A Networked World

The damage done by Wikileaks

I'm sure that it comes as absolutely no surprise to any diplomat nor their employing government, that their counterparts from other nations routinely lie to them about pretty much everything. Nor should it come as a shock that some of their counterparts think of them as idiots or worse.

A diplomat is someone who lies professionally for his country and any diplomat not fully aware of that is a liability and should be fired forthwith.

So it is unlikely that the Wikileaks data dump provides anything more than confirmation of normal suspicions and, being diplomats, these people will have no trouble whatever continuing both to deal with, and lie to, each other with unruffled feathers for many years to come, their personal flutterings soothed by regular application of canapes and booze.

On the other hand, what the leaks can very much damage is the credibility and safety of governments at the hands of their employers, viz, us.

While most of us have a default position that our masters, elected and otherwise, treat us and our aspirations and needs with dismissal when it is not outright contempt, it is another thing altogether to discover how regularly and egregiously they betray our interests in the pursuit of their rarefied and esoteric goals in the Great Game.

Wikileaks has the mission of fleshing out and adding fine detail to those betrayals and in doing so they undermine the pretenses and obfuscations and credibility, the authority of nation states in relation to their own people.

THAT is why the bastards are screaming in moral panic; that is why they are plotting the destruction of the torchlight shone straight into their corrupted hearts.

That is why we all have a duty to support Wikileaks, because it has the potential, at last, and in fact, to keep the bastards honest.

Update:  What is the betting that, if sweden is able to have Julian Assange extradited, the rape case will be dropped but he will be held because there is an application from the US for his extradition to their jurisdiction? I'm going with about 80%.

Plus, after spending so many uyears in a very happy association with sweden and its reputation for openness, I'm bloody horrified by their role in this.

They NEVER give up.

You have to hand it to the right wing ideologues; they really do never give up trying to create their corporatist state. I wonder how much we paid disgraced former leader of the national Party and, god help us, former head of the reserve bank Don Brash for this odorous pile.

'400,000 will leave in next 15 years' New Zealand will lose another 400,000 people to Australia over the next 15 years, based on current projections of the income gap between the two countries, the 2025 taskforce says. The taskforce, chaired by Don Brash, is charged with providing recommendations on how to close the income gap by 2025. In its second report, released yesterday, it says OECD projections of each country's growth prospects would see the gap widen from 35 per cent to 42 per cent. "Can we close the gap?" Brash asked yesterday. "To paraphrase President Obama [in a recent appearance on The Daily Show]: Yes we can, but it may take a little time." 

It would require an unwavering focus on policies that would see the New Zealand economy grow nearly 2 per cent per annum faster than Australia over that period.Some steps the Government had taken over the past two years - like income tax cuts - are likely to have improved the country's growth prospects, Brash said, but others - like tax changes which have effectively increased the tax burden on business - are likely to have detracted from them.

"On balance New Zealand is still a long way from the kind of policies needed to have any chance of closing the gap with Australia by 2025, or even of making serious progress towards that goal."

The report recommends cutting Government spending and tax rates, and a rapid return to a structural fiscal surplus. It wants to "shift the boundary" between private and public sectors, with more of the former and less of the latter, including in health and education.

It favours at least the partial privatisation of state-owned enterprises. It calls for more robust and transparent cost/benefit analyses of major infrastructure projects, including plans for ultra-fast broadband. It is sceptical of the return on public sector research and development and advocates a freeze on that spending coupled with less micro-management of how it is distributed.

It wants a more inviting regime for foreign investment and is critical of the uncertainty recent Government statements and regulatory changes have engendered. And it favours "institutionalising" better processes for vetting Government spending and regulation - either in the form of a taxpayer's bill of rights or an "independent fiscal council" akin to the Congressional Budget Office in the United States.

The whole thing is predicated on current conditions, conditions that are changing more rapidly than ever in my lifetime and that are a long way from done in this phase.

Meanwhile Australia is a very small chain of overpopulated Islands of dubious fertility surrounded by sand and salt water. Its prosperity comes entirely from its willingness to dig up its mineral resources and sell them overseas, principally to China which depends for its demand on the US as buyer of first, middle and last resort. And the US just voted to rush headlong into a major depression, if not actual financial collapse.

Meanwhile the UK, a favourite destination of many Kiwis is also diving into a major financial and social mess.

