The Zero Room

This week, I have been mostly reading:

• The Higher Education White Paper: Euphemisms for Destruction — Will Davies in the Political Economy Research Centre blog: It is easy to moan about ‘privatization’ of higher education, but this is arguably something worse. With privatization go some of the benefits of privacy. Instead, we have a technocratic dream of perfectly calibrated ‘satisfaction’ and fees, where every ‘incentive’ is ‘aligned’. It all stems from a Benthamite fantasy that (as I explore in The Happiness Industry) money and subjective experience have a simple, stable relationship to each other. Sustaining the fantasy in an area like higher education involves regulatory complexity on a scale and cost that even Blairites might have blanched at. Technical complexity of this nature benefits one ‘stakeholder’ above all others: consultants.
• Polls Showed Sanders Had a Better Shot of Beating Trump–but Pundits Told You to Ignore Them — Adam Johnson, at Fairness and Accuracy In Reporting (FAIR): There was a debate last spring, when the Sanders/Clinton race was at its most heated, as to whether Bernie Sanders’ consistently out-polling Hillary Clinton was to be taken as a serious consideration in favor of his nomination. […] Never mind, the pundits said—Clinton had been “vetted” and Sanders had not.
• Obama said Hillary will Continue his Legacy – Indeed! — Michael Hudson. Okay, academic now, but this is a very important point I've not heard expressed from anybody else. Forget superdelegates; the Democratic primary process included essentially irrelevant states in the sample that was supposed to prove Clinton's electability: Appointed as DNC head by President Obama in 2008, [Tim Kaine] dismantled Howard Dean’s 50-state strategy, not bothering to fight Republicans in the South and other solid Republican states. His move let them elect governors who gerrymandered their voting districts after the 2010 census. The DNC designated these “neglected” states to come first in the presidential primaries. They were the ones that Hillary won. Sanders won most of the swing states and those likely to vote Democratic. That made him the party’s strongest nominee – obliging the DNC to maneuver to sideline him.
• Time to ditch Rawls? — Branko Milanovic: Liberal democracies do not affirm the principles of liberalism, as Rawls expected, neither domestically nor internationally. It is inconceivable for Rawls, if these societies would be working well, that they would, as in the US now, generate a third or more of “malcontent” population that clearly does not believe in liberal principles nor is willing to affirm them in their daily lives. Far from it. This, plus the pervasive role of money in electoral politics, lower tax rates for capital than labor, neglect of public education etc. imply that domestically so called liberal societies are very far from Rawls’ idea of liberalism. The difference is so great that we cannot, I think, speak of the discrepancy any longer as the expected difference between an abstract idea and what exist in reality. These societies belong to an entirely different category. Moreover, in foreign policy, as became clear with the Iraq war, they act like outlaw states since they break the fundamental rules on which the international community is founded, namely absence of wars of aggression.
• The Gig Economy — Ted Rall:
  
• Building a Progressive International — Yanis Varoufakis continues his crusade of optimism in the pages of Project Syndicate: Bernie Sanders’s “political revolution” in the US, Jeremy Corbyn’s leadership of the UK’s Labour Party, DiEM25 (the Democracy in Europe Movement) on the continent: these are the harbingers of an international progressive movement that can define the intellectual terrain upon which democratic politics must build. But we are at an early stage and face a remarkable backlash from the global troika: witness Sanders’ treatment by the Democratic National Committee, the run against Corbyn by a former pharmaceutical lobbyist, and the attempt to have me indicted for daring to oppose the EU’s plan for Greece.
• Why Jeremy Corbyn Matters — Richard King in 3 Quarks Daily: It's this prospect of genuine grass-roots democracy that scares the bejesus out of the establishment. The Blairites like to talk about "credibility" and to lament or decry Corbyn's lack of it. But they know as well as anyone that the public's notions of what is credible are changing faster than Donald Trump's policy positions. Boris Johnson, a man who can't comb his own hair and describes African people as "piccaninnies", has just been made British Foreign Secretary: how's that for "credibility"? No, the Blairites aren't anti-Corbyn because they think he can't beat May in a general election. They are anti-Corbyn because they're worried he will.
• Class in America and Donald Trump — Karin Kamp interviews historian Nancy Isenberg for BillMoyers.com: Donald Trump’s success is rooted in a raw, unscripted speech, outright rudeness and his ability to project anger without being constrained by the well-measured idiom of the politician. His campaign manager admits he is “projecting an image.” Who’s surprised? Our electoral politics has always countenanced con artists and has abided identity politics. An Australian observer described the phenomenon succinctly back in 1949, and it’s true today: Americans have a taste for a “democracy of manners,” he insisted, which was in fact different from real democracy. Voters accept huge disparities in wealth, he observed, while expecting their leaders to “cultivate the appearance of being no different from the rest of us.”
• My Fellow Americans: We Are Fools — Margot Kidder vents on CounterPunch on the occasion of Hillary "We came, we saw, he died" Clinton's coronation as Democratic nominee: I am half Canadian, I was brought up there, with very different values than you Americans hold, and tonight — after the endless spit ups and boasts and rants about the greatness of American militarism, and praise for American military strength, and boasts about wiping out ISIS, and America being the strongest country on earth, and an utterly inane story from a woman whose son died in Obama’s war, about how she got to cry in gratitude on Obama’s shoulder — tonight I feel deeply Canadian. Every subtle lesson I was ever subliminally given about the bullies across the border and their rudeness and their lack of education and their self-given right to bomb whoever they wanted in the world for no reason other than that they wanted something the people in the other country had, and their greed, came oozing to the surface of my psyche.

This week, I have been mostly reading:

• Surpluses & deficits are hotly debated – but what about the currency? — Emile Woolf, Renegade Inc: When a British importer buys German goods he must pay for them in euros. For that purpose he (or his agent) will acquire euros from a German bank, and after settling the bill the German exporter (or his bank) is now a holder of British pounds. What will he do them? He can use them to buy British goods, or even UK treasury bonds, or he can exchange them for a different currency – but if, instead, he just sits on them indefinitely he will, just like the retailer who never cashes your cheque, be handing the importer a free gift!
• John McDonnell is right: we do disagree on macroeconomic policy — Richard Murphy: I said he should not agree to a fiscal charter promising a balanced budget which is wholly economically unnecessary and even destructive. But he did. I also argued against the fundamentally neoliberal concept of an independent central bank that takes control of key aspects of economic management out of democratic control and which was Ed Balls idea. But John bought into it. And as a result he backed off from People’s QE : he was advised that a central bank cannot create money to help ordinary people, job creation or the building of social housing. Instead John accepted that central banks can only use that power for the sake of saving bankers.
• The macroeconomic challenge of the twenty first century — Richard Murphy: Petrodollars created the architecture of the economies of the world that are now creaking at potential massive cost to us all. Now wise management of the fiscally created dollars, euros, pounds, yen and more can provide the alternative, costless but ultimately liberating source of the lubricant for our future economies. As a result we no longer need to burn the planet to liberate the potential in all people. The fiscal dollar can instead build the foundations for prosperity and social harmony that we all crave.
• New Paper: Demand-Side Business Dynamism — Mike Konczal and Marshall Steinbaum in Roosevelt Forward: This paper argues that the decline in mobility, dynamism, and entrepreneurship is a result of declining labor demand since 2000. When it is hard to find another job, employed workers stay at the jobs they have, impairing their ascent up the job ladder and the accompanying wage growth over careers that historically led to the middle class. Declining entrepreneurship can also be explained by workers’ reluctance to leave large, stable incumbents to start their own firm or to work at a start-up when they cannot be assured that they will have a more stable job to return to. Thus, we find that the concentration of employment in old firms and in large firms mirrors the timing of declining labor mobility due to declining demand.
• Understanding Trump — George Lakoff: Private enterprise and private life utterly depend on public resources. Have you ever said this? Elizabeth Warren has. Almost no other public figures. And stop defending “the government.” Talk about the public, the people, Americans, the American people, public servants, and good government. And take back freedom. Public resources provide for freedom in private enterprise and private life. The conservatives are committed to privatizing just about everything and to eliminating funding for most public resources. The contribution of public resources to our freedoms cannot be overstated. Start saying it.
• How Did We Get Such a Terrible Nominee? — Ted Rall:
  
• The Bank of Japan needs to introduce Overt Monetary Financing next — Bill Mitchell: When economists talk of ‘printing money’ they are referring to the process whereby the central bank adds some numbers to the treasury’s bank account to match its spending plans and in return is given treasury bonds to an equivalent value. That is where the term ‘debt monetisation’ comes from. Instead of selling debt to the private sector, the treasury simply sells it to the central bank, which then creates new funds in return. This accounting smokescreen is, of course, unnecessary. The central bank doesn’t need the offsetting asset (government debt) given that it creates the currency ‘out of thin air’. So the swapping of public debt for account credits is just an accounting convention.
• Economic change will not happen until the left understands money — Ann Pettifor in openDemocracy: The fact is that as western economies try to recover, they are sunk again by a mountain of private debt whose repayment is made less likely by austerity policies. These are policies with the ideological aim of “shrinking the state” but which, in the process contract both public and private sector investment, employment and incomes. The consequence of weak demand built on a mountain of debt is deflation: a generalized fall in prices and wages. Most economists, especially those in thrall to the finance sector, have an obsession with, and an aversion to inflation. The reason is that inflation erodes the value of debt. Deflation does the very opposite: it inflates the value of debt. Creditors are not disturbed by deflation, as it effortlessly, and silently increases the value of their most valuable asset: debt.
• Education, The Enlightenment, and the 21st-Century — Fred van Leeuwen for the RSA: There is an inherent conflict between blind faith and critical thinking. That is true whether it is religious fanaticism or the imposition of political ideologies or nationalistic or ethnic dogmas in schools. Although I am not confounding barbaric terrorism with the “values” of the market, it is a danger if one grants markets and management thinking unexamined reverence. Placing education in such a straightjacket is having a major impact on development because it is affecting the way in which communities are conceived, justice is understood, and democracy is practised.
• The DNC Email Leaks: The Gift That Keeps On Feeding Distrust — John Kiriakou in Truthdig: As my friend the State Department whistleblower Peter Van Buren said recently, “People are claiming the Russian government risked something close to war to hack DNC emails to embarrass [Hillary] Clinton after her own email shenanigans and to help [Donald] Trump, who maybe would win in November and who maybe would make decisions favorable to Russia? You realize that’s what has to be true for this [Vladimir] Putin scenario to be true, right? We’re back to the 1950s, accusing politicians of being in league with the Russians.” […] The issue is that the DNC colluded and conspired to favor the Clinton campaign and deny Bernie Sanders the Democratic nomination for president. The DNC’s actions were Nixonian, and they read like an account of that shamed president’s actions from a chapter of “All the President’s Men.”
• Overt Monetary Financing would flush out the ideological disdain for fiscal policy — Bill Mitchell: Monetary policy is really such a blunt and ineffective tool that it should be rendered redundant. The mainstream have never provided a convincing case that manipulating interest rates is somehow the preferable and effective option for stabilising the spending cycle. The GFC experience would suggest otherwise. All the monetary policy gymnastics have had very little impact. It would be much better to set the overnight rate at zero and leave it there and allow the longer term rates (which are impacted by inflation risk) settle as low as possible. Then, manage the spending cycle with fiscal initiatives that can be targetted, adjusted fairly quickly and which have direct impacts.
• Democrats, Trump, and the Ongoing, Dangerous Refusal to Learn the Lesson of Brexit — Glenn Greenwald: Put simply, Democrats knowingly chose to nominate a deeply unpopular, extremely vulnerable, scandal-plagued candidate, who — for very good reason — was widely perceived to be a protector and beneficiary of all the worst components of status quo elite corruption. It’s astonishing that those of us who tried frantically to warn Democrats that nominating Hillary Clinton was a huge and scary gamble — that all empirical evidence showed that she could lose to anyone and Bernie Sanders would be a much stronger candidate, especially in this climate — are now the ones being blamed: by the very same people who insisted on ignoring all that data and nominating her anyway.

This week, I have been mostly reading:

• The Incalculable Cost of our Aversion to Government Debt — Ari Andricopoulos: Thanks to austerity there is both a non-growing pie and workers receiving a smaller share of it (due to austerity forcing interest rates down). So there is low demand because of low government spending and high supply of labour because of benefit sanctions. The inevitable result of this is a low wage economy.
• The elites hate Momentum and the Corbynites - and I’ll tell you why — David Graeber in the Guardian: The real battle is not over the personality of one man, or even a couple of hundred politicians. If the opposition to Jeremy Corbyn for the past nine months has been so fierce, and so bitter, it is because his existence as head of a major political party is an assault on the very notion that politics should be primarily about the personal qualities of politicians. It’s an attempt to change the rules of the game, and those who object most violently to the Labour leadership are precisely those who would lose the most personal power were it to be successful: sitting politicians and political commentators.
• Fears For Pauline Hanson’s Health After She Realises Some Asians Are Also Muslim — The Shovel:
  
