit of also being consistent with the libertarian principle
of voluntary transactions among consenting adults: externalities are
imposition of a transaction cost on third parties without consent. This
principle works across the ideological spectrum.
In general, "nature builds with few & simple rules", and humans are well
advised to do likewise. Regulatory Rube Goldberg contraptions are
hardly as useful as straight-up statute laws such as "externalizing of
costs is forbidden, and the fine shall be quadruple damages."
Growthism:
The fact that human economies have not reached a steady state before, is
not proof that they can continue indefinite growth on a finite planet.
"Past performance is no guarantee of future yields."
Or to put it differently, if you can find a way to map an infinite plane
onto the surface of a Euclidean solid, I'll find a way to get you
nominated for a Field Prize (the math equivalent of a Nobel).
Exponential growth always appears as if it can continue forever, right
up to the point where it hits the wall. And every species eats right up
to the limit of its food supply, and then has a dieoff. Yes, that would
be oscillation and chaotic behavior: waves of mass death that make WW2
and the Holocaust look like warm-up exercises.
Now we can either surrender to the proverbial forces of nature on this,
or we can use our brains and our free will to create an economic system
that doesn't behave like bulimia.
Albert Einstein and Edward Teller both agree: the exponential function
is humanity's most dangerous math.
Investing vs. speculating:
Speculating is short-term betting on financial transactions without
producing tangible goods and services. It's parasitic and predatory,
and should be strictly limited by law, and taxed into insignificance.
Speculators are an example of what I call "dissipative structures type
B" (DSBs) that feed off entropy gradients in such a manner as to export
an inflated entropy load to their ambient environments. (Contrast to
"dissipative structures type A" (DSAs) that don't foist an excessive
entropy load on the ambient.)
Investment is also a "bet" on the future, but it works on longer time
scales and it produces tangible goods and services.
Speculators care about the length of their brokerage's Ethernet patch
cords and fiber optic cables in inches, because every inch at c counts
in their microsecond-trading universe.
Investors could care less about the speed of electrons in patch cords or
photons in fiber, because they're in it for the long haul.
Manipulation is the use of borderline-illegal means to influence markets
and outcomes. Borderline-illegal ought to count as malfeasance.
More later, I gotta scoot...
-G.
======
On 13-05-06-Mon 10:55 AM, Steve Berl wrote:
Interesting. A few fine points that seem to be bugging
me though, and
some terms that need to be defined better.
Seems to me that you can factor the "ecological sustainability" into
the more traditional models by assigning a value to "ecosystem
services" in just the same way you can assign value to real estate or
other natural resources. The way a wetland filters storm water runoff
or protects a coastline from hurricane damage can be assigned a value
in whatever currency you choose.
I have to object to the statement "the ultimate outcome of an economy
is necessarily a steady state". This is clearly not true based on both
the past history of human society, and an understanding of system
theory in general. There are plenty of systems that never reach a
steady state. Some systems oscillate and some systems have chaotic
behavior. Systems that converge to a steady state are sort of a
special case, and I see no evidence that human economic systems are
one of those cases.
Coming at it from a systems engineering point of view, I think that
"investing" or "speculating" means that someone believes that they
have a model which can predict future behavior of the system based on
some known inputs, and chooses to use that model to bet on some future
outcome. I'm not sure exactly what the difference is between investing
and speculating. Perhaps someone can help flesh that out?
"Manipulation" seems to mean that not only do I have a model for the
future behavior of the system based on its inputs, but that I also
have control over some of the inputs.
steve
On Sun, May 5, 2013 at 9:38 PM, GtwoG PublicOhOne
<g2g-public01(a)att.net <mailto:g2g-public01@att.net>> wrote:
Sonja, Rabbit, Ryan, and Yo's-
Re. alternative currencies: I've given a lot of thought to this
subject over the years.
A currency is not only a transaction medium but a measure of
wealth in an economy: real resources that have economic value.
There are basically three types of resources: natural resources,
labor, and capital.
Natural resources include: Renewable energy sources (solar, wind,
geothermal, tidal, biomass), non-renewable energy sources (fossil
fuels, uranium, thorium), minerals (nonliving matter that's taken
from the ground), and agricultural products such as food.
Labor includes: casual labor, unskilled and skilled occupations,
and licensed occupations.
Capital includes: natural capital (land, monetized resources),
industrial capital (e.g. tools, plant & equipment), inventoried
goods, and financial capital (equity and debt instruments).
I'm inclined to treat real estate as a limited natural resource
(land) or as natural capital generally. Today it is often treated
primarily as a concretized form of financial capital, which leads
to speculative bubbles such as the one that produced the present
depression.
A sustainable economy, in the purely economic sense (ecological
sustainability is a different axis of measurement), is one that is
largely resilient against manipulation and fraud, and boom and
bust cycles. Boom & bust economies are like bulimia: binge &
barf, inherently unhealthy and harmful.
Ecological sustainability isn't dealt with by conventional
economics, which works on a "flat Earth" model: as if the Earth is
an infinite flat plane. This is the most important fatal flaw of
conventional economics, and it leads to the myth of infinite
growth. The most important foundation for a new economic paradigm
is the recognition that the Earth is not flat, not an infinite
plane, but is a Euclidean solid with a finite surface and
therefore with finite resources. From this, the rest follows.
From this, two other things follow that are "taboo" in
conventional economics: the ultimate outcome of an economy is
necessarily a steady state, that can be anywhere on a spectrum
from the most egregiously exploitative (e.g. a slave economy with
a hereditary aristocracy) to the most equalitarian ("from each
according to ability, to each according to need"). The most
likely outcome of a steady-state economy is the inexorable demand
for economic justice or "distributional equity," with its center
of gravity in a sustainable middle class, and viable paths to
economic sustenance for all.
The role of currencies in building economic resilience is: a) to
provide negative feedback loops in the economy, that prevent the
positive feedbacks that cause booms and busts, b) to minimize the
occurrence of fraud and manipulation, and c) to provide isolation
or compartmentalization that enables "quarantine" of economic
damage: such as preventing a local economic crisis from going
global, and preventing a global economic crisis from affecting
every locality.
Currencies, with those points in mind:
A viable economy would include three levels of currency: global,
national, and local/regional. The global currency handles
transactions between nations. The national currency handles
transactions between localities within each nation-state. And the
local/regional currency handles transactions that occur wholly
within the scope of local/regional economies.
The ideal global currency would be denominated in energy, for
example in joules as Rabbit pointed out. Ultimately, energy is
the foundation of all economic transactions: the global common
denominator.
National currencies tend to be based on arbitrary measures of
value, whether gold or the credit of national governments. But in
general they tend to represent the wealth of nations, plus or
minus the effects of speculation. If I was setting up a national
currency from scratch, I would value it in terms of natural and
industrial capital: real capital wealth.
There's been much discussion of the proper foundations for local
currencies. In the Bay Area there is a group that is working on
the premise of a local currency denominated in the food production
of local agriculture. But one of the most successful local
currencies, "Ithaca Hours," is based on the value of local labor.
To my mind this is correct: because labor is the one resource that
is reliably available in every local economy.
I've studied the Ithaca Hours system in some depth, and I'd
suggest anyone who's interested in local currencies do likewise,
starting with a keyword search.
The major value of a local currency to any local peoples (such as
ourselves) is that it enables us to maintain functioning economies
when the global or national economies are in crisis. By analogy
it's like having rubber tires and shock absorbers on a bus, to
insulate the riders from bumps and potholes along the road. All
other factors equal, you don't want to ride on a bus where a bad
road translates to a bone-crunching ride.
Even where many or most of our transactions are not local, the
ability of a local currency to insulate certain parts of a local
economy from national and global economic crises, translates to
the difference between having to tighten your belt vs. not being
able to eat, or having less work vs. having no work.
Re. the IRS:
The question always comes up: what does the IRS have to say about
this? As it turns out, the IRS takes a practical attitude toward
local currencies. They have two requirements, that are entirely
reasonable:
One, that the exchange rate between a local currency and the US
Dollar must be public, must be arguably reasonable, and must not
subject to insider manipulation.
Two, that income earned in local currency must be declared for
purposes of income tax, translated to US Dollars at the current
exchange rate, and the taxes paid in US Dollars.
If we do those things, we're good to go.
Re. Bitcoin:
I'm highly skeptical of Bitcoin, precisely because it has
demonstrated a tendency toward bubbles and busts, speculation, and
manipulation by questionable actors. These characteristics do not
make for a stable holder of wealth or a stable medium of
transactions.