Far from an exodus of population we should be preparing for a return of the diaspora as thousands of our kin find that they can't survive, or stand, living in the US and UK and come home. They will also be coming home broke and bearing skills such as investment banking that will be of little or no use to them here.

When China undergoes its own inevitable meltdown as its global customer base dries up and its US dollar reserves turn to fertiliser, Australia too will find itself in rather a surplus position vis a vis kiwis and they too will start coming home.

But Don Brash and his ilk don't want us to think about the really big picture, they just want to scare us into accepting their corporatist agenda, to hand over the private enterprise every possible thing that someone might possibly make a profit from if they drive down the quality enough, this especially applies to those things like health and education where the demand is pretty much inelastic.

And they have apparently decided that fear and envy of Australia is our biggest goad but since we have been rated as one of the top 5 nations in which to live, based on pretty much anything worth having, catching up with Aussie doesn't seem to have much point and, unless we suddenly discover that we have a million square miles of mineral rich desert in demand from a massively consuming global population, trying to do so is about in the same category as taking that LSD and thinking you might just catch up with that passing seagull.

As usual, life continues to be an intelligence test, and if we fall for this one again we will deserve the mess it lands us in.

Demonstrating strength

Seth Godin is a fine stirrer and I like this list a lot. Demonstrating strength

1. Apologise
   I remember years ago a staff member taking me to task for apologising to a client for something that, almost certainly was the client's fault and from which I was defending another client. First client took exception to being stepped on and demanded an apology. She got one, without hesitation or qualification. My staff member didn't get that the apology took off the table the form of the issue, leaving only the substabnce to be dealt with, that said client was, in fact, an asshole and a bully and needed to be controlled.
2. Defer to others
   Best way to learn anything is ask someone else to help you, its a pretty good way to make other people feel better about the day. Being helped is OK, being thought able to help is much better.
3. Avoid shortcuts
   Ack!, guilty.
4. Tell the truth
   It's cost me more than one contract. But then, I have no debts, no mortgage and a big garden, I can afford to tell the truth.
5. Offer kindness
   I hope so. Especially to those close to me.
6. Seek alliances
   I'm not as good at this as I might be, partly because of 4.
7. Volunteer to take the short straw
8. Choose the long-term, sacrificing the short
   I have a little mantra for those who always want to pluck the "low hanging fruit" or "get some easy runs on the board", do the hard stuff first, the easy stuff is always going to be easy, but going from the easy to the hard just makes the hard seem even worse." Most people aren't interested.
9. Demonstrate respect to all, not just the obviously strong
   Yep. Doing my best when I'm taking potshots at the strong.
10. Share credit and be public in your gratitude
    One of my trustees once said to me as we stood at the back of a room while a politician took all the glory for our hard work, "you can get a lot done if you don't mind who takes the credit".  Yes

Risking the appearance of weakness takes strength. And the market knows it.

My one disagreement. The market doesn't know anything. Look at the state its in.

1. Apologise
   I remember years ago a staff member taking me to task for apologising to a client for something that, almost certainly was the client's fault and from which I was defending another client. First client took exception to being stepped on and demanded an apology. She got one, without hesitation or qualification. My staff member didn't get that the apology took off the table the form of the issue, leaving only the substabnce to be dealt with, that said client was, in fact, an asshole and a bully and needed to be controlled.
2. Defer to others
   Best way to learn anything is ask someone else to help you, its a pretty good way to make other people feel better about the day. Being helped is OK, being thought able to help is much better.
3. Avoid shortcuts
   Ack!, guilty.
4. Tell the truth
   It's cost me more than one contract. But then, I have no debts, no mortgage and a big garden, I can afford to tell the truth.
5. Offer kindness
   I hope so. Especially to those close to me.
6. Seek alliances
   I'm not as good at this as I might be, partly because of 4.
7. Volunteer to take the short straw
8. Choose the long-term, sacrificing the short
   I have a little mantra for those who always want to pluck the "low hanging fruit" or "get some easy runs on the board", do the hard stuff first, the easy stuff is always going to be easy, but going from the easy to the hard just makes the hard seem even worse." Most people aren't interested.
9. Demonstrate respect to all, not just the obviously strong
   Yep. Doing my best when I'm taking potshots at the strong.
10. Share credit and be public in your gratitude
    One of my trