Tag Archives: economics

The Future is Now: the Recession and the Steep Upward Slope

It’s a recession.  The housing market is tough, the job market is worse, and the country is so sharply divided we’ll be lucky if anything useful happens in Washington D.C. in the next two years.  Whole economies are backpedaling into austerity programs.  This does not feel like a ride up the steep right-hand curve of the emerging technological singularity.  But I think that’s where we are – in that place of so much change we can barely keep up, and in a time when many people are falling so far behind that they will never catch up. Continue reading The Future is Now: the Recession and the Steep Upward Slope

The ethics of content theft in a digital world

Here’s a simultaneously wry and astute post from novelist Philip Palmer about the publishing industry’s new here-to-stay bugbear, digital piracy. What I like most about it is the blend of idealism and honesty; rather than simply stating that Piracy Is Wrong And Evil And Makes Jeebus Cry, he’s willing to objectively assess his own moral code as applied to evading cost on the media he wishes to consume.

Before we get to the meat, though, I’m going to call out one item for criticism, because it’s such a well-used semantic straw man that by this point that it gets repeated as a matter of fact:

… there are many thoughtful individuals out there, possessed of shitstorm-generating superpowers,  who do believe that EVERYTHING SHOULD BE FREE ON THE WEB.

I tend to think of this as The Doctorow Rejoinder, because it’s usually Cory that’s the target (implied or otherwise) of that complaint. But here’s the thing: it’s bollocks.

Sure, there are people out there who believe everything should be free on the web… and sure, those people are pretty stupid (or extremely idealistic and ignorant of the most basic tenets of economics). However, the “shitstorm-generators” that Palmer refers to – the ones with any real influence at all, rather than the lip-flapping skriptkiddiez who requote them out of context on their warez blogs – do not believe (or at least do not publicly claim) that “everything should be free on the web”.

People are always reminding me about how Cory Doctorow believes and preaches that; however, not one of them has yet been able to show me a citation where he does so. Doctorow happily and truthfully claims that free content has worked for him, and explained the potential benefits of such a business model to people in similar positions, but he’s never (to my knowledge) claimed free content as a) a panacea to the struggles of the obscure artist/creator or b) the road to an inevitable digital syndicalist utopia where everything necessarily costs nothing. (I’m quite willing to be proved wrong on this point, but I want citations from original source material, not flimsy op-eds from folk with axes to grind or political capital to reap.)

So, let’s be clear: no one worth arguing with has ever claimed that “everything should be free on the web”; until we get past this particularly tenacious straw man, we’re going to struggle to deal with the real issues. And so, it’s back to Philip Palmer’s otherwise sound essay. A few quotey bits:

I think it’s worth pointing out that there’s nothing new under the sun.  The digital age didn’t invent plagiarism; nor did it invent piracy.  The web changes many things; but not basic questions about right or wrong; it merely AMPLIFIES the problems that always existed

Book piracy, for instance,  was pioneered by the public library service.  For many years, until the advent of PLR, it was considered moral and normal to give away books for zero money on a rental basis to members of the public.  This is a great way to impoverish authors.  Because a book that’s been borrowed a hundred times has only been bought once!

Second hand bookshops!  They are the buccaneers of the book trade. A second hand book may be sold a dozen different times but again,  the author only gets paid once.  We authors notice these things.

So illegally downloading books is no different, in principle, than going to Hay-on-Wye.  Fact!

Yes, that’s a sophistic argument; that’s Palmer’s point, I think. Now, here’s where it gets interesting:

When I started getting published I stopped buying second hand science fiction novels from authors still alive or not-rich.  So I’ll buy second-hand Stephen King, though only occasionally,  but I’d never buy Al Reynolds’  latest in a second hand bookshop, because  he’s a real writer earning a living. I do though buy all my Edgar Rice Burroughs’ Barsoom novels (my current passion)  second hand via Amazon, mainly because the old Del Rey editions are so stunning, and I’m pretty sure they’re out of print.

So that’s my moral code, based on the opinion that borrowing books from a pal and illegally downloading books are pretty much the same thing, ethically speaking. In other words, it’s okay to get stuff free sometimes, as long as you OFTEN pay.

