Piles (part 1)

When we hear about the amount of money that we as a nation have lent to banks or the value of the total national debt, we struggle to comprehend the sums of money involved. This tends to have the effect of trivialising the amounts of money involved, they simply become conceptually small again, because in order to be able to deal with them we tend to remove the zeros. On top of this, when amounts of money can be related to us personally, we tend to concentrate solely (and understandably) on the part of the transaction that concerns us, rather than using our part of the transaction to contextualize the whole transaction. If we take a long haul flight, we might pay £850 (assuming it's not peak season), and our ticket will be one of 150 on that flight (150 x 850 = £127500), and if we add in some business class (20 x 2500 = £50000) and some first class (10 x 6000 = £60000) then we can pretty much visualise what a quarter of a million pounds looks like: like 180 people eating unfinished baby food, watching three month old films and breathing each other's recycled farts (obviously, some of them get more space to do this in than others). Once you fill the sky with these things, it becomes a very valuable place, but the sums of money involved quickly become incomprehensible again. If you look up at the sky and think 'two hundred and fifty thousand pounds (£250,000)' every time you spot an aeroplane, you'd lose count very quickly. This dissociation is both a symptom and a necessity of the systems of large scale capital: being in possession of large amounts of money obtained from the payments of a large number of people is only morally acceptable if we are entirely detached from the mass of humanity that lies behind the money.
Of course an amount of upscaling is required for large-scale economies to work, but the dislocation between the source of income and its output that this creates allows for inefficient distribution of the wealth generated. Indeed, as the systems and networks that the global economy relies on improve, it increasingly appears that the only reason for the traditional large scale corporate structures is to justify the payments of those at the top. The skills involved in the provision of any upscaled service cannot reside with one excessively remunerated person, so why do they get paid for making largely ineffectual decisions about 'direction', 'strategy' and other nebulous concepts? The only reason I can think is that they have persuaded us of the importance of what they do. In the past it may have been the case that the benefits of scale only came from behemoth companies with legions of superremunerated executives at the top dealing with their corporate affairs, but with the infrastructure that exists now this should no longer be the case. Smaller companies should be able to pool their specialities to form lose partnerships of common interest that would have the advantages of scale that large corporations currently do. Such networks could be formed and funded on a project by project basis. Obviously there are issues of joint liability that would need to be clearly defined at the start to avoid the sort of blame-shifting that can happen in large companies when something goes wrong, but the infrastructure required exists. So why isn't this happening? The main issue is one of perception: ask any young silicon valley/roundabout entrepreneur what their goal is and it will invariably be founded on an idea that they may one day be as unimaginably wealthy as the pioneers of the commercial computer technology: Bill Gates, Steve Jobs or Mark Zuckerberg. Did you spot the odd one out? Mark Zuckerberg is not like Bill Gates or Steve Jobs. The latter two men found themselves at the head of multinational companies due to an overriding passion for their subject and after years of work. Mark Zuckerberg had one idea and almost instantly saw its potential to make him a lot of money as event software. There is no sense in which facebook was ever intended to bring benefit to humanity; Zuckerberg never had any of the early revolutionary zeal of Jobs or Gates, he wanted to fastrack to the executive boardroom. Sure, he made the early years like being at college, but that's because he was at college and so was his market. Zuckerberg unfortunately embodies the dreams of the people who could so easily change the way our society functions: at the first opportunity, sell out.
With the strange abstraction that comes from very large sums of money comes the assumption that, as we cannot really comprehend such things, they must be unimaginably good. Whilst we all dream of winning the lottery we will never move away from this flaw in our culture; whilst we believe that the only way to be truly happy is to have considerably more than everyone else, we will have a society where there are a sizeable minority with much more than everyone else. The only way to comprehend the big numbers is to think of the individual stories that make them up. Think of each of the people on the aeroplane and how each of them got there: the pensioners who have waited all their lives to make that trip; the young couple looking for a new life who have bought a ticket on credit and hoping their future will pay down the debt; the businessman chasing the dream of glamorous business travel. The stories quickly pile up and become overwhelming in themselves and we realise that it is money itself that allows us the separation from those who contribute to our wealth. The idea of owning slaves is reprehensible to almost everyone, yet many people have no problem putting a price on the value of another person if that transaction is indirect. The fact of money allows us to make a commodity out of anything without any associated guilt; it allows us to launder association and context, so that commodity may be sought from the ills of the world without any associated moral taint. I am not saying that money is the cause of all of the world's ills, but that it is the means by which we most easily allow ourselves to ignore them.
We don't need to burn all money and return wholesale to a barter economy, but maybe we should think about the true cost and value of the goods and services we buy. If we think about it as buying a segment of someone's life then maybe we'd be more concerned. Then again maybe we just don't care, maybe we're too selfish care, maybe we'd rather just think about all those people's lives as so many numbers.

