ftalphaville.ft.com/ 2012/ 06/ 08/ 1030801/ the-end-of-artificial-scarcity/
Unemployment, Artificial Scarcity and Radical Abundance / February 28th, 2014
We are in the midst of massive economic disruption and growing structural unemployment caused by the automation of increasingly large segments of the economy. These days very few people are actually needed to provide the basic necessities of an affluent society. This is what Buckminster Fuller called ephermalization, the ability to do more and more with less and less. But rather than an increase in leisure time one would expect from such gains, we have record levels of poverty and wealth disparity. Despite an economy that continues to grow in per capita terms, the gains of that economy flow into ever fewer hands. A lot of people blame the “free” market, but the situation is anything but. The source of the problem is built-in structural theft facilitated by the state to benefit an increasingly small, politically connected, economic elite. Those gains in wealth have been enclosed as a source of rent through government enforcement of artificial scarcity using intellectual property laws and regulatory barriers to prevent genuine competition, and the radical distribution of wealth it would generate.
You can see how this theft works in the current wireless services market. The technology exists now for everyone in the world to have high-bandwidth communications (data and voice) with anyone else in the world for free, without any company or middle man whatsoever, using super cheap devices that cost less than $20. When something is free, it’s one less thing you have to buy, and one less thing you have to work for. As far as radical abundance is concerned there is no functional difference between making everyone richer and making everything cheaper. So what kind of technology enables the creation of a free worldwide communications network? It’s called software defined radio, and it’s been around for more than a decade. It completely solves the spectrum scarcity problem by finding, negotiating, and determining moment-by-moment, on the fly, the most efficient frequency for any given communication. This happens at the device level, so it renders the need for centrally controlling towers, and their bandwidth bottlenecks, completely obsolete. By bypassing these lower bandwidth cell towers, this decentralized, p2p, spectrum allocation protocol increases available bandwidth over traditional cell networks by three orders of magnitude. The result is profound – by ditching wireless service companies we gain a one thousand fold increase in wireless bandwidth! The only problem with this plan is it’s illegal.
What we get instead are companies like Artemis Network’s licensing this technology (PCell) so that you’ll have to keep paying your wireless bill to use it. Say again? You’ll have to keep paying your old company every month for something they no longer provide. Imagine a scenario in which up until now you’ve always paid Peter to fetch your daily water because he had the specialized tools to do so. Then one day you figured out how to do it yourself easier and cheaper. But because of some law on the books you still have to pay Peter for the water you’re getting yourself. This is outrageous, but it is exactly the kind of situation we now have with PCell within the existing regulatory landscape. A middle man, a thief, or in this case your wireless service provider, is forcing you to pay the same “service” fee you’ve been paying for a service you no longer use, and they no longer provide. Artemis Networks is calling this new technology “personal cellular”, but it is anything but. It’s completely owned and licensed by your wireless service provider. This obscene state of affairs is enabled through enforcement of obsolete spectrum scarcity laws on a resource that is no longer scarce. I repeat – the only reason we don’t have super fast, super cheap worldwide communications is because of artificial scarcity imposed by government regulation and coercion.
The same holds true for virtually every sector of the economy. Luckily for us the trend is shifting both on the ground and in the halls of government. At the state level we’re seeing a loosening of restrictions on home based businesses. For example, California just passed a Homemade Food Cottage Business bill that makes it easier for home based business to sell food directly to the public. Meanwhile the tools of abundance are multiplying faster than they can be expropriated, because the means of finance (cryptocurrencies, crowdfunding, peer lending, etc) manufacturing and production (3d printing, permaculture, etc.) and energy (solar, microhydro) are decentralizing outside of the control of regulators. Laws are only as good as they can be enforced. We’ve already seen this battle lost by the music industry. Other parts of the economy are next. 3d printing is going to disintermediate the manufacturing business the same way Napster and Bittorent disintermediated the music business. At some point, open-source software radios are going to hit the streets, regardless of the laws in place, and once that genie is out of the bottle, there is no putting it back in.
But until these technologies of abundance break out we’re going to see state-sponsored capitalism, and it’s artificial scarcities and sources of rent, continue to expropriate as much of this abundance and wealth for itself and its crony benefactors as possible. What they don’t realize is by depriving us access to the tools of abundance they are actually undermining the same system it so desperately depends on. You can’t bleed a bled horse, and the sources of capital the state relies on to pay for this theft are drying up under a mountain of unsustainable debt. Debt incurred for the most part by a massive and out of control national security state apparatus and the corporate giants that depend on it. It’s bankrupting itself through anti-competitive business practices that can only be maintained by bleeding dry the very customer base they depend on, both for taxes to finance it, and dollars to buy the crap these state-backed corporations are selling. It’s an incestuous and codependent relationship of corporation and state (not to mention Ponzi scheme), caught in a death spiral it cannot escape. Death of the old system is inevitable. The only question is when. The best we can hope for is an inflection point high enough on the graph, where the tools of abundance pick us up as the old system collapses. In the meantime, innovations like decentralized autonomous organizations are opening up possibilities for creating wealth dividends for everyone in a decentralized and distributed manner.
