So I went to the Royal Academy’s Russia exhibition yesterday, which led to me looking up oligarch/collector Petr Aven on Wikipedia. He’s Mikhail Fridman’s business partner in Alfa Group, which means ironically enough I was looking at paintings belonging to the guy whose employees built a whole fake website to confuse me about their ownership of Russian mobile operator Megafon back in 2006, but failed because I used the magic of traceroute, WHOIS, and the Firefox built-in developer console to unmask their stinking act.

Anyway, Fridman’s entry led me to this North London landmark, this related Yorkshire chemical corporation, one of their original key products, its main application, and via one of the stated alternative applications, to music, magic, its texts, their sources, and Bismarckian-era German Jewish historical scholarship that evidently had unintended consequences.

A bit like looking up Petr Aven on Wikipedia, then.

The design values of today

So I read the Indivisible Guide, which was drafted by a group of ex-Obama staffers as a HOWTO for people interested in protesting Donald Trump. The core idea is that the ‘baggers were very successful as a protest movement and their strategy can be replicated. Basically, don’t bother with shopping lists of nice stuff, do badger elected representatives of any kind to say no to everything, and organise locally to threaten their re-election specifically. It also offers a lot of useful tactical advice. To be honest it’s pretty much the document we needed in the UK in 2010.

And the typography is gorgeous in a way that is redolent of fast-breaking Obama nostalgia. The subheads are even in that Toronto Transit typeface. Compare the deliberately horrible, Angus Steakhouse aesthetic of fake news sources, desperately trying to turn away anyone who is likely to see through them, or the early 2ks revival pink/viridian blinktag hell of your favourite woke blog, parading its deliberate anti-accessibility. Design value, it turns out, are actually values. (Hey, in 2003 this blog had a mousetrail clock and a dancing terrorism alert banana. I should know.)

A simple, terrible plan

Now if you read this blog, you probably know I was briefly known for proposing that councils borrow against the stream of Local Housing Allowance payments and use this to buy up a lot of rental property. I called it the Simple Plan; it would simultaneously do something for the housing crisis, let the buy-to-let mob walk away with at least some of their money, and ease the squeeze on councils’ budgets by getting rid of expensive emergency short lettings.

It turns out the councils have invented their own, terrifying perversion of the Simple Plan. They’re borrowing from the central government Public Works Loan Board, all right, and they’re even issuing their own bonds. But what are they doing with the money? Rather than buying (or building) houses, and therefore also reducing their rental bills, they’re buying commercial property in order to make a turn on the spread between the rent and the PWLB repayments. This will work just so long as the commercial property market behaves and interest rates don’t go up.

Of course it won’t do anything for the councils’ public purposes, and it will only help their finances in so far as they get to pick up some coins in front of the steamroller. This is an example of one of the problems with any localist solution to our problems; local authorities are notoriously full of idiots, and because no bugger votes in local elections, it’s impossible to get rid of them until the damage is done. Here’s Brent being proud they’ve signed up a lot of private lets on long term contracts. You could buy them out and keep them for good and all! At least it’s less crazy than playing Forced Buyer of Risk with shopping centres.

If anyone’s looking for a good idea, by the way, I quite like this scheme which basically offers the BTLers a golden bridge to bugger off. Meanwhile, I associate myself entirely with Dawn Butler’s point that the Government housing white paper could be summed up as “whatever you do, do nothing.”

Note on a future populism post

An interesting post about populists. I think this point can be extended.

Find a wound common to many, someone to blame for it and a good story to tell. Mix it all together. Tell the wounded you know how they feel. That you found the bad guys…if you’re not among the victims, you’re among the culprits

OK. Conservatism: there are always victims and culprits, and that’s OK. God and the King say so. Classical Liberalism: whatever God or the King may say, you can avoid being a victim by your own hard work as long as no bastard interferes. Marxism: some people are victims because they are workers and must sell labour to survive. As a result, the culprits can always exploit them because the workers are forced sellers. That’s why the culprits get rich. All post-Marxist movements: we assert that the same insight applies to us.

The common feature here is that there’s a determinate standard of victimhood. The rich man is in his castle and the poor man at his gate because He made them high and lowly, and ordered their estate. (Yes, we sang it in 1980s Yorkshire.) The working class is exploited because they’re workers, and further, they’re poor. Women are exploited because they’re women. So on and so forth.

