Using a farmer with two cows is fun way to explain complex economic systems.

SOCIALISM
You have 2 cows.
You give one to your neighbour.

COMMUNISM
You have 2 cows.
The state takes both and gives you some milk.

FASCISM
You have 2 cows.
The state takes both and sells you some milk.

NAZISM
You have 2 cows.
The state takes both and shoots you.

BUREAUCRATISM
You have 2 cows.
The state takes both, shoots one, milks the other, and then throws the milk away.

TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income.

ROYAL BANK OF SCOTLAND (VENTURE) CAPITALISM
You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened
by your brother-in-law at the bank, then execute a debt/equity swap with an associated
general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island
Company secretly owned by the majority shareholder who sells the rights to all seven
cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more.
You sell one cow to buy a new president of the United States, leaving you with nine cows.
No balance sheet provided with the release.
The public then buys your bull.

SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons.

AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has dropped dead.

A FRENCH CORPORATION
You have two cows.
You go on strike, organize a riot, and block the roads, because you want three cows.

A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
You then create a clever cow cartoon image called a Cowkimona and market it worldwide.

AN ITALIAN CORPORATION
You have two cows, but you don’t know where they are.
You decide to have lunch.

A SWISS CORPORATION
You have 5000 cows. None of them belong to you.
You charge the owners for storing them.

A CHINESE CORPORATION
You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.

AN INDIAN CORPORATION
You have two cows.
You worship them.

A SPANISH CORPORATION
You have 2 cows but owe Santander for 6.
Nobody drinks milk.
You have a siesta and read about the collapse of the Euro

A GREEK CORPORATION
You lease 2 cows and pay somebody 3 times the going rate to milk them using borrowed money.
You refinance the 4 cows to secure the services of Goldman Sachs. They sell the future milk
production of the 60 cows and fund your lifestyle.
You retire to anywhere that doesn’t use the Euro.

A BRITISH CORPORATION
You have two cows.
Both are mad.

AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the cr_ap out of you and invade your country.
You still have no cows, but at least you are now a democracy.

AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.

A NEW ZEALAND CORPORATION
You have two cows.
The one on the left looks very attractive.

AN ARGENTINIAN CORPORATION
You don’t have any cows.
But you claim sovereignty over the ones belonging to your neighbour

Author unknown.

The amazing construction feat has been captured in a time-lapse video.

Chinese firm the Broad Group grabbed world attention last year when it built a 16-storey residential block in just five days.

The firm has done it again but this time on a more ambitious scale building a 180,000 sq ft hotel in the south-central Chinese city of Changsha.

The remarkable achievement was completed with no injuries to any worker.

The building has been designed to withstand magnitude 9 earthquakes and is claimed to be five times more energy efficient than standard towers, both in construction and materials used, and in the energy required to maintain and run the building.

All the key components were prefabricated off-site. The builders took just 46 hours to finish the main structural components and another 90 hours to finish the building enclosure.

And if you’re thinking the builders were working around the clock, think again. They downed their tools at 10pm every night. We’re seriously impressed.

Daily exposure to pollution can set us up for a lifetime of ill-health. And as cities become ever more crowded, these problems are only going to get worse.

The latest studies indicate that daily exposure to urban pollution can affect us before we are even born – leaving us prone to a lifetime of ill-health.

Scientists have discovered that babies born in cities are bigger and heavier – normally a good sign – than those born in the countryside.

But when they compared the placentas of mothers from a busy city and a quiet rural district, they found that the city mums had far higher levels of chemical pollutants called xenoestrogens in their blood – and in that of their unborn babies.

Xenoestrogens are industrial chemicals that affect our bodies in similar ways to the female hormone, oestrogen.They are found in petrol fumes and are more abundant in industrial areas than the countryside.

As well as causing excess foetal growth, they have been linked to fertility problems as well as obesity, hyperactivity, early puberty, and cancers of the lung, breast and prostate.

Maria Marcos, who led the study by the University of Granada, Spain,  says the toxic xenoestrogens seem to have a significant effect on the development of unborn children. Her report provides the latest evidence that city air can seriously hinder normal childhood development.

This report might also help to explain why infertility seems to be on the increase and why more and more couples are turning to IVF and other assisted conception methods.