FOOD & WATER
Should Nestle Be Bottling California Water In The Middle Of The State’s Record-Breaking Drought?
by Ariel Schwartz / July 21, 2014
California is in a deep drought. 2013 was the driest year on record in the state. The State Water Resources Control Board went so far this month as to impose harsh restrictions on outdoor water use. (Using potable water in an ornamental fountain? That’ll be a $500 fine.) And somehow, in the middle of all this, Nestle is bottling California’s scarce water and selling it. The company’s plant in Cabazon, California, leased from the Morongo Band of Mission Indians, packages water for the Arrowhead spring and Nestle Pure Life brands. The problem is that nobody knows quite how much water the company is taking, because the Morongo tribe is a sovereign nation and doesn’t have to deal with local water agencies or normal reporting requirements. Cabazon is also in the middle of a Southern California desert ecosystem.
According to the Desert Sun, Nestle Waters did actually submit annual reports on local groundwater extraction until 2009. In 2005, it extracted 595 acre-feet of water. In 2009, the company reported 757-acre feet of water (a little over 244 million gallons) tapped in the previous year. The Desert Sun has asked for tours of the plant numerous times over the past year, to no avail. Nestle’s operation is far from the only plant in the region to suck up water–there are plenty of resorts and factories that are also guilty of overusing the scarce resource. But bottling and selling water seems like a particularly egregious failure to recognize the drought situation. Water researcher Peter Gleick, president of the Pacific Institute, expressed his concern in the Desert Sun article:
In his 2010 book “Bottled and Sold,” Gleick described the inner workings of the Cabazon plant, which covers an area larger than seven football fields, saying it was producing more than 1 billion bottles of Arrowhead spring water a year. Labels on the bottles list several sources of water, including the spring in Millard Canyon and other springs elsewhere in Southern California. The reason this particular plant is of special concern is precisely because water is so scarce in the basin,” Gleick said. “If you had the same bottling plant in a water-rich area, then the amount of water bottled and diverted would be a small fraction of the total water available. But this is a desert ecosystem. Surface water in the desert is exceedingly rare and has a much higher environmental value than the same amount of water somewhere else.”
Nestle has responded to the controversy by saying that it manages its operations “to prevent adverse impacts to local area groundwater resources.” But with little oversight and a closed-door policy to anyone seeking answers, how can we really know?
It’s Still the Oil: Secret Condi Meeting on Oil Before Invasion
by Greg Palast / March 18, 2007
Four years ago this week, the tanks rolled for what President Bush originally called, “Operation Iraqi Liberation” — O.I.L. I kid you not. And it was four years ago that, from the White House, George Bush, declaring war, said, “I want to talk to the Iraqi people.” That Dick Cheney didn’t tell Bush that Iraqis speak Arabic … well, never mind. I expected the President to say something like, “Our troops are coming to liberate you, so don’t shoot them.” Instead, Mr. Bush told, the Iraqis, “Do not destroy oil wells.” Nevertheless, the Bush Administration said the war had nothing to do with Iraq’s oil. Indeed, in 2002, the State Department stated, and its official newsletter, the Washington Post, repeated, that State’s Iraq study group, “does not have oil on its list of issues.” But now, we’ve learned that, despite protestations to the contrary, Condoleezza Rice held a secret meeting with the former Secretary-General of OPEC, Fadhil Chalabi, an Iraqi, and offered Chalabi the job of Oil Minister for Iraq. (It is well established that the President of the United States may appoint the cabinet ministers of another nation if that appointment is confirmed by the 101st Airborne.) In all the chest-beating about how the war did badly, no one seems to remember how the war did very, very well — for Big Oil.
