The internet of money wherefore art thou?

THE INTERNET OF MONEY Sander Duivestein  My forward to Deloitte’s second report on digital money - The future of exchanging value: Cryptocurrencies and the trust economy.

Exchanging value

Ice becomes water when warmed. Only familiarity prevents us from marvelling at the mysteriousness of this ‘phase change’, as physicists call it. Nevertheless, we’ve witnessed a similar phase change as the physical hardware that delivered the phone network was repurposed to also deliver a new network – the internet.

And where the phone network depended on point-to-point connections, the internet connects people via packets of information that travel through cyberspace until they arrive at their address.

Initially, the old ‘connect first’ phone network was monopolistically competitive. The upshot of that market structure has produced all manner of frustrations and complexities such as incomprehensible pricing structures and prices way above cost for peripheral services such as texting and international roaming. However, all this is different on the net because of the different market structure produced when each node in the network helps out – redirecting digital packets in return for reciprocal help from other nodes.

Thus, all the transaction costs of the old network melt away. If you have a great product – such as Google, Wikipedia, Salesforce or Xero – you can just put it on the net and it’s there for everyone. And we’ve watched on as this miracle has unfolded, just as astounded as if we were watching ice melt for the first time.

This analogy helps us understand the potential costs of a financial system that looks like the phone system – with complex terms, price gouging, etc. For me to exchange value with, say, an American airline, I’ll pay about 2 per cent commission to a bank to facilitate the cross-currency transaction. That amount vastly exceeds the bank’s cost. Large corporates get the same service for a 20th of that margin!

So the hunt is on for the ‘internet of money’ – a technology and overarching architecture to displace the oligopolistic position of the too-big-to-fail banks. Continue reading

Posted in Economics and public policy, Innovation, IT and Internet | Leave a comment

Crikey! It’s on again: THIS OFFER MUST END (like the world … though the offer will end sooner)

As aficionados will be aware, Troppo funds its entire garage of imaginary vehicles (including the latest acquisition – Bronnie the chopper) from its annual group subscription to Crikey.

This is how it works. You email me on ngruen at Gmail with “Crikey” in the subject heading. (This is a new bit, and without it I don’t think Troppo’s Group Subscription Division could aim to be bought up by Facebook in a few years time with 100 million followers.)

I then send the names and email addresses to Crikey and they get in touch with you with an offer of a very cheap subscription to Crikey. (Illustrating the glories of crowdsourcing, someone will now look up the group discounts available on the Crikey website and post it for others. Anyway, we have for many years got over 50 million subscribers.

You get the subscription cheaper than ever thought possible, and then the holding conglomerate Private Media – which runs Crikey, The Mandarin and Fox News – sends Troppo all the imaginary vehicles it needs in the coming year. (Stop Press: Private Media appear to have divested itself of Fox News in favour of News Limited – a nice move, given the rise of Donald Trump – this itself coming on top of Troppo’s endorsement of The Donald).

Posted in Competitions | 5 Comments

Costume drama: Two more duds

Some readers will be aware of my distaste for costume drama – films about the past without any serious effort to engage with the difference of the past. It’s a crime against Oscar Wilde’s great admonition to Bosie. Shallowness is the supreme vice. Anyway, we have two more crimes of shallowness doing the rounds: Suffragette and The Danish Girl. Though I think they’re duds, I wouldn’t discourage you from seeing them, both are high production values period dramas and they’re both enjoyable to watch, aesthetically and/or just because it’s endlessly beguiling to look and imagine how similar and how different things were just a few decades ago, let alone around a century ago.

The latter film is also a landmark. So go see it by all means. But both suffer from dreadful political correctness. Maud, the chief suffragette in the movie is a working class woman. It’s admirable I guess that the producers went for this angle since it’s a harder sell than the usual middle-class story. The trouble is, she’s just a middle-class person playing a working class person. Carey Mulligan plays the part with a strange accent with working class sounds in it but somehow without conviction. She has a permanent smirkette on her face. Maud lives with her husband and child. You’d expect if they really were living on their own that their home would be tiny. But the film never catches any of the pressure this kind of living would have produced. They’re always comfortably away from the child when they want a chat in the kitchen.

The husband has the sexist attitudes of the time (or more likely the 1950s) but none of the body language of his entitlement as the master of the house. Likewise her relationship with her child is very post stolen generations. She loses custody of her child and this distresses her greatly and she lingers around his school to get a glimpse of him and hold him. But it’s strangely uncompelling. Perhaps that’s because it’s somehow emotionally distant. There’s no truth to the relationship. The kid never gets a clip over the ears, yet it’s hard to imagine kids of almost any class not getting plenty of clips over the ears in the early 1900s. So, to cut a not very long story short, I found it uncompelling.

I went to The Danish Girl with high hopes. Continue reading

Posted in Cultural Critique, Films and TV, Gender, History | 2 Comments

Open, decentralised systems of collective intelligence and action: onwards and upwards


David Brin offers a usefully concise means for distinguishing liberalism from what liberalism became within just a few years from Adam Smith’s death - the worship of private property or as Brin puts it “today’s idolatry of personal and family wealth as the fundamental sacrament of economics”.  He contrasts that with ”the Enlightenment’s principal tool Reciprocal Accountability. But it really is just another way to say ‘get everybody competing’”.

I don’t think ‘get everyone competing’ is quite right, but what sparked this post was Brin’s generalisation of this idea, his assertion that this ‘decentralise and compete’ formula isn’t just descriptive of the way markets have evolved. It’s also descriptive of their correlative in Western modernisation – government. And it’s also descriptive of another transformational system – science.

Ever since civilization began, nearly all societies were dominated by centralized oligarchies, priesthoods or hierarchies who ruled on policy, resource-allocation and Truth for 4,000 years of general incompetence mixed with brutal oppression.

Today, by sharp contrast, all three of the Enlightenment’s great arenas — democracy, markets and science — feature a revolutionary structure that broke with the oligarchic past. The old, arrogant, top-down approach was replaced with something else. Something that great Pericles described 2,000 years earlier, during the brief Athenian Renaissance.

Continue reading

Posted in Cultural Critique, Economics and public policy, Philosophy | Leave a comment

“T” isn’t just for Troppo. T is for Trump

Well folks after a gruelling (if largely imaginary) 24 hour period haggling with other Troppmeisters, I’m pleased to announce Troppo’s unanimous support for The Donald for President of the Greatest Country on Earth. We were locked in disagreement until we had it summed up by Sarah Palin in the video above. Essentially the whole group agreed that we need a leader who can kick ISIS’s arse. Is that asking too much? I mean they’re ripping our guys heads off for Chrissake.

And Donald Trump doesn’t just talk about it. He’s had a TV program in which he’s said “you’re fired” on numerous occasions. Capiche? It’s not theoretical, its real world experience. As you’ll see in the video, Mr Trump also backs up those tough words with real actions. When he says “you’re fired” he points his finger. I mean the only thing he doesn’t do is lift it to his mouth and blow off the smoke – but that’s because it would be imaginary smoke, and Donald Trump is a real world kind of guy. Imaginary smoke is for wusses.

Meanwhile as the Australian informs us

Earlier on Tuesday, Mr Trump received an endorsement from the daughter of movie star John Wayne. Standing in front of a life-size, rifle-toting model of the actor in full cowboy gear, Mr Trump accepted the endorsement of Aissa Wayne at the John Wayne Birthplace Museum in Winterset, Iowa. “America needs help and we need a strong leader and we need someone like Mr. Trump with leadership qualities, someone with courage, someone that’s strong, like John Wayne,” she said.

So, as Sarah Palin put it, “help is on the way”.

Posted in Art and Architecture, Ask Troppo's Love Gods, History, Humour, Inequality | 3 Comments

Teacher pay: teacher productivity

Double for Nothing? Experimental Evidence on the Impact of an Unconditional Teacher Salary Increase on Student Performance in Indonesia
by Joppe de Ree, Karthik Muralidharan, Menno Pradhan, Halsey Rogers – #21806 (CH DEV ED LS PE)


How does a large unconditional increase in salary affect employee performance in the public sector? We present the first experimental evidence on this question to date in the context of a unique policy change in Indonesia that led to a permanent doubling of base teacher salaries. Using a large-scale randomized experiment across a representative sample of Indonesian schools that affected more than 3,000 teachers and 80,000 students, we find that the doubling of pay significantly improved teacher satisfaction with their income, reduced the incidence of teachers holding outside jobs, and reduced self-reported financial stress. Nevertheless, after two and three years, the doubling in pay led to no improvements in measures of teacher effort or student learning outcomes, suggesting that the salary increase was a transfer to teachers with no discernible impact on student outcomes. Thus, contrary to the predictions of various efficiency wage models of employee behavior (including gift-exchange, reciprocity, and reduced shirking), as well as those of a model where effort on pro-social tasks is a normal good with a positive income elasticity, we find that unconditional increases in salaries of incumbent teachers had no meaningful positive impact on student learning.

Posted in Economics and public policy, Education | 6 Comments

Neoliberalism, public and private goods and the digital revolution: Part one

The office of intelligence in every problem that either a person or a community meets is to effect a working connection between old habits, customs, institutions, beliefs, and new conditions.

John Dewey, Liberalism and Social Action, 1935

As I’ve argued before, our engagement with the digital world is suffering horribly from a metaphor hangover. We deploy the policy language articulated for micro-economic reform – the project of ridding ourselves of the tired and corrupt detritus of a century of political favouritism and relying where possible on market competition instead. It’s always worth continuing to ask such questions but, as we’ve learned to our cost, there are lots of areas where simple deregulation and market forces don’t work well and though it may not be easy to work out what the best strategy is, the reasons to be suspicious of simple market solutions are obvious enough. (Thus for example, and with the greatest respect for the authors of the report, why government decided to throw the commissioning of human services at the Harper Review into competition is an example of the problem. As far as I know none of the members of the review had much background in the area.

As I’ve argued, one of the exciting things about the digital world is that the relation between public and private goods is almost always different there. Often it makes sense to ignore this and just watch the market do its thing. But always and everywhere, a digital artefact is a potential public good. Indeed most of the new public goods that have evolved so far in the 21st century have been privately built. Google, Facebook, Twitter and Wikipedia.

So it’s an exciting area for new thinking, some of which I’ve tried to do here and here. Continue reading

Posted in Economics and public policy, Information | Leave a comment