Word gets around about Mary’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Mary’s bar. Soon she has the largest sales volume for any bar in Dublin.
By providing her customers’ freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.
Consequently, Mary’s gross sales volume increases massively. A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Mary’s borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into Drinkbonds and Alkibonds. These securities are then bundled and traded on international security markets. Naïve investors don’t really understand that the securities being sold to them as ‘AAA’ secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary’s bar. He so informs Mary. Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Mary cannot fulfil her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, Drinkbonds and Alkibonds drop in price by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community. The suppliers of Mary’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the various Bond securities. They find they are now faced with having to write-off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro no-strings-attached cash infusion from their cronies in government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary’s bar.

The writing is spidery, the occasional ink blob suggesting an old steel nib that had seen better days and the grey unlined paper might have been ripped out of a cheap notepad.

The title is uninspiring too: Social Insurance and Allied Services. This could be the workof a rather sloppy civil servant, too junior to qualify for a secretary of his own, jotting down a few thoughts that might one day impress his boss.

But when I took it from its dog-eared folder I felt like a Shakespearian scholar handling a rare first folio. Of all the documents stored away in the library of the London School of Economics, none has had a greater impact on the way we live our lives than this. There is scarcely a soul born in this country over the past 70 years whose life has not been affected by what resulted from this scruffy piece of paper.

When it was published, a year after these original scribblings, it had a slightly snappier title: Beveridge Report. Its author, Sir William Beveridge, had said he wanted a revolution and that’s what he got: the creation of the welfare state. What, I wondered as I scanned the pages, would he have made of the way his revolution turned out.

His ambition was immense: to slay what he called the five evil giants of society. Want. Disease. Ignorance. Squalor. Idleness. The first four may not have been slain but, given how grim life had become for all but the privileged few, their malign power has faded. It’s the fifth he’d have a problem with today and the great irony is that so many people believe it was his own creation that is at least partly to blame.

Idleness takes two forms today, one enforced and the other voluntary. One is the result of unemployment made worse by recession, cutbacks, growing competition from abroad and other economic factors. The other is the predictable effect of a dependency culture. A sense of entitlement. A sense that the state owes us a living. A sense that not only is it possible to get something for nothing, but we have a right to do so. This, 70 years on from the Beveridge Report, is the charge many people level against it.

I have spent the past year making a documentary for BBC2 in which I have tried to deal with that charge. In the process I have talked to people who are desperate for a job — any job — and to people for whom idleness is a lifestyle choice and who are quite happy to admit to it. I have talked to assorted academics who have studied the subject for decades and arrived at entirely contradictory conclusions. I have been to the United States, where they had their own welfare revolution a few years ago, and have witnessed some of its outcomes in the soup kitchens of Manhattan. And we commissioned our own opinion poll to test the mood of the nation. Do we still want the benefits system that the welfare state has spawned, and if not why not?

Inevitably our opinions (our prejudices, maybe) are influenced by our childhood. I was born in a working-class district of Cardiff called Splott. My father was a self-employed French polisher and my mother had been a hairdresser and still managed to do the odd home perm in our kitchen for friends and neighbours in between bringing up five children.

We were often broke but probably neither much better nor worse off than most other families in the street. All the parents seemed to work as hard as my own — with one exception. The father in question had lots of children and no job, nor did he seem to want one. He was happy living on the dole. Because of that he was treated with contempt.

That was more than half a century ago. When I went back to my old neighbourhood we found others like him. In the words of an old lady who lived opposite my house when I was born and who lives there still: “If they can get money without working, they will.” Times have changed, she told me sadly, and the “pride in working” has gone.

The statistics seem to suggest she may have a point: one in four people of working age in this area is now living on benefits. But maybe that’s because there are no jobs to be had.

I went to the jobcentre, a smart modern building where bright young staff smile a lot and there are plenty of computer terminals to display what’s on offer. Last month there were more than 1,600 jobs advertised in Cardiff. Rosemary Gehler, the manager, agreed with the rather brutal verdict of my former neighbour.

“There is undoubtedly less of a stigma to being on benefits and I don’t think anyone would argue with that,” she told me. “Benefits became fairly easy to access … too easy, probably, in some cases … and people taking them didn’t see themselves getting back into work. That situation has built up over the years.”

http://www.thesundaytimes.co.uk/sto/newsreview/features/article803855.ece Page 2 of 6

Shameless Britain | The Sunday Times 23/10/2011 22:51

Back in my old street I talked to Pat Dale, a single mother of seven children. She was most indignant about the “people who’ve never worked in their life … they don’t even know what a job is”.

