Archive for the ‘economics’ Category

The nightmare of artificially low water prices

Wednesday, January 11th, 2006

The Bureaucrat in Your Shower discusses regulation of maximum water flow rate in showers taken by USA residents.

I agree that it would be better to charge higher prices and make water desalination economically viable. Or at least require attachment of water consumption meters to shower heads, so that people can see exactly how much water they are consuming. Water consumption meters together with existing technology would at least allow people to enjoy brief and intense showers while conserving water in the large.

Broadband Internet does not have to be expensive

Monday, December 26th, 2005

In Dharamsala, Dalai Lama’s home in exile, they managed to install a solar-powered wireless mesh at low budget.
Network Watch article
Tibetan Technology Center blog

Bibi Netanyahu and the First Zionist Congress at 1897

Thursday, December 22nd, 2005

Bibi Netanyahu was excellent Minister of Finance, who saved the Israeli economy from the fate of Argentinian economy. Too bad people do not recognize this fact and are angry with him due to cutbacks in handouts to poor people. They do not realize that if Netanyahu hadn’t cut back those handouts, those handouts would have suffered much more serious and less controlled cuts as the Israeli economy collapses.

Bibi Netanyahu was OK as Prime Minister.

However I am not happy with one thing which he failed to accomplish.
This failing is a reason why I and other people do not remember the exact date of the first Zionist Congress at 1897.

You see, Bibi Netanyahu was Prime Minister at 1997. However, he failed to arrange for celebrations to mark 100 years since the first Zionist Congress. The event could be used to explain to the world why Zionism was necessary given the status of the Jews in Europe and Russia at the time. Why Zionism is not as discriminatory as an affirmative action type movement. What problems Zionism set out to solve.

However, since the original Zionist ideology was different in details from Netanyahu’s ideology, budgetary excuses were invoked to avoid celebrating the event.

Ten years later, we have a chance to partially fix this oversight. At 2007, we can celebrate 110 years to the first Zionist Congress. Let’s start preparing for this.

Paul Graham's What Business Can Learn from Open Source

Friday, August 5th, 2005

According to Paul Graham’s What Business Can Learn from Open Source, people are more productive when they work at their own hours in their homes. He uses the examples of software startups versus established software companies.

This leads me to wonder how should businesses, which have a lot of capital invested in equipment, manage the work hours of their employees. The employees have to be in contact with the machines at scheduled times, if the machines are to be operated efficiently and economically. Examples: Intel’s semiconductor FABs with their process developing and monitoring physicists and chemists, airline companies and their pilots and airplane maintenance technicians, car assembly plants.

Maybe it is a significant fact that those businesses, which have expensive equipment, do not lock into uniform office cubicles those employees, who deal with the equipment on daily basis. Sailors on a ship sometimes need to be available 24 hours a day to handle emergencies. They work under different weather conditions. They have shore leaves. Shop workers need to be in the shop during its work hours, because it is when the customers come in. However they do not sit in offices or waste time in meetings. They stand and serve customers, reorder the inventory, or whatever. The “expensive equipment” in their case is the shop’s inventory and fixtures which entice customers to leave their money in the shop.

So it seems that it is only those businesses, which do not need to provide their employees with expensive capital equipment, do lock their employees into a 09:00-17:00 day in boring offices and lots of meetings. It is precisely those companies, for which Graham’s conclusions seem to be true. The work done for those companies could be done from employee’s home at his own hours - the inexpensive equipment (such as a PC with one or two specialized peripherals) could be installed at his home. The profession is not necessarily software development. It could as well be a telemarketing operation (heaven forbid).

Relationships between speculative bubbles and economic depressions?

Wednesday, May 11th, 2005

It seems to me that after each bubble (like the American stock market speculations of the 1920’s or the 1990’s dotcom bubble) , an economic depression ensues.

Possible explanation?

When a bubble happens, several people lose their sound judgment and spend their capital and precious time on nonprofitable business dealings. They waste their time on activities, which do not create food and other life’s needs. Without feeling so, they get into debt, one way or other. Eventually, the bubble bursts and they realize that they didn’t make a profit from the work and capital spent.

Since their capital is gone and time was spent on other than profitable work, they find themselves without money to buy the necessities and luxuries of life. Hence, depression.

Depression ends after people work few years and pay off their debts (both real and virtual) and again have money to spend.

What is the real meaning of money?

Sunday, May 1st, 2005

I have read a book about alternative money schemes. It is called “Funny Money”, written by David Boyle (who has a Web site at ISBN 0 00 653067 2.

The book offers alternative points of view on money - as time, as information, as religion, etc. One of the alternative money schemes has people earn “time-dollars” for helping their elderly neighbors, running their errands, keeping them company, etc. They can pay with “time-dollars” for help to their own grandparents or parents, or even themselves if they themselves are old.

In another section of the book, the author explains that all of us are already exposed to various alternative monies, and he does not mean foreign currency. There are the air-miles handed out by airlines, “points” given by the credit card issuers for purchases (worth in Israel about 1 agora per “point”), etc.

I found two oversights in the book.
One oversight is the Free Software world. You pay for your use of Free Software by adding your pet features to it and allowing the entire world and his niece to use them.
Another oversight is understandable. It was due to the fact that the author wrote his book as an account of his trip in USA, which of course excluded Israel. The book does not cover the economic systems developed in Israeli kibbutzim at intermediate stages of privatization.

The important point I took home from the book is that the meaning of money is - that in exchange of my labor, I get a promise that someone else will work for me sometime in the future, when I need this. Bills or gold bars are concrete manifestations of this promise.

Of course, if someone collects more promises of labor than other people can deliver within reasonable working time, then they would eventually find a way to renege on their promise. This is inflation.

One complicating factor of money as a promise of labor is that an hour of one person’s labor is not equivalent to an hour of another person’s labor. Education, experience, availability of capital equipment (such as hammer and screwdriver or an oscilloscope with voltmeter or a stethoscope or a PC) apply a factor, which can be very large in today’s Hi-Tech based economy. The value also varies over the seasons of a year (or a business cycle). At some times, certain professions are in demand and an hour of their labor is worth more than that what it would be worth at other times.

Misfits and Revolutionaries in Utopia

Saturday, June 5th, 2004

When designing an Utopia, one needs to consider also how people who do not fit in are treated in the Utopia.

One way in which someone may fail to fit in is by being unsuccessful when trying to play by the Utopia’s rules.

In capitalistic regimes, unsuccessful people are poor, hungry, have poor health and bad (or nonexistent) housing. They then have a good reason to try to overthrow the present regime, in the belief that in a better regime they will have higher quality of life.

Another kind of unsuccessful people are those, who do not have the patience and long attention span to build their wealth slowly and on solid base. Such people indulge in various get-rich-quick schemes. They typically become real estate and insurance agents. They start the classical makework businesses. They do not consider the benefit to society when planning their business, only how it can funnel money into their pockets. Such people are behind business scams and Enrons.

A third kind of people are ones, who are better at organizing (i.e. influencing) people than in creating something. They become salespeople and politicians. They are the ones, who might believe that their personal success would come from organizing poor people to overthrow the present regime.

The real test of an Utopia is in how it deals with all those kinds of people and how can they find their opportunities in it without harming other people.

At any case, there will always be some people, who feel very dissatisfied with the Utopian regime, and who would try to overthrow it, or at least get it to change. Such people are necessary for the future evolution of the Utopia and for updating its workings according to the changed times. Those people would be good at pointing out abuses of the establishment and at getting it to change before it is overthrown.

Makework in the gift economy

Saturday, June 5th, 2004

I wrote elsewhere my suggestion that people be paid to study, if they don’t currently have a job.

The gift economy concept fits with the above approach.

When people compete for status from having the greatest & biggest skill set for coping with emergencies, or for having made the best contributions to scientific research, or for having had contributed to the coolest software projects - rather than for having the most expensive car or the biggest house or expensive jewelery - the world would be a better place to live.

Other people complain about makework economics, too

Wednesday, June 2nd, 2004

Makework = what you need when you perpetuate an outdated, pre-automation 1940-era workweek discuss another way to deal with the makework problem.

They propose to “timesize” jobs i.e. reduce the number of hours per work week.

However, they don’t address the real problem: many work hours are not needed anymore to operate and maintain the means of producing the basic human necessities. On the other hand, the only way to sustain an economy in the long range is to reward people in proportion to the quantity and quality of work they put in.

Thus, there is a dilemma.

Using welfare to restructure economy

Saturday, May 15th, 2004

Previously I wrote about the make-work problem of developed countries’ economics. In brief, the problem is that to produce the needs of a population, only small percentage (i.e. much less than 100%) needs to work. Thus, a system is needed to:

  1. Distribute the fruits of the producers’ labor among the entire population.
  2. Discourage people from being freeloaders incapable of doing productive work should this ever be necessary.
  3. Allow people to choose to work more (or make effort in another socially acceptable way) in exchange for more luxurious lifestyle.
  4. Develop and maintain excess capacity to work. This excess will allow the population to recover quickly from disasters.

There are some possible solutions:

  1. The conventional solution is to use advertising to develop artificial demand, and to get people to work to meet this artificial demand. I wrote elsewhere about some consequences of this solution.
  2. A better solution is to let people work in smaller and less efficient production units (factories, farms, or whatever) if they cannot pay for the products of bigger production units. On the other hand, people may find themselves working so much and get so tired that they cannot get ahead by studying.
  3. Even better system is to get people, who don’t have a job, to spend time learning something which will improve their productivity in the future.

The first two solutions are such that no special mechanisms are needed to cause cash to flow in a way which holds them together. This is why several economies implement them. The third solution needs special mechanisms to get goods to flow from the producers to the students, as there is no direct benefit to the producers from the fact that students spend time studying.

Now, I would like to propose a solution to this problem.

Welfare - both taxing of high incomes and handing out of money to people with low incomes - is now an established and accepted part of several economies. The welfare systems do a lot and get abused a lot.

My proposal is to replace existing income-based criteria for getting welfare by willingness to spend time studying something new.

Under this proposal, anyone, who did not (or was too lazy to) find a job, can get money for studying something. Welfare applicants would be evaluated to get a recommended course of study. However, they will then be free to study whatever they wish, at least some of their time.

Single mothers would be provided with services which look after their children while they study. People, who have learning disabilities, will be catered to by special methods of instruction, matched to their preferred studying style.

Just by studying, people would be able to get a minimum level if income. Certain subjects, which are deemed to be in demand, may carry higher pay tag. People, who study those subjects, will get more money while they study them.