The war has kept Iraq’s oil production to 2.1 million barrels a day from pre-war, pre-embargo production of over 4 million barrels. In the oil game, that’s a lot to lose. In fact, the loss of Iraq’s 2 million barrels a day is equal to the entire planet’s reserve production capacity. In other words, the war has caused a hell of a supply squeeze — and Big Oil just loves it. Oil today is $57 a barrel versus the $18 a barrel price under Bill “Love-Not-War” Clinton. Since the launch of Operation Iraqi Liberation, Halliburton stock has tripled to $64 a share — not, as some believe, because of those Iraq reconstruction contracts — peanuts for Halliburton. Cheney’s former company’s main business is “oil services.” And, as one oilman complained to me, Cheney’s former company has captured a big hunk of the rise in oil prices by jacking up the charges for Halliburton drilling and piping equipment. But before we shed tears for Big Oil’s having to hand Halliburton its slice, let me note that the value of the reserves of the five biggest oil companies more than doubled during the war to $2.36 trillion. And that was the plan: putting a new floor under the price of oil. I have that in writing. In 2005, after a two-year battle with the State and Defense Departments, they released to my team at BBC Newsnight the “Options for a Sustainable Iraqi Oil Industry.” Now, you might think our government shouldn’t be writing a plan for another nation’s oil. Well, our government didn’t write it, despite the State Department seal on the cover. In fact, we discovered that the 323-page plan was drafted in Houston by oil industry executives and consultants. The suspicion is that Bush went to war to get Iraq’s oil. That’s not true. The document, and secret recordings of those in on the scheme, made it clear that the Administration wanted to make certain America did not get the oil. In other words, keep the lid on Iraq’s oil production — and thereby keep the price of oil high. Of course, the language was far more subtle than, “Let’s cut Iraq’s oil production and jack up prices.” Rather, the report uses industry jargon and euphemisms which require Iraq to remain an obedient member of the OPEC cartel and stick to the oil-production limits — “quotas” — which keep up oil prices.
The Houston plan, enforced by an army of occupation, would, “enhance [Iraq’s] relationship with OPEC,” the oil cartel. And that’s undoubtedly why Condoleezza Rice asked Fadhil Chalabi to take charge of Iraq’s Oil Ministry. As former chief operating officer of OPEC, the oil cartel, Fadhil was a Big Oil favorite, certain to ensure that Iraq would never again allow the world to slip back to the Clinton era of low prices and low profits. (In investigating for BBC, I was told by the former chief of the CIA’s oil unit that he’d met with Fadhil regarding oil at Bush’s request. Fadhil recently complained to the BBC. He denied the meeting with the Bush emissary in London because, he noted, he was secretly meeting that week in Washington with Condi!) Fadhil, by the way, turned down Condi’s offer to run Iraq’s Oil Ministry. Ultimately, Iraq’s Oil Ministry was given to Fadhil’s fellow tribesman, Ahmad Chalabi, a convicted bank swindler and neo-con idol. But whichever Chalabi is nominal head of Iraq’s oil industry in Baghdad, the orders come from Houston. Indeed, the oil law adopted by Iraq’s shaky government this month is virtually a photocopy of the “Options” plan first conceived in Texas long before Iraq was “liberated.” In other words, the war has gone exactly to plan — the Houston plan. So forget the naïve cloth-rending about a conflict gone haywire. Exxon-Mobil reported a record $10 billion profit last quarter, the largest of any corporation in history. Mission Accomplished.
Diamonds: Driven by market forces for the first time in 100 years
by Paul Zimnisky / April 9, 2013
Up until recently the diamond industry had a structural flaw — just one player controlled it. De Beers was the diamond industry, and diamonds were synonymous with De Beers. However, over the last 25 years, a series of events led to the dismantling of the De Beers monopoly. Today, De Beers no longer has complete control of the diamond industry, and for the first time in a century, market forces, not the De Beers monopoly, drive the diamond market. In the late 1800s after a massive diamond discovery in South Africa, a diamond rush was born, and businessman Cecil Rhodes bought as many diamond mining claims as he could, including farmland owned by the De Beer family. By the turn of the century, Rhodes had accumulated enough properties that his company accounted for the majority of the world’s supply of rough diamonds. He called his company De Beers Consolidated Mines Limited. As De Beers maintained a hold on the worlds rough diamond supply through the first quarter of the 20th century, financer Ernest Oppenheimer began accumulating shares of De Beers whenever available, and reached a controlling stake of the company by the mid-1920s. Under Oppenheimer’s control, De Beers further expanded into every facet of the diamond industry, intent on monopolizing distribution. De Beers successfully influenced just about all of the world’s rough suppliers to sell production through the De Beers channel, gaining control of the global supply not produced by De Beers mines. The cartel was born, giving Oppenheimer the power to influence diamond supply and thus diamond prices. The De Beers distribution channel, named the Central Selling Organization or CSO, (later changed to Diamond Trading Co. or DTC), had the power to sell what, when, and where they wanted to. In order to buy from CSO, membership as a “Sightholder” was required, which was completely the discretion of De Beers, as was the quality and price of the product being sold. No negotiation between the CSO and Sightholder occurred, all transactions were take-it-or-leave-it. In order to maintain a stable but rising diamond price, De Beers had the power to stockpile inventory in a weak market or raise the prices charged to Sightholders, and then in an excessively strong price environment (with the potential to damage demand), De Beers had the excess supply on hand to release to the market when needed, repressing disorderly price increases.