The populist genius is to deny this stricture. Access to justified indignation is fully democratised. No matter how petty your grievance, you have it on an equality with everyone else. Swimming the Med away from your rapists? OK, but the bins here are only collected every other week, and my GP is Polish. Who cares? This is the populist moment – standing over the temporarily uncollected rubbish, you rage as if you had a real problem. The Germans have the useful word Wutbürger, which means an angry citizen or maybe an angry bourgeois. A valid but wrong translation, though, might be a citizen of anger, clutching a puce passport issued by the ungovernable state of rage. Other political movements tell you to wind your neck in and concentrate. Populism enrols your risible whining in its wider crusade towards wherever.

Endlessly expandable victimhood has an important consequence. The set of culprits can – must – expand to include all the grievances anyone could possibly have. In practice, this means that the culprit can be either left vague, or else selected as the moment demands, left to the performer’s unique interpretation.

Interrogation by silence, and Trump’s mental Heartbleed

This Trump speech has been widely circulated by now, but two things come to mind. The first of all is that he seems to have the verbal version of the Heartbleed SSL bug. In Heartbleed, the problem is that you can request a keep-alive message of length you specify, with data you provide, but there was no check that the provided data was in fact of the length stated. Therefore, if you declared a much greater length than the actual data you provided, the target machine would keep reading past the end of the buffer it put your message in, sucking up whatever happened to be in working memory nearby and disclosing it to you.

As with the broken server, so with the Donald. He just keeps talking, filling the space, reading from whatever is immediately available in his head. This reminds me of a old journo trick. When I was your actual journalist, I often had to interview pompous and self-important businessmen. I came to realise that one of the best ways of getting news out of them was to shut up. Questioning them tended to make them clam up, refer me away, or complain to my editor. But if I said something as a stimulus, tangential to my real point, and then shut up, they tended to over-answer. And I would let them. When they paused, I would keep stumm, encouraging them to fill the awkward pause with talk.

A lot of people love the sound of their own voices. Self-important SVPs are preferentially selected for this trait and, God knows, get plenty of chances to exercise it. Also, there’s something about having a member of the media around as sycophantic amaneunsis that encourages the behaviour. If you hear something interesting, of course, you can shift gear and probe, but you might as well just take your full notebook back to the newsroom and your best friend, the Google site: command. That said, it’s very important to recognise the slips when they come, not least because that’s how you’ll remember them. Using this method requires you to brief yourself thoroughly.

Trump seems like an extreme case of the self-important sales guy promoted to the C-suite, so I’d recommend this trick to anyone interviewing him. It also has the advantage that it looks subservient and deferential to the crude eye, although it is anything but. This may be a problem for anyone who has to ask him questions on TV, as a live media interview is in part a theatrical performance. Questions must be asked and must be seen to be asked. On the other side of the table, one of the skills of a really good PR person is to recognise when the client is in danger of over-answering and divert them; the one who used to see through me on this was Vodafone’s feline mandarin of a PR director, Bobby Leach, who I think realised I was making a strategy out of it.

Scarcity and political complexity

So I’m watching the chute, and then the experimenters chuck down this pellet, which turns out to be some sort of libertarian riffing off my Neo-Edwardians post around the idea that perhaps the move away from a simple, Posh vs. Oiks politics is to do with the rise of post-scarcity, idea dear to the hearts of SF readers.

Now I might get snarky and point out that I can see people sleeping in doorways in central London and it was -4 degrees C last night and where’s your post-scarcity now, eh, eh? (Insert the canonical Jabbing of the Virtual Finger.) But I think it’s worth examining this a bit. What would we mean by saying that some good or other is post-scarce? Well, I would start by saying that its marginal cost is zero, or for practical purposes, that its marginal cost of production (and therefore price, for the firm in perfect competition) has fallen below the overhead cost of charging for it.

Put like that, there’s more of it about than you might think.

The obvious example is information of one kind or another. It’s not just that Google has an advertising-funded business model – it’s also evident that the marginal cost of a search is extremely tiny, so much so that it’s probably indistinguishable from zero. The economics and politics of information goods are notoriously weird, which might both reassure us that we’re onto something and also suggest that perhaps this is just some boring Internet thing with no connection to the real world. You’d be wrong, though. It’s become, if not exactly routine, not unusual for the price of electricity to become negative in some markets where there is a lot of wind or solar power on the grid. And by “some markets” I mean Germany, half of the world’s manufacturing heartland. If you have to pay people to take it away, it ain’t scarce. A lot of industrial products are stupidly cheap at scale – the canonical example is micro-electronics. Even something as drastically physical as ocean freight is very, very cheap.

