Tuesday, 21 October 2008

Popular Subscription, LPG and Free Software

In the remarkable book "White Mars" by Brian Aldiss (with Roger Penrose) there is a discussion of a concept called "Popular Subscription". I quote:

"We are conditioned to subscribe to the myths of the age. We hardly question the adage that fine feathers make fine birds, or that young offenders should be shut up in prisons for a number of years until they are confirmed in misery and anger. When witch hunts were the thing, we believed in witches or, if we did not believe, we did not speak out, for fear of making ourselves silly or unpopular."

I was at my local LPG filling station, in Lye, the other morning and was chatting with the guy who does the conversions and another owner of an LPG converted car. We were trying to understand why more people did not convert their cars to LPG, when it will pay for itself in abut 2 years and there after almost halve the fuel costs. For myself, I bought a 20 year old Volvo estate, in really excellent condition, for £900 and then paid £1,500 to convert it to LPG. The car has a good decade's life in it and now costs me about 11p a mile, for a luxury car that will carry a massive load - which I need for my work. We could not understand how people could not see the logic of doing the same. Aldiss' concept explains it pretty well, it is that most people cannot consider alternatives to the common views. Everyone runs their car on petrol, so that must be the thing to do. I explained my work with Free Software, and said I faced the same problem. I explain that Free Software is:
  • Free - as in without cost;
  • Reliable - very well maintained;
  • Cheaper - in that you can often run it on older hardware;
  • Sustainable - if you need a specific piece of software, you can maintain it.
I sometimes wonder if I'm wasting my breath. Yes, I'm managing to make a living out of supporting GNU/Linux and the like, but most people just won't get the idea. Just like most people won't get the idea of LPG conversions for their cars. This is not a conspiracy, it's just a cock-up of society that constructs people who conform in their thoughts - they just find it really hard to listen to new ideas.

This morning I filled up again, and when I wandered in to pay, I was brought to a halt. There was a Toyota Prius in for conversion. I had a long chat about the conversion, which was only the second that they knew of in the UK. Now I'm not certain about the Prius, particularly as the key to being green is not driving, but this was interesting. I reckon that it will cost about 4.5p per mile in fuel. Now that is cheap! Is it cheap enough? We not for me, as I reckon that over the five year term my old Volvo will cost me considerably less (about a third of the total cost of ownership).

Originally published on my consultancy blog.

Tuesday, 14 October 2008

Enough is enough

I still wear my "Make Poverty History" wrist band. I've had to repair it with superglue and I'm pretty sure that it will not last until poverty has been eradicated. Here we are three years later with Blog Action Day on poverty....

We all know the cause. As Ghandi so accurately put it:

"There is enough for everybody's need, but not enough for anybody's greed."

The tragedy goes on. Our political leaders have no vision, think in the 4 minute to 4 year time scale and lie to us repeatedly. And then we vote in replacements who also lie to us.

OK, so we all know the cause, what about...

a solution

We need to change the game. Capitalism is based on exponential growth. A mere 2% growth per annum, leads to a more than 7 fold increase in the economy in a century. The problem is, just like the metaphorical boiled frog, it seems like a steady sustainable growth. But assuming that constant 2% growth, that means we are adding the entire economy of 200 years ago each year. Alright, there was only a population of 11 million in the UK then, but that's still a large increase.

we need to say enough is enough

We can then focus on moving to equality, and inherently tied into this is moving towards local food production - because the only essential daily consumption is of food, heating and drink. Shipping food across the world is unnecessary and wasteful. We need to adopt a simpler life style. Long distance travel should be a rare event.

and if we don't

Then we can be sure that things will go badly wrong for everyone. The bald options are...

equality and enough or a new Dark Age.

Sunday, 12 October 2008

Stupidity, theft and incompetence

Warning, this is likely to be a rant, but I hope an informed one.

Our leaders, political, financial and hereditary, have no ability to deal this the current economic crisis. This is obvious from their statements and purely reactive behaviour. They do not understand what is going on, let alone how to solve it. This is my analysis of what is going on, followed by my recommendation for the way out.

Fractional reserve banking is the problem. It allows the generation of pseudo money by those to whom it is entrusted. The banks take in a 1(insert your currency unit here) and mark it as yours in their books and then promptly lend out roughly 87.5% of it. This is credited to someone else's bank account, who then pays it to a third party. The bank takes in 0.875(insert your currency unit here)... OK the net effect is a multiplier effect of eight to one, so every (insert your currency unit here) that is issued by the state becomes 8 by the time the process is finished. Now the cash money supply has been growing spectaculaly for quite a long time. This means that money has been being generated at a spectacular rate. Meanwhile, back at the exchanges, people have been putting huge nominal values on their shares. Remember, until these shares are sold this money is not realised. So the people holding the shares think they have something that is valuable. This is not normally an issue, but consider the following...

British Airways announced a pension deficit of £1.5 billion, as I write this, its market capitalisation is £1.2 billion. I think this means it is bankrupt. Worse, this deficit is probably much worse than this as much of its pension fund is in shares. This probably applies to a substantial proportion of the stock market.

What is the reaction of our leaders to this type of problem? To buy or prop up the banks. They won't say this, but they are electronically printing the money to do this. The UK government, for example, has waved around £500 billion saying that they will use that much money to support the banks. By my estimates this is around one-quarter of the entire M4 money supply! If you listen to them they are saying that they are 'borrowing' it. I simply do not believe them - why? - because one of the problems at the moment is that no-one is lending money. If they are borrowing it, it is from the future. Now, remember that 8 times multiplier. By the time that comes into play, they have offered to almost triple the money supply. At the moment, the banks are asking for around £35 billion. Just multiply that by 8 and that is about one-tenth of the M4 money supply. To put this context, it is almost two-thirds of the cash money supply (M0).

This is going to cause inflation, at the best, and at the worst we could be on the edge of the government just keeping on printing money. Why is this a solution for them? Well, if we have a serious bout of inflation the following happens...
  • Debts effectively reduce;
  • House prices can rise again (though slower than the rate of inflation);
  • Money purchase company pensions schemes are saved.
Winners - Those with debts.
Losers - Those with savings or on fixed incomes.

This is incredibly risky. We could end up with a stagflation, where the economy is stagnant (or shrinking) and the value of the currency falling. Alternatively, it could fail to restart the economy, and we enter a period of deflation. What does this mean?
  • Debts effectively increase;
  • Repossessions rise as house prices continue to fall;
  • Money purchase company pensions are doomed.
So, what would I recommend?

The whole game is flawed. It is inherently unstable and unsustainable. We have to change the rules of the game. If I were in charge, I would...
  • Move towards an agricultural society.
  • Move to a co-operative rather than corporate business model.
  • Devolve decision making.
  • Require banks to become mutual societies.
  • Reduce demand for everything.
  • Evaluate decisions on a 1,000 year time scale, not a 4 year one.
We must move towards only doing those things we need - we cannot have a society that encourages greed and consumption, we need one that encourages happiness.