When did she last work? Twenty years ago. The older children don’t have jobs either. The problem, she says, is that the jobs on offer don’t pay enough. “If I worked for the minimum wage, I’d get paid £5.50, right? That means I’d lose out on my rent benefits and I’d be working for nothing. I think it’s disgusting. Honestly, it is really, really disgusting.”

Her figures were slightly inaccurate — the national minimum wage is £6.08 an hour — but she’s right about losing some benefits, depending on how many hours she worked. That is the problem. I came across it again and again as I travelled round the country.

On a pleasant housing estate outside Middlesbrough I met Steve Brown, as calm and mild-mannered as Dale was defiant and angry — but equally dependent on benefits and equally unapologetic about it.

He and his girlfriend live with their three children in a comfortable rented semi. Their household income is about £20,000 a year without, of course, any deductions for tax. Brown told me that before he could take a job he’d “have to sit down with them and work out whether it’s acceptable to go to work or not”.

Had he considered that some people on the minimum wage might reckon working is better than not working? “No, no, no … not at all. I just don’t want to be going out to work for 40 hours and missing my kids if I’m only going to receive a few quid extra for it, d’you understand? I’d be missing my kids growing up.”

I’m not sure I did understand, but I’ve never had to try living on the minimum wage.

There are about 250,000 people in this country today who have been out of work for more than a year and are claiming jobseeker’s allowance. The total number of unemployed is now 2.57m. But that’s only the half of it. Literally. There are another 2.5m people who do not work and claim sickness benefits of one sort or another.

That figure was much smaller until governments in the 1980s set about hacking back the number of people on the dole by the simple expedient of transferring vast numbers of them onto sickness benefits. So the dole queues grew smaller and the number of people on the sick list went through the roof. Now it works out at roughly 1 in 11 of the entire British labour force.

I talked about this to Dr Sharon Fisher, a GP who left her native South Africa 10 years ago to practise in this country. Her surgery is in Tower Hamlets, one of the poorest boroughs in London.

She told me the system is harming her patients: “I tell some patients it’s actually not in their best interests to be off sick, but sometimes they’re really adamant. They say their previous doctor signed them off, or they’ve been off for a very long time. They say, ‘What’s different now, doctor? Why aren’t you giving us the time off?’ As a clinician I know that the longer a patient is off sick, the lower the chance of them ever returning to work.”

What does she think of the statistics that say there are 2.5m people too sick to work? Unbelievable, she says. Literally unbelievable.

David Cameron has another word for it. “Conned by governments” was the phrase he used at this year’s Tory party conference. And not just by governments, apparently, because he went on: “It turns out that of the 1.3m people who have put in a claim for the new sickness benefit in recent years, 1m are either able to work or stopped their claim before their medical assessment had been completed.”

The long-term unemployed and people on sickness benefits make huge demands on the welfare state. There’s one other group — a group that Beveridge did not target because it barely existed in his day: single mothers. Today 590,000 lone parents are on out-of-work benefits.

Professor Paul Gregg of Bristol University calculates that the level of support a single mother receives for a child today is about three times the amount it was 20 years ago. It was raised, he says, in a deliberate attempt to reduce child poverty. But the other side of the argument, he told me, is that “the very creation of the safety net encourages people to exist on it longer than they otherwise would”.

Barack Obama in a soup kitchen. Many have sprung up since benefits cuts (Jim Watson)

So we’re back to perverse incentives. When Beveridge wrote his report in the 1940s he saw a nation in which there were vast numbers of people who were desperate to work if only they could get a job. Now there are many who have no incentive to get one because they are better off on benefits. The Centre for Social Justice, which was set up by Iain Duncan Smith, the welfare secretary, calculates that the number of households in which no one works has doubled over the past 15 years.

Gavin Poole, its director, told me it shows there is something wrong with a system that enables part of the population who could work to choose the option to live a life on benefits. Does he want to force people to work? He preferred to talk about “mentoring” and “encouraging” people, but conceded that if all else fails some form of sanctions might be needed.

So that’s it, then? The solution is right there, staring us in the face. You cut the benefits and people who don’t want to work will have no choice. It might be tough but why should hard-working taxpayers (every politician’s favourite phrase) have to work even harder to keep others in their idleness — especially when we’re all feeling the pinch these days?

