Here’s my piece from the Fin on Thursday
The global financial crisis that began early in 2008 has put many of the seemingly unstoppable processes of globalization into reverse. The volume of international trade has fallen sharply, and that of international financial transactions even more so. The banks and financial markets that seemed to define the global economy have retreated into the arms of national governments.
There is one striking exception to this pattern of retrenchment. According to the TeleGeography Global Internet Geography Research Service, international Internet traffic has grown at an annual rate of 74 percent in 2009, well above the 55 percent growth measured in 2008.
In part this is a matter of momentum. The huge growth in capacity that was already committed before the crisis ensured that growth could continue. Although new investment in fibre optic capacity has slowed as a result of the crisis, the system has proved capable of absorbing massively greater traffic.
But there are more fundamental forces at work here. Although the Internet and its main manifestation, the World Wide Web depend on physical communications networks and commercial service providers, they are not, in the end, about cables and modems.
The Web is a set of protocols and social institutions for the expression and exchange of ideas of all kinds, whether expressed as text, audiovisual material or software. Ideas are public goods. They can be shared without losing value, and they cannot easily be restricted. The Web is a prime example of a global good, one which benefits people everywhere in the world and depends for its value on contributions made all over the world.
The fact that the spectacular expansion of Internet activity has continued, and even accelerated through the financial crisis shows that the global exchange of information does not depend, in any important way, on the global financial sector. Most Internet innovations have been developed on a non-profit basis, and even for-profit companies like Google maintain strong independence from the short term demands of financial markets.
On the other hand, the productivity of the real economy, and therefore the financial sector depends hugely on innovations that have arisen from the growth of the Internet. The first-generation innovations of the Web in the 1990s universally adopted by business and governments. Now they are shifting to ‘Web 2.0’ technologies, including wikis, blogs and web-centric applications.
There has, then, been a huge shift in the location of innovation. Many of the innovations that have driven productivity growth over the past two decades depend on public goods mostly produced outside the market and government sectors.
When we compare the huge social and monetary cost of the global financial crisis with the huge and continuing benefits of the global exchange of information, almost all of it given away free of charge, a striking paradox emerges. With a handful of exceptions the innovators who gave us the Internet received little or nothing in the way of financial reward.
Leading figures like Tim Berners-Lee, the initiator of the World Wide Web have become famous, but not, at least by the standards of the global financial sector, wealthy as result. And the thousands of contributors whose efforts turned these innovative ideas into reality have received little more than a warm glow of satisfaction.
Meanwhile, the innovators who gave us such boons as the CDO-squared, the option-ARM mortgage and the stapled security have walked away, collectively, with billions in salaries, bonuses and share options, leaving the rest of us to clean up the mess they created when the whole edifice of collapsed so spectacularly a year ago. ??Even during the dotcom boom, when financial markets were eager to finance Internet-based innovation, their efforts were spectacularly misdirected. Billions were hurled at ludicrous ventures like the on-line sale of pet food. Meanwhile, the innovations that were to produce the Web 2.0 wave, such as the first blogs and wikis, were being developed without any significant input of credit or venture capital.
This contrast raises questions about the way we organise our economic system , the way we regulate financial markets, and the incomes derived from those markets. If monetary returns are weakly, or even negatively, correlated with the value of social production, there’s no reason to expect financial markets to do a good job in allocating resources to supporting innovation.
?As a result, it seems unlikely, that the massive incomes generated in the financial sector to reward financial innovation are beneficial to anyone except, of course, the recipients.
John Quiggin 
Yes – the actual words used do tend to obscure the meaning.
Alice,
A lack of reform comes down to vested interests. Unions don’t want change… they are categorically opposed to reforms such as WA’s recent reforms to create more “independent” schools. With large governments, large unions and big business getting cosy, then you have a corporatist/statist nightmare that stiffles innovation and dynamism. This is my fear for Australia over the next decade.
@Andrew Reynolds
I think almost everyone else has the point and it looks like that is all I can hope for…
@SeanG
Unions Sean??? Not enough of them right now!
There are plenty of public sector unions.
Ah, the unions, run by a bunch of Labor stooges who care more about votes and staging strikes than actually ensuring a productive workforce and a good and sustainable standard of living.
SeanG, you seem well informed. How did the 38 hour week come about?
MOSH,
I dislike the modern incarnation of the unions. However I can say this: if I was in Australia then I would be working longer than 38 hours per week.
Do you believe in arbitrary strikes? Or union-dominated thuggery with bashings and death threats?
SeanG, you are not answering the question.
I did answer the question. You are now avoiding my questions.
SeanG, I am still waiting for your answer as to how Australia got a 38 hour working week?
