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Lies, damn lies and statistics: moderating the tyranny of numbers

Lies, damn lies and statistics: moderating the tyranny of numbers

Quoting numbers, whether denominated in dollars, deaths or whatever, has always been a favourite way of adding weight to an argument.

Metrics are gamed in order to increase (or decrease) a given number so as to support an argument, boost a political view, trigger a linked payout or justify a proposed policy or course of action.

The modified metric elevates the case of the proposer above the merely subjective/ rhetorical and lends an ‘objective’ weight to their argument. If, over time, the narrative can be sculpted so that the metric becomes synonymous with something good (or bad), all the better. In this way GDP growth became a proxy for progress – a relation still frequently implied in mainstream discourse.

For those with the requisite level of agency, the rules for the collection of a metric can be changed, often subtly without anyone noticing. Pre-change and post-change numbers can be plotted on the same graph.

The spotlight metric – (i.e. the core metric used at a given time to drive/ justify policy etc) can be changed to suit the convenience of the moment.

The mega-nudge

This traditional art of meretricious metric management has been substantially boosted by the rise of behavioural economics as a ‘discipline’. Nudge units have become super-users for the emerging metrics-scuplting industry. What started as well-intended, often subtle interventions to prompt towards marginal socially-desired behaviour modifications has become a hothouse for heavy handed authoritarian intervention – creating fear as the primary motivating force. Again this is not a new phenomenon, but it has a new face courtesy of social media and the ability of super-digitised communications to facilitate intrusion.

The two ‘industries’ are mutally supporting. As those with power become habituated to nudging the precariat into compliance, they create a series of ‘testimonials’ for the metric-sculpting industry…

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The environmental consequences of monetary dysfunction

The environmental consequences of monetary dysfunction

Dysfunction of the money-system underpins the problems of the world’s multiple converging crises. Discuss.

Might that assertion be taking an ideological position, encouraged by the echo chambers of like-minded twitterati? This piece is an attempt to tease out the nature of the underlying connection, and in doing so describe some of the attack surfaces that are available to those bent on change.

From an environmental perspective the most damaging money-system dysfunction is the misallocation of credit. Commercial banks have been given the responsibility of deciding who should receive loans – for capital investment, mortgages and asset purchases for example – and the privilege of charging interest on those loans. They are largely unconstrained in this process – while there are theoretical constraints, in practice their main concern is making sure they get their full whack of interest due over the term of the loan. They therefore generally prefer lending secured against an asset that they can repossess if necessary than against the uncertain (and difficult to assess – at least for today’s disconnected and centralised account managers) future productive capability of entrepreneurial projects. This is borne out by figures for productive investment which tend to show lending for productive use at about 15%.

The first consequence of this preference is that the banks find themselves in an unholy alliance with asset owners, with a joint interest in ever rising asset prices and a reluctance to moderate activity in asset markets lest their loans lose collateral value. They all know in their hearts that this will eventually mean painful busts. But they also know that when the time comes they will be bailed out by the government, that many of their more savvy and comfortably-connected friends will have disposed of their assets ahead of the peak, and that the greater part of the associated pain will be experienced by less well connected ‘outsiders’. There is no real sanction on the banks or their senior management from buying into this toxic cycle. So we should not be surprised when it repeats. They operate in any case with a sort of herd mentality, and taking a heterodox stance would fail the wine-bar peer-reviews. There is no way that this cycle can avoid the progressive concentration of wealth. (In passing we might note that this in turn puts a misplaced emphasis on philanthropy and volunteerism as means to address society’s ills.)

…click on the above link to read the rest of the article…

The Strange Idea of Negative Interest

The Strange Idea of Negative Interest

This article addresses the role of demurrage (negative interest) in the design of new currencies. But it takes a roundabout route with diversions around the zero and negative interest rates being currently applied to fiat money; and a detour via positive interest which is itself a stranger idea than we have been led to believe. It suggests that demurrage is worth a place in the designer’s kitbag, but not for the reason normally postulated.

The basic idea of interest is simple. It’s a special type of rent. If we loan out something we have no immediate need for ourselves, it seems reasonable that the borrower should pay us rent for its use. So interest is a rent on money.

A fundamental problem with the rent rationale in general occurs when the ‘property’ concerned is a public good – a commons which has been enclosed – or where it has been secured by violence or some other unfair means. In that case we might feel a little aggrieved at having property we feel we should have a degree of proprietorship over sold or rented back to us. This is the way many people feel about water for example.

Another issue arises when the property owner has (and will have) no need for the property themselves and have acquired it only for its rental value. Seeking a store of value via investment is understandable but when the asset class created is a ‘stuff of life’ good, tensions are sure to arise because investors are affecting the price of essentials. The more they can corner the market the more they can increase the cost of basic living. This seems to be increasingly the case with housing.

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Olduvai IV: Courage
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Olduvai II: Exodus
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