It’s not as if every other European country takes the same approach. I talked to a group of Polish building workers on the south coast, all of whom said they couldn’t find work in Poland and it was impossible to live there on benefits. They told me you can just about survive for one week on what the state pays out for a month. So they left Poland several years ago, came here and stayed.

What happens in a rich country when the government decides the benefits system is too generous? When Bill Clinton was president of the United States he said what no British politician would dare to say: America would “end welfare as we know it”. He declared a revolution. Instead of welfare, Americans would have “workfare”. Instead of the state paying its citizens to be idle, the citizen would Americans would have “workfare”. Instead of the state paying its citizens to be idle, the citizen would have to find work. If not, the state would find something for them to do. And if they didn’t like what was on offer — sweeping up leaves, perhaps — then that’s just too bad. No work, no welfare.

The first American state to raise the banner of revolution was Wisconsin. Other states followed. The number of people on benefits dropped by as much as 80% and the revolution took hold. Many British politicians beat a path to the revolutionaries’ door and returned, having seen the light, with shining faces. That was 15 years ago.

I went over to New York to see if the light is still shining as brightly. Robert Doar, the city’s welfare commissioner, told me: “Our system had developed a sense of entitlement in people who expected cash benefits without having to do anything in return. The benefits without work were greater than the benefits of going to work. We said, ‘We expect you to work’.”

Sound familiar? Elaine Huitt, the manager of the Manhattan jobcentre, told me what happens if someone doesn’t want to do the job the city offers them or, in the official lingo, “fails to co-operate with our guidelines”. That, she said, “results in a denial”. And that means? “No more assistance.”

If workfare has a godfather, his name is Professor Larry Mead. He says the figures prove it’s working. About 60% who were on benefits before it was introduced have taken jobs. And what about the other 40%? “There is some debate about whether they are worse off or not because they are not working and they are not on welfare, but it is still clear that the overall economic effects of welfare reform are positive.”

To which the obvious answer is: not if you’re one of the 40%. I talked to some of them queuing outside the soup kitchens and “pantries” of Manhattan where people go when there’s nowhere else left. The manager of one, a fiery Irish New Yorker called Aine Duggan, described the welfare reforms as an “atrocity”. She said: “We have used welfare reform as an excuse to cut and cut and cut and to push more and more families out of the welfare system.”

Many of the people in her soup kitchen were professionals who lost their jobs at the start of the recession and have become “ninety-niners” — people who have passed the period when they are still eligible for the most basic benefits. Now they are on their own.

Yvonne Fitzner, an articulate, neatly dressed middle-aged woman, told me her payments had “run out” more than a year ago. When her modest savings ran out too, she’d had to sell her television, most of her jewellery and furniture and was sleeping on a mattress on her kitchen floor. She has lunch at the soup kitchen seven days a week and a church has started serving free dinners. She said: “I can’t imagine how I’m going to keep paying my rent or phone. I’m scared. I’m just hoping for a miracle.”

Mead was invited to Downing Street last year to talk about welfare reform. Since then the coalition government has been putting some flesh on its own proposals.

The plan is to combine jobseeker’s allowance with other benefits into one personal allowance called universal credit. As with workfare, the aim is to encourage the jobless, particularly the long-term unemployed, to return to work.

Duncan Smith uses tough language: “This is a two-way street … We expect people to play their part … Choosing not to work if you can work is no longer an option … We are developing sanctions for those who refuse to play by the rules.”

What he and every other politician knows, though, is that fundamental reforms to the benefits system will come about only if there is public will. It happened in the United States because of what was called at the time “moral panic”. The politicians detected that taxpayers were no longer prepared to tolerate a system under which they worked hard to pay the dues of those who chose not to.

What is the mood of Britain 70 years after Beveridge? The first conclusion from an Ipsos Mori poll would have gladdened the old man’s heart. Fully 92% agreed that we must have a benefits system that provides a safety net for everyone who needs it. In polling terms, that’s as close as you get to unanimous approval.

We got a different response when we asked whether people think the present system is working effectively. Only two-thirds think it is. Even more think there are some groups claiming benefits who should have those benefits cut. They were particularly suspicious of people on sickness benefits: 84% wanted stricter tests to make sure claimants were really incapable of working.

They were pretty hawkish on housing benefits, too: 57% said people who get higher benefits because they live in expensive areas should be forced to move into cheaper accommodation.