• A comment on Keen’s “Credit plus GDP” measure — Cameron Murray: There are two extremes I have in mind in this analysis. First, if all new credit is directed to new capital investments, we would expect a very close match between credit creation and increases in nominal GDP. Second, if all credit creation is to fund asset purchases, we might expect a much lower relationship between new credit and GDP growth. This idea fits nicely with the story that we should use the banking system to support new capital investment instead of funding asset purchases, which simply leads to asset price growth and speculative cycles. In this story it matters what new credit (money) is used for, not just the levels of new credit. And, related:
• The Truth about Banks — Michael Kumhof and Zoltán Jakab, in the IMF's Finance & Development magazine: In modern neoclassical intermediation of loanable funds theories, banks are seen as intermediating real savings. Lending, in this narrative, starts with banks collecting deposits of previously saved real resources (perishable consumer goods, consumer durables, machines and equipment, etc.) from savers and ends with the lending of those same real resources to borrowers. But such institutions simply do not exist in the real world. There are no loanable funds of real resources that bankers can collect and then lend out. […] financing, is of course the key activity of banks. The detailed steps are as follows. Assume that a banker has approved a loan to a borrower. Disbursement consists of a bank entry of a new loan, in the name of the borrower, as an asset on its books and a simultaneous new and equal deposit, also in the name of the borrower, as a liability. This is a pure bookkeeping transaction that acquires its economic significance through the fact that bank deposits are the generally accepted medium of exchange of any modern economy, its money.
• I’m already tired of the ‘lessons’ of Chilcot. What can we learn from a report that ignores Iraqis? — Robert Fisk, the Independent: Yes, [Blair] sure was a nasty piece of work, lying to us Brits and then lying to us again after Chilcot was published, and then waffling on about faith and “the right thing to do” when we all know that smiting vast numbers of innocent people – and even bringing about the smiting of a vaster number of the very same Muslims, Christians and Yazidis up to this very day – was a very, very bad thing to do. For these victims – anonymous and almost irrelevant in the Chilcot report – we cannot say “even unto the end”, because they are dying unto the present day. The real “end” for these victims cometh not even yet.
• #1236; In which a Reminder is constant — Wondermark, by David Malki!:
• Credentialism and Corruption: The Opioid Epidemic and “the Looting Professional Class” — Lambert Strether in Naked Capitalism: As reader Clive wrote: "Increasingly, if you want to get and hang on to a middle class job, that job will involve dishonesty or exploitation of others in some way." And you’ve got to admit that serving as a transmission vector for an epidemic falls into the category of “exploitation of others.”
• WBC warns on NZ household debt. What about Australia’s? — Leith van Onselen at MacroBusiness compares the household debt/income levels of us and them next door:
• Regulator Warns Commercial Real Estate Bubble Is Biggest US Bank Risk — Yves Smith, Naked Capitalism: The reason commercial real estate lending is so hazardous is banks routinely lose more than 100% of the loan when the projects go bad. Not only do all the loan proceeds go “poof,” but when they foreclose, they are typically stuck with a completed or partially completed project. If it is completely and not fundamentally unsound (say an office building in an up-and-coming area), it’s possible to get a partial recovery. But for a white elephant or a half-finished building, the bank will need to clear the property, which means throwing good money after bad, and is stuck with land plus perhaps some general previous owner improvements (if a subdivision, getting zoning and running in plumbing; in an urban setting, doing the assemblage). Moreover, commercial properties are idiosyncratic, so liquidating them is also inherently time-consuming.
• That Far Left Entryist Takeover of the Labour Party — Craig Murray: At its height in the 1980’s, Militant claimed 8,000 members. In 2013 its descendant, the Socialist Party, claimed 2,500 members and crowed that it was now bigger than the Socialist Workers Party. The SWP replied, not by claiming to have more than 2,500 members, but by saying that the Socialist Party’s claim of 2,500 was inflated. The various manifestations of the Communist Party are smaller. […] I have therefore watched with bemusement the claims that the 120,000 new Labour members now banned from voting, and perhaps half of the remaining 400,000 Labour electorate, are entryists from organisations of the “hard left”. Anybody who believes there are over 300,000 members of “hard left” groups in the UK is frankly bonkers.
• Robot Bombs: A One Time Thing, Right? — Ted Rall:
• Paul Krugman’s stock market advice — Dean Baker, in the Real World Economics Review Blog: [Apple, Google, and Microsoft] are companies that depend to a large extent on government-granted monopolies in the form of patent and copyright protection. We have made these protections much stronger and longer over the last four decades through a variety of laws and trade agreements. Of course the point of these protections is to give an incentive for innovation and creative work. But in a period where we are supposedly troubled by an upward redistribution from people who work for a living to people who “own” the technology, perhaps we should not be giving those people ever stronger claims to ownership of technology.
• The Trojan Drone: An Illegal Military Strategy Disguised as Technological Advance — Rebecca Gordon in TomDispatch: The technical advances embodied in drone technology distract us from a more fundamental change in military strategy. However it is achieved -- whether through conventional air strikes, cruise missiles fired from ships, or by drone -- the United States has now embraced extrajudicial executions on foreign soil. Successive administrations have implemented this momentous change with little public discussion. And most of the discussion we’ve had has focused more on the new instrument (drone technology) than on its purpose (assassination). It’s a case of the means justifying the end. The drones work so well that it must be all right to kill people with them.
• Why are license "agreements" so uniformly terrible? — at Boing Boing, an excerpt from The End of Ownership: Personal Property in the Digital Economy, by Aaron Perzanowski and Jason Schultz: The current iTunes Terms and Conditions are over 19,000 words, translating into fifty-six pages of fine print, longer than Macbeth. Not to be outdone, PayPal’s terms weigh in at 36,000 words, besting Hamlet by a wide margin. The demands of these prolix legal documents are jaw-dropping. Take Adobe’s Flash, a software platform installed on millions of computers each day. Assume the average user can read the 3,500-word Flash license in ten minutes—a generous assumption given the dense legalese in which it is written. If everyone who installed Flash in a single day read the license, it would require collectively over 1,500 years of human attention. That’s true every single day, for just one software product. Imagine what would happen if you tried to read every license you encountered. […] License terms are not negotiable. So there’s little to gain from a careful reading. […] Adobe is not going to negotiate a new license with you. They won’t even entertain the idea. So your choice is simple. Either use the product—and live with the license—or don’t. Take it or leave it.
• Sole and Despotic Dominion — Cory Doctorow in Locus Online: If the mere presence of a copyrighted work in a device means that its manufacturer never stops owning it, then it means that you can never start owning it. There’s a word for this: feudalism. In feudalism, property is the exclusive realm of a privileged few, and the rest of us are tenants on that property. In the 21st century, DMCA-enabled version of feudalism, the gentry aren’t hereditary toffs, they’re transhuman, immortal artificial life-forms that use humans as their gut-flora: limited liability corporations.
• Gnome Ann — xkcd:

