Free Lunch: Freecomomics
May 10, 2008
The left really needs to embrace free culture and the new means of spreading ideas on the internet. For example, if you are publishing a book are you doing it to make money or spread your idea? If you want to spread your idea then follow the intellectual pioneers publishing a paper copy and releasing a digital copy too, under creative commons license, for free download and distribution. This allows wider readership and may ultimately end in greater sales (I know many of the free books I and my friends have read we’ve later bought). The following article covers this a little but is primarily looking at how “the internet has revolutionised economics.” Persnally I find it inspiring that all human knowledge and culture could be made availalbe to everyone for free, what a global victory for education and emancipation that would be, I disagree that it will somehow corrupt society or that we will have to plaster knowledge with advertising to make it feasible.
A few years ago, Ryanair’s founder Michael O’Leary told an interviewer that he had a dream. He had already democratised air travel: “For years flying has been the preserve of rich fuckers. Now everyone can afford to fly.” His new ambition, he told the Financial Times in 2004, was to give customers free tickets, perhaps even to pay them to fly. He predicted: “In a decade or so, airlines will pay travellers to distribute people around Europe.”
But how could he make his dream of free air travel a profitable reality? It’s a question that takes us to the heart of a new philosophy called freeconomics that turns traditional capitalist business models on their heads. O’Leary argued that the airline industry would have to learn from commercial TV, which allows viewers to watch for free while advertisers pay for access to them. It would also have learn from the internet, where websites make money for delivering click-through traffic to other sites.
As you may have noticed, O’Leary isn’t yet paying you to fly, not even to from Birmingham to Bratislava (which currently costs £10 one way), but he has a few years to deliver on his prediction. If he manages it, Ryanair will become an exponent of a revolutionary idea being developed by Chris Anderson, editor-in-chief of Wired magazine.
Inflated Claims
May 9, 2008
‘Simplistic and crude: it’s time central bankers recognised inflation targeting for the misguided fashion it really is,’ writes Joseph Stiglitz.
The world’s central bankers are a close-knit club, given to fads and fashions. In the early 1980s, they fell under the spell of monetarism, a simplistic economic theory promoted by Milton Friedman. After monetarism was discredited — at great cost to those countries that succumbed to it — the quest began for a new mantra.
The answer came in the form of “inflation targeting“, which says that whenever price growth exceeds a target level, interest rates should be raised. This crude recipe is based on little economic theory or empirical evidence; there is no reason to expect that regardless of the source of inflation, the best response is to increase interest rates.
One hopes that most countries will have the good sense not to implement inflation targeting. My sympathies go to the unfortunate citizens of those that do. (Among the list of those who have officially adopted inflation targeting in one form or another are Israel, the Czech Republic, Poland, Brazil, Chile, Colombia, South Africa, Thailand, Korea, Mexico, Hungary, Peru, the Philippines, Slovakia, Indonesia, Romania, New Zealand, Canada, the UK, Sweden, Australia, Iceland, and Norway.)
New Labour is Dead
May 3, 2008
‘Power Can’t Shape Truth Forever’, Tariq Ali writes.
New Labour has suffered a crushing defeat. The Blair project of promoting and implementing right-wing policies in the knowledge that traditional working class voters would remain solid died on 1 May 2008. Labour’s vote in the local elections in dropped to 24 percent, a point below the Liberal Democrats and twenty points less than the Conservatives (44 percent). Given the scale of the catstrophe, It seems unlikely that Gordon Brown can win the next general election.
Awestruck by Margaret Thatcher, Blair and Brown aped her achievements within their own party, squeezing old social-democratic ideas out of themselves, drop by drop. They were all market fundamentalists now. Deregulation and privatisation became a mantra and over the last ten years the social divide in the country between rich and poor increased more than even under Thatcher. Redistribution of wealth was no longer on Labour’s agenda.
Losing Nerve and Direction
April 22, 2008
‘The Left Has Lost Its Nerve and Its Direction’, writes Chris Hedges.
The failure of the American left is a failure of nerve. It has been neutralized and rendered ineffectual as a political force because of its refusal to hold fast on core issues, from universal, single-payer, not-for-profit health care for all Americans, to the steadfast protection of workers’ rights, to an immediate withdrawal from the failed occupation of Iraq to a fight against a militarized economy that is hollowing the country out from the inside.
Let the politicians compromise. This is their job. It is not ours. If the left wants to regain influence in the nation’s political life, it must be willing to walk away from the Democratic Party, even if Barack Obama is the nominee, and back progressive, third-party candidates until the Democrats feel enough heat to adopt our agenda. We must be willing to say no. If not, we become slaves.
Bitter Fruit in Pennsylvania
April 17, 2008
‘If Obama’s remarks on poor white voters were gauche, the responses they elicited have been galling’, writes Gary Younge.