Passing The Buck

Someone somewhere may well read this post and shake their head with exasperated condescension, or sigh at how naive I am to wish the world to be such a simple place. However, I am going to attempt to argue that just such people are very much part of the problem. But I am getting ahead of myself: first to set out my stall.
I had a little Twitter rant the other day about bond traders and their seemingly short sighted desire to cause a sovereign debt crisis. The argument being that by increasing the price of sovereign debt, they are increasing the chances of a sovereign debt crisis, which will mean they are less likely to see a return on their investments. Obviously, they won't lose out, as they will have bought credit default swaps to insure against a country going bust. And of course the price of those credit default swaps goes up the greater the risk is of a country going bust. Obviously, insurance companies have to price their products according to risk, so they get the credit ratings agencies to calculate the risk of a country going bust for them. The credit ratings agencies look at the amount of debt a country holds and what the bond traders are charging for that debt and decide on the risk of a default. So it is a self-perpetuating cycle, that amplifies the jitters of those involved into massive gains or losses, potentially ruining the economies of nations. Of course those involved in the process don't make massive losses, they have made sure that there is no chance of that. However there are losses and gains built into the system, so who pays for them? You do, you schmuck. Not only do your taxes go into paying back the money that your government has borrowed, but the money that was lent in the first place came from your pension scheme, or ISA, or other savings scheme. So you fund the system at both ends, yet the amount of your tax that gets spent on paying back bonds does not equate at all to the rate of return you will see on your investments. Obviously there is a need for companies to make a profit, but there seems to be a problem with the fact they can make a profit when the losses occur at both ends of the chain. It's odd that so much has been made of governments bailing out banks when government debt has been an essential part of the investment mix for years, quietly turning profits for financial institutions, and allowing a 'safe' investment vehicle for people nearing retirement. The current financial system needs sovereign debt to function properly, which cannot necessarily be a good thing. If we are replacing the welfare state with a system that relies at least partially on making money from government debt, what are we actually gaining? By 'we' I mean taxpayers, not the 'wealth creators' who profit from this situation and make sure that their money remains largely untaxed.
Anyway, the people who do profit from this system excuse themselves by stating that they didn't create the system, and that they are just reacting to market pressures. Brilliantly, they are instantly absolved of any responsibility, making it a classic victimless crime, except of course it isn't a crime. The significant lobbying power of the financial services industry ensures that time after time any legislation that may threaten their ability to exploit whatever market they chose is kicked into the long grass. The result is that it is only people who do not listen to the financial services industry at all who make new legislation, and because of the lack of dialogue, it is not very good legislation. This in turn fuels the view of those in financial services that politicians are not competent to regulate the system. In many ways of course they are right, our economic systems in their entirety are now so complex that economists struggle to explain them fully. It is easy for traders to understand the influences on their specific product, but as they have little concerns for the effects of that product beyond profit making, they cannot be considered to have a 'big picture' understanding. The economists who do look at the big picture can't agree on how it works, so how are we supposed to know what the effects of certain products are?
In such a climate, politicians can perhaps be forgiven for regulating the symptoms without any real understanding of the cause, but that doesn't mean they do any good by it. Self regulation would be much better if anyone had any enthusiasm for it, but they don't. The city's enthusiasm for self regulation is just a pretext for its enthusiasm for no regulation. You don't ask an alcoholic to look after your cellar.
So we are at a regulatory impasse: the only people capable of understanding the detail sufficiently have no interest in the big picture and the people whose concern is the big picture rely on others who only understand theory or poachers turned gamekeepers. I sometimes think that the solution might be arrived at if we all study economics, but I'm not sure: knowing the theory hasn't worked for anyone so far, so all of us knowing the theory is likely to just cause more confusion. Also, knowing the theory won't get us any closer to understanding the details, or understanding the relationship between the two. So we have to go one way or the other, either financial products must have clear definitions of their influence and impact if they are to be licenced, or they must only be allowed if they are simple enough for a politician to understand. And that's pretty simple.

