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	<title>Hardin Tibbs</title>
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	<link>http://www.hardintibbs.com</link>
	<description>Strategist and futures researcher</description>
	<pubDate>Tue, 31 Aug 2010 16:09:49 +0000</pubDate>
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		<title>Floating upstream</title>
		<link>http://www.hardintibbs.com/index.php/2010/08/floating-upstream/</link>
		<comments>http://www.hardintibbs.com/index.php/2010/08/floating-upstream/#comments</comments>
		<pubDate>Mon, 23 Aug 2010 16:16:24 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=1549</guid>
		<description><![CDATA[I&#8217;ve been dipping into Whole Earth Discipline: An Ecopragmatist Manifesto, the latest book by Stewart Brand, a former colleague from GBN days. Back in January I caught one of his promotional presentations at the ICA in London. He is an inveterate showman and iconoclast, resplendent that day in black and turquoise to match the cover of [...]]]></description>
			<content:encoded><![CDATA[<p style="text-align: left;">I&#8217;ve been dipping into <em>Whole Earth Discipline: An Ecopragmatist Manifesto</em>, the latest book by <a href="http://web.me.com/stewartbrand/SB_homepage/Home.html" target="_blank">Stewart Brand</a>, a former colleague from GBN days. Back in January I caught one of his promotional presentations at the ICA in London. He is an inveterate showman and iconoclast<span id="more-1549"></span>, resplendent that day in black and turquoise to match the cover of the American edition, and an absolute master of arresting aphorism. He once told me that in the part of the US mid-west where he grew up, people used to say of the Brands that if you threw one in the river, they would float upstream.</p>
<p style="text-align: left;">True to form, while insisting he is an unwavering environmentalist, he is now provocatively arguing that nuclear power, transgenic organisms and cities are all desirable for genuinely pragmatic environmentalists. He prefaced his talk by saying that his book was largely journalistic, and that its conclusions were almost incidental—the stories were the main thing. Readers should feel free to draw different conclusions.</p>
<p style="text-align: left;">Well, it will be interesting to see how right he is over the years ahead. Listening to him, I almost agreed, but not quite. My hunch is that while biotechnology is certainly not going away, there are still major hurdles to overcome and in retrospect today’s transgenic efforts will look like crude early-stage technology. On nuclear, I agree we are facing an energy crunch with no clear solution, and the future of energy may well be something nuclear-ish, if your definition is elastic enough, but it will probably not be mainly nuclear reactors as we know them today. As for cities, they are certainly filling up fast and he may be right that we are all better off in them, but only if their prodigious footprint can be significantly diminished.</p>
<p style="text-align: left;">Much of his argument hinges on a pretty dismal view that the planet is going to hell in a huge anthropogenic handbasket and, although I agree up to a point, I am uneasy about some of his specific assumptions on this front. So maybe we should not allow fear to push us too quickly towards all his chosen solutions – I suspect the behaviours and technologies that ultimately succeed on the upside are likely to take a little while longer to emerge and be much more obviously acceptable than their distant forebears that he promotes today.</p>
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		<title>Peak oil now</title>
		<link>http://www.hardintibbs.com/index.php/2010/06/peak-oil-now/</link>
		<comments>http://www.hardintibbs.com/index.php/2010/06/peak-oil-now/#comments</comments>
		<pubDate>Mon, 07 Jun 2010 22:37:29 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=1075</guid>
		<description><![CDATA[It is interesting to speculate that the horrendous BP oil mega-spill in the Gulf of Mexico may come to be viewed as the defining moment when Peak (Easy) Oil arrived. Up to now the advent of Peak Oil has been difficult to pinpoint in time because it was a function of many variables in constant [...]]]></description>