Of course, public opinion changes. When a relentlessly rising benefits bill collides with the national coffers running dry it would be surprising if the public mood did not turn sour. But talking to so many people caught in the welfare trap against their wishes, I’d like to think it was as simple as people such as Mead seem to suggest.

The problem is that for every claimant who makes you want to scream in frustration because they’re happy to live off the state, you meet one who makes you want to weep because they are so desperate to find work. And can you blame youngsters who can’t see the point of working if their parents have never bothered?

At the City Gateway charity, which tries to get young people into apprenticeships and off benefits, I asked a group of about two dozen who’d volunteered for training how many had a father or mother in work. Not a single hand went up.

For every single mother pilloried by the tabloids for deliberately getting pregnant so she can claim the benefits and live rent-free, you meet young women like Gemma, who lives in Knowsley, the Merseyside town where the number of single mothers is nearly twice the national average. Yes, she got pregnant when she was still at school and, yes, when I first met her she seemed to fit the stereotype. When I asked about her benefits she stormed out of the interview.

Later we talked at length. Her eyes filled with tears when she told me she’d been doing well at school. Then she started taking drugs because everyone else was and then she got pregnant and was “trapped”. She didn’t look like a tough young woman who’d set out to milk the system and was enjoying it. She wanted a different life from the one she had but couldn’t see how to get there.

Trapped was the right word. How does a young woman with a small child and no qualifications find a job that will pay the rent and all the other bills, in a depressed area, when there are close to 1m other young people out of work and living on benefits across the country?

It may be that we really are on the brink of another welfare revolution. I have never seen the sort of political consensus on the benefits system that we seem to be approaching now and our poll suggests the politicians are reflecting a changing public mood. But that consensus has yet to be converted into hard policies acceptable to the nation as a whole.

Beveridge tried to slay the fifth evil giant and, in the process, helped to create a different sort of monster in its place: the age of entitlement. The battle for his successors is to bring it to an end.

John Humphrys presents The Future State of Welfare, BBC2, Thursday, at 9pm

http://www.thesundaytimes.co.uk/sto/newsreview/features/article803855

As a side-effect of the financial crisis, more and more people are starting to think Karl Marx was right. The great 19th Century German philosopher, economist and revolutionary believed that capitalism was radically unstable.

It had a built-in tendency to produce ever larger booms and busts, and over the longer term it was bound to destroy itself.

Marx welcomed capitalism’s self-destruction. He was confident that a popular revolution would occur and bring a communist system into being that would be more productive and far more humane.

Marx was wrong about communism. Where he was prophetically right was in his grasp of the revolution of capitalism. It’s not just capitalism’s endemic instability that he understood, though in this regard he was far more perceptive than most economists in his day and ours.

More profoundly, Marx understood how capitalism destroys its own social base – the middle-class way of life. The Marxist terminology of bourgeois and proletarian has an archaic ring.

But when he argued that capitalism would plunge the middle classes into something like the precarious existence of the hard-pressed workers of his time, Marx anticipated a change in the way we live that we’re only now struggling to cope with.

He viewed capitalism as the most revolutionary economic system in history, and there can be no doubt that it differs radically from those of previous times.

Hunter-gatherers persisted in their way of life for thousands of years, slave cultures for almost as long and feudal societies for many centuries. In contrast, capitalism transforms everything it touches.

It’s not just brands that are constantly changing. Companies and industries are created and destroyed in an incessant stream of innovation, while human relationships are dissolved and reinvented in novel forms.

Capitalism has been described as a process of creative destruction, and no-one can deny that it has been prodigiously productive. Practically anyone who is alive in Britain today has a higher real income than they would have had if capitalism had never existed.

The trouble is that among the things that have been destroyed in the process is the way of life on which capitalism in the past depended.

Negative return

Defenders of capitalism argue that it offers to everyone the benefits that in Marx’s time were enjoyed only by the bourgeoisie, the settled middle class that owned capital and had a reasonable level of security and freedom in their lives.

In 19th Century capitalism most people had nothing. They lived by selling their labour and when markets turned down they faced hard times. But as capitalism evolves, its defenders say, an increasing number of people will be able to benefit from it.

Fulfilling careers will no longer be the prerogative of a few. No more will people struggle from month to month to live on an insecure wage. Protected by savings, a house they own and a decent pension, they will be able to plan their lives without fear. With the growth of democracy and the spread of wealth, no-one need be shut out from the bourgeois life. Everybody can be middle class.