COFFS Harbour company Janison has today launched a cloud-based enterprise learning solution, developed over several years working with organisations such as Westpac and Rio Tinto.

Really? In 2016 businesses are supposed to believe that a corporate MOOC (Massively Open Online Course; a misnomer from day one) will do for them what MOOC's didn't do for higher education? There are two issues here: quality and dependability.

In 2012, the "year of the MOOC", the ed-tech world was full of breathless excitement over a vision of higher education consisting of a handful of "superprofessors" recording lectures that would be seen by millions of students, with the rest of the functions of the university automated away. There was just one snag, noticed by MOOC pioneer, superprofessor, and founder of Udacity Sebastian Thrun. "We were on the front pages of newspapers and magazines, and at the same time, I was realizing, we don't educate people as others wished, or as I wished. We have a lousy product," he said. That is not to say that there isn't a market for lousy products. As the president of San Jose State University cheerfully admitted of their own MOOC program, "It could not be worse than what we do face to face." It's not hard to imagine a certain class of institution happy to rip off their students by outsourcing their instruction to a tech firm, but harder to see why a business would want to rip themselves off on an inferior mode of training. Technology-intensive modes of learning work best among tech-savvy, self-modivated learners, so-called "roaming autodidacts". Ask yourself how many of your employees fit into that category; they are a very small minority among the general population.

The other problem is gambling on a product that depends on multiple platforms which reside in the hands of multiple vendors, completely beyond your own control. The longevity of these vendors is not guaranteed, and application development platforms are discontinued on a regular basis. Sticking with large, successful, reputable vendors is no guarantee; Google, for instance, is notorious for euthanising their "Software-as-a-Service" (SaaS) offerings on a regular basis, regardless of the fanfare with which they were launched. You may be willing to trade quality for affordability in the short term, but future migration costs are a matter of "when", not "if".