Category Archives: Banking

Fake news and botnets: how Russia weaponized the web

By Hannes Grassegger and Mikael Krogerus – Estonia boasts the most technologically advanced system of government in the world.

Every citizen possesses a digital identity – an identification number and login code for access to completely digitized interactions with the state. Estonians can vote online, file their taxes, check medical records, access the national health care system, and receive notifications of most government attempts to access their personal records. About 97% of the country uses digital banking. The Estonian national ethic is built on the idea that every citizen is transparent and the state is too. This makes Estonia extremely efficient – and extremely vulnerable.

“We live in the future. Online banking, online news, text messages, online shopping – total digitization has made everything quicker and easier,” Jaan Priisalu said. “But it also creates the possibility that we can be thrown back centuries in a couple of seconds.”

The question is how the west can maintain its core values of freedom of speech and the free flow of information while protecting itself from malevolent geopolitical actors? For centuries, eastern European countries such as Estonia relied on walls, watchtowers, and fortresses to keep out invaders. The US became the world’s most powerful country in part because it was insulated from foreign threats by vast oceans on two sides. In the internet age, traditional borders are less effective.

To survive in the era of information warfare, every society will have to create ways of withstanding cyber-attacks. more>

From A Casino Economy To A New Golden Age

By Steve Denning, Carlota Pérez – To simplify and summarize: there have been five technological revolutions over the last 240 years.

What’s interesting for us today is that the historical record reveals a regular pattern in the diffusion process. It takes place in two halves. First, we have the rise of the new technology that occurs during the decline of the previous revolution. It’s like the 1980s, when we had inflation with the old technologies, which were yielding decreasing returns, while the information technology companies were growing fast with steadily increasing returns (and decreasing prices).

That first half is the installation period of the new technology, which leads to and ends with one or more bubble prosperities –as in the late 1990s and mid-2000s– when the financial sector and the casino economy take over.

Then the bubble or bubbles burst and we have a recession, as we have now, that might last anywhere from 2 years to 13 years or more.

Now in 2017, we are in the middle of another turning point, as in the 1930s, and we could have a period of sustained global prosperity if appropriate action is taken. more>

Failure of ideas and not failure of political Establishment

By Harilla Goga – It is well known that the free individual with his thoughts and his actions, certainly in the frame of the legal system being in his service, is in the center of the democratic system. But, this individual, in fact, looks like “a consumer” of the democratic system goods. As such, he can keep his position as receiver, rejecter or protester depending on the “quality and quantity” of these goods.

Furthermore, this attitude is manifested towards elites/political establishment of the country concerned, but he generally cares a little or not at all about theories/ideas that politics are based on.

In economic terms, this lack of new ideas and theories is the “consumer’s” most sensitive subject, for example: The current economic and financial system is set based on very old theories which stress the maximum profit for business through tight competition and bankruptcy; The trade and free movement of capital system, that have unified markets and removed barriers, bringing benefits, common developments and new technologies throughout the world, but causing economic and social damages and environmental challenges in all regions of the world. States, governments and International organizations are addressing these challenges, but their programs and politics (leftists and rightists, or independents/new movements), are still fed by theories and ideas over than 100 or 200 years earlier. more>

Free Money: The Surprising Effects of a Basic Income Supplied by Government

By Issie Lapowsky – A legislated basic income is in the realm of fantasy at the moment. Even among its proponents there is almost no agreement about the fundamentals, starting with how much money would be an optimal basic income.

Ioana Marinescu, a professor at the University of Pennsylvania’s School of Social Policy and Practice, who researches basic income, says that research on the Alaska fund is enlightening, but not dispositive. “We know $2,000 a year makes a real difference to many people,” Marinescu says. “But would something lower still make a difference? We don’t know.”

As with any program, there are infinite opportunities for abuse and bad decisionmaking.

One illuminating New York Times article illustrated how the men and women who scrub toilets and do other low-skilled work for companies like Apple are hired from contracting companies which set the terms of their employment. Those workers are cut off from the benefits and upward mobility that the company’s engineers and marketers enjoy. Because the workers are contractors, the big tech companies feel no pressure to raise their wages, and aren’t responsible for offering health-care coverage.

Looked at in this light, the tech-led efforts to push a basic income can appear hypocritical. more>

This world is enough

BOOK REVIEW

Zombie Economics, Author: John Quiggin.

By John Quiggin – Economic development and technological progress provide the only real hope of lifting billions of people out of poverty and destitution, just as it has done for the minority in the developed world. Yet the living standards of the developed world have been built on cheap energy from carbon-based fossil fuels. If everyone in the world used energy as Americans or even Europeans do, it would be impossible to restrict climate change to even four degrees of warming.

The question is not: ‘Can we let everyone live like prosperous residents of the First World without destroying our natural environment?’ It is: ‘Will we?’ A balance is achievable, if we want it

The first thing is to identify the right ones. Aggregates such as gross domestic product (GDP) often come up in this context, but they are of very little use. GDP is a measure of overall economic activity, produced to assist short-term macroeconomic management.

By design, it takes no account of the usefulness of what is produced or of the specific resources used up in production. Unless you are an economic planner or central banker, you are better off ignoring it altogether. more>

Related>

Economic Growth Is No Longer Enough

By Manuel Muñiz – Macroeconomic data from the world’s advanced economies can be mystifying when viewed in isolation. But when analyzed collectively, the data reveal a troubling truth: without changes to how wealth is generated and distributed, the political convulsions that have swept the world in recent years will only intensify.

Most of the wealth created since the 2008 crisis has gone to the rich.

