Category: Economics Page 2 of 3

[:en]Often critical ramblings on government and business fiscal policy.[:de]Kurze geifernde Momente, die zumeist Regierungs- und Geschäftsfinanzpolitik ins Visier ziehen

Bucking the Trend

By Fips

On 11th July 2009

In Criticism, Economics, Politics

Harry S Truman

President Truman famously kept a sign on his desk that said “The buck stops here”, a gift from an avid poker player. Yet whilst we might appreciate the imagery and the sentiment, should we really rely on there being a ‘buck‘ to pass? Is there always a man in charge, someone with whom the ultimate responsibility lies? The public at large like to believe so. Having someone who is nominally in charge provides a feeling that there is some level of control over daily events, that there is some direction to the madness that seems to govern our lives. It isn’t particularly important whether that person you believe in is God, the president, the Führer or Chuck Norris. Nor does that responsible person need to be an individual, it can just as easily be taken as being particular position, a group of people, or an organisation.

Yet having someone to look to as the ‘Man in Charge’ also entails having someone to blame when things go wrong. In general, people are not willing to look at events as the result of complex systems of uncountable interconnected threads. Such systems lack palpability, they invoke confusion and lack obvious conclusions. Much easier to view events as the result of simple inputs and outputs, revolving around the decision-making roles of important personages. When the proverbial hits the fan, the easiest response is to find those at the helm, whether particular individuals or a group, and lay the blame as thick and fast as the cement mixers can provide it. It’s a simple and effective reaction, since any person that can be held culpable must have made decisions, and any decision can be deemed retrospectively fallacious. Ergo any individual can be made and held responsible. ((We should not forget, of course, that as much as we enjoy seeing certain individuals as being responsible for the workings of the world, both for the comfort it gives us whilst things are ticking along smoothly, as well as the convenience of having someone to blame when they don’t, the individuals themselves also enjoy a level of revelry in the illusion that they are the ones with all the answers.))

Capital for the Third World

By Fips

On 20th October 2008

In Economics

Kiva

I recently came across a wonderful idea for providing peer-to-peer lending to entrepreneurs in developing countries. The idea seems akin to the principles of the Grameen Bank, providing microcredit in this case primarily as a form of aid. The system allows people with spare cash to browse potential applicants and offer them money in the form of a loan. Kiva works with what they term experienced ‘field partners’ to provide the loans, these bodies being established and recognised sources of finance (which may charge interest on the money to the borrower). Eventually the loans are repaid and the money can be withdrawn, redistributed or donated to Kiva to help cover their organisation’s costs. Of course the levels of finance are fairly miniscule on the larger scale, a far cry yet from providing the many milliards needed to create the level of sustainability needed in many parts of the developing world, through stability, infrastructure, education etc. Yet Kiva has plenty of room to expand, and importantly the principle behind the organisation is sound, in trying to create a direct link between people in the developing world who need capital (and know what they want to do with it) and those with the money and the conscience to try and help. Time will tell how effective Kiva’s mission will be.

Market Games

By Fips

On 8th December 2007

In Business, Economics, Rants

Supermarket

There are very few today who would deny that the quality of our food has dropped, partly as a result of the change embodied by the death of the local shop and the rise of the supermarket. Where once the only change was that our food was pre-grown, now we find it has been pre-grown, pre-made, pre-cooked, pre-packaged, pre-distributed, and often find our purchases are precluded by lack of choice for good measure. Of course, supermarkets are the just one example of today’s monopolies, that much should be clear. Enter the store at one end, and you can start your purchases with your baby food at one end, and walk all the way through life till you need find a buy-one-get-one-free headstone and a “Value” lawyer to deal with your wills and probate. Plus the stores are so big these days that you might in fact need the coffin by the time you finally leave.