The primary usefulness of Bitcoins is that they facilitate
anonymity of online transactions. This is all well and good, but
can also be accomplished by creating online financial institutions
that anonymize transactions made in US Dollars or other
currencies. By analogy think of Gift Cards, that are issued by
Visa and Mastercard, but that aren't tied down to your legal name.
Anonymization without speculation & manipulation:
In the type of institution I have in mind, account holders would
have accounts in their legal names as they do at any bank or
credit union. Transactions would occur in two steps: one
occurring in your personal or business account, and one occurring
in the institution's account.
For example you buy something online. A payment goes from your
account to the institution's common account, and another payment
goes from the institution's common account to the person or
company you're paying. The latter payment is anonymized: it is
made between the institution and the person being paid, and
assigned a transaction number that you and they can use to track it.
For example you sell something online. The buyer makes a payment
to the institution's common account and obtains a transaction
number and gives you that number. You use that transaction number
to move the payment from the institution's common account to your
personal account.
The question has been raised as to whether this could be used for,
or seen as, a form of money laundering. I believe the answer is
No, because the institution itself would maintain records of every
transaction, and these records would (only) be accessible for
lawful uses such as investigating crimes or as evidence in civil
lawsuits. The important difference is that the transaction
records would be private aside from those two exceptions (criminal
and civil cases), and not be accessible to Big Data, so your
purchases of (for example) consenting adult porn, or your reading
habits in general, wouldn't become part of your dossier.
As far as Porn-O-Mat or Amazon, Ebay or iTunes, or any of those,
are concerned, they are doing business with another business
entity (the Cyberia Credit Union or whatever we call it). They
have no need or desire for a "person name" for every transaction,
any more than
Staples.com does when they sell office supplies to a
company that's an incorporated entity. They are not going to turn
down transactions just because they don't have the legal
person-name of the soft squishy human body that sits in the
hypothetical office cubicle for which the office supplies (or
porn, best-sellers, flea-market goods, songs, etc.) have been
bought.
In other words, we can get the most important benefit of Bitcoin,
without sticking our hands in the shark- and piranha-infested
waters of speculation and sabotage that have become Bitcoin's
habitat.
So: is anyone here interested in creating a labor-based currency,
and/or an online credit union for anonymous transactions?
-G.
=====
On 13-05-05-Sun 12:09 PM, Sonja Trauss wrote:
+1
On Sun, May 5, 2013 at 11:53 AM, Rabbit <rabbitface(a)gmail.com
<mailto:rabbitface@gmail.com>> wrote:
Someone was proposing a currency denominated in joules which
would represent the ability to generate that much energy in
the future.
https://medium.com/armchair-economics/183c2ad47b50
The exchange rate between Bitcoiny CPU cycles and joules
would be pretty straightforward to figure out.
But: would this be more prone to speculation and bubbles
since it's based on our estimation of what will happen in the
future? And what happens when everyone tries to cash in
their joules at the same time?
On Sun, May 5, 2013 at 10:44 AM, Ryan Bethencourt
<ryan.bethencourt(a)gmail.com
<mailto:ryan.bethencourt@gmail.com>> wrote:
Hi All,
I've been reading/following the whole evolution of
bitcoins as currency and I'm still a bitcoin skeptic (I
prefer potential rather than spent processing power :) ).
So I was curious, has anyone in the past tried to create
a virtual currency based on a resource value, like future
usage of CPU time (i.e. $1 would equal an equivalent
amount of electricity and hardware wear and tear for x
number of CPU cycles, which could be exchanged either for
the cycles, at a super computer bank or for other
currencies)?
To me it seems that bit coin is like a spent CPU resource
rather than a future resource and by flipping the
equation to future rather than past value a currency
based on this type of commodity would be useful... any
thoughts?
R
--
Ryan Bethencourt
Tel: (415) 794 6463 <tel:%28415%29%20794%206463>
ryan.bethencourt(a)gmail.com
<mailto:ryan.bethencourt@gmail.com>
www.bamh1.com <http://www.bamh1.com>
www.linkedin.com/in/bethencourt
<http://www.linkedin.com/in/bethencourt>
www.logos-press.com/books/biotechnology_business_development.php
<http://www.logos-press.com/books/biotechnology_business_development.php>
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