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Category: flaneur

The death of the middle class

22 statistics from the Business Insider illustrating the complete obliteration of the middle class in the US. Sobering data, considering that all countries pursuing US economic/monetary/taxation policies are in line for the same medicine. In essence this is a massive, unprecedented in its scale, hollowing up of individual wealth.

1. 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
2. 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
3. 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.
4. 36 percent of Americans say that they don’t contribute anything to retirement savings.
5. 43 percent of Americans have less than $10,000 saved up for retirement.
6. 24% of American workers say that they have postponed their planned retirement age in the past year.
7. Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
8. Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
9. For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
10. In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
11. As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
12. The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
13. Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
14. In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
15. The top 1% of U.S. households own nearly twice as much of America’s corporate wealth as they did just 15 years ago.
16. In America today, the average time needed to find a job has risen to a record 35.2 weeks.
17. More than 40% of Americans who actually are employed are now working in service jobs, which are often very low paying.
18. For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
19. This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
20. Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
21. Approximately 21 percent of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.
22. The top 10% of Americans now earn around 50% of the national income.

Back to reality

The World Cup is over, and so is semester 1 marking. But what a World Cup it was! Spain won what was rightfully theirs, Holland betrayed everything they stood for, Germany were fantastic, Maradona entertaining, Chile a pleasure to watch – all in all the best Cup I have seen so far (watched all since 1986). Back to reality. Unfortunately though, semester two is about to start soon while the next World Cup is in four years .

De Revolutionibus

I am currently reading Paolo Rossi’s The Birth of Modern Science [available here]. The chapter on Copernicus discusses his De Revolutionibus Orbium Coelestium from 1543, which is today seen as the revolutionary work that established the heliocentric system and forever removed the earth from the center of the universe. Rossi however demonstrates how un-revolutionary Copernicus’ work in fact was, not only in terms of style and format – which were based entirely on Ptolemy’s Almagest from 1400 years earlier, but also in terms of argumentation. Virtually all of Copernicus’s arguments existed in one form or another before him, and some of them were in fact Ptolemy’s – most important of all being the argument on the uniform and regular circular motion of heavenly bodies. Fascinatingly, Copernicus argued that his work is important because it explains Ptolemean astronomy better than its author did – and the concept of circular motion across heavenly spheres was crucial for that. Apparently Johannes Kepler commented that Copernicus had interpreted Ptolemy rather than nature when he wrote his treatise (deducing from authority was a very Medieval approach to science, and the fact that the greatest scientific achievement of the Renaissance was achieved in that way is a damning comment on the notion of the Renaissance as a negation of scholasticism).

Copernicus never went as far as Giordano Bruno and suggest an infinite universe, populated by bodies in irregular motion. Rather, the revolutionary aspect of Copernicus’s work was in using the very same facts as everyone else, to propose a previously unsought direction disguised as an improvement on the dogma. It’s hard to get more unintentionally subversive than that. From the perspective of scientific advancement, the fascinating observation here is that a revolutionary jump was achieved thanks to a proposal asking many more questions than it could answer, rather than delivering a coherent theory to substitute the previous one. For example, Copernicus’s position on the earth’s rotation led directly to the need to explain gravity (now that the earth was not the center of a spherical universe), which in turn led to Newton.

This realization is interesting, because it questions, as so many other examples, the image of science as a monolithic coherent discipline engaged in an ever-forward progress. The move, if there is any move at all, is never forward, but more sideways-backwards-sideways until a new way to question the obvious emerges somewhere on the periphery.

Of course, it never hurts to ruffle a few feathers in the process – apparently Martin Luther fumed against ‘that fool astronomer who claims that the earth moves’.

The horror, the horror

Haven’t been able to post for a while due to plenty of boring work – the worst combination. The flaneur spirit crumbles when faced with repetitive and intellectually unchallenging tasks. However, meanwhile in the real world the Greece fiasco turned into farce, and The Economist captured that just brilliantly in their May 1 issue, with Angela Merkel appearing as a natural in the Colonel Kurtz role on the cover below.

While the Greeks were burning banks, and keeping in line with the Apocalyptic theme, the Euro almost collapsed with the beginning of this week:

May the 6th was an interesting day in that context, because while the euro was heading for the Acropolis gold broke above 1200:

And, what a curious coincidence, something even stranger happened on that same day:

Dow

The financial markets had a 20 minute period of complete collapse, which the media immediately explained as a human error (haha). Other, less imbecile explanations are to be found here and here. I find it fascinating how in a highly leveraged complex system a relatively small event (sorry Greece) can cause tremendous and unpredictable repercussions which apart from forming a somewhat black swan, cause system-wide readjustments. This again comes to show that [1] in a complex networked environment the notion of periphery is meaningless, [2] connectivity acts as a magnifying glass for network events, [3] the longer structural instabilities are ignored/covered up, the bigger the eventual ripple-effects of the collapse.