			<content:encoded><![CDATA[<p style="text-align: left;">It is interesting to speculate that the horrendous BP oil mega-spill in the Gulf of Mexico may come to be viewed as the defining moment when Peak (Easy) Oil arrived. Up to now the advent of Peak Oil has been difficult to pinpoint in time because it was a function of many variables in constant dynamic interplay. For instance, as the financial crisis<span id="more-1075"></span> depressed demand, it pushed the peak further away in time. However, in the case of physical phenomena, failures often depend on a small triggering factor. When a sheet of glass under bending stress finally breaks, the failure propagates from a tiny existing crack. By analogy, this may also be true of developments in time. The oil mega-spill has suddenly dramatised the stark difference between the technology and economics of easy oil and the much higher risks and costs of oil from difficult environments. This unpredictable time-specific event may well set off a cascade of responses that &#8220;fix&#8221; the moment of Peak Oil and precipitate it into reality. Future historians take note!</p>
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		<title>Buckminster Fuller and a slight case of the not-really-invented-here syndrome</title>
		<link>http://www.hardintibbs.com/index.php/2010/05/buckminster-fuller-and-a-slight-case-of-the-not-really-invented-here-syndrome/</link>
		<comments>http://www.hardintibbs.com/index.php/2010/05/buckminster-fuller-and-a-slight-case-of-the-not-really-invented-here-syndrome/#comments</comments>
		<pubDate>Sat, 15 May 2010 10:07:42 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=1046</guid>
		<description><![CDATA[A couple of weeks ago I took part in the BBC Radio 4 show Great Lives, in which I talked about the life of Buckminster Fuller. A listener, Ron Bird, wrote in afterwards to say that contrary to general belief and our claims on air, Bucky had not invented the geodesic dome. Here is what [...]]]></description>
			<content:encoded><![CDATA[<p style="text-align: left;">A couple of weeks ago I took part in the BBC Radio 4 show <a title="BBC Great Lives 30/4/2010" href="http://www.bbc.co.uk/programmes/b00s2ylh" target="_blank">Great Lives</a>, in which I talked about the life of Buckminster Fuller. A listener, <a href="http://www.2birds.org/" target="_blank">Ron Bird</a>, wrote in afterwards to say that contrary to general belief and our claims on air, Bucky had not invented the geodesic dome. Here is what he said:<span id="more-1046"></span></p>
<p class="MsoNormal" style="text-align: left;"><span>&#8216;While I appreciate the energy Buckminster Fuller gave to design, the one thing he is not responsible for is the invention of the geodesic dome, though he did perfect it, popularise it, patent it, and invent the name!</span></p>
<p class="MsoNormal" style="text-align: left;"><span>The honour of being the first to design a geodesic structure goes to Dr. Walter Bauersfeld chief designer at the Carl Zeiss Optical Works in Jena in 1922 at the time called ‘The Wonder of Jena’ I enclose a copy of its photograph. This structure formed the shell of the Zeiss Planetarium. 25 more were built including one in Chicago in 1930, this became the shell of the first US planetarium, the Alder Planetarium.</span></p>
<p class="MsoNormal" style="text-align: left;"><span>Indeed Carl Zeiss and Dyckerhoff &amp; Widmann the firm who build the dome received the US Edward Longstreth Medal in 1938 for the dome construction. All patents and recordings were lost in WW2 when both the Russian and US armies occupied Jena in 1945. Dr. Bauersfeld was among a group of fortunate people brought to West Germany by US troops. Though it is said the the Zeiss company did not patent it as it had a policy that basic findings should be made available to the whole scientific world.&#8217;</span></p>
<p class="MsoNormal" style="text-align: left;"><span>Ron attached a photograph of the Zeiss dome (below), and it is immediately clear that this is indeed a geodesic dome, with the same great circle geometry as Bucky&#8217;s domes – the same alternating pattern of pentagons and hexagons that can be seen in a football. I was aware in general terms that Zeiss had done &#8217;something similar&#8217; but I did not realize until I saw this photograph that it was actually identical. Strictly speaking, Bucky should not have been able to patent the dome at all as it was in the public domain, but these are obviously the spoils of war and ignorance. </span></p>