The example of electricity is an interesting one. The costs of production for these sources are basically made up of equipment, i.e. panels or turbines, interest on its capital cost and construction costs, and rent, because the sun is already post-scarce. As far as the equipment goes, it is getting remorselessly cheaper or in other words less scarce, like manufactured goods in general. Interest rates are of course nobbut bugger-all at the moment, and the construction cost is getting amortised over 25 years or more for wind machines. We can see from this that there are some specific sources of scarcity:

Enduring scarcity

First up, land, which they famously aren’t making any more. Those panels have to go on somebody’s property and that somebody can charge rent. Land as such is interesting not just because it’s permanently limited in supply, but because it’s radically heterogenous. You occasionally see economists saying things like “Houses are so much cheaper in the US’s open market cities! Silly people! All you need do is move to Bismarck, North Dakota and you’ll be rich!” Which is funny, because some of the same people will also tell you that cities are important because of agglomeration effects. Even if we could create land cheaply, we couldn’t make it all be in London. Landlords are still going to be with us. And to repeat the point about agglomeration, this isn’t just because some addresses are posher than others; people create cities because they are useful and enjoyable.

Economists have a nasty habit of rolling the whole planet up as undifferentiated “land”, so it’s worth noting separately that even if goods are extremely cheap, perhaps because we were using post-scarce solar energy to keep re-using the same elements, natural capital (e.g. the atmosphere) might still be scarce. This is hard to think about because the economy doesn’t do a good job of pricing it and it ends up as an externality, aka the Big Bin of Things Not To Think About. The obvious party to eventually stick a tag on this is the state.

Transitional scarcity

Even though a lot of industrial processes are hyper-deflationary, some of the technological pathways seem very resistant to commoditisation. Countries that can barely scrape into the middle-income category manufacture cars and even aircraft, but the number of firms worldwide that can make a jet engine is still probably smaller than the number that could make a nuclear bomb, and even more so if you restrict that to ones who should make them rather than risking the passengers’ lives unnecessarily. Think about that one for a moment; Frank Whittle’s first effort ran for the first time in 1937, so it’s stayed very high technology for a long time. Similarly, electronics is incredibly cheap and incredibly deflationary, but the suppliers of tooling like ASME are a very select bunch. Software is often free, and being digital information, its marginal cost is zero. But good software, free or not, is painfully rare.

A common feature of these cases is that they are often intensive in craft skills and hard-to-automate tacit knowledge, something which is also very common in the services economy. In many ways, this branch of scarcity is defined by the fact that it’s people. It might not stay that way, which is why I categorise this as transitional scarcity. But I also did that to remind us that a transitional phase can be very long, in fact, permanent for practical purposes. That brings us to:

Artificial scarcity

Because one man’s craft skill is another’s guild mystery! Google searches are abundant, but their private-use software very much isn’t. Unlike the tacit skills of their SREs, embodied in the people who possess them, this stuff could be leaked on pastebin or deliberately released into open source, so I classify its scarcity as artificial. Artifical scarcity is created either by a monopoly or else by an act of state. As it’s basically a social decision to have it, there is no reason to think it’s going anywhere. One of the absolute classic examples of this is copyright, but perhaps the more important one today is the associated right (called the database right in Europe) to collect, use, and claim property rights in data.

And, you know, I think I see it. If everything else is getting less scarce and you own land, you’re going to be very rich. If you’re a monopolist of technology or information that’s important to the nonscarce sector (or as I remember Mark Kleiman calling it, the communist sector) you’re going to be very rich and very keen on defending that monopoly. And if you are the technology, you ought to get paid for it. So what do we see? Skyrocketing land prices, extreme inequality between individuals, and huge profits at oligopolistic technology- and data-intensive firms, which match my three forms of enduring scarcity rather nicely. And political systems that were based on the assumption of fairly high scarcity, evenly distributed between sectors, aren’t functioning well. We also see deflation, which is what you’d expect if chunks of the world economy were approaching the zero lower bound on price. Hey! Zero lower bound, didn’t I hear that somewhere? Perhaps the secular stagnation concept is how capitalism ultimately defends scarcity and the benefits it brings to the rich. There’s a thought.