Interesting weeks ahead.

The battle for the future of publishing

With the iPad openly poised to attack the Kindle in the e-books business, the clash is not only between two major players, but between two astonishingly diverse philosophies. Apple is all about total control, Amazon is all about the long tail. More than that, Apple is all about inserting itself in and enlarging the margin between its customers and their desires – with the omnipresent ‘i’ in front of your pod, pad, computer, mouse, earphones, keyboard, screen, operating system, etc. You shall desire only the iThing. The paradigm for Apple is the top-down guru-led religious cult. Amazon on the other hand is about extending the channel of distribution as far as the customer’s most insignificant desires – they have built that into their core company DNA. You read as a kid a long-forgotten pirate book by Sabatini and suddenly feel the urge to re-read it? Yes, it’s out of print, but not only are we going sell you that book, we can offer you these 5 other books which people like you recently bought. The paradigm here is the Damascus souk. You want a jade necklace? I don’t have them but my cousin’s brother in law knows someone who has, and I will sell it to you for a discount, together with this rose-wood box (you need to keep them somewhere).

So, back to the iPad and Kindle, a recent article in the New Yorker by Ken Auletta describes nicely the situation the publishing business will have to face in the near future. E-books are the future – judging by the massive sales Amazon is doing through the Kindle – but are publishers part of this future? Apple wants to lock in customers and publishers into the cult – no doubt practicing iReading. Publishers would still get their cut, which sure beats not getting anything. Amazon wants to eliminate the publishers altogether and deal directly with authors and readers. One obvious result will be that the barrier to author publishing will fall drastically.

Needless to say, publishers are not too warm for the Amazon future. The best summation of the issue – publisher control over authors, content, and readers – comes from Tim O’Reilly: “They think their customer is the bookstore,” he says. “Publishers never built the infrastructure to respond to customers.”

US Joint Forces Command and global strategy

This, a strategic study by the US Joint Forces Command, is a thoroughly fascinating read.  The part of immediate interest  is of course the section on energy, and the prediction of oil shortages made already in the introduction by the commander of the USJFC General Mattis.

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day.”

And then this:

“While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”

The rest of the text is equally interesting however. For starters, Mattis is a Marine, and the Marines seem to have been very interested in Fourth Generation Warfare lately. There are plenty of Sun Tzu references throughout, and the depth of the analysis is fascinating.

Joint Operating Enviornment 2010

China links

“What’s at Stake in Kyrgyzstan?” by Ariel Cohen, Wall Street Journal, 14 April 2010.

“Bismarck holds lessons for a rising China,” by Wen Liao, Financial Times, 14 April 2010.

The recent action in Kyrgyzstan prompted a lot of speculation on spheres of influence, hands under the table belonging to the usual suspects, the great game, etc.  Tom Barnett has some very insightful comments on China’s role in this and the wider neighborhood. This  relates in a way to the earlier post on complexity – the Chinese do not engage as much with the ‘center’ of adjacent systems, but instead try to interconnect economically with the local ‘peripheries’. A low-radar high-impact strategy. Key bit from Barnett for me:

“If anything, China’s rise and the growing organized resistance it generates means its diplomacy is arguably the biggest change-agent on the planet right now–even bigger than our own, because everybody is simultaneously adjusting to and preparing against China’s trajectory.”

Dealing with entropic complexity

John Robb over at Global Guerrillas has an interesting post on the root problem in dealing with entropic complexity (entropic because of the inevitability of collapse) – influenced by the work of Quigley and Tainter. As he narrates it, the key issue is the uniqueness of each system at the level of its smallest nodes – the entities/actors enacting the system. In other words, whether it is the international wheat market, the English Premier League, or the Australian banking system, while there are certain structural similarities once the systems reach a certain level of complexity (network power laws, etc) at the most local level each system is absolutely unique, and differs even from ‘similar’ systems next door. Furthermore, the local level is the fastest changing part of a system, in that it is the closest to the inputs (of course all levels are local as actor network theory argues, but that is all too often not understood), and consequently when viewed over time there grows a chasm between the fluidity of the local and the structural integrity of the wider system. As Robb words it:

The need for evolutionary advances at the local level will always outstrip the pace of evolutionary change at the center.  When the mismatch grows too large, the entire system collapses.

Of course, Robb forgets that every system is always local at every layer of its network, the center and the periphery are equally situated in a local setting, and the problem he describes is not one of miscommunication between local and global, but of breakdown of translation between equally local layers. The solution Robb proposes is one of resilient local communities existing in some sort of semi-autonomy from a wider system. This of course has been an old political dream of both the far left and the far right. Interestingly though, the Austrian economic school and Murray Rothbard in particular have long argued for the independent city-state as the optimal politico-economic entity on a global scale – I don’t think Robb is aware of that though.