In fact, in Britain, the US and many other developed countries over the past 20 or 30 years, the opposite has been happening. Job security doesn’t exist, the trades and professions of the past have largely gone and life-long careers are barely memories.

If people have any wealth it’s in their houses, but house prices don’t always increase. When credit is tight as it is now, they can be stagnant for years. A dwindling minority can count on a pension on which they could comfortably live, and not many have significant savings.

More and more people live from day to day, with little idea of what the future may bring. Middle-class people used to think their lives unfolded in an orderly progression. But it’s no longer possible to look at life as a succession of stages in which each is a step up from the last.

In the process of creative destruction the ladder has been kicked away and for increasing numbers of people a middle-class existence is no longer even an aspiration.

As capitalism has advanced it has returned most people to a new version of the precarious existence of Marx’s proles. Our incomes are far higher and in some degree we’re cushioned against shocks by what remains of the post-war welfare state.

But we have very little effective control over the course of our lives, and the uncertainty in which we must live is being worsened by policies devised to deal with the financial crisis. Zero interest rates alongside rising prices means you’re getting a negative return on your money and over time your capital is being eroded.

The situation of many younger people is even worse. In order to acquire the skills you need, you’ll have to go into debt. Since at some point you’ll have to retrain you should try to save, but if you’re indebted from the start that’s the last thing you’ll be able to do. Whatever their age, the prospect facing most people today is a lifetime of insecurity.

Risk takers

At the same time as it has stripped people of the security of bourgeois life, capitalism has made the type of person that lived the bourgeois life obsolete. In the 1980s there was much talk of Victorian values, and promoters of the free market used to argue that it would bring us back to the wholesome virtues of the past.

For many, women and the poor for example, these Victorian values could be pretty stultifying in their effects. But the larger fact is that the free market works to undermine the virtues that maintain the bourgeois life.

When savings are melting away being thrifty can be the road to ruin. It’s the person who borrows heavily and isn’t afraid to declare bankruptcy that survives and goes on to prosper.

When the labour market is highly mobile it’s not those who stick dutifully to their task that succeed, it’s people who are always ready to try something new that looks more promising.

In a society that is being continuously transformed by market forces, traditional values are dysfunctional and anyone who tries to live by them risks ending up on the scrapheap.

Looking to a future in which the market permeates every corner of life, Marx wrote in The Communist Manifesto: “Everything that is solid melts into air”. For someone living in early Victorian England – the Manifesto was published in 1848 – it was an astonishingly far-seeing observation.

At the time nothing seemed more solid than the society on the margins of which Marx lived. A century and a half later we find ourselves in the world he anticipated, where everyone’s life is experimental and provisional, and sudden ruin can happen at any time.

A tiny few have accumulated vast wealth but even that has an evanescent, almost ghostly quality. In Victorian times the seriously rich could afford to relax provided they were conservative in how they invested their money. When the heroes of Dickens’ novels finally come into their inheritance, they do nothing forever after.

Today there is no haven of security. The gyrations of the market are such that no-one can know what will have value even a few years ahead.

This state of perpetual unrest is the permanent revolution of capitalism and I think it’s going to be with us in any future that’s realistically imaginable. We’re only part of the way through a financial crisis that will turn many more things upside down.

Currencies and governments are likely to go under, along with parts of the financial system we believed had been made safe. The risks that threatened to freeze the world economy only three years ago haven’t been dealt with. They’ve simply been shifted to states.

Whatever politicians may tell us about the need to curb the deficit, debts on the scale that have been run up can’t be repaid. Almost certainly they will be inflated away – a process that is bound to be painful and impoverishing for many.

The result can only be further upheaval, on an even bigger scale. But it won’t be the end of the world, or even of capitalism. Whatever happens, we’re still going to have to learn to live with the mercurial energy that the market has released.

Capitalism has led to a revolution but not the one that Marx expected. The fiery German thinker hated the bourgeois life and looked to communism to destroy it. And just as he predicted, the bourgeois world has been destroyed.

But it wasn’t communism that did the deed. It’s capitalism that has killed off the bourgeoisie.

From the BBC.
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Behind every smart web service is some even smarter web code. From the web retailers – calculating what books and films we might be interested in, to Facebook’s friend finding and image tagging services, to the search engines that guide us around the net.

