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Article: Is The Internet Messing Up Our Economies?

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The article below is well worth reading for a big picture take on things:

https://medium.com/bull-market/our-economies-are-messed-up-and-the-cause-is-the-internet-aeb4a16a2a23

A couple of excerpts:

"Imagine that someone told you that three of the biggest stories of the past few years — the financial crisis, exploding economic inequality, and the National Security Agency spy scandal — weren’t actually different stories at all. Different in detail, yes, but essentially identical in their deeper cause. The cause, they go on to say, wasn’t greed or fear or the age of terrorism or anything else linked to human fallibility, but technology — specifically, computation and its networked manifestation, the Internet. Sound crazy?"

"… Liars have to have the best memories. It’s more work to keep two sets of books than one set of books. The plague of toxic assets and mega-pyramid schemes, and the pointless growth spurt of the financial services sector would all have been impossible without vast computational resources remembering and sorting all the details needed to snooker people. The most egregious modern liars not only need computers, they can be inspired by them… It was only recently that computation became inexpensive enough to be used to hide bad assets."

I think this view of the crisis deserves consideration....

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I remember Jaron Lanier. Uber smart. He was one one of the original VR gurus back in the day. A plump, substance-free hippie who hung out with Leary, Stewart Brand et al pre-Wired magazine.

He seems to be recapitulating the great Ted Nelson here: A hypertext of micropayments, with copyright and the origins of content baked in - that's essentially Project Xanadu, isn't it?

Ted Nelson, like his friend and inspiration Doug Engelbart, always zigged when everyone else zagged.

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Compuers should make thigns very tansparent indeed.

Shed loads of computing power that could be put to good use to find risk and make very simpe risk analyses - if it isn't obvious to a computer where the risk really is and what the potenital liabilities are then there is most liekly soemthing wrong.

A compueter can look at the books of a FTSE 100 company and preocess every transaction doen to the last penny and rather than take man years could do it in hours.

Nope it is just an excuse for regulators to look the other way, make excuses for their overt nod and a wink to the worst of financial practices and for a few bent and unscrupulous companies to game the financial system and the populations of countries purely for their own benefit.

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It all boils down to the fact that nothing in life is really free and that the internet strikes a Faustian bargain with all those who use it. In fact in many ways its users are one of the biggest supplier of subsidies to big business in that they provide hours of work for nothing inputting data and pay for a good part of the modern IT infrastructure from the end user devices to most of the ISP and networking gear. At the same time they have helped build an economy where it is increasingly hard for ordinary people to realise the value of their labour or to control their intellectual property. Despite the fact ( or maybe because of the fact) I have worked in IT for more than 25 years I am pretty wary of things like Facebook, Twitter because I know how much data is being stored away on each and everyone of us and how it is being used to profile each individual. Moreover, the 'convenience' of online administration is used by our rulers to distance themselves ever more from those they govern.

Edited by stormymonday_2011

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I've been thinking something not unrelated for a while. With its vast reach and the collation of data from so many sources, the internet, networks and databases are the perfect tool for manipulating an economy in a way that doesn't necessarily serve those participating in it.

There are enormous volumes of data on each one of us - what we buy, where we buy it, how much we earn, what we spend it on. If you wanted to allocate credit and set interest rates in a way that is most effective in propping up selected assets then what better place to start than this web of data - to which we voluntarily or involuntarily submit every detail of our daily lives.

There isn't a time in the known history of the human race that so much information about so many has been available and at the fingertips of so few. The statistical slicing and dicing of risk can only go so far to spread the load - then the government and money printing presses fire up to dilute inevitability to the degree that it continues in the form of a slow creep, to the point of virtual imperceptibly.

Marketers of financial "services" trawl through their market data from the likes of Experian and Equifax and consider the ability to create accurate profiling on customers and you have the foreknowledge with which to offer products that maintain your bottom line as well as ensure that customers don't over-stretch themselves to the point that they're no longer viable as interest-paying production units. There exists the cynicism in the governments and the financial institutions that views us purely as economic units to be optimally milked.

The outcome of over-milking can be mitigated by pumping in the right amount of printed digits at the right time and at the right rate. The over-milked have their milking load temporarily reduced (by forcing it onto other tax payers) but the system is running out of ways of taking the strain off.

If the whole of our society is just a tax farm then this computerised control system is constantly adjusting and re-adjusting to ensure maximum productivity, then might the recent plunge in oil prices be "the system's" way of reducing inflation by just enough to ensure the whole shebang can continue for a bit longer?

Seems like there is a wall of cheap money and it's seeking returns in anything that can still be exploited, even if it's not producing any real wealth for ordinary people. The printed money, which is available to relatively few, is the virtual land in the neo-feudal system for rent-extraction from an ever decreasing circle of maxed out consumption units.

I believe the term "financial terrorism" is the means used to transfer control beyond elected governments (they just serve to police the victims and step in occasionally to lubricate the works). It involves not just high frequency trading, but also making available funds to banks and other lenders, both at home and overseas.

If you can't see your exploiters, you can't revolt. The financial system and its intricate web of deception has turned us into virtual serfs.

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The thing that struck me about Lanier's ideas is how so many of the things people do to earn a living boil down to information processing of one sort or another.

That being so his argument that the Internet and technology more generally is debasing the value of that knowledge processing ability by making it harder to protect it's results is quite powerful- if most of us are in effect earning our living from our ability to process information and the web is degrading the market value of this ability by in effect stealing the output then it does represent a fundamental attack on the current economic arrangements.

A world of 'knowledge workers' in which knowledge cannot be protected is something of an oxymoron since any value those 'workers' might create is dissipated if that value is immediately captured by others with a vested interest in disseminating it as widely as possible in order to grease the wheels of their own venture.