Like many, if not most, readers of this magazine, I often vote against my economic interests. Whenever I vote for a candidate who wants to redistribute wealth — which is basically whenever I vote — I am electing to make myself poorer. Like many of you, then, I am a values voter. There are more important things to me than money. This is not entirely selfless. I vote not only for a world I want to see but a world I want to be part of and a world I think would welcome me as part of it. It has never really occurred to me that I might cast a vote in solidarity with those who earn like me.
So the fact that so many white working-class people in this country vote Republican does not strike me, a priori, as an aberration. That they put different priorities (like opposing gay marriage or abortion) ahead of their financial well-being does not mean they are any less savvy about their interests than I am. I think their priorities are wrong. But I don’t think them irrational.
$3 Trillion May be too Low
April 6, 2008
‘Our original estimate of the cost of the Iraq war was too conservative’, write Joseph Stiglitz and Linda Bilmes, ‘in reality the cost for the US will be much higher’.
President Bush has tried to give the impression that the $3 trillion dollar estimate of the total cost of the war that we provide in our new book may be exaggerated.
We believe that it is in fact conservative. Even the president would have to admit that the $50 to $60 billion estimate given by the administration before the war was wildly off the mark; there is little reason to have confidence in their arithmetic. They admit to a cost so far of $600 billion.
Our numbers differ from theirs for three reasons: first, we are estimating the total cost of the war, under alternative conservative scenarios, derived from the defence department and congressional budget office. We are not looking at McCain’s 100-year scenario – we assume that we are there, in diminished strength, only through to 2017. But neither are we looking at a scenario that sees our troops pulled out within six months. With operational spending going on at $12 billion a month, and with every year costing more than the last, it is easy to come to a total operational cost that is double the $600 billon already spent.
War Costs and Costs and Costs
March 14, 2008
‘The war in Iraq has cost trillions. But the US – and the world – will be paying the price of the conflict for decades to come’, writes Joseph Stiglitz. The Guardian also reports on the further tumble of the dollar. As Alberto Cruz argued showed here earlier, world markets are already reacting by switching to stable currencies.
With March 20 marking the fifth anniversary of the United States-led invasion of Iraq, it’s time to take stock of what has happened. In our new book The Three Trillion Dollar War, Harvard’s Linda Bilmes and I conservatively estimate the economic cost of the war to the US to be $3 trillion, and the costs to the rest of the world to be another $3tn – far higher than the Bush administration’s estimates before the war. The Bush team not only misled the world about the war’s possible costs, but has also sought to obscure the costs as the war has gone on.
This is not surprising. After all, the Bush administration lied about everything else, from Saddam Hussein’s weapons of mass destruction to his supposed link with al-Qaida. Indeed, only after the US-led invasion did Iraq become a breeding ground for terrorists.
The US Trump to Avoid a Dollar Collapse
March 13, 2008
Iraq, writes Alberto Cruz of Centro de Estudios Políticos para las Relaciones Internacionales y el Desarollo (CEPRID) in today’s guest editorial, is ‘the US trump to avoid a dollar collapse.’
Do you remember the proposal of Iran and Venezuela to OPEC in October 2007 on the need to open a debate in the organization about whether or not to continue using the dollar as the payment currency for a barrel of oil? That proposal which caused such a fuss among some people, describing Ahmedinejad and Chavez as histrionic, turns out to be up for formal discussion according to the organization’s president, Chakib Khelil. OPEC will do so at a time when Iran, one of its most important members, has already stopped all trading in dollars by setting up its own oil exchange. Likewise, Qatar has announced a reduction in its reserve of dollars in favour of other currencies like the Euro. The United Arab Emirates is expected to do the same in May this year.
The $3 Trillion War
March 4, 2008
‘After wildly lowballing the cost of the Iraq conflict at a mere $50 to $60 billion, the Bush administration has been concealing the full economic toll. The spending on military operations is merely the tip of a vast fiscal iceberg.’ In an excerpt from their new book, Joseph E. Stiglitz and Linda J. Bilmes calculate the grim bottom line.
On March 19, 2008, the U.S. will have been in Iraq for five years. The Bush administration was wrong about the need for the Iraq war and about the benefits the war would bring to Iraq, to the region, and to America. It has also been wrong about the full cost of the war, and it continues to take steps to conceal that cost.
In the run-up to the war there were few public discussions of the likely price tag. When Lawrence Lindsey, President Bush’s economic adviser, suggested that it might reach $200 billion all told, Secretary of Defense Donald Rumsfeld dismissed the estimate as “baloney.” Deputy Defense Secretary Paul Wolfowitz went as far as to suggest that Iraq’s postwar reconstruction would pay for itself through increased oil revenues. Rumsfeld and Office of Management and Budget Director Mitch Daniels estimated the total cost of the war in the range of $50 to $60 billion, some of which they believed would be financed by other countries.
