January 29, 2009

The house passed Obama’s $819 billion stimulus package without a single vote from a Republican (se NYTimes).  In the press conference following the President’s meeting with business executives at the White House (see video),  Obama reiterates that he is ushering in a new era of ‘responsibility’ in which ever person must make an effort to contribute to economic recovery.

The victory statement, which emphasized action, was an improvement over what Krugman called the “standard we’re-all-at-fault, let’s-get-tough-on-ourselves boilerplate” message at the heart of the inaugural speech. The success of the legislation is, however, as Krugman wryly points out on his blog, an ominous sign of the defeat of bipartisan efforts.

Obama also announced of a website,, designed to let taxpayers oversee the implementation of the recovery plan.  “I know that there are some who are skeptical of the size and scale of this recovery plan”, he said “and I understand that skepticism given what has happened in this town in the past. That’s why this recovery plan will include unprecedented measures that will allow the American people to keep my administration accountable.”

A direct information link between the government and citizens?  Something to keep in mind with regards to the role of technology and new media in the ‘Changing Dynamics of Public Controversy‘…

There’s a ‘Fashion Meets Finance‘ mixer in New York planned for January 22 where the ‘women’ of the fashion industry are intended to mix with the ‘men’ of the banking industry (who apparently still make more than guys in advertising).

The invitation to Wall Street starts like this: “Life may be tough, and your industry might be crumbling, but what you need to realize is that the implications of this crisis for the rest of New York society are even more intense. You Bankers are the core of our ecosystem, the top of the food chain. And when there are less lions hunting, the natural balance is destroyed and next thing you know advertising guys are picking up tens at 1Oak buying drinks from the bar. Pathetic. Without you, there’s chaos, and hot women don’t know where to turn. In the next year there will be too many hot girls that were supposed to marry bankers making the life-long decision to settle with consultants, accountants, and lawyers? Its unnatural and unfair.”

Check out the ‘who’s coming‘ section where participants state their salaries and post photos. Of ethnographic interest, anyone…?

On Friday, crude oil prices jumped in a new all-time high: the benchmark futures contract of light sweet crude was traded at US$139.54 in New York.

This new record was attributed to a comment by Iranian-born Israeli deputy prime minister, Shaul Mofaz, who said that: “If Iran continues its nuclear weapons program, we will attack it. Other options are disappearing. The sanctions are not effective. There will be no alternative but to attack Iran in order to stop the Iranian nuclear program.”

The news stories did mention that the context for this comments is the primaries in Kadima, PM Olmert’s party, where Mofaz is a contender and that it is likely that the comments were made for ‘domestic consumption’. The reaction to the statement shows that in today’s highly connected markets distinction between the local and the global cannot be made easily. Mofaz’s Israeli political bravado injected volatility to global oil markets. Such effect, in itself is dangerous enough, of course, but the other ‘leg’ of the reflexivity circle is potentially even riskier. In fact, this side of the phenomenon may feed a social loop that can place Iran and Israel on a sure collision course.

How so? Mofaz is now aware of the impact that his words have on markets. However, if anyone may think that this would serve as a lesson and that future comments would be less vehement, then they do not know the Israeli political discourse. Mofaz will now celebrate his influence on global oil markets and will use last week’s price rise as leverage for creating more political capital. Moreover, the reaction to this comment will motivate Mofaz and other Israeli politicians to outdo it and to have even more impact. So, as long as the scandal-ridden Olmert government is haemorrhaging support we should expect increasingly more flamboyant statements from Israeli politicians about Iran, more volatile markets and a steady progress to the brink of a (possibly, nuclear) war in the middle east.

A project has been launched between the government of Guyana and a London-based firm called Canopy Capital to turn intact rainforest into economically viable, tradable commodities.   

How can it be that Google’s services are worth billions, but those from all the world’s rainforests amount to nothing?” asked Hylton Murray-Philipson, director of Canopy Capital.

[From an article on]


The idea (which piggybacks off of carbon emissions markets) is to create a flow of money for conservation by garnering recognition of the variety of ‘environmental services’ that are generated by rainforest and attributing these with a market value that venture capitalist can invest in.  This sure is a long way from Rainforest Crunch!

The BBC World Service has broadcast a report on the topic (fast forward to 19:45-23:20) and there is a more detailed article on the topic on the environmental website,

The news of Eliot Spitzer’s fall from grace as the governor of New York following the exposure of his patronage of a high end prostitution outfit called the Emperor’s Club, is being largely reported on as a ‘sex scandal’. Interestingly enough if you can get beyond the issue of moral disgrace, the judicial core of the charges hinge upon the details of his financial transactions. In addition to possible charges for having violated the Mann Act, which banns the interstate transport of females for ‘immoral purposes’, federal investigators are pursuing Spitzer for having potentially engaged in ‘structured cash transactions’. As reported on in the New York TimesUnder the Bank Secrecy Act, all financial institutions are required to file currency transaction reports with the federal government for any deposit or withdrawal of more than 10,000.” (This is the reason why the blue and white U.S. customs cards ask people to report whether they are carrying in excess of $10,000 in financial instruments into the country.) Structuring’ (IRS Manual, Section is the act of breaking up cash transfers over several transactions to avoid being detected and is considered a felony. In short then, it is the govenor’s methods of payment more so than his sexual practices that are of central legal concern. Apparently, however (according to the same NYTimes article quoted above) “If the governor was simply trying to conceal his activities from, say, his wife, it would be considered different from trying to deceive federal authorities.”