Palmer’s point is that (with very few exceptions) we don’t have unlimited funds for buying entertainment, but we have a close-to-unlimited hunger for the stuff, and so we all come to our own ethical compromise with the world; Palmer puts money in the pockets of living authors who he feels deserve it, but he doesn’t want to contribute to Stephen King’s retirement nest-egg, nor send money to middle-men reprinting the works of the long-dead if he has a cheaper option available to him. He’s obeying the spirit of the piracy laws, though not necessarily the letter of them.

I take a similar approach to music, as do many people I know; I’m – by my own admission – a somewhat skewed data-point (because as a reviewer I get sent a lot of legitimate freebies) but I download hard-to-find and/or costly albums without too many qualms because I attend dozens of live shows every year, buy merchandise, patronise live music venues, buy music equipment and use rehearsal spaces. I’m paying my way within that economic sphere, and doing so with a fairly significant portion of my disposable income.

There are those who don’t pay their way, certainly, but I suspect they’re a minority; digital music recordings are valueless unless you want to listen to them. I can’t imagine many folk bother downloading albums just to consume hard drive space and have a longer list in their media player library; you collect music because you’re passionate about it, and if you’re passionate about music you probably go and see it played live if you have the opportunity to do so.

Digital media is a non-rival good; to take it for free is not theft but evasion of cost, and evasion of cost is a fundamental tenet of economic behaviour (with the possible exception of those with more money than sense); economic behaviour is not rational but emotional, and basing your response to a change in the underpinnings of an industry’s economy on the hope that you can stop human beings behaving in the ways they always have done is to doom yourself to failure. Successful businesses work out ways to monetise desire, but business models do not last forever; if they did, there wouldn’t be an internet (or cars, or electricity, or, or, or). QED.

This is a point borne out in the music industry, where – in spite of the withering of the recording companies – overall profits are actually growing consistently: live show tickets, merchandise, new instruments and recording technology, all selling better than they ever have before. There are studies based on the industry’s own figures that show heavy downloaders of music torrents spend more on legitimate content purchases than those who buy a few albums every year. Illegal downloading is not “killing music” (just as home-taping didn’t “kill music”); it’s killing a business model, and the record labels really don’t have anyone other than themselves for failing to adapt to a changing landscape.

As I’ve mentioned before, the publishing industry appears to have wised up faster than the record labels did, but it’s interesting to note that – as with the music industry – the smaller more artist-centric outfits are the ones who seem to be most willing to try new options. The more profitable the old model was, the greater the inertia of those who profited from it. Evolve or die.

This is the point where I usually get accused of celebrating the fact that it’s getting harder and harder for artists of all stripes to make money from their work. To which I respond: pointing out the realities of the situation, and the fact that all the idealistic thinking in the world won’t stop consumers behaving as they do (namely getting something they want as cheaply and conveniently as possible), is not celebratory; it is a matter of pragmatism.

The genie will not go back in the bottle; it is more productive to work out ways to cope with the genie’s freedom than it is to build elaborate doomed-to-fail genie entrapment devices, or to repeat idealistic platitudes about how the bottle shouldn’t have been opened in the first place and look for someone to blame for it. Yes, it sucks that the business models of many creators whose work I adore and wish to support are under economic pressure; however, no amount of me (or anyone else) saying how much it sucks will make a damned bit of difference. Play the hand you’re dealt, or fold and get out of the game.

A harsh thing to say, perhaps, given I’m a friend of (and contractor to) a number of authors… but would you want your doctor to lie about a life-threatening illness? If you want to survive, you have to accept the reality of the situation, take the pills, endure the surgery; I can’t help but think that content creators as a demographic are moving slowly through the five stages of grief psychology with respect to the economics of infinite goods. It’s a painful and necessary process, but acceptance is the only end-point from which you can move on.

In an ideal world, we’d all be paid enough in return for doing something we loved to have everything we wanted. If anyone has directions on how to get to that ideal world, by all means please let me and everyone else know how to join you there; in the meantime, I think we’re best off concentrating on finding a way to make a living here in reality.

Location, location, location

Why would anyone in their right mind consider building a server farm in deepest darkest Siberia, or the middle of the Indian Ocean? Possibly because the intersection of geography and information flow means such locations would give you a slight yet crucial edge in the high-stakes imaginary-money game of high-frequency trading [via SlashDot]:

The insight of the MIT researchers, Alexander Wissner-Gross and Cameron Freer, is that some automated traders–or at the very least, their server farms–will be best positioned in-between certain exchanges. Since some trading strategies capitalize on price fluctuations between separate exchanges in different parts of the world, the optimally located server will receive information from those exchanges at precisely the same moment, gaining that millisecond advantage over the competitor. In some cases that pefect location is the midpoint between the two exchanges, but not always–it depends on whether the exchanges’ prices move at the same speed or not.