<p class="MsoNormal" style="text-align: left;">So where does that leave our appreciation of Bucky? I tend to agree with Ron, who closed by saying that while this in no way detracts from the greatness of Buckminster Fuller, credit should indeed be given where it is due.</p>
<p class="MsoNormal" style="text-align: left;"><a href="http://www.hardintibbs.com/wp-content/uploads/2010/05/zeissjenadome.jpg"><img class="alignleft size-medium wp-image-1051" title="zeissjenadome" src="http://www.hardintibbs.com/wp-content/uploads/2010/05/zeissjenadome-434x305.jpg" alt="zeissjenadome" width="434" height="305" /></a></p>
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		<title>&#8216;Fallout from Icelandic disaster destroys world economy&#8217;</title>
		<link>http://www.hardintibbs.com/index.php/2010/04/fallout-from-icelandic-disaster-destroys-world-economy/</link>
		<comments>http://www.hardintibbs.com/index.php/2010/04/fallout-from-icelandic-disaster-destroys-world-economy/#comments</comments>
		<pubDate>Sat, 17 Apr 2010 11:43:17 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=1039</guid>
		<description><![CDATA[
That hypothetical headline, which almost seemed possible in 2008, could yet lie in the future for reasons that have nothing to do with the financial crisis. An erupting volcano in Iceland has caused the total closure of UK airspace for three days so far, along with other European countries, which is apparently unprecedented since World [...]]]></description>
			<content:encoded><![CDATA[<p><!--StartFragment--></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">That hypothetical headline, which almost seemed possible in 2008, could yet lie in the future for reasons that have nothing to do with the financial crisis. An erupting volcano in Iceland has caused the total closure of UK airspace for three days so far, along with other European countries, which is apparently unprecedented since World War II. Here in London today<span id="more-1039"></span> the skies are blissfully clear - both of aircraft, clouds and any visible sign of volcanic dust. But things were dramatically worse in 1783, when an Icelandic volcanic eruption blanketed Europe in a ‘dry fog’ for months. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US"><span lang="EN-US">In 1783 the Laki volcano </span><span lang="EN-US">erupted ten times between June 8th and the end of October, and the prevailing weather conditions swept an ash cloud across the whole of Europe, reaching as far as Moscow and Baghdad. After a stifling summer in Europe, the dust had altered weather patterns enough to cause temperatures to plunge that winter and the following year, resulting in famines as far away as Egypt and Japan, where the cold destroyed the rice harvest and a million people died. In America, Charleston harbour froze over and ice floes were carried down the Mississippi into the Gulf of Mexico.</span></span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">If these conditions were repeated again now, it is not an exaggeration to say that the present world economy would be destroyed. The million or two passengers delayed in the last three days are a pinprick compared to the events of 1783. This is a case where nature has already written a far more dramatic scenario than even the most daring scenario-writer would think plausible. To read more of the gruesome details and imagine the impact in today&#8217;s world, see this <a href="http://www.economist.com/science-technology/displaystory.cfm?story_id=10311405&amp;source=hptextfeature" target="_blank">article</a> published by the Economist in 2007. </span></p>
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		<title>Toyota and the invocation of doom</title>
		<link>http://www.hardintibbs.com/index.php/2010/02/toyota-and-the-invocation-of-doom/</link>
		<comments>http://www.hardintibbs.com/index.php/2010/02/toyota-and-the-invocation-of-doom/#comments</comments>
		<pubDate>Wed, 10 Feb 2010 09:59:44 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=1026</guid>
		<description><![CDATA[
It is interesting to trace the connection between Toyota’s recent troubles and faulty strategic self-perception. As a Prius owner myself, I had already discovered the slight electronic glitches on ice and over potholes, but they seemed relatively insignificant and I had shrugged them off (although admittedly my car is the earlier version).