It is these invisible computations that increasingly control how we interact with our electronic world.

At last month’s TEDGlobal conference, algorithm expert Kevin Slavin delivered one of the tech show’s most “sit up and take notice” speeches where he warned that the “maths that computers use to decide stuff” was infiltrating every aspect of our lives.

Among the examples he cited were a robo-cleaner that maps out the best way to do housework, and the online trading algorithms that are increasingly controlling Wall Street.

“We are writing these things that we can no longer read,” warned Mr Slavin.

“We’ve rendered something illegible. And we’ve lost the sense of what’s actually happening in this world we’ve made.”

Million-dollar book

Algorithms may be cleverer than humans but they don’t necessarily have our sense of perspective – a failing that became evident when Amazon’s price-setting code went to war with itself earlier this year.

“The Making of a Fly” – a book about the molecular biology of a fly from egg to fully-fledged insect – may have been a riveting read but it almost certainly didn’t deserve a price tag of $23.6m (£14.3m).

It hit that figure briefly on the site after the algorithms used by Amazon to set and update prices started outbidding each other.

It is a small taste of the chaos that can be caused when code gets smart enough to operate without human intervention, thinks Mr Slavin.

“This is algorithms in conflict without any adult supervision,” he said.

As code gets ever more sophisticated it is reaching its tentacles into all aspects of our lives, including our cultural preferences.

The algorithms used by movie rental site Netflix are now responsible for 60% of rentals from the site, as we rely less and less on our own critical faculties and word of mouth and more on what Mr Slavin calls the “physics of culture”.

Leading role

British firm Epagogix is taking this concept to its logical conclusion, using algorithms to predict what makes a hit movie.

It takes a bunch of metrics – the script, plot, stars, location – and crunches them all together with the box office takings of similar films to work out how much money it will make.

The system has, according to chief executive Nick Meaney, “helped studios to make decisions about whether to make a movie or not”.

In the case of one project – which had been assigned a £180m production cost – the algorithm worked out that it would only take £30m at the box office, meaning it simply wasn’t worth making.

For another movie, it worked out that the expensive female lead the studio had earmarked for a film would not yield any more of a return than using a less expensive star.

This rather clinical approach to film-making has irked some who believe it to be at odds with a more creative, organic way that they assume their favourite movies were made.

Mr Meaney is keen to play down the role of algorithms in Hollywood.

“Movies get made for many reasons and it credits us with more influence than we have to say we dictate what films are made.

“We don’t tell them what the plot should be. The studio uses this as valuable business information. We help people make tough decisions, and why not?” he said.

Despite this, the studio Epagogix has worked with for the last five years does not want to be named. It is, says Mr Meaney, a “sensitive” subject.

Secret sauce

If algorithms had a Hollywood-style walk of fame, the first star would have to go to Google.

Its famously secret code has propelled the search giant to its current position as one of the most powerful companies in the world.

No-one would doubt that its system has made searching a whole lot easier, but critics have long asked at what price?

In his book, The Filter Bubble, Eli Pariser questions how far Google’s data-crunching algorithm go in harvesting our personal data and shaping the web we see accordingly.

Meanwhile, a recent study by psychologists at Columbia University found that reliance on search engines for answers is actually changing the way humans think.

“Since the advent of search engines, we are reorganising the way we remember things. Our brains rely on the internet for memory in much the same way they rely on the memory of a friend, family member or co-worker,” said report author Betsy Sparrow.

Increasingly, she argues, we are knowing where information can be found rather than retaining knowledge itself.

Flash crash

Move over traders, there’s a new code in town

In the financial markets, code is increasingly becoming king as complex number-crunching algorithms work out what to buy and what to sell.

Up to 70% of Wall Street trading is now run by so-called black box or algo-trading.

That means, along with the wise guy city traders, banks and brokers now employ thousands of smart guy physicists and mathematicians.

But even machine precision, supported by the human code wizards, doesn’t guarantee things will run smoothly.

In the so-called Flash Crash of 2.45 on May 6 2010, a five minute dip in the markets caused momentary chaos.

“We are running through the United States with dynamite and rocksaws so an algorithm can close the deal three microseconds faster.”
Kevin Slavin. Algorithm expert

A rogue trader was blamed for the 10% Dow Jones index fall but in reality, it was the computer program that the unnamed trader was using that was really to blame.

