Plagging for beginners

Admire my parking skills, originally uploaded by Bashed.

I've been thinking (don't groan like that please).

The banking crisis - the general downturn of everything as a result - is quite a complex demonstration of Garrett Hardin's 'Tragedy of the Commons' and his observation of the number of times organisations and people are selfish - despite the negative consequences even to themselves.

I thought the photo was quite a nice illustration of behaviour that clearly seemed perfectly logical to the driver, but at some cost to others.

In many areas of life, people engage in behaviour which has short term personal benefits, but causes other people to suffer. But Hardin's insight was with regard to unregulated commons (or common goods) which are a limited resource to which many have access.

This issue is that there can be a considerable incentive to exploit the resource to the detriment of all other users and that, ultimately, to one's own. This is a kind of prisoner's dilemma in which two prisoners will be set free if both keep quiet. However each can incriminate the other and the first one to do so increases his/her chances of release. The result is that both are likely to co-operate with the authorities.

In the commons problem Hardin had it that cattle herders using a common would tend to over-graze the land. They tended to 'commonize the costs' and 'privatize the profits' and some have argued that is exactly what has happened in the financial services industry.

Incidentally I first came across Hardin many years ago writing something for my Masters about altruistic behaviour which I was hoping would turn into a doctoral thesis. I was inspired by the retelling of this, with some elaboration, in a fascinating book called 'The Origins of Virtue' written by a guy called Matt Ridley. It's a very well-written book and I'd recommend it.

I also found a reference to PLAG - protagonist loss/antagonist gain - behaviour. The fact is that many people do act altruistically. It's possible to reduce this down to some kind of selfish exchange behaviour ("well, they get a kick out of giving to charity" or the 'feel good' reward); a utilitarian argument, but I think this over-simplifies behaviour.

At the time I was thinking about all this I established that there were enough examples of people exhibiting 'PLAG' behaviour to demand an explanation that wasn't just about selfish exchange and then I found Bourdieu...but that's another story.

Back to the financial crisis. It's fairly clear that institutions were acting as if the market could go on climbing and they could continue to profit from this without considering the 'resource' that was being exploited. This 'common' resource could be said to be the real economy or maybe it's just people (as workers and consumers) but, in any case, there was and is a limit to how far you can repackage and re-sell debt.

Even as the mortgage market collapsed like a souffle, banks continued to commonize costs - in fact the world's governments seemed conditioned to accept this - after all they are there to step in and protect the little people...aren't they? So houses and life and medical insurance are propped up by giving money to the banks.

Well, I've said before that I struggle with some economics, but surely the more efficient route would be to give the support direct to the consumer so they could spend or save (in a bank) as they needed. Writing off a lot of debt would help.

Instead governments, working within a broken banking system, are enabling a few to continue to 'privatise profits'.

Matt Ridley...mmmm...feeling you've heard that name before? Possibly.

Until October 2007 he was Chairman of Northern Rock.

He doesn't mention that on his CV.

[Having written this check out George Monbiot putting the boot in far more effectively than I]

Recession? Oh goody!

Economics is wierd isn't it?
If we talk about recession and try and guard against it, we precipitate it. If everybody dismissed the idea of recession and spent well then...
Will Hutton, who I respect, often talks about the need for government to intervene in the market economy. His comments often attract vitriol for, it seems, daring to suggest that the market may not always work.
Well, I'm pretty clear that the Market works. But the capital letter is there to denote a particular market which dominates out thinking - it even dominates the thinking of politicians on the left.
I've just been reading Bourdieu on politics (chapter 8 of his book Distinction) and what struck me most of all was the emphasis he puts on being able to talk of politics.
Bourdieu points out, in brief, that many people are excluded from having an opinion, or from expressing anything other than the dominant 'logic' of politics, because of their position. Those who are least equipped (largely through education) who are in a dominated position often feel unable to give a response to even an apparently simple question.
Moreover, political questions use the language of politics expressly to exclude; they are expressed in abtract, technical language in expectation of understanding only by those 'qualified'.
The kinds of questions people feel able to respond to vary, often correlating with their 'distance' from the domestic, personal experience.
Questions of economics, which are essentially political, are often disguised as apolitical (appeals to 'common sense' are a dead giveaway!) but also have significant personal ramifications.
One might want the economy to slow down, but you certainly don't want it to result in your house being worth less than you owe on your mortgage.
That we can entertain this possibility, without being struck by the peculiar logic of this 'market' says much about its pervasiveness. How can a company (a mortgage lender) assume no risk (that is to say, a predictale and predicted, therefore accounted-for risk turned into an overhead) whilst individuals (borrowers) assume complete responsibility for the loss (they cannot spread their risk)? The simple answer is; those are the rules of the game.
Occasionally, however, it is interesting to step outside of the game and consider what is just.
I might suggest that it is unjust that landlords can keep properties empty whilst people cannot afford to rent or buy a home. For that matter, it would seem unjust that people must impoverish themselves to have a basic necessity - a permanent dwelling.
The nature of the Market is that it will always arbitrate between competing sources of profit pursued by those with stocks of economic capital. But is is also in the nature of markets that they do not run smoothly and that generating (big) winners inevitably generates (a lot of small) losers.
Even those who see recession as inevitable must agree that for people to lose their homes as a result can, and perhaps should, be ameliorated. That requires intervention on the side of justice, not just to support the myth of the market. And that demands that we acknowledge the voices of those who are unable to speak because they are not shareholders - they are only bit players in the market game.