Passage

I've reached an age where I am suitably embarrassed by how late in life* I was still enthralled by Star Wars. In that respect, I am possibly in the minority: Star Wars is a cornerstone of the contemporary cultural encyclopedia of many a man child, rather than something they were interested in as a kid. How else can you explain Vodafone considering Yoda to be a suitable brand ambassador?
Star Wars is a useful piece of rights-of-passage filmmaking that saw many a young person through the darkness of an 80s childhood. It taught us many useful adult lessons, not least about technology, which should be viewed as either:
a) polite yet totally ineffectual (C3P0),
b) belligerent and utterly incomprehensible (R2D2) or
c) functional but occasionally requiring a kick to fulfill its potential (Millennium Falcon).
Indeed a major lesson of the original trilogy is that efficient technology and organisations are to be feared, because it is impossible to be technologically and/or organizationally efficient without being evil. This is perhaps the most effective message that Lucas portrayed, indeed he is at least partially responsible for making this counter-cultural concept mainstream. Whilst we all consume goods from vast corporations at a rate unseen in human history, we get nervous and edgy when these corporations become too vast, and rightly so. The Microsofts and Apples of this world maintain their market dominance by methods not dissimilar from those of the Empire (minus the killing people bit). As a consumer of goods from these companies you are basically told to either subscribe to their system wholesale or not at all: protectionist strategies that even in the late 70s were viewed as undesirable and old fashioned. So, oddly, the technological universe can still be divided into the factions defined by Star Wars: those who are happy to be conform, to allow a single, faceless, homogeneous organisation to form their world view in exchange for technological efficiency, and those who are willing to accept a ramshackle technological landscape inhabited by myriad worldviews, personalities, races and cultures. I will not make judgment, but Star Wars clearly does.
Of course, it is not just (70s/80s) adult attitudes to technology that are presented, young Luke Skywalker has to deal with all the pains of growing up, from learning to operate his 'lightsaber' correctly, to fulfilling the oedipal cycle by killing his father (although he gets off with his sister, due to his mum being entirely absent from the picture). On the way he has to deal with the fact that adults lie to you if they think it's in your best interest, the knowledge that everything is not always as it seems and that to achieve anything you have to put in quite a lot of effort (and literally fight against yourself, etc etc).
Yes it's tough growing up, and Star Wars helped us get there. However, that doesn't mean we need to spend all of our adult lives eulogising it. Surely it should be like any other part of our childhood, which we remember fondly, but with an adult understanding of what's past. In that respect, surely the Walt Disney company taking over the franchise appears wholly fitting, they are specialists in children's filmmaking after all. If you find yourself in the position of being a grownup with genuine concerns over what will happen to the franchise next, you are either George Lucas, a Disney employee, a little bit immature or hopelessly nostalgic. If you're any of the last three, it's time to move on.
*about 24