A bigger part of [...]]]></description>
			<content:encoded><![CDATA[<p><!--StartFragment--></p>
<p class="MsoNormal" style="text-align: left;"><span>It is interesting to trace the connection between Toyota’s recent troubles and faulty strategic self-perception. As a Prius owner myself, I had already discovered the slight electronic glitches on ice and over potholes, but they seemed relatively insignificant and I had shrugged them off (although admittedly my car is the earlier version).<span id="more-1026"></span><br />
</span></p>
<p class="MsoNormal" style="text-align: left;"><span>A bigger part of the problem in my estimation is that Toyota does not know what to do after ultimate success. Having become the world’s biggest carmaker in 2008, by October 2009 p</span><span lang="EN-US">resident Akio Toyoda said </span><span>in a speech that </span><span lang="EN-US">the company was one step away from ‘capitulation to irrelevance or death.’ He was quoting the final stage of Jim Collins’ five step framework in <em>How the Mighty Fall</em>. </span></p>
<p class="MsoNormal" style="text-align: left;"><span>If your overriding goal is to be number one, you are in danger of losing your way if you succeed. Like NASA after landing a man on the moon, you will have no idea what to do for an encore. Toyota would have been better off heeding one of Jim Collins&#8217; earlier books, in which he suggested that a company’s goal should be a combination of star and mountain. The star is the enduring purpose that provides lasting direction, while the mountain is a challenge to be achieved. </span></p>
<p class="MsoNormal" style="text-align: left;"><span>Toyota seems to have taken the mountain for a star, and having reached the summit did not know what to do next. From there it was a short step to strategic suicide. Toyoda’s speech was not so much a signal that something really bad had happened, to quote a recent </span><a title="FT 9 Feb 2010" href="http://www.ft.com/cms/s/0/b1786ad4-14e2-11df-8f1d-00144feab49a.html " target="_blank">column</a><span> in the FT, but was itself a spell-like invocation of doom. </span></p>
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		<title>Happy New Decade 2010–2019</title>
		<link>http://www.hardintibbs.com/index.php/2009/12/happy-new-decade-2010%e2%80%932019/</link>
		<comments>http://www.hardintibbs.com/index.php/2009/12/happy-new-decade-2010%e2%80%932019/#comments</comments>
		<pubDate>Thu, 31 Dec 2009 18:01:06 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=999</guid>
		<description><![CDATA[
Looking into the future often seems like watching a shifting reflection in a distorting mirror. In the last year, we have moved from the prospect of worsening global financial meltdown to a recovery that is presenting at least the appearance of normality. 
Under the surface things are not so reassuring. It feels uncomfortably as if [...]]]></description>
			<content:encoded><![CDATA[<p style="text-align: left;"><!--StartFragment--></p>
<p class="MsoNormal" style="text-align: left;"><span>Looking into the future often seems like watching a shifting reflection in a distorting mirror. In the last year, we have moved from the prospect of worsening global financial meltdown to a recovery that is presenting at least the appearance of normality.<span> </span></span></p>
<p class="MsoNormal" style="text-align: left;"><span>Under the surface things are not so reassuring. It feels uncomfortably as if this part of the world has shot itself resoundingly in both feet<span id="more-999"></span>, and its power is ebbing away. This applies to both the US and the UK, but the UK in particular seems to have nowhere to go in conventional economic terms. For the moment it is living on borrowed time, waiting for the full consequences to play out. </span></p>
<p class="MsoNormal" style="text-align: left;"><span>Nevertheless, as one thing ends another inevitably begins. Focusing on the aspect in decline can make it seem like the end of the world. Turning to the aspects of newness and promise reveals a new world in the making, one utterly unlike the world of the last hundred years. As the adage has it, things are getting worse and worse and better and better at the same time.<span> </span></span></p>
<p class="MsoNormal" style="text-align: left;"><span>Conventionally, commentary such as this tracks the gyrations of business as usual, but what to do when the party is over and a hangover is imminent? The coming decade will not be a time to hold on to old ways of thinking and acting. This is a time to be tracing the outlines of the new – and I hope this blog can make a contribution. There is enormous promise hidden in the confusion of what humanity has achieved so far, and I am convinced a way of living is in prospect that can resolve the confusion and deliver on the promise. My personal New Year/New Decade resolution is to help in piecing together a new and optimistic vision for what is possible.</span></p>
