Wednesday, 28 December 2016

The End of A 'Belle Époque'. 1991-2016.

The interlocking webs of policy which 'politics' seeks to knit are complicated. Whole books can be written on how two individual policies interact. PhDs in Economics are awarded for small snapshots of the whole cloth. Most people don't have the time to keep abreast of developments or read sufficient history to understand why some policies are bad. Thus, people use heuristics - rules of thumb - to make decisions  about that which they aren't expert. "Is this person trustworthy" is a key issue, and we tend to overweight the opinion of those near us. "He is my brother, and I say he's ok" says a friend, you are more likely to believe a mutual friend, than the opinion of a stranger on the same issue.

In the evolutionary past, such a question was a matter of life and death. People only really had to trust those with whom they shared a close genetic relationship. Since the development of agriculture, we've been steadily widening that circle of trust. The wider you spread that circle of trust, the richer your society will be. Even before it had a name, Free market economics allowed people to become blacksmiths, knowing others have water, food, shelter and so forth covered in return. More specialisation, greater productivity, means greater wealth.

Eventually, this requires trust in people we've not met. Towns' food supplies require that farmers unknown and distant supply the basics of existence. Nowadays, It's unlikely the west could quickly supply all available plenty currently manufactured in China. Nor could China supply quickly the complex components and tools shipped from Japan, Europe and USA. Both China, and "the west" are richer from the exchange. And yet, we still don't trust "globalisation".

Most persistent fallacies in political economics are the result of simple policies that appeal to some base heuristics, but which when applied to the larger and wider society, fail catastrophically. Thus egalitarianism in one form or another pops up every 3 generations or so and succeeds in making everyone equal, but some more equal than others, and even more, dead. Then nationalism comes along, and says it's all [another, arbitrarily defined group of humans with slightly different modes of speech] fault, leading to more waste and piles of corpses. And even when the results aren't catastrophic, we seek out the views of those who agree with us on say, Nationalism to inform our opinion on, say, whether or not people are responsible for climate change.

Which political tribes stumble into being right or wrong on any given issue appears arbitrary, because no-one's asking for the evidence before they decide on the policy. Instead of asking "what's right", we're asking what's popular (amongst the coalition of tribes that voted for me) right now. That an opponent comes out with an identical policy, for different reasons is reason enough to oppose something, forgetting completely prior support for it. After all, whatever [another political tribe] thinks must be wrong, right.


The Labour party opposes ID cards. The Labour party has always opposed ID cards. The Tory party is for the Free market and was never in favour of the Corn Laws. We have always been at war with Eastasia. Perhaps if we could think for ourselves rather than just accepting tribal dogma, we'd get better governance. But none of us have the time. So "Democracy" is merely a means to give temporary permission to one coalition of tribes to push through dogmas over many issues, until either the population notices, or the coalition of tribes breaks up, and the electorate takes a punt on the other tribe's prejudices for a bit, and then gets on with whatever they were doing before.

Society ultimately advances by eliminating prejudices it's acceptable to hold thus widening the circle of trust, and increasing riches. By falling back on ancient heuristics to answer the wrong question ("who's fault?" is the wrong question) 2016 democracy has delivered the worst political outcomes on a broad front, as a result of which, we are poorer, and more likely to start fighting as a result of the collapse in political trust we have seen over this year. The post Cold-War 'Belle Époque', which saw half of humanity, 3 billion people, lifted out of poverty, is over.

Idiots cheer.

Monday, 19 December 2016

This was my Market Report 6 months ago... (Before the Referendum).

The UK markets have been hit hard by the threat of leaving the EU. The consequences, at least in the short-term would be a short sharp fall in UK stocks and Sterling. Depending upon what happens to the necessary capital flows which fund our current account deficit, (as well as our trade and fiscal ones), we might suffer an interest rate shock too. If the Foreign direct investment dries up, the UK may suffer a prolonged period of stagflation, falling currency and higher interest rates, choking off the recovery. If foreign capital flows do not dry up, then the recession or slowdown will be much milder. The fear of this outcome therefore has held markets back, even as US jobs data, and even Chinese numbers have surprised on the upside.
It is unusual for political events to so impact the markets, but we don't even know if 'Leave' would mean leaving the Single Market (Gove and the EU seem to say 'yes', a lot of Leave campaigners say 'No') and the government's contingency planning is silent on the issue. It is possible we could leave the EU but remain in the EEA which would be far less disruptive. Markets do not react well to not knowing such crucial bits of information.
So, the outlook is utterly dependent upon a "Known unknown" (the referendum) followed by an "unknown unknown" (how foreign capital reacts) to use Donald Rumsfeld's unfairly mocked phrase.  It's not even clear overvalued gilts would make a safe haven in the event of brexit, as if Foreign Direct Investment dries up, interest rates will have to rise. Only index-linked offer much of a safe-haven, but they seem overpriced. There is much else to report, but this month, it simply doesn't matter.

Tuesday, 13 December 2016

Boston Dynamics and The Late Sir Terry Pratchett

Everyone knows how driverless cars will work: they will be like ordinary cars, except you read a book rather than acting as pilot. And so, people's understanding of what a technology can do is clouded by what the old technology it replaces does. Which means people without imagination, Head of IBM Thomas Watson, for example, say things like

"There may be a world market for maybe five computers"
and get it wrong. In 1943, computers were used for cryptography, and that's it. (At least he knew what a "computer" was, which few did back then). Predictions are hard, especially about the future. But it's probably worth noting here that the famous World Wide What? front page of The Sun, was in fact rather a good a spoof, by The Sun.

Boston Dynamics makes robots.


Who needs Robots? Well, like computers or the internet or driverless cars, the technology is coming. And it will change people's behaviour in many, unpredictable ways. For example, mobile phones were conceived as portable analogues for the phone on your desk or in your hall. SMS text messaging was added as an afterthought, but became THE dominant means of communication. Calling someone is now rude, often you text first to see if a call would be convenient. Who (apart from mums) leaves voicemail messages any more? Few predicted that change in our behaviour. The smartphone is now ubiquitous, and is more about accessing the internet than calling friends, but wasn't imagined before the internet, Except by Douglas Adams (and John Brunner of whom I'd not heard until I discussed the issue on Twitter). Driverless cars will be as close to the car, as the car is to a buggy and four. And robots, when they become ubiquitous, will be unlike anything we've considered.

I look at Boston Dynamics Robots, the big dog is conceived as a load carrying mule for soldiers on rough terrain, and I think of The Luggage, Rincewind's inscrutable companion on the discworld. I suspect everyone will one day have a robot the size of a dog to carry daily necessaries, following them round. You could send your luggage to someone else, by smartphone app to pick something up. Your luggage could take your shopping home and collect it from the store for you. Large luggages could be sent on ahead with bags. Small luggages could replace handbags and briefcases. The labour and time saving would be vast, spawning whole new areas of employment, servicing and modifying your faithful electronic companion and providing for the opportunities they create to effectively be in two places at once. Freed from the ownership of motor vehicles by the fact we'll be taking taxis everywhere, our Robot luggage will perhaps become the next status symbol around which society is built, replacing the car.

Like cars, I suspect the battery technology will be the limiting step, and like cars, I suspect the fuel cell will be the answer. Small fuel cells will one day power your smart phone too.

But think about the opportunities for people from smart phone. There are tens of thousands of app designers round the world now, a job that had barely been considered as recently as 2007, when the first iPhone was released, and that is similar to how the jobs which will be taken by the robots, will be replaced. That is why people who fear of a "post-jobs" future were wrong in 1816 and are still wrong 200 years later. The world's only limitless resource is human ingenuity.

Anway. I for one welcome our new robot overlords, and this guy should totally be locked up.


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