A simple market solution to internet privacy

The issue of internet privacy is easy to solve and in a way which should appeal to those who claim to believe in a free market economy.

Governments should pass legislation that all computer data should be publicly available without charge. This means we should be able to see what information about us is available and any business should also have access the same information. We should also be able to see who has accessed the information.

securitycamera-1-800pxWe would be responsible for deciding what personal information to make public realizing that it would be out there forever. We would also see who was using that information and would be responsible for protecting ourselves from exploitation.

Those of us who live in small communities are already used to others, including some business people, knowing quite a bit about us. It is now a question of scale. Once upon a time I worked on a small town newspaper in Ontario. As the junior reporter one of my duties was to write obituaries. Each day at lunch the elderly couple with whom I boarded wanted to know who had died. They also wanted to know which funeral home as Conservatives and Liberals were buried by separate undertakers

We often want and expect governments to protect us from people who would exploit us. But in the long run we all have to take responsibility for our behavior and our own protection. We are the ones who take the consequences.

Internet privacy is an issue because some people can make lots of money if they have exclusive access to the data. Making data free would change the dynamics of social media and some of it might become subscription based.

One of the biggest current economic fallacies is that we have a market economy. What we really have is an economy in which governments legislate to restrict competition so that some people can make profits. One of the fundamentals of a market economy is that knowledge, technical and market conditions, is known to all participants. Another fundamental principle is that customers pay the full cost of the goods or services they consume. Subsidies whether from the government, advertising or the sale of data make for an inefficient economy. What I am suggesting in this post is that we make the internet a part of a market economy.

In a true market economy there are no profits as competition keeps prices such that people can earn a wage and a return of investment but no profits. Therefor a market economy would take care of another current issue – equality.

I do not expect this idea to be taken seriously as those who profit from a noncompetitive economy have a lot of political power. Therefore internet privacy will provide a lot of work for lawyers and that Mark guy will become even more exploitive, richer and more powerful.



Let’s put some ‘civil’ in civilization

Over the past few weeks I have been reading some anthropology about hunters and gathers and have decided these so-called primitives are really the most civilized Peoples of all times.  I absolutely do not want for myself or anyone else to go to that life style but I do think we should evaluate their cultures for ideas we could adopt.  We need to put the civil in civilization.

In this post I propose to look at some of the things that make our society uncivilized and contrast these with what we know about hunters and gathers. A lot what makes us uncivilized are sources of in justice –  overpopulation, forcing people to do things according to the values and morals of others and exploitation of people and resources.  Generally these injustices are not a part of the lifestyle of hunters and gatherers.

59889This guy used to think that violence was a natural part of human nature and we  just have to live with it.  After reading about hunters and gatherers I am not so sure.  These people are generally known for being peaceful and non-violent.  One group, when threatened by some war-like neighbors just disappeared into the forest.
It would be interesting if an anthropologist would do a detailed study of this aspect of their lives.

Hunters and gathers must be expert psychologists as they have to teach their young to kill animals while remaining non violent in their human relationships.  There often appears to be a spiritual aspect to their hunting.  Apparently a lot of social control is with verbal tactics such as teasing or ridicule.

In contrast most civilized countries maintain standing armies, sometimes used for social control of populations and in some places it is acceptable for agents of the state to execute innocent people who happen to be in their way. Some people claim the right to force others to live by their values and morals and are often very successful at getting state support in the form of legislation.  Our civilizations are also very tolerant of psychological violence. In spite of all the feminist propaganda we hear, women are very skilled at this type of violence.  Violence is so pervasive in our societies that very few people get through their lives without experiencing some of it.

History tells us that so far all civilizations have failed although many people believe our own will last forever.  As so many civilizations have failed this is a major issue.  One theory is that previous civilizations have failed because they have depleted their topsoil.  If this is true we need to proceed with caution as a lot of our food supply is dependent upon adding chemicals to the soil.  We need to put a lot of effort into studying agriculture.  It is too important to leave to people who make their living from it.

This blogger believes the major threat to our way of life is that we have used up most of the easily accessible energy and mineral resources on the earths crust.  Yes, there are lots of resources left but cost of extracting them is such they are mostly useless unless we have some major technology breakthroughs.
In  contrast there is archeological evidence that the bushmen of the Kalahari desert have maintained their civilization for up to 200,000 years.  They did this by living hand to mouth, seldom  having more than a day or two of food on hand and not over exploiting resources.

A significant feature of hunting and gathering is that most decision-making is by individuals.  Leadership is low-key and individuals can easily move from one small group to another. The bushmen’s  time came to an end when their territory was taken over by farmers and herders with the help of modern technology such as boreholes to provide reliable water supplies.

