Dallio on Economics

I am tidying the flat of items I have kept for too long, and came across an unread copy of Ray Dallio’s “How the Economic Machine Works”. I had been pointed at it by a then work colleague who had asked me to comment.

I didn’t feel in the mood to read it, and know I don’t want to keep it and so I googled it to create a bookmark but came across this 30 minute video, which can of course be consumed at double speed.

Dallio constructs a macro-economic model based on productivity growth, and credit cycles.

I have problems with his ignoring of the impact of monopoly on prices which given his rigid adherence to demand pull inflation theories could be a problem because he requires that over pricing leads to a dropin demand which doesn’t necessarily occur in monopolistic markets. He treats savings as a purchase of assets i.e. as spending; I am not sure that’s right.

He makes no mention of the marginal propensity to spend/save i.e. ignores the fact that the poor spend more of any incremental income than the rich. There is a limited discussion of fiscal policy.

He argies that the real economy i.e. the economy in terms of goods and services ignoring prices, grows at the rate of macro productivity growth.

There is no mention of international trade in his model.

I am unclear what causes the turn round in his long term debt cycle i.e. why does it change from benign to catastrophe. (Is it just animal spirits reacting to inflation and/or the micro debt burden? Or maybe its banks getting cold feet about the creditworthiness of thier borrowers.)

He argues that when the long term credit cycle moves to bust there are only four things that policy makers can do in order to reduce the total debt burden, restore creditworthiness and start spending again,

  • Cut spending (Austerity)
  • Reduce debt (Defaults & Restructuring)
  • Redistribute wealth (from the wealthy)
  • and print money

He argues that the first three are deflationary i.e. will reinforce the recession but the final one does not. (I can’t see how taking money from the rich and giving it to the poor is deflationary because of the short term higher propensity to spend of those with lower incomes.) He argues that these policies need to be balanced and that changes in income/product must be greater than the change in the debt burden. This reminds me that he does not seem to discriminate between domestic and government debt.

He finishes with three personal lessons, the last of which I heartily agree,  don’t borrow too much, don’t charge too much, and keep yourself up to date i.e. improve your productivity. …

Facebook & the European Union

Techcrunch reports that the European Parliament have called for an audit of Facebook’s systems in the light of reported data breaches. Will Facebook be added to the long list of US Tech companies successfully regulated by the EU albeit mainly over monopoly issues. (Google, Microsoft, Intel, Oracle). This is shared power, that the UK will lose should we leave the European Union. …

A bit of an old hat

I am tidying up my flat and recovered a copy of my 1988 paper developed for Oracle Expo Europe of that year, called Developments in the UK Case Market. It looked at SSADM vs Information Engineering and how and why to implement these methodologies. It’s not as dated in content as one might think, although the language is a bit old fashioned. Obviously if using post relational design and implementation techniques some of it is a bit old hat but not having a data model will be a cause of regret. …

Power in Momentum

I wrote a piece on Momentum, kindly published by the Clarion, which they finally published early in October.

Momentum democracy: how the organisation ignore its own flawed rules

It looks at the untrammelled powers of the National Coordinating Committee, the lack of the on-line voting portal promised, the lack of clarity on whether non-members of the Labour Party were grandfathered into membership, the necessity for a national conference (with no powers), the unlimited delegation powers of the NCG to officers and committees and the constraints its aims, objects and ethics place upon it. I also talk about the lack of transparency in its IT and finances.

I hope you find it useful. …

Mass Action or Court Action

I have today posted a limited review of Orgcon17 which happened last year. One of the most provocative presentations was this one, “Is the law the best way to stop mass surveillance?” While it documents the heroic struggle by a small group of fiercely motivated lawyers, it’s incredibly slow at the time, the court cases considered in 2017 related to 2015 laws and by the time the rulings came through the law in question had been replaced, but while pursuing legal action, mass action is hard, although crowdjustice.com and other petition sites allow the building of an on-line communities.

The presentation made me think about the numerous, trade union legal actions on collective bargaining issues, most notably their pursuit and criminalisation of Uber. In these cases, the use of the law is a sign of weakness, albeit of both sides, but demos and voting aren’t enough to change politicians minds on issues they consider peripheral. …

Balancing interests

I have been thinking about secure election systems for a while. Two events have provoked me to consider this issue today. Firstly, I was looking at building a voting system in WordPress and came across YOP Poll which does not have a secret ballot hidden from the system administrators. Secondly, the Lewisham Momentum meeting tonight it seems is going to have Momentum staff or nominees on the door.

The point of principle is that when building trustworthy systems, they must have a segregation of duties and are best observed by competing interested parties who can call foul if something wrong is happening.

In the examples above, neither the software, nor its administrators should be trusted, and in the second example, since there is no audit of their decisions neither should the door keepers who are accountable to no-one. …

Summer of 15

From the summer of 2015, through to the summer of 2016, with time off for winter ski trips[1], the Labour Party Head Office ran a purge of the Party’s membership which otherwise grew from about 180,000 to 550,00, a growth of 206%.

This note describes the impact of the purge. These numbers do not include the 125,000 (about 25%) excluded from the leadership election in 2016 by the imposition of a freeze date, nor the tens of thousands rejected as registered supporters.

These numbers have been constructed using Christine Shawcroft’s data (see here on the CLPD site)  and survey techniques[2],[3]. The data values have been normalised[4] between those categories where data is available and those where the values have been derived via survey.

We should bear in mind, that the guilty have been deemed so by the bureaucracy with some oversight from the leadership of the NEC Disputes panel; no hearing, no defence and no appeal.

 


[1] I dunno, I made it up, I have no idea how many of Labour’s Compliance team ski.

[2] The survey work was conducted by someone else.

[3] The sample was constructed via advertisement and opt-in. It is possible that it under-estimates those whose investigation was terminated or finished with no further action.

[4] My stats professor will be turning in is his grave. …