MoSH: Australia doesn’t have a 38 hour working week (a bureaucratic myth).
SeanG: If you’re at or towards the bottom of the heap, you’d better hope you have a union handy.
Ah, but I forgot, unions have to be saintly or demonic. Hmm. How do I choose?
Crispin Bennett, under the new workplace laws effective from 1 July 2009 the standard working week in Australia is still 38 hours per week (7.6 hours per day), usually worked Monday to Friday and any work beyond that amount is classified as overtime.
Political donation.
Overtime? Tell that to small business owners or those who earn a salary.
SeanG, any more bull.
MoSH: Unpaid overtime is the norm in Australia, laws or no laws. Of course if our citizenry was committed to asserting its rights, unions could help rectify this. But we get the unions we deserve.
Crispin Bennet, you tell me who they are and see what happens if they are breaking the law.
MoSH: have you ever had a private sector job where the law wasn’t routinely broken by management? Australia reportedly has some of the highest working hours in the world. Do you think employers are paying for all those hours? I don’t think I know a single person who works less than 50 or so hours a week, or who gets paid overtime.
It’s similar to the private housing rental sector. There are in theory laws to protect tenants. But in practice landlords can do as they will because they have the upper hand. Laws are useless to those without the power to assert them (and you don’t have the power if the attempt to assert loses you your house or job).
Crispin Bennett, you are generalising and I am not interested.
MoSH: then tell me what you think. Do you believe that people, by and large, are paid for the overtime they do? If they aren’t, why not?
@Michael of Summer Hill
Just waiting for an answer, Mike.
Don’t you know that small business owners must put in above 38 hours?
Reminds me of when the French put in 35 hour work weeks. The French minister who introduced the bill sat down at a restaurant only to be told that it was closing at 9.30pm because the new law meant that he cannot afford to open the restaurant later in the evening…
Michael, I don’t want to sound nasty or patronising but what do you do for a living?
SeanG: true enough about small business owners. They often have a hard (but chosen) time. But perhaps it’s a worthwhile sacrifice if they can grow into large business owners who then can get unpaid work out of their employees.
Crispin Bennett, under the new industrial laws all time worked beyond 38 hours per week attracts a premium of 1.5 times the ordinary rate of pay for the first three hours (2 hours in some industries) and double time thereafter. I’m stuffed, have a good night’s sleep.
MoSH: I take it you’re a bureaucrat?
Crispin,
SL did a great piece along those lines earlier today. It starts about halfway through this one.
Andrew: I’m terribly shocked to be in partial agreement with a libertarian! Though reactions to the limitations of law/bureaucracy differ: the libertarian one is to feign regret, and secretly be pleased that obligations to others seem to be easy to avoid. That is, a libertarian wants an ideology to justify sociopathy (perhaps why so many IT and finance people are libertarians?). My reaction is to think about what other mechanisms might be used to limit sociopathic damage.
Crispin,
I think you have been meeting the wrong libertarians if you have been meeting sociopaths – or you have been imputing motives based on a feeling you have that people who think that way must be doing it for nefarious motives.
To me, individual responsibility extends to doing the right thing just not being forced to do it by the State because I (IMHO) recognise that social pressure is going to be more effective for many or even most activities short of the criminal.
Andrew: I wouldn’t hold to what I said as a truth so much as an overgeneralisation with a reasonably sound kernel. You have to treat individuals without prejudice as much as possible. But inasmuch as ideologies may have characteristic non-cognitive motivations, I suspect a “devil take the hindmost” attitude to be one libertarian one. But of course there are cognitive and more honourable non-cognitive motivations around also. My experience is mostly of libertarians from the world of IT, and I haven’t found them so much to be ‘nefarious’ in character so much as childishly underdeveloped, wanting “their own” money to spend on gadgets, and with little thought or regard for the wider world.
Crispin,
Whereas if you tried to typify social democrats by going to a university sociology department you may get a skewed view of what the Left consists of.
To me, the reason why you came (dangerously?) close to agreeing with SL is that she, like many non-geek libertarians, have actually a reasoned approach to the practical limits of government power and what the effects are of the State overstepping that mark.
@Andrew Reynolds
I have met plenty of libertarians and worked with plenty, distinguishing features have been at least one of the following: narcissism or sociopathy or psychopathy. Essentially, this is what libertarian philosophy is all about. If you read a little of it you soon find out that it is, in its various forms, an all about me, f*ck you, philosophy.
Andrew: I won’t claim too much substance for my opportunity sample. I’d like to see some research. I’m sure I remember reading in a study that economics students gradually acted more like selfish rational actors the more they were exposed to that particularly daft ‘human nature’ candidate manque. There may be much of the self-fulfilling in ideologies.