It is not clear if there was a natural transition from hunting and gathering or if farming and herding developed independently.    What is significant is that the latter made for different social dynamics in that some people could make decisions that affected others.  As these other types of food provision involved food storage they also led to residence mostly in one location, more and more complex tools and a more material lifestyle.  This was probably the start of the decline into our uncivilized history.

Probably the most important of all freedoms is the right to make decisions according to our own values and morals. In our society this is a complex issue with many limits.
The first limitation, shared by hunters and gatherers, is the need to provide ourselves with food and shelter. We must spend some time on this although most hunters and gatherers devote far less time to this than we do. Anthropologists have found that a lot of them devote only 15 to 20 hours a week to this basic activity. The rest of the time they spend socializing, performing rituals, doing crafts or sleeping and being lazy.

The rest of the limits on freedom to make decisions follow from our economic organization often with religious sanctions. Modern technology and the use of oil in agriculture probably means we only need to work two or three hours a week but the work ethic requires us to work 40 to 60 hours a week. If one does not do this much work one is a deadbeat on not doing ones share. This is great for those people who want others to support their empires but not so great for the environment and the resource base and our right to decide for ourselves what we want to do.

Possession of money gives us freedom to make decisions but the way in which it is created is a limitation. Most of the money used in our exchange of goods and services is created when banks make loans in what is known as fractional reserve banking. This is a complex but easy to understand process that is fully explained in many places on the FunnyMoneyArtPowell-finalinternet including this weblog and the e-book by this writer, Funny Money: Adapting to a Down Economy. As money is created by bankers they determine who gets it and what projects are undertaken. Creating money with an income scheme and national exchange trading scheme as proposed in my book would mean a major transfer of decision-making power to individuals.

Another limit on our ability to make independent decisions is the extensive use of marketing techniques by major corporations. I have often thought the best psychological insights come from marketing people and they do not hesitate to use their knowledge to influence how people think and what they do. Sadly, we have got to the point where a lot of people consider exploitive marketing to be normal, legitimate and even desirable. Some major Canadian companies have recently made the news because of the pressures put on their sales people, like to sell expensive internet or phone services to people who will never use them.

It is amazing how easily so many people get hooked into agendas set by others. It is easy to avoid being influenced by the marketers; just avoid television and social media. It is also easy for me to say that as I left home before my parents bought a television.
Not only are hunters and gatherers known for their peacefulness, they are also known for their equality. If people are not trying to aquire lots of material things, then economic equality becomes natural.

In our own culture we are aware of increasing inequality as more people suffer from the falling economy but we do not know how to change things. I believe everyone should have the opportunity to have the same standard of living as everyone else. It is painful to see people homeless and having to rely on food banks.

This writer believes inequality could be corrected with an income scheme and a true market economy. One of the features of a market economy is that competition wipes out the profits that allow some people to become rich.

The books I have read say little about sexuality but it appears most hunters and gathers are casual and accepting. Nor do they appear to have the sexual problems which plague so many people in our societies. It could be that we have something to learn from them about sex .

The key to what we call civilization is the agricultural surplus which is the food production in excess of what the producer needs for his own survival. Generally hunters and gathers do not have an agricultural surplus because once they have enough food for a day or two they stop working knowing that more is easily available when they need it.

The agricultural surplus is a two-sided coin. It releases people from food production to do other things some of which are positive and some of which are destructive. It can be the start of the decline onto the slippery slope into uncivilized behaviors,
The agricultural surplus presents a people with two questions; what to do with it and who makes the decision. These questions open up opportunities for people whose personality is to tell others what to do. This writer believes each of us should have to right to decide how his/her share of the surplus should be used.

Some economists like to tell students consumers control the economy in their spending decisions. This is correct so long as we make the right decisions. Many people want to go off the grid and live the simple life in the bush but that is not easy to do. The people who create the money want the rest of us to work at their projects rather than our own.

We have good material standards of living because our economy has been labor intensive and the demand for bodies has allowed us to extract from the elite a nice portion of the agricultural surplus. As technology increases and robots do more and more of the labor we are losing our bargaining power. The rich get richer and more people become poor. Frightening and uncivilized.

There is a slight ray of hope in our two or multi party electoral system. Some politicians are realizing tha to get votes they have to allow voters some share of the agricultural surplus.

There are lots of anecdotal evidence that our economy is on a down trend. Lots of people are suffering and lots more are likely to suffer. There are many unknowns in the future and most of them are frightening. Our goal should be to minimize the suffering and maximize the enjoyment of living.

We are unlikely to ever get consensus on how to deal with this situation as many people have a strong vested interest in the status quo. However, if we do not try, there will be no progress.

I once heard an engineer say, “If it is working, it is not complex enough.” I was not impressed with his engineering and I do not want to apply his principle to economics. Let us keep it simple. The challenge is to get the best out of technology without the technologists telling us how we should live to meet their goals.