The algorithm sold 75,000 stocks with a value of £2.6bn in just 20 minutes, causing other super-fast trading algorithms to follow suit.

Just as a bionic limb can extend a human’s capability for strength and stamina, the electronic market showed its capacity to exaggerate and accelerate minor blips.

No-one has ever managed to pinpoint exactly what happened, and the market recovered minutes later.

The chaos forced regulators to introduce circuit breakers to halt trades if the machines start misbehaving.

The algorithms of Wall Street may be the cyber-equivalent of the 80s yuppie, but unlike their human counterparts, they don’t demand red braces, cigars and champagne. What they want is fast pipes.

Spread Networks has been building one such fibre-optic connection, shaving three microseconds off the 825-mile (1327km) trading journey between Chicago and New York.

Meanwhile, a transatlantic fibre optic link between Nova Scotia in Canada and Somerset in the UK is being built primarily to serve the needs of algorithmic traders and will send shares from London to New York and back in 60 milliseconds.

“We are running through the United States with dynamite and rock saws so an algorithm can close the deal three microseconds faster, all for a communications system that no humans will ever see,” said Mr Slavin.

As algorithms spread their influence beyond machines to shape the raw landscape around them, it might be time to work out exactly how much they know and whether we still have time to tame them.

Jane Wakefield. BBC Technology reporter 23/08/11

He explained why people have such a need for drama in their life.

He said, “People have been hearing fantastic stories since time began. The problem is, they think life is supposed to be like the stories. Let’s look at a few examples.”

He drew an empty grid on the board, like this:

Time moves from left to right. Happiness from bottom to top.

He said, “Let’s look at a very common story arc. The story of Cinderella.”

It starts with her awful life with evil stepsisters, scrubbing the fireplace. Then she get an invitation to the ball! Things look up. Then the fairy godmother makes her a dress and a coach. Even better! Then she goes to the ball, and dances with the prince! This is great! But then it’s midnight. She has to go. Oh no. Sadness. Back to her humdrum life scrubbing the fireplace. But it’s not as bad as before, because she’s had this encouraging experience. Then, the prince finds her, and the happiness factor is off the chart! Happily ever after.

“People LOVE that story! This story arc has been written a thousand times in a thousand tales. And because of it, people think their lives are supposed to be like this.”

He wiped the board clean and said, “Now let’s look at another popular story arc: the disaster.”

It’s an ordinary day in an ordinary town. But something horrible happens! A child falls down a well! The whole town gathers to save her. Old grudges surface, but are belittled in the light of this tragedy. Rifts are bonded as people work together. The child is saved, and all is well. But notice it’s a little better than it was before, now that this incident has brought them all closer together.

“People LOVE that story! This story arc has been written a thousand times in a thousand tales. And because of it, people think their lives are supposed to be like this.”

But the problem is, life is really like this…

Our lives drifts along with normal things happening. Some ups, some downs, but nothing to go down in history about. Nothing so fantastic or terrible that it’ll be told for a thousand years.

“But because we grew up surrounded by big dramatic story arcs in books and movies, we think our lives are supposed to be filled with huge ups and downs! So people pretend there is drama where there is none.”

That’s why people invent fights. That’s why we’re drawn to sports. That’s why we act like everything that happens to us is such a big deal.

We’re trying to make our life into a fairy tale.

taken from  http://sivers.org/

A new study by the Radcati Group discovered that 40% of UK men were spending 2 hours a day dealing with e mails and that 62% of men were sending work e mails out of hours.

“We’re living through an information overload” says psychologist and stress expert Dr David Lewis. “Our studies show that this excess and inescapablility of e mails is a major contributing factor to stress.”

Using leisure time to deal with work e mails enhances stress levels. Our bodeis are not deisgned to deal with consistennt stress. Stress may be teh buzzword of teh decade but it need sto be taken seriously, it is now being blamed for 85% of chronic ilnesses in the Western world.

“It can lead to feelings of depression, anxiety and even mental breakdown. Increased e mailing can also lead to alienation and disenchantment.” says Dr Lewis.

So how do you stop e mails taking over your life? Professor Cary Cooper from Lancaster University says the secret is not to constantly check them and instead impose strict rules. “Only check your e mails every hour at the most” he advises.

“For many there  is no way to answer every e mail. It is important to understand this and not feel guilty. Prioritise the important ones, do some others later and forget about the ones that could drown you.”