Freelander,
You seem to have a very narrow circle of acquaintances in that case. If you were the oportunity sample for whatever group you claim membership of then there are certain conclusions I could draw from that. Add in MoSH and the conclusions could be much stronger.
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Crispin,
In my experience you will find rude, arrogant people that are unwilling or unable to discuss or accept challenges to their ideas in any and every political framework – there are a few examples here. Tarring any political philosophy by some of the adherents you happen to meet is, IMHO, not a useful method of evaluating that particular philosophy.
There are several self-described libertarians that I would not care to be in a room with – but then that is not because they are libertarians but because they seem to think that abuse is OK if you are abusing someone you see as an “enemy”.
Fortunately our good host and many others here are not of that ilk and so I enjoy the discussion.
Andrew: I don’t disagree with any of that, but, still, it isn’t beyond the bounds of possibility that different beliefs/ideologies appeal on non-cognitive grounds to different types of people. As for communicating across the various divides, there’s no doubt that we need to try.
@Andrew Reynolds
My libertarian sample is quite wide ranging, quite large and accumulated over a number of years. I have also read a significant amount of the libertarian philosophy, probably more than many of its adherents, some of whom are just to lazy for that sort of thing. The philosophy or philosophies are f*ck you and so are its adherents. The are intolerant, that is illiberal. Theirs is quite a distorted view of ‘freedom’. It is a f*ck you freedom. A freedom for me but not for you, philosophy. That is why they tend to have such cranky views like the Charles Murray view on IQ, or the undeserving poor view or a variety of other ‘blame the victim’ views on various social problems. Other than that, they can be pleasant company; some of them can be quite witty, in fact. But that is frequently true of other sociopaths or psychopaths (in between their orgies of bad behaviour).
Yes, Freelander, of course. Only people like you are pleasant, never rude, not prone to gross generalisations and more than hard working enough to read books and stuff.
@Andrew Reynolds
That sounds like a bit of a generalisation? Could even be called a converse error.
I am not particularly pleasant, I must admit, unless the occasion calls for it. And, like most, when I want something is often such an occasion. And I don’t think it is that they, the significant number, don’t work hard. They don’t read much of the libertarian stuff because they tend to be intellectually lazy. Thinking is just not their forte. This does not mean that they are lazy in all spheres of life. If you have ever talked to one you find they are not lazy in expressing their opinions, for example.
Freelander,
What I find as being intellectually lazy is to generalise from some of the people you meet who claim to be libertarian and then attempting to reject a whole theory of government based on your personal impressions of those people.
That is true intellectual laziness.
@Andrew Reynolds
Yes, I agree that would be lazy. But that is, of course, not what I did. My problem with the philosophy has not reaulted from my noticing the personal defects of its adherents. Far from it, I had problems with the philosophy prior to having noticed this pattern. And the pattern is one that others have noticed too. Some generalisations are true. If there were no true generalisations the ability to function in the world would be somewhat diminished. I can understand how people with those defects can be attracted to libertarian philosophies. The way that it is not so difficult to understand how nazi’s, for example, were also attracted to particular philosophies. Even Al Capone liked to think of himself as a nice guy. Hell, I even think I’m a nice guy and I imagine you think you are too! I should really have said in the above post ‘a wild generalisation’ but that was implied.
Freelander,
That is not what you said at #26 above, but I will have to discuss this with your changed perceptions of your own ideas. Very well. I would also note a Godwin’s law violation – so I will have to comment on that.
I reality libertarianism is as far from Nazism as it is possible to be short of rejecting government completely. If you wish to use Nazism comparisons, I suggest you look to socialism as it is much closer to Nazism than libertarianism.
I can understand how control freaks can be attracted to socialistic philosophies. It is always better to be able to say “you will do that” rather than having to spend the time and effort to actually persuade someone to do the right thing.
@Andrew Reynolds
Oh no – can we please get rid of Godwin’s law??? How about Mugabe’s law or Idi Amin’s law? Or even Nathan’s law?…You see…law really isnt much good at protecting us is it as Godwin’s law shows us….Hitler could make his own laws, so could Mugabe and so could Rees – not that I am comparing Rees to Mugabe of course but Rees is more inclined to make laws allowing them to sell everything public down to parks, schools, railtrack land – next it will be footpaths (tolls to walk the streets).
Changing tack as usual…they cant find a buyer for the sorry Lane Cove Tunnel affair. They just dont get it. The majority cant afford those tolls everyday stupid! NSW state Labor must think the average wage is a pollies wage.
Oh oh Andy – am I turning libertarian…????