<p><span>As we enter this new decade, we are at a tipping point between civilizations, a prospect that is both exhilarating and terrifying. Let us hold fast to optimism and see this as a time of birth and celebration. Happy New Year and Happy New Decade! </span><!--EndFragment--></p>
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		<title>Economic recovery, oil price, and carbon</title>
		<link>http://www.hardintibbs.com/index.php/2009/11/economic-recovery-oil-price-and-carbon/</link>
		<comments>http://www.hardintibbs.com/index.php/2009/11/economic-recovery-oil-price-and-carbon/#comments</comments>
		<pubDate>Fri, 13 Nov 2009 14:31:37 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=927</guid>
		<description><![CDATA[
Earlier this week there were two signals that the oil price is threatening to return to dangerous levels as economic growth begins to pick up. On Monday, the FT reported that forward oil prices are now $20 higher than two years ago, even though spot prices are much lower. And on Tuesday, the Guardian reported [...]]]></description>
			<content:encoded><![CDATA[<p style="text-align: left; "><!--StartFragment--></p>
<p class="MsoNormal" style="text-align: left; "><span>Earlier this week there were two signals that the oil price is threatening to return to dangerous levels as economic growth begins to pick up. On Monday, the </span><a href="http://www.ft.com/cms/s/0/896e4516-cccd-11de-8e30-00144feabdc0.html" target="_blank">FT reported</a><span> that forward oil prices are now $20 higher than two years ago, even though spot prices are much lower. And on Tuesday, the </span><a href="http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency" target="_blank">Guardian reported</a><span> allegations by a whistleblower at the International Energy Agency in Paris that the agency has been underplaying the rate of oilfield decline, while overplaying the chance of finding new oil<span id="more-927"></span> – suggesting that the peaking of global oil production is much closer than they previously maintained.</span></p>
<p class="MsoNormal" style="text-align: left; "><span>This news is exactly what would be expected if the world actually is entering the zone of the global oil production peak. </span></p>
<p class="MsoNormal" style="text-align: left; "><span>Nevertheless, even if we knew the supply situation accurately, the peak itself could not be predicted at a fixed moment in the future. Depending on whether economic growth is higher or lower, the peak is effectively smeared out over a longer period of time or concentrated closer. Peak oil and oil-intensive economic growth are locked in a see-saw relationship. </span></p>
<p class="MsoNormal" style="text-align: left; "><span>This means the approaching peak may well trigger a dynamic process that can already be seen underlying the events of 2007–2008. The sequence would go like this. The onset of the peak initially constrains economic growth by shocking the system into recession through oil price rises. For a while, recession makes the oil problem recede as prices fall.</span></p>
<p class="MsoNormal" style="text-align: left; "><span>Then, when the world economy begins to pick up, growing consumption runs head-on into limited oil availability again, pushing prices back up and stalling the recovery. Repeated episodes of this stop-start pattern would force the economy lower each time, following the downslope of global oil production. That is, if the economy is not derailed entirely by the second or third jolt. </span></p>
<p class="MsoNormal" style="text-align: left; "><span>If the world economy and energy consumption contract in this way, so will carbon dioxide emissions, to the point where there will not be enough carbon going into the atmosphere to achieve anywhere close to business-as-usual carbon dioxide emission projections. </span></p>
<p style="text-align: left; "><span>This would not make current efforts to achieve a low-carbon economy redundant. Ultimately, the savings involved may have their real payoff in helping the world adapt to a progressive decline in oil production. So in this scenario, low carbon technologies and practices still promise to be a source of lasting economic security, even if for different reasons than we currently suppose.</span></p>
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		<title>The invisible hand has finally vanished</title>
		<link>http://www.hardintibbs.com/index.php/2009/09/the-invisible-hand-has-finally-vanished/</link>
		<comments>http://www.hardintibbs.com/index.php/2009/09/the-invisible-hand-has-finally-vanished/#comments</comments>
		<pubDate>Fri, 25 Sep 2009 16:08:58 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=796</guid>
		<description><![CDATA[

Yesterday evening I took part in a wide-ranging discussion in London that included a number of senior civil servants. Although I need to respect the anonymity of the participants, I do have permission to mention one fairly abstract point that caught my interest.

