Category Archives: economics

Nokia exits the mobile market


So Nokia have given up and sold their mobile handset and presumably the mobile infrastructure to Microsoft. Last year, Nokia, the World’s No. 1 mobile phone manufacturer but were struggling to meet the onslaught of Apple’s iphone and the rapidly alternative  growing of Android decided to shit-can their two Linux projects and exclusively throw in their lot with one of the then weakest phone operating-  and eco-systems, Microsoft! Coincidently they had just hired Steven Elop as CEO, whom they had poached from Microsoft.  … » Read more …

Hyperloop and Hope


In California, they have been planning a San Francisco – Los Angeles bullet train. This was brought to my attention by a story by Molly Woods at CNET, which points at an alternative, the Hyperloop.

For some reason the politics of developing infrastructure in the USA is tortured and this project is no exception. It has the economic and environmental objections which we have all begun to get to grips with as the national debate about HS2 begins to take off. In California this debate is exacerbated by the US’s unhinged dislike of government and taxes.  … » Read more …

Tim Wu speaks

I got there late, but in time to hear the end of Tim Wu’s opening  key note. His comments about the failure to build a peer-to-peer internet stimulated an interest. His book, “The Master Switch: The Rise and Fall of Information Empires” examines the evolution of information networks from radio through TV and Cable to the Internet, so I have ordered it. It’ll be interesting to compare, contrast and possibly integrate his ideas with those of Benkler and Perez. While researching for the article that eventually became Municipal WiFi, now over 1½ years old, I was interested in the funding and technology problems faced by public sector organisations. Some hackers have considered making wireless access gateways peer-to-peer, particularly in France while the Hadoopi laws were being debated and passed, but we are still running an internet of hubs and spokes, in the words of the Register, modeled on the command and control systems used in the Soviet Union.  … » Read more …

Modern Monetary Theory

The Right’s attempts to fetishise the level of the deficit both in the UK and the US has led to one interesting response. While discussing this with friends, I was pointed at the group of economic theories called Modern Monetarist Theory.

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They argue that in fiat currency economy, governments do not need to tax or borrow to fund government expenditure. They argue that in an economy functioning at under full employment, printing money will increase demand, and thus spur growth, and that otherwise inflation will erode the value of the debt. They further argue that debt and deficit management should not be the goal of public policy. The man most associated with the label of MMT, Bill Mitchell, is interviewed at the Harvard International Review and has a blog called billy blog, with a sub domain of bilbo, wonder if the Tolkien estate will hunt him down; the blog sub title is “Modern Monetary Theory … macroeconomic reality”. I also found this article, “Modern Monetary Theory – An Overview” by someone signing themselves as Bolo, a useful simplification, although on reading more, I find that my difficulties in following Professor Mitchell are based on problems I have with the model’s assumptions and boundaries. Bolo points us at Mitchell’s article called “A simple business card economy” which to me, while explaining the model, illustrates the weakness of modelling a two player economy, in which there are thus no intra private sector transactions, and one with no international trade, where other actors require the use of alternative currencies. Another of the problems, I have in the explanations, it maybe that MMT has answers, lies in the centre of post classical monetarism. The value of the economy, equals the amount of Money multiplied by the number of times money is used, otherwise expressed as the velocity of money. While governments can impact the amount of money in the economy, although it’s not as easy as that, there is allegedly no government policy instrument to impact velocity. Actually, there is, it’s about income distribution. By taking money from the rich and giving it to the poor, we will increase the velocity of money because the poor save less than the rich; they have pent up demand, which due to lack of cash, is not effective.

I found some parts of MMT hard to get. It wasn’t that I found it hard to to understand, but it didn’t seem to tell the whole story. So with help from Google, I found “A critique of Modern Monetary Theory” by Thomas Palley. In the abstract, he says,

“MMT over-simplifies the challenges of attaining non-inflationary full employment by ignoring the dilemmas posed by Phillips curve analysis; the dilemmas associated with maintaining real and financial sector stability; and the dilemmas confronting open economies. Its policy recommendations also rest on over-simplistic analysis that takes little account of political economy difficulties, and its interest rate policy recommendation would likely generate instability. At

  … » Read more …

Was this the new Black Wednesday?

What a week for economic and political news! Unemployment down, National Income (GDP) Down, IMF & Goldman Sachs say Austerity isn’t working, Clegg and Boris agree and argue for increased capital expenditure (Houses and Transport projects). Is it the turning point in this government’s fortunes? It’s clear Plan A isn’t working and Larry Elliott in the Guardian says it better than I can.

Dave Cameron’s response to this is to say that the Tory party will offer an in/out referendum on Europe in the next Parliament, if he wins a majority. Not sure you’re on the right page. It’s still the economy, stupid!  … » Read more …

HMV, a tale of hubris, tax and monopoly

HMV, the UK’s leading bricks & mortar creative industries retailer has gone into administration. Lets hope that its winding up is not as brutal as at Jessops which also failed last week. The FT reports in an article, published yesterday, entitled, HMV calls in the Administrators that the rug was pulled when their suppliers of the music, films and computer/console games refused to extend credit terms to allow them to refinance their debt.

So 4000, jobs in the UK are risk.