Andrew: of course you can’t reject a model of government based on its proponents’ apparent motivation. But it’s reasonable to enquire into the motivations for adhering to a model of government that appears too silly to be held by grown-ups.
And which one would that be, Crispin? One that holds that it is possible for a government to know better than the people what they really want out of life and how they should go about getting it or one that does not?
One that elevates one value above all others. All simple-minded ‘systems’ do just that: apply a pre-formatted phrase to the vast congeries of human complexity, without regard to the consequences. If we ever had a libertarian (or any other simple-minded) ‘system’ applied, it would be a barely-mitigated horror. Fortunately, there’s no chance it’ll happen, so it’s not a threat worth worrying much about.
@Andrew Reynolds
You ought to read more carefully. I didn’t compare libertarians to nazis. I just pointed out that particular types of people are atrracted to particular types of philosophy, which in your reply you seem to accept is true in at least some cases. I note your comments on socialists, without in anyway endorsing their validity. Naxi are attracted to certain philosophies. I think you would concede that. Nevertheless, although I didn’t compare the two, that doesn’t mean that I reject any comparison between them. It simply means that I didn’t compare them to each other.
Ahh, Freelander. Casting aspersions and then stepping back saying “It wasn’t me” is not an admirable tactic.
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Crispin,
That, to me, is the beauty of a libertarian government – it lets the systems work themselves out as far as possible. Other systems, such as socialism, attempt to impose an external order on the self generating order that would otherwise be there. While it may not appeal to a socialist’s desire to control others, a libertarian one is the least “systematic” of all systems short of no system at all.
Andy – a socialist doesnt have desires to control others…I really think you are engaging very lightly in your inbterpretations of socialism (either that or they show a superficial understanding only). You know Andy and I know there are many hues of what you might call the right wing as many as the left. In fact its a continuum of all shades Andy. If you really wanted to suggest a regime that seeks to control others I would have thought you would have explored fascism or communism first. Dont get carried away with superficial pat statements like that Andy.
Define or explain a “libertarian government” Andy. Should this “libertarian government”, in your opinion, have the power to make legislation and regulate others Andy? Isnt that a contradiction in terms to libertarianism?
If it isnt you need to explain what a libertarian government would look like.
@Andrew Reynolds
What has always amused me about libertarians is that they claim to be in favour of choice but seek to impose their choice of social order on everyone else. This is despite most people thinking that the choice of social order is, perhaps, the most important choice. I have read so much libertarian stuff about how they think that people should be allowed to vote but their vote shouldn’t really make any difference except in the case that the vote is unanimous. Instead everything should be governed by a constitution that embodies libertarian values. Exactly how free is that?
Andrew: “Self-generating order” is deeply misleading in this context, depending as it does on a vague analogy with self-organising systems in nature. But complex systems in nature generally manage their ‘self-organisation’ with the assistance of generous lashings of top-down feedback. The brain is a great example, with sensory to higher-level representation feedforward being modulated by constant real-timefeedback. Even systems that appear to be organised on largely bottom-up principles (like ant colonies) have actually had their component units designed by millions of years of evolution to operate together in particular ways.
There is no ‘self-generating order’ to be gained by sticking 4 billion (or even 20 million) people in a pot and seeing what happens.
@Crispin Bennett
Blasphemer! Unbeliever! The market giveth and the market taketh away. And the market createth spontaneous order. All hail to the market.
@Freelander
Freelander! Irony alert missing…
I am much more worried about the libertarianism over the financial systems in the US that have permitted what is essentially unregulated HUGE bets to me made with very little underlying capital, and has essentially resulted in the dirty word in economics “speculation” , rampant speculation at that.
These same institutions have been given unprecendented control over the retirement savings of millions of people across the globe. Their manager have enriched themselves disporoportionately to any returns…
The entire system became dysfunctional to the point of the US fed generating trillions in debt. Now just how is that debt going to be paid back? BY inflation in the US which is the only way the debt can be corrected.
They have ignored Keynesian theory, they have ignored monetary theory, they have ignored every economic theory. There is no economic theory that prevails any more, There is no control and there are no systems at all, except to keep those who can manipulate markets and cause wild speculative swings alive.
I fear for my children. This will not end well. Go to the sharemarkets at your own peril. The economic problem we have is not over.
@Alice
There is a good chance that there will be a burst of inflation in the US to disenfranchise the Chinese who hold US Treasuries. The real worry incresingly discussed by economists, including in the US, is that the US’s role as the default currency is coming to an end and that and the debt will contribute to a currency crisis, in which case, we might be in for ‘interesting times’ again.
Not being knowledgeable in these matters “What are irony quotes?”
Apparently you, with your concern for your children, do not subscribe to “Who cares about future generations; what have they ever done for us anyway?”