For a brief but informative NYTimes radio account of structuring click here, and then on clip featuring Gerald L. Shargel, a criminal defense attorney commenting on the legal issues of the case. For the story of the woman whose services unleashed the storm, see here.

Nobel prize winning economist Joseph Stiglitz and Linda Blimes (lecturer in public policy at Harvard’s Kennedy School) have just released a new book entitled The Three Trillion Dollar War (published by the incomparable Norton Press).   The title, plastered all over the press, gives away the basic argument: it’s a calculation for the estimated cost of the war.

Like all good financial figures, this is a projection – an estimation that includes future costs, such as the long term responsibility of providing health care to disabled veterans.  (For a visual image outlining the argument see here).

An estimate of the actual costs of the war is available on a moving counter at the National Priorities Project website.  It is noteworthy that two years ago, the suggestion of a one trillion dollar war was still barely believable. 

The Stiglitz and Blimes book, released yesterday is available on Amazon, where, in the US at least, it’s selling for a curious 32% off the cover price.   And incidentally, Fox News, which publishes many trillion dollar reports, had nothing to say about it.  Guess their book reviewer can’t read as fast as Charles Taylor, who must have stayed up all night to get his review in to Bloomberg today.

A comment on Free! Why $0.00 is the Future of Business’ published Feb. 25, 2008.

Editor in chief at Wired, Chris Anderson, believes that ‘free has emerged as a full-fledged economy’.  In the good old days companies might provide things free or at a very low cost to consumers (shaving handles, cosmetics samples, loss for leader goods…) as promotional devices that incited brand loyalty and future purchases.  In the new economy of free, argues Anderson, the costs of producing digital storage devices have dropped so low that there has been a ‘vaporization of value’ in the web world.  Digital space has become infinitely abundant because it is ‘too cheap to matter’. 

Following Malcolm Galdwell’s bestselling argument in The Tipping Point, what is scarce in the new economy of free – where newspaper content, email service, software, Craigslist postings, search engines etc are all accessibly without direct payment from users – is reputation and the attention of consumers.  To make it in the new economy, providers of digital goods are increasingly forced to make their stuff available for free.  Thus, the new mode of dono libere (I made that up) requires a set of new business models that have emerged to capture this increasingly precious resource: you.

As Anderson points out, however, “Just because products are free doesn’t mean that someone, somewhere, isn’t making huge gobs of money”. For example, the act of using a “service creates something of value, either improving the service itself or creating information that can be useful somewhere else.  “To follow the money”, he writes, you now “have to shift form a basic view of a market as a matching of two-parties – buyers and sellers – to a broader sense of an ecosystem with many parties, only some of which exchange cash.”  Here, he sorely misses what the social anthropology of the gift, with its grasp of circuits of value, might contribute to his analysis.  This is because he interprets ‘gift’ in the layperson’s sense of being given totally and absolutely without return. 

As usual, Anderson has grabbed onto an emerging phenomenon in an engaging way and has made it his own.  But in his enthusiasm for explaining the new free economy, some of its salient ‘costs’ seem to have escaped his immediate analysis.  ‘Externalities’ that he fails to count up are the costs in setting up the digital apparatuses that access digital space.  Sure, the search engine is free, providing you are equipped with a computer and operating system.  Anderson passes (too) quickly over ‘China and global sourcing’ as thought suppressed wages are not indeed a price that is paid (in multiple ways) for the production of cheap digital memory.  And sure, digital is becoming cheaper to make and to acquire, but as the NYTimes has recently reported the human and environmental cost of disposing of all of this technological trash is piling up.  All while the carbon emissions ‘commons’ are being lassoed into market forms. 

The emergence of new economies supported by elaborate information infrastructures have costs as they imply the investment of labor, inventiveness, movement, experimenting, training, physical infrastructural building, maintenance, renewal and destruction.  Mark Levinson’s excellent book, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (2006), shows how container transport achieved the Ricardian assumption that transportation costs could be modeled as insignificant.  But this was only once containers were designed, rail and road was defeated, unionized dock workers were displaced and a set of global standards were set up and locked in place at ports around the world.  Then and only then does the economic cost reasonably appear to approach zero.

Following the details of these kinds of changes is, perhaps, not Anderson’s focus as he is in the business of reporting on the latest and greatest effects in the digitization of everything.  His piece however, is a timely call to the social studies of markets and finance which is thorougly equipped to take on the task of capturing this movement’s origins and to trace the ample infrastructural costs of configuring the digital economy of ‘free’. 

Anderson’s book Free is to be published by Hyperion in 2009.  The price has not yet been announced.