A view was expressed that rising complexity in an instantaneously interconnected and interdependent world [...]]]></description>
			<content:encoded><![CDATA[<p><!--StartFragment--></p>
<p class="MsoNormal" style="text-align: left;"><!--StartFragment--></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">Yesterday evening I took part in a wide-ranging discussion in London that included a number of senior civil servants. Although I need to respect the anonymity of the participants, I do have permission to mention one fairly abstract point that caught my interest.</span></p>
<p><!--EndFragment--></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">A view was expressed that rising complexity in an instantaneously interconnected and interdependent world has reached the point where governments<span id="more-796"></span> can no longer exert control. Now, without debating the point about whether governments were ever really in control, I would agree that the complexity of what they deal with is certainly increasing. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">However, for the last couple of decades or so, governments have had a meta-narrative that absolved them from any need for overall control. This story asserted that the invisible hand of the market would automatically organize all the complexity of the world. Unfortunately this belief is one of the casualties of the financial crisis, along with the efficient market hypothesis. Not only did the markets not manage complexity, they actively created disorder. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">There is now a narrative vacuum: no new big story to explain where control will come from next. Trust in government is waning and this can only make things worse. None of the major political parties, in the UK at least, has anything to offer on this front, so if credible control is important to our sense of government competence, we have a problem. As it says in Proverbs, without a big story the people perish.<span> </span></span></p>
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		<title>Derren Brown predicts lottery!</title>
		<link>http://www.hardintibbs.com/index.php/2009/09/derren-brown-predicts-lottery/</link>
		<comments>http://www.hardintibbs.com/index.php/2009/09/derren-brown-predicts-lottery/#comments</comments>
		<pubDate>Sun, 13 Sep 2009 13:50:42 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=787</guid>
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The UK’s celebrated TV illusionist Derren Brown appeared to get the future right on Wednesday this week when he predicted the outcome of the National Lottery on live TV. As this blog is concerned with the future it seems appropriate to comment. Setting aside the temporarily beguiling explanation offered on his Friday night TV show, [...]]]></description>
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<p class="MsoNormal" style="text-align: left;"><span>The UK’s celebrated TV illusionist Derren Brown appeared to get the future right on Wednesday this week when he predicted the outcome of the National Lottery on live TV. As this blog is concerned with the future it seems appropriate to comment. Setting aside the temporarily beguiling explanation offered on his Friday night TV show, on this occasion he was given away by a slight error<span id="more-787"></span>. If you look very carefully at this </span><a href="http://itricks.com/news/2009/09/derren-brown-attempts-to-predict-the-lottery-watch-the-video/" target="_blank">clip</a><span> of the prediction and step between 6:05 and 6:07 you will see that the ball on the extreme left jumps up very slightly. This is almost certainly the telltale for a split-screen illusion which allowed the balls to be changed by assistants, who unfortunately failed to pack all the new balls down flat. The constant camera movement could preclude split-screen, but if you look carefully you can see there is no parallax displacement of the background behind the balls, suggesting that this was not camera movement but a video effect. This is a curiously elaborate way of doing things, as radio receivers inside the balls and e-paper on the outside ought to have been easier. Sad really, as it would have been much more fun if he really had predicted the future. </span></p>
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		<title>Crisis over? Time to look deeper</title>
		<link>http://www.hardintibbs.com/index.php/2009/08/crisis-over-look-deeper/</link>
		<comments>http://www.hardintibbs.com/index.php/2009/08/crisis-over-look-deeper/#comments</comments>
		<pubDate>Mon, 31 Aug 2009 17:11:01 +0000</pubDate>
		<dc:creator>Hardin</dc:creator>
		
		<category><![CDATA[Commentary]]></category>

		<guid isPermaLink="false">http://www.hardintibbs.com/?p=779</guid>
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Last Monday, Nouriel Roubini, writing in the Financial Times, said there are now three open questions about the economic crisis: when will it end, what shape will it be, and are there risks of relapse? Clearly these are pertinent questions, but they reflect a general tendency for commentary to be framed in terms of a [...]]]></description>