To wind up, eventually, in a substantially post-scarce future, what remains scarce is what society chooses to value. What that is, and how much it gets paid, is a political decision. ***prolonged, stormy applause as the giant gilt idol representing plutocracy is toppled***

In which I whine about Boris buses again

Here’s a really good post about public transport and design. I would add to their account of the genesis of the Boris-bus that it’s not enough to say that Johnson started out by saying he wanted a new Routemaster, rather than saying he wanted a new bus for London and deciding what would be best. This misunderstands Boris Johnson. Clausewitz says that strategy is the combination of successive actions that converge towards the achievement of a selected aim. The aim was to promote Boris Johnson in general and his political career in particular.

He wanted something that was visibly, palpably, new, and at impressive scale. This is simple enough – people in authority always want to build monuments to themselves. He also wanted it to project certain statements of style that associated it with the brand values of Boris Johnson. Specifically, it needed to be both new, and nostalgic.

Boris Johnson represents nostalgia, but not for a past where you’d be expected to believe in God, hand over your credit cards to your husband, or fill out an exchange-control form before going on holiday. His job used to be reviewing sports cars. His greatest pet project was a giant international airport on an artificial island. He is not a fake Victorian, but a fake 60s face dressing up as a Victorian fop. Very likely, he projects this because the political constituency he wants to appeal to – well-off baby boomer suburbanites – agree that they liked being young in the early 1970s very much. Precisely because of this, they are unlikely to appreciate any suggestion that they are getting behind the times. Hence the need to cut the nostalgia with novelty. It’s important to remember that this is harmonious, counterpointing, contrasting, in tension, or in opposition, rather than contradictory. As a style statement, it belongs to the category of aesthetics rather than logic.

Further, it needed to be good copy because Boris Johnson is a lifelong journalist. In pursuit of his aims as the chief promotor of Boris Johnson, he needs things that are good to write with, because his primary voice is his column. That the New Bus for London was the New Routemaster suited this. Even the word is nicely balanced and abstractly euphonious, something Johnson can be expected to appreciate. In a sense, the column and the talking points – even the harvest of below-the-line comments – came first and the bus was designed to suit it.

Amazon Web Services has a longstanding practice of starting any new project by drafting the final press release that will announce its launch into general availability. It’s worth stopping and thinking a moment about the similarities and differences between this practice and the process that gave us that bloody bus. As a design discipline, AWS’ process has the virtue that it forces you to identify what makes the project useful to the customer – the key design affordances – and what makes it useful to Amazon – the unique selling points – from the very beginning. The Boris process does half of this, the half that is useful to Boris. Cynicism aside, there is also a major distinction here between a bus and an API.

The bus is an object, embodying a service, that represents itself through its design values. The API is a purely immaterial service, that represents nothing but itself. If you say it will permit you to automatically provision additional virtual machines when the CPU load percentage rises above a user-defined value, optionally reporting the event by webhook, loading the specified machine image, and shutting them down when the load percentage is again normal, it had better do it, and we can write a unit test for each item before we get started implementing the thing. But it’s possible to enjoy the bus without ever actually getting aboard. As an aestheticised object, it has an audience beyond the user. As a politicised object, it has a purpose beyond the bus service embodied in it. There’s a reason they’re called Boris buses!

There’s also a reason why the lights went out at every stop on the one I took the other day. This secondary audience and function can dominate the primary one. By contrast, you give AWS money and it gives you a VM or three hundred, and there is no arguing with that. On the other hand, nobody in this exchange is talking about how much the employees of their tangentially-related bookshop get paid. Politics is more complicated than pure commerce, and that’s also a good thing.

Open newslist 10

We haven’t done one of these for a while, not least because I haven’t been blogging enough. Here are some ideas

The Populist Papers: this will probably be either AFOE or maybe Politico Europe, and it’s an effort to define what the key traits of populism (European meaning, negative LaFollette) are. My thinking is that it’s mostly a technique of politics, and that’s what’s interesting about it.

Google Editor: basically, if you want Google to do something about the Twitter-nazis, be careful what you ask for as turning a bunch of big Californian corporations into admitted rather than veiled editorial authorities might have some unintended consequences.

Something about the French socialists and how they were the real model for Blairism, New Democrats etc. Troll potential considered gnarly but I think it’s important it was them who decided that the “choix de’l Europe” was also the “tournant de la rigeur”, not once but four times by my count.

Follow up on neo-Edwardians and what the fuck to do about it.

So anyway, for my next trick I’ll need a blogosphere. Step right up!