Companies like HMV have been up against it ever since Amazon launched, and Phillip Beeching in his Blog shows why HMV were uniquely unqualified to respond. The cultural supply chain is now dominated by multi-nationals such as Amazon, Sony, Universal, Warner Brothers, Google, Apple & Entertainment Arts. Vertical integration and consolidation is occurring meaning that smaller players are being driven out of business, the internet is becoming the distribution channel, obviating the need for shops and vans and internet attached devices such as phones, consoles, laptops and other devices are becoming the consumer interfaces. Consolidation is a result of the deliberate strategies of the large players. They can and will dis-intermediate the retailers, retain more profit for the publishers and maintain a role as barriers-to-entry to their respective businesses, inhibiting both new acts, films and games from reaching consumers, and inhibiting consumers from using a selection of publishers. They propagate a lottery labour market where a minority are as rich as Croesus, while the majority of musicians and actors end up doing something else, having spent their youth trying to break through, consistently taking home less than average earnings. The monopolists dominance of the markets is based firstly on their size, but is reinforced by the world’s copyright laws which are written in the USA, and propagated by their lobbying machines and budgets.

It is a matter of record that many multi-national companies use international transfer pricing to repatriate profits to low tax domains avoiding sales, payroll and profit taxes in the process. It’s becoming crucial that consumers work to ensure that their consumption tax payments aren’t appropriated to other tax collection jurisdictions. We should note that the real cost values of digital media is near to zero, which makes transfer pricing a simple moral issue.

The continued industrialisation of music makes live music harder to perform and to attend. I nearly always enjoy my trips to the Bird’s Nest and while not the biggest music fan ever, I did visit the Montague Arms, one of South London’s top music venues before it closed.

How are we going to defend the UK’s creative industries? Stronger copyright will just increase the power of the publishers, who are in fact, both parasites on the creative, and barriers to entry to the businesses. Copyright isn’t working!

It’s the copyright monopolists that finally pulled the plug on HMV, but one has to recognise, that it had failed. Creative Destruction aided in this case by hubris, had wrought its path.  … » Read more …

Oracle & Sun & the European Single Market

A lot of people have been busy commenting on the EU’s investigation into the competitive dynamics of Oracle’s proposed acquisition of Sun, so I thought I’d join in.  … » Read more …

Some insights into managing the cloud

Dave Cliff, Professor of Computer Sci at Bristol spoke to Waters Power:09 in Canary Wharf yesterday. It is clear from many sources that IT is changing and he examined some of these changes. He woke me up by quoting Carlota Perez  who argues that there are five transformational changes since the industrial revolution, Steam, Railways, Electricity, internal combustion and IT. She also argues that the adoption and maturity cycles are similar, and Cliff argues that “money’s out of IT now”. Her book is called “Technological Revolutions and Finance Capital:The Dynamics of Bubbles and Golden Ages”, which gives on an idea of where she’s coming from. Cliff also pointed his audience at Nick Carr’s “The Big Switch”, another pundit that argues that IT is done!  … » Read more …

Where did the Tobin Tax come from?

Lord Turner certainly made a splash last week with his comments on the social value of banks and support for a ‘Tobin Tax’. Larry Elliot of the Guardian, offered us his thoughts in an article called “Forgotten brainchild that could transform the banking casino”.  According to Elliot, Tobin argued that he sought,

“to make exchange rates reflect …long term fundamentals… {&} …preserve and promote autonomy of national macro-economic and monetary policy”.

According to Elliot the tax proposed is a tiny tax on FX deals, of the order of .175%. It makes me wonder how it would achieve these goals. I hope I don’t have to read the original paper, most economists are a difficult read at best. According to  Princeton Encyclopedia of World Economics hosted at, which has an entry on Professor Tobin, it seems the Tax was first articulated in a paper called, “Prospects for Macro-economic Policy”,  published in The New Economics One Decade Older by the  Princeton University Press 1974, and developed in “A Proposal for Monetary Reform” in Eastern Economics Journal in 1978. In 1996, he revised his ideas in the light of developments over the previous 22 years, in the Prologue of, The Tobin Tax: Coping with Financial Volatility, edited by Mahbub ul Haq, New York, OUP. As stated these references were found in Google book’s entry on “The Princeton Encyclopaedia of the World Economy” and the article also references Keynes in the General Theory as arguing that a tax on Securities would reduce speculation.


I found this link, a .pdf, a copy of “A Proposal for International Monetry Reform” about two years after I first published this article. I have mirrored it here, A Proposal for International Monetry Reform  … » Read more …

Free software, fairness and scientists

I have just posted my final blog posts to my Sun blog, including one called Free, the right price for software. (Now republished on this blog,as Free, the right price for software.) This uses a Welfare Economics approach to argue that the correct price for software is free. This is designed to be an abstract for an essay I have promised myself, which will also be the basis for my evidence to the UK Government Consultation on regulating and restricting file sharers.

Two points that I failed to put in the abstract, are firstly that economists see equity, as in fairness, as having two dimensions and that paying people with the same skills and abilities different amounts is inefficient and thus sub-optimal but arguing about the fairness of paying differently skilled people different amounts is the domain of politics. Efficiency tries to remove considerations of political equity from the model. It’d be interesting to see if this can be worked into the essay; why is Tom Cruise paid so much?

The second issue is that pure science research has to be published, peer-reviewed and refereed before it is adopted. Sharing knowledge for free is what professionals and scientists have been doing for years, why is software and the media any different. I hope to work these questions into the essay.  … » Read more …