BT and the Cost of Money

By Fips

On 19th June 2007

In Criticism, Economics

Cash – An Expensive Commodity

How much does it cost to pay? That might appear to be an odd question, but it is a seldom acknowledged hidden attribute of the market economy. Paying costs. If one only imagines the contingencies required to handle the coin money which filters through any system of minor payments, such as a road toll booth, a system of parking meters or a public transport system, it becomes clear that dealing in such currency requires some not inconsiderable expenditure on the part of the service provider.

The key here of course is cash, that anonymous key to the monetary house. Some have pointed out that the age of using cash as a medium is gradually drawing to a close, and the establishment is beginning to see the benefits of expediting its demise. This includes the government, banks, financial markets and big corporations. For an example, we need only consider the recent charges introduced by BT.

According to the government watchdog Ofcom, in recent years BT have had a residential market presence of 70-80%, with the latter figure roughly representing the number of residential lines. This totals roughly 20 million landlines, which using the traditional quarterly bill paying system makes 80 million payments a year. So how much does it cost BT to collect these charges? Well, consider the options.

An old-fashioned method such as paying your bills at the Post Office should involve little detriment, the money being transferred electronically into BT’s bank accounts, with presumably some small handling fee for the Post Office.
A cheque made payable to the company, which given the scale of their operation should also be a simple matter for the giant to deal with.
Online credit card transaction, which would incur charges from the credit card companies, though I’ll admit I don’t know if BT passes these on to its customers.
Electronic Direct Debit payments direct from customers’ bank accounts.

BT’s preferred method is clear, and as their website points out:

Many of our customers now pay by Direct Debit which is an ideal option if you find it difficult to get out or worry that you will forget to pay your bill on time.

The arguments are dressed up and sugar coated to make the idea of giving BT direct access to your bank account seem to be a rather agreeable proposition. The icing on the cake is that it costs customers less to pay via this method. BT have introduced a scandalous ‘payment processing fee’ amounting to £4.50 (plus VAT) per transaction, paying via cheque or cash.

Now one can understand the complexities of dealing with payment methods such as the cheque. Assuming BT have no automated procedures for dealing with cheques, manually inputting the figures, such as dates, sums, account numbers etc., requiring an hour’s labour for 100 payments, one can see how a wage of £500 per hour is justifiable. But to charge such extraordinary fees for cash payments that are dealt with by another body, where is the justice in that? The levy represents around a 10% increase on the average customer’s quarterly bill. Add to that the fines for late payment (which are avoided with Direct Debit by having your bank balance overdrawn instead), and it becomes clear how BT are dictating the payment methods of their victims customers.

This isn’t the first example of prejudice against traditional payment methods, nor is it a precedent for cash payments being made financially unsound. But it is surely an example of the way in which the demise of anonymous paper money is slowly being exacerbated by that interlinked establishment of government and big business.

Advertising Takes The Logical Next Step

By Fips

On 7th January 2007

In Economics

Zool: An early example of in-game advertising

We should be clear about one thing. In-game advertising isn’t new. And not just the self-effacing, tongue-in-cheek form of advertising epitomised by the Loom™-toting pirate in LucasArts’ The Secret of Monkey Island. Anyone who remembers Zool from the early 1990s might recall the Chupa Chups sponsorship deal, and the FIFA series has been using advertising on their billboards for many years, though what with ‘image rights’ being big money for clubs and players alike, the football genre could be said to have entrenched itself in the realm of ‘reverse’ advertising.

Nevertheless, the presence of advertising in games has been pretty low key, considering the industry’s growth over the past decade or so. Advertising is not usually so slow to find its way into new forms of media entertainment, Internet advertising being the biggest example of recent times. So the news that in-game advertising rights for Counter-Strike (the ‘big one’ as far as non-MMORPGs is concerned) have been sold to IGA should only come as expected. Previously adverts for Valve’s flagship had been reserved for brief loading screens, an idea which apparently never took hold. Where Internet advertising has had much reaction to the point where many people block out adverts as a matter of course, this will be more difficult to achieve in such a gaming environment, and should it succeed, might result in future games featuring truly hard-coded advertising avenues.