An even simpler plan nobody wants

The world is in turmoil. Trump. Brexit. Marine Le Pen. And as very often when this is so, it’s in turmoil about macro-economic policy although this is often less obvious than you might think. MLP, for example, wants to recreate the franc, redenominate the French national debt, presumably devalue/inflate a great chunk of it away, and then peg to a hard euro. (Remember that?) The point isn’t so much about the content of this plan but more just that, when you get down to the detail, madmen (and women) in authority are still distilling their frenzy from some academic scribbler of a few years back, like the fella said. It’s almost reassuring to think that something as boring as money might be involved. So what’s Ed Balls been up to lately?

Writing a paper on central bank independence, and of course some other stuff. The paper is mostly interesting because it concedes that a major element of the independent central bank model is wrong, but ironically in a way that reinforces the need for its independence. Classically, the justification for making the central bank independent was that it would be able to fight inflation without worrying about how to get re-elected. The core assumption here is that governments like deficit spending and workers like raises, and therefore at some deeply denied level, inflation is a phenomenon of democracy.

As it turns out, central banks these days are spending all their time fighting deflation, which turns out, astonishingly, to be pretty popular. Ask…Ed Balls. Not only that, but their remit has expanded enormously to include things like acting as a financial regulator, generally trying to warn the public off from bubbles, and providing direct business financing. This has resulted, through the search for requisite variety, in a major expansion of their policy toolkit and staffing until they start to look weirdly like a kind of outsourced and unelected economic government, an internal European Commission.

The key driver for this diversification is that, arguably, the politicians have either avoided dealing with these problems, have found dealing with them to be unpopular and given up, or are deadlocked by veto actors on what to do about them. Being operationally independent, this doesn’t apply to the central bank, and therefore its mission tends to expand. Its area of responsibility, however, has not expanded in a similar way because it’s still independent. As a result, people who love deflation can howl “Audit the Fed!” all day but it doesn’t have to listen to them, and people who hate it can picket the ECB all day and the Frankfurt police will crack their heads.

Paul Krugman coined the phrase “a credible promise to be irresponsible” to describe the perceived need for the central bank to do whatever it takes to get away from the zero lower bound on interest rates. The problem, however, is that there is no matching credible promise to be unpopular that binds the fiscal authority. Balls makes some suggestions about this, but the whole issue reminded me of an old idea of mine.

One way of looking at the problem is that while inflation is reasonably close to the target, it makes sense to think in terms of a negative feedback loop between the fiscal and monetary authorities. If the government’s spending plans start to push up inflation, the central bank can respond to keep it down. If prices start falling below target for some reason, the central bank can respond to push them back up without trying to fine-tune the budget. But there is only a restricted domain in which this works well, rather like an aircraft’s flight envelope. Outside this domain, things work differently. The obvious example is the zero lower bound, where the central bank has basically run out of options. Presumably, there is a similar inflection point in the other direction where inflation goes out of kilter, but this is obviously a secondary consideration at the moment.

To get back into the stable domain, we need fiscal and monetary policy operating in the same direction. This, however, is where politics creeps back in. The quasi-automatic setup we just described is in many ways an effort to depoliticise economic policy; but now a fundamentally discretionary, political decision is required and it’s quite possible that we won’t get one whatever the sign, because evidently a lot of people love them some deflation and are determined to get revenge on anyone who denies it to them. Inflation bias, he dead.

So why not apply the same logic that we did to the central bank? Balls argues that the BoE should write one of its famous letters to the Treasury if it looks like it would hit the ZLB. But I think this is weak sauce. Why not commit to fiscal measures in advance, in the same way that operational independence commits us to monetary measures in advance? The Treasury could agree with the BoE that, in the event that the ZLB is reached, it undertakes to reflate until the inflation rate is positive and trending towards the target. It could make a matching commitment to deflate if the inflation rate (or the BoE interest rate) hits some upper bound.

Of course, nobody wants this or anything like it. It strikes me that perhaps the big lesson of 2016 is that we’re sick of depolicitising anything, and we damn well want things politicising.

The Rogers Legacy

Does anyone else think Sir Ivan Rogers quit when he did in order to make sure his replacement was someone like Sir Tim Barrow?

Rogers’ ostensible explanation for quitting was that his posting was coming up anyway in a couple of months and he wanted to give his successor some time to read themselves in. Naturally he then gave the real explanation further into the letter. Had the appointment process been allowed to run its course, there would have been time for an organised campaign for some clown like [fill in the blank] to get it, and for David Davis to try to grab the UK Permanent Representation to the EU away from the Foreign Office. Instead, as Rogers quit with immediate effect and an immediate replacement was needed, the process was telescoped into 24 hours, giving a huge advantage to the immediately available institutional candidate who was also the safe option.