Wissner-Gross and Freer rounded up the locations and price-speeds on the 52 largest global exchanges, and plotted a map of the ideal locations for traders who would want to be perfectly positioned between any given pair. The map, which appears today in an article in the journal Physical Review E, dictates that some traders’ servers will be ideally positioned in central Africa, others in the remotest forests of Canada, others in the middle of the Indian Ocean, and still others in Siberia. This all assumes, of course, a proper infrastructure in place–in the short term, Freer tells Fast Company, it might make more sense to approximate these locations, rather than invest in installing a server farm underneath the ocean.

Brilliant… yet another way for compulsive gamblers to squeeze more profits out of the aether (not to mention shades of Ian McDonald’s Dervish House – which, if you haven’t read it yet, should be added to your stack of pending reads with immediate effect). But according to New Scientist, this might actually represent the last possible way to grasp advantage in the automated trading system:

“This shows that the technological arms race to extract every penny from high-frequency mechanical arbitrage will soon reach its ultimate limits,” says physicist and hedge-fund manager Jean-Philippe Bouchaud, based in Paris. “Maybe the buzz around high-frequency trading will then calm down.”

We can live in hope, I guess.

The greys are coming! From generation gap to economic turf-war

Props to George Dvorsky for flagging up this Salon interview with Ted C Fishman, promoting his new book Shock Of Gray, which is all about the recent rapid increases in human longevity, and the knock-on effects of such. Perhaps we’ll finally shake off our geographical differences only to get caught up in an economic tug of war between the elderly and the young:

As baby boomers start to approach the age of 65 in large numbers, do you foresee a civil rights movement for older adults, given that generation’s history of activism?

There might be a civil rights movement, but people won’t recognize it as a civil rights movement. They’ll see it as an economic turf war. When you get the resources of a society, you get the respect. You can see this in Europe right now, where the population is somewhat older than it is here. The debt crisis has really caused a huge and quick reckoning with the crisis in pension funding and hundreds of thousands of people are coming into the street. They made promises to themselves and now they find that they can’t keep those promises. In some ways, they’re battling their past selves.

But they feel like they are fighting a younger generation.

Yeah, I think that’s right. But in the long run the battle will not be for who gets what share of the public financing. It will be a more traditional civil rights issue, which is: Evaluate me on my abilities and my skills, not on my weaknesses. The older population is a hugely diverse one. If the image of an older person is going to be exclusively that of an enabled, sharp, cognitively with-it, older person who can work into their 70s and 80s, then we’re ignoring a huge part of the population that will need our help.

Not exactly a new idea, but one that probably isn’t getting the attention it deserves; longevity is kind of sneaking up on us while we bicker about other matters.

Here’s an idea that’s new, though, or at least it is to me: longevity as an accelerator of globalisation.

You argue that when wealthy nations started to age, that actually sped up globalization.

Right. Aging economies — Japan and Europe and the United States — are shopping the world for youth. The traditional workplace is changing to drive older people out — the cost of healthcare and pensions weighs very heavily on global companies — and places such as China have a population that it could send to the cities unburdened by age and the cost of age. Globalization really is a function of demographic change. When you go into beat-up, industrial towns you can feel it. You can see that older workers who used to be on the factory are now doing minimum-wage work at big-box stores on the edge of town. And then China has factories that contain tens of thousands of workers, without a single soul that’s over 25 years old. And you think, the only important thing about these workers is their youth.

Unspoken but implicit in that statement is longevity-as-driver-of-immigration. In fact, the more I think about it, the more I wonder whether the widespread tensions over immigration levels aren’t just a convenient proxy for concerns about the economics of greying…

Cities and security: a Mexican story

For the last few months I dove deeper into topics I’d already covered.  But this month I decided to do something else.  At my job, I get the Homeland Security Newswire (I manage technology for a medium-sized local government).  I keep seeing various articles that reference Mexico – the big country next door to the US that is in some danger of becoming a failed state; the one in the bloody middle of an honest-to-goodness drug war rather than an anemic War on Drugs. Continue reading Cities and security: a Mexican story