Employment, too, seems to be performing in anomalous ways. For example, most employment growth has been in high-skill or low-skill occupations, hollowing out the middle. Many of the people who once comprised the Western middle class are now part of the middle-lower and lower classes, and live more economically precarious lives than ever before.

The fundamental consequence of this is that wages are no longer performing the central re-distributive role they have played for decades. Simply put, gains in capital productivity are not being translated into higher median incomes, a breach of the social contract on which liberal economies rest.

The debate about solutions has only just begun. Reducing economic inequality will require reforms of education and taxation, with the tax burden shifting decisively from labor to capital. more>

Post-Capitalist Entrepreneurship: Basic Income, Blockchain Cities, and Local Currencies

BOOK REVIEW

Post-Capitalist Entrepreneurship: Startups for the 99%, Author: Boyd Cohen.

By Boyd Cohen – We are in the very early days of what blockchain can mean for cities. Obviously, the smart cities movement with a strong focus on the Internet of Things (IoTs), big and open data, and sensor technology will likely benefit from the growth of blockchain solutions. But perhaps more interesting is to reflect on how blockchain could be used to support social inclusion and a post-capitalist economy.

Aside from its potentially transformative potential in local cryptocurrencies, blockchain may also support many other important changes to life and government in cities. The blockchain may support alternative forms of sharing economy that challenge platform capitalism.

Take Arcade City as an example. Arcade City is a blockchain-enabled (with ethereum) organization aimed at taking on Uber first, and other platform capitalists later. It is a peer-to-peer app, founded in Austin, Texas, in 2016, which aids people seeking a ride with drivers of passenger vehicles. Unlike in Uber’s model, Arcadian drivers are able to charge their own fees and process transactions directly with their passengers. Since its launch, rides have been facilitated in other cities in the United States, Europe, and Africa. Arcade City has launched their own initial coin offering in 2016, to create Arcade Tokens which can be used for payments with the app.

I suspect in the future, we will witness cities embracing everything from local digital currencies, three-tiered maker communities (in the home, in the neighborhoods via fab labs, and city-level flexible manufacturing production), some form of basic income (perhaps tied to civic contributions), hopefully affordable housing for all through community land trusts and other housing innovations (e.g., Vancouver’s in-fill housing), blockchain-enabled distributed sharing platforms that compete with, or maybe even replace, platform capitalists, entrepreneurial and maker education in all schools. more>

Money And Credit: Paradigm Shift Is Overdue, Part I

By John M. Balder – All of us were taught in Economics 101 that central banks determine the money supply by using their high-powered (base) money and the multiplier. Both of these concepts should be tossed in the trash can. These notions are in error, as both the BOE and the Federal Reserve have recognized. In fact, central banks passively accommodate bank demand for reserves (as doing otherwise could prove disruptive to financial stability).

The influence central banks exert over money and credit creation is achieved via their control of short-term interest rates, and not via quantitative restrictions.

A quick aside here, I have always been curious as to why economists tend to focus so exclusively on the real economy, while choosing to ignore the financial system entirely. Similarly, my work in banking regulation in the early 1990s indicated that most regulators tended to ignore macroeconomic variables.

Is this a case of “where you stand on an issue is often a function of where you sit?” As one who participated in both endeavors, I have perpetually felt a need to connect macro with finance. This may be happening more today than it was 10 or 20 years ago, but it still has a long way to go. more>

Updates from GE

A Bright Idea: How LEDs Are Helping JPMorgan Chase Become Carbon Neutral
By Bruce Watson – When Mike Norton took over as managing director of real estate at JPMorgan Chase & Co. in 2015, he took on a weighty responsibility that included finding an efficient and sustainable way to oversee the branding, maintenance, upkeep and design of 6,000 branches and commercial properties around the world. It was a complex task that turned on a simple item: the light bulb.

Norton started talking to the energy management company Current, powered by GE. They devised a plan for a system focusing on improving energy efficiency, productivity and sustainability in nearly 4,500 Chase branches across the U.S. In 2016, that proposal turned into a deal for the world’s largest LED lighting installation, a project covering 25 million square feet of real estate that would eventually lead to energy savings equivalent to taking 27,000 cars off the road.

One year later, Current by GE has installed LEDs in 2,500 Chase branches. The original plan estimated that the installation would lead to 12 percent energy savings. But in reality, the savings have ranged from 15 to 50 percent, depending on the branch.

“It’s common sense: You take a 100-watt phosphorus light bulb and replace it with a 4-watt LED, and it’s going to lower energy usage by quite a bit,” Norton says. more> https://goo.gl/1UiEwV

It’s Time to Rewrite the Rules of Our Economy

By Tim O’Reilly – Business leaders making decisions to outsource jobs to low-wage countries or to replace workers with machines, or politicians who insist that it is “the market” that makes them unable to require companies to pay a living wage, rely on the defense that they are only following the laws of economics. But the things economists study are not natural phenomena like the laws of motion uncovered by Kepler and Newton.

The political convulsions we’ve seen in the United Kingdom and in the United States are a testament to the difficulties we face. We are heading into a very risky time. Rising global inequality is triggering a political backlash that could lead to profound destabilization of both society and the economy. The problem is that in our free market economy, we found a way to make society as a whole far richer, but the benefits are unevenly distributed. Some people are far better off, while others are worse off.

Why do we have lower taxes on capital when it is so abundant that much of it is sitting on the sidelines rather than being put to work in our economy?

Why do we tax labor income more highly when one of the problems in our economy is lack of aggregate consumer demand because ordinary people don’t have money in their pockets? more> https://goo.gl/2DioyZ