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<p class="MsoNormal" style="text-align: left;"><span>Last Monday, </span><span lang="EN-US">Nouriel Roubini</span><span lang="EN-US">, writing in the </span><span lang="EN-US"><a href="http://www.ft.com/cms/s/0/90227fdc-900d-11de-bc59-00144feabdc0.html" target="_blank">Financial Times</a></span><span lang="EN-US">, said there are now three open questions about the economic crisis: when will it end, what shape will it be, and are there risks of relapse? Clearly these are pertinent questions, but they reflect a general tendency for commentary to be framed in terms of a desired return to normal, a restoring of economic growth. The assumption that this is a ‘normal’ crisis<span id="more-779"></span>, not much more than a really nasty lurch in business as usual, has meant that the reforms deployed so far have been relatively superficial, and possibly even counter-productive. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">Obviously, an urgent response was necessary to rescue normal functioning. But now that this seems to have staved off the worst, this is the stage to be asking about neglected deeper aspects of the crisis. Particularly if they hint that this has been just a foreshock of something larger – meaning there are still things that must be mended to avoid a much worse crisis later. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">The sense that deeper reforms might be needed also seems to have prompted Adair Turner, chairman of the UK’s FSA, to think out loud this week in <em><a href="http://www.prospectmagazine.co.uk/wp-content/cache/supercache/www.prospectmagazine.co.uk/2009/08/how-to-tame-global-finance/index.html" target="_blank">Prospect</a></em><a href="http://www.prospectmagazine.co.uk/wp-content/cache/supercache/www.prospectmagazine.co.uk/2009/08/how-to-tame-global-finance/index.html" target="_blank"> magazine </a>about the need for a Tobin tax. But as always it is tempting to reach for answers without spending enough time exploring what the question might be.</span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">Is there more amiss with the global financial system than simply an excess of speculative activity, which a Tobin tax would aim to damp? Three deeper aspects come to mind:</span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">First, where are the economic circuit-breakers? The 1933 Glass-Steagall Act in the US introduced the separation of investment and commercial banking. It was repealed in 1999, and since the onset of the financial crisis there have been many calls to revive it. But opponents argue that this would not be the simple panacea it might seem, and that the real problem lies in the hazy linkage between the banks and the shadow financial system where vast amounts of leverage can be created without regulatory oversight. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">While the old definitional line may be obsolete, the principle still remains valid. If we fail to distinguish and separate the casino dimension of banking from critical social infrastructure such as the payment clearing system and the safety of deposits, we place the so-called ‘real economy’ – the everyday world of ordinary people – at unnecessary risk of cascading failures. Social well-being somehow needs to be insulated from the inherent oscillations of the market. It’s not that having a free speculative market is a bad idea, it’s just that the whole of society shouldn’t be hardwired to the outcome. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">Second, is the playing field level? The current rules of the global financial system tolerate persistent trade imbalances. At the Bretton Woods Conference in 1944, J. M. Keynes, negotiating for the UK, attempted to persuade the US to accept a system that would penalize both creditor and debtor countries. He failed, and 65 years later the US is now the principal debtor, and the pernicious effects of international imbalances threaten the global economy. Do we now need a new Bretton Woods agreement, close to the one we might have had originally?</span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">Put in simpler, and some might say more naïve terms, the underlying question here is about the overall fairness of the financial system. The US benefited for many decades from the post-Bretton Woods tilt of the international playing field, but this unfair advantage has blown back and inflicted a possibly fatal wound. As in all matters strategic, when a <span>strength</span> is overplayed it eventually turns into its own opposite. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">This outcome is very similar to what is now recognized as the curse of oil, the counter-intuitive outcome that oil wealth leads to worse economic outcomes in the long term – unless specific protective institutions are put in place as in Norway. The wisdom we need is to realize that such unbalanced advantages cause moral erosion, and that if they endure at a global level, all societies will become less equal and ultimately worse off. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">Thirdly, do we have the right money? Money is not something arbitrary and unchangeable. It is very much a human invention and several alternative designs are available. The money we have now, technically known as fiat money, is created by means of debt, which requires interest, which in turn demands economic growth. The expansion of debt creates bubbles and crises. The inevitability of interest drives inflation and undermines individual financial independence. The requirement for growth drives corporate excess and over-exploitation of the natural environment. If we really want to address these things at the root level, in the end we will need to change the design of our money system. </span></p>
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<p class="MsoNormal"><span lang="EN-US">The solutions to these deeper issues are much harder than introducing a Tobin tax, which itself would meet stiff opposition. Changing the money system is virtually inconceivable as things stand. Yet as long as the financial basis of the world economy has deep design flaws the risk of catastrophic crisis remains. </span></p>
<p class="MsoNormal" style="text-align: left;"><span lang="EN-US">We must not heave a sigh of relief too soon. The worst may appear to be over, but this may just be a breathing space. If so, now is the time to begin addressing the deeper issues to avoid something far worse next time. </span></p>
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