This post has focused on some of the negative features of our civilization. I want to continue to enjoy the positive things, like being able to write this weblog, but I also want to correct some of the injustices and uncivilized behaviours. Genius is 90 per cent plagiarism and we should look for good ideas wherever we can find them.
The hunting and gathering lifestyle appears to be a lot simpler than what we have and it also appears to be a lot more civilized. Let’s put the civil back in civilization.

Note: Once upon a time this blogger took a course in Economic Anthropology and since then I have frequently read books on anthropology and especially economic anthropology. Prior to writing this post I read the following books:

Affluence without Abundance: The disappearing world of the bushmen, By James Suzman, 2017.

Hunters and Gathers: History, Evolution and Social Change, Edited by Tim Ingold, David Riches and James Woodburn, 1988.
Politics and history in band societies, Edited byEleanor Leacock and Richard Lee, 1982

Capitalism – a meaningless concept in which we can believe

As one surfs the economic forums of Medium and other media one often sees the word “capitalism” in the headlines but mostly I ignore these items because the word’s definitions are generally so vague the word is meaningless.  Because capitalism is such a meaningless word it is something in which we can believe while ignoring a less pleasant reality.

When we study economics we can try for an honest understanding so we can solve problems and reduce human suffering or we can seek rationalizations for things which will make us rich in spite of exploiting others, destroying the environment and overusing scarce resources.  If I were the chief executive of a large corporation or a politician I would want the second approach to economics.  Guess who pays the salaries of most economists.  This blogger makes no money out of his study of economics, so he can take the first approach.

The main feature of the economic organization with which most of us are familiar is that a lot of it is based on legislation which restricts competition.  Patents, copyright, licensing and subsidies all work to restrict competition  and/or distort prices.  These are so pervasive that we cannot say we have competitive market economy.

The problem with a perfectly competitive economy is that it does not allow for profits.  Competition reduces profits until each firm makes wages and a return on investment but no profits.  If one wants profits one needs government to pass legislation to restrict competition and most current  governments are happy to oblige.  Once upon a time this blogger used to make pottery.  I suggested that in order to make a good living we should form the Canadian Potters Association and get the government to pass legislation that all the people in Canada should eat only from dishes make by members.  Other potters laughed but lots of other occupations have that legislation: teachers, doctors, lawyers, septic tank installers, most large corporations (patents and copyright), etc.

Like lots of other people I would like to see an economy with more equality and less exploitation.  I believe the best way to get it would be to have more competition.  To get there we should repeal or at least reduce copyright, patent and licensing legislation and drop all subsidies.

This would leave many people exposed to economic adjustments which often cause suffering. A guaranteed income scheme would be a better way of coping with these problems than restricting competition.

Payday loans, slavery and money creation

What is the marginal cost of making a payday loan? Or any other type of loan?  The answer to this question should help to answer a question about interest rates on loans raised in the Buttonwood column of The Economist, November 30, 2013 issue. What interest rates should lenders be allowed to charge?

Unfortunately loans and credit are complicated beyond simple economics because the making of loans is an instrument of exploitation even to the point of slavery and because credit is involved in how we create money.

Economic theory tells us that so long as there is competition the price of a product should be equal to the marginal cost of producing that product.  Therefore for loans the marginal cost would be the cost to the lender of acquiring the money to loan (i.e. the interest paid to the depositor of for payday lenders to their source of funds) plus the operating costs and the cost of loans written off.  The legitimate interest rate to charge on a loan should be easy to calculate and for banks we can compare the rates they pay on deposits and the rates they charge for loans.

It appears the need for credit is almost universal at least in large-scale economies.  I’m not sure about hunting and gathering groups which practice a sharing economy.  It appears there has always been a need for short-term lending of the type done by payday lenders.

The problem is that the making of loans can be an instrument of exploitation.  One of the quickest ways to get control over a person is to lend them some money.  In peasant societies people borrow to put on funerals and weddings and if they cannot repay they sometimes find themselves in slavery.

In our own society there are probably lots of people with dreams of doing something other than the daily employment but they are unable because of their debt load.  All this consumer debt works as an instrument of social control for the one percent.  So long as we are in debt we work to support their goals and interests rather than for our own.  If a person wants to be truly free one should try to live without  borrowing.

As for payday loans Mr./Mrs./Miss/Ms Buttonwood says:

“Provided the terms of the loan are made clear, then it should be up to borrowers to decide whether to accept the costs involved. An interest rate is simply the price of money.”

Once again this is simple economics without the human factor.  For many people there are times when  it may not be easy “to decide whether to accept the costs involved.”

The other complication with lending is that our money supply is based on fractional reserve loans by financial institutions.  As money is essential for the exchange of goods and services it is also essential that we carry a debt load.  Says Buttonwood

“But businesses and consumers are positively encouraged to borrow. Indeed, when debt growth slows, as it has in recent years, an air of panic develops about how to get it going again.”

There are a number of problems with the fractional reserve method of creating money, most of which have been discussed elsewhere on this weblog and especially in the essay “LETS go to market: Dealing with the economic crisis.”  Basically it is a Ponzi scheme which is urgently in need of reform.

The reform proposed in that essay, a national Local Exchange Trading System (LETS) should also help with the need for short-term credit.  It would be a lot less exploitive as no interest would be charged and control over the money supply would be in the hands of all people.  A national LETS system would transfer a lot of economic decision-making from bankers and governments to individuals.

There are consumer loans and there are business loans.  Loans are a transfer of purchasing power from one person  to another and interest is compensation for the transfer.  A LETS system  should take care of the need for short-term consumer  credit.  The compensation for business loans should come out of the profits in which case they should be considered equity.

Back to the question of caps on interest charged on payday loans.  Is it the role of government to prevent some of its citizens from exploiting others?  If yes, then governments should limit interest  rates  charged (marginal cost is a guideline) or find another way of creating money so that the need for short-term consumer credit is easily satisfied.

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

Health care greed

This post was inspired by a rather long article on why health care in the United States is so expensive.

As I read the first section I was thinking that when it comes to greed some health care people make Wall Street bankers look like amateurs.  By my values the bankers are higher on the ethical ladder than some medical people because the bankers are conning people who are just as greedy.  Medical people are exploiting people when they are sick and at their most vulnerable.

metalmarious_Medicine_and_a_StethoscopeOne of the more interesting university courses I took was sociology of work in which the professor talked about the professional encounter.  We go to a professional when we are in a crisis situation and because the professional has specialized knowledge which can be used to get us out of the crisis.

This gives the professional a great deal of power over us and according to the article it appears some in the he medical profession take full advantage of it.

How do we protect ourselves from medical exploitation?  Normally I would say increase competition.  But one probably doesn’t want to take time to compare prices when having a heart attack.


To some extent we can choose a family doctor.  More competition would make this easier.  We might get a little more competition if health people were to be certified by associations rather than licensed by governments in that associations could certify more practitioners and more different types of practitioner.

Maybe the best way to protect ourselves is to live a healthy lifestyle – exercise, eat mostly healthy foods and practice defensive driving.  Even so it is hard to imagine anyone getting through life without interacting with the medical profession.

System D, the underground economy and competition

Just read an article on the web about the underground economy, also known as system D, which is probably more the case in the developing world than it is in Canada.  This follows reading a book chapter about London when Karl Marx lived there.

It sounds as if both of these are closer to the perfect competition model than anything I have experienced.  The difference is that Marx lived at the beginning of an age unprecedented prosperity and we are probably going into an era of decline.

The author of the article appears optimistic about the potential for System D and I find it attractive.  It appears to have a lot of vitality.

However I see at least two problems.  One is that if you work outside the law then there is potential for exploitation and dishonesty.

Another problem with System D is that when it is hit with a recession a lot of people will be out of work.  There is no potential for economic safety  mechanisms such as unemployment insurance.

It could well be that System D is a way to get around excessive government regulation of the economy most of which works to restrict competition.

Therefore we should aim for the best of both worlds.  Keep legislation which tries to prevent exploitation and provide a safety net and get rid of legislation which restricts competition.

(The book is Grand Pursuit, the Story of Economic Genius by Sylvia Nasar and was published this year.)

Agricultural surpluses, relationships and Occupy Wall Street

Here is a possible explanation for the Occupy Wall Street protests which are currently happening around the world.

For a relationship to be satisfactory there has to be a more or less equal two-way exchange.

However, there is no law that says relationships have to be satisfactory,  Furthermore, some people take advantage of others by exploiting or coercing them.

How do these observations apply in economics.

Throughout history there has been exploitation of some people by others.  Mostly this has involved agriculture and force.  The surplus has been taken.  Mostly enough has been left for the producers to just subsist.

Starting with the Industrial Revolution three things changed.

First the surplus started increasing so that more could be left for the producers.  Eventually during the recent years of prosperity  the surplus was so large that many people (especially in the industrial countries) could have a nice share of it.

Second, population levels (at least in the industrial countries) have been low relative to the opportunities for employment.  As wages are a function of supply and demand wages have been good and thus the surplus has been shared.

Third, those people who do the exploiting have discovered psychological ways of getting their hands on the riches of the world without using force.  These include legislation which restricts competition,  sneaky marketing, promoting the work ethic and emotional appeals such as to our greed.

To those of us who have been able to share the wealth it has not been clear that we have been exploited.

Once again, things are changing.  There is some evidence we are now using resources at an unsustainable rate and there is now more competition for the surplus.

As the above listed psychological instruments are still working the rich are getting richer, the poor are getting poorer   and the Occupy Wall Street protests are spreading around the world.

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