From this perspective Google is the biggest heist in history- it makes it's profits via the exploitation of vast amounts of information that it paid nothing to create- it's the ultimate middle man rentier exploiter of other people's efforts.

Those who argue that 'information should be free' overlook the huge asymmetry between the effort and time required to create this information and the almost effortless way that third parties can simply take and make use of it.

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I was invited back to my old university a couple of years ago to give a talk about the area of finance that I work in; the idea being to give the economics and finance undergrads a sense of what its actually like to work in the area.

What shocked me was their total faith in complex computational modelling focused almost entirely on historic financial data. When I started talking about "rules of thumb"/"situations that don't smell right"/"applying common sense to what I'm being asked to believe" I lost them a bit.

It's almost as if they had blind faith in the formulae and analysis - they didn't seem to get that it's usually the stuff that isn't in the model and that hasn't happened "quite that way before" that'll blow a big hole in your returns.

I think that this is a big cause of inherent financial instability - years of experience, rules of thumb, and the inherent caution gained by experience are ignored on the basis of the assumption that a supercomputer will always give you the right answer.

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At the same time they have helped build an economy where it is increasingly hard for ordinary people to realise the value of their labour or to control their intellectual property.

I see it as a double edged sword - I'm gearing up to be a illustrator and while I can have access to an endless stream of inspiration and art tutorials undreamed of just 15 years ago, and my work could get noticed by hundreds of thousands if not millions easily, I would never have full control of my output.

And it's a double edged sword for the authorities - while they can spy on somebody on Facebook and send a B2 bomber after him by tracking his phone, the governments, corporates, and other VIPs became the victims of WikiLeaks, USB/hard drive theft, hacking, and online rumour mongering.

The internet is changing the playing field, but the challenge is trying to adjust to the paranoid doom and gloom that comes with it (like industrialisation).

Edited by Big Orange

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The other thing that they use the internet for is to use it as a barrier between themselves and the people. It can be difficult to argue with a computer etc etc.

Edited by billybong

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The article below is well worth reading for a big picture take on things:

https://medium.com/bull-market/our-economies-are-messed-up-and-the-cause-is-the-internet-aeb4a16a2a23

A couple of excerpts:

"Imagine that someone told you that three of the biggest stories of the past few years — the financial crisis, exploding economic inequality, and the National Security Agency spy scandal — weren’t actually different stories at all. Different in detail, yes, but essentially identical in their deeper cause. The cause, they go on to say, wasn’t greed or fear or the age of terrorism or anything else linked to human fallibility, but technology — specifically, computation and its networked manifestation, the Internet. Sound crazy?"

"… Liars have to have the best memories. It’s more work to keep two sets of books than one set of books. The plague of toxic assets and mega-pyramid schemes, and the pointless growth spurt of the financial services sector would all have been impossible without vast computational resources remembering and sorting all the details needed to snooker people. The most egregious modern liars not only need computers, they can be inspired by them… It was only recently that computation became inexpensive enough to be used to hide bad assets."

I think this view of the crisis deserves consideration....

Sounds a bit like a lazy Adam Curtis documentary.

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I was invited back to my old university a couple of years ago to give a talk about the area of finance that I work in; the idea being to give the economics and finance undergrads a sense of what its actually like to work in the area.

What shocked me was their total faith in complex computational modelling focused almost entirely on historic financial data. When I started talking about "rules of thumb"/"situations that don't smell right"/"applying common sense to what I'm being asked to believe" I lost them a bit.

It's almost as if they had blind faith in the formulae and analysis - they didn't seem to get that it's usually the stuff that isn't in the model and that hasn't happened "quite that way before" that'll blow a big hole in your returns.

I think that this is a big cause of inherent financial instability - years of experience, rules of thumb, and the inherent caution gained by experience are ignored on the basis of the assumption that a supercomputer will always give you the right answer.

Its not the internet that is the problem, its the millions of drones working to the beaurocratic correctness that is messing everything up, the internet just has them all joining up and holding hands.

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If you can't see your exploiters, you can't revolt. The financial system and its intricate web of deception has turned us into virtual serfs.

I think this is exactly where we are today and what particularly scares me is the way it is unfolded around us with our complicit agreement.

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I was invited back to my old university a couple of years ago to give a talk about the area of finance that I work in; the idea being to give the economics and finance undergrads a sense of what its actually like to work in the area.

What shocked me was their total faith in complex computational modelling focused almost entirely on historic financial data. When I started talking about "rules of thumb"/"situations that don't smell right"/"applying common sense to what I'm being asked to believe" I lost them a bit.

It's almost as if they had blind faith in the formulae and analysis - they didn't seem to get that it's usually the stuff that isn't in the model and that hasn't happened "quite that way before" that'll blow a big hole in your returns.

I think that this is a big cause of inherent financial instability - years of experience, rules of thumb, and the inherent caution gained by experience are ignored on the basis of the assumption that a supercomputer will always give you the right answer.

But from their perspective the computer is always right. The answer is correct reality is clearly wrong....

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The more complex the web of debt, the more sheeple are turned into debt slaves by using money invented on the computer on an hourly basis.

Eventually, even the non-sheeple will get caught up in a debt because they can't compete with willing slaves.

I can't work for such a low salary (pocket money) whilst purchasing such expensive car, house or holiday without- high debt.

Even maintaining the frugal lifestyle becomes increasingly difficult because of willing slaves to take on huge debt.

Without a vast computer power, how could rulers keep the debt tracking on everyone?

It is no coincidence that explosion of debt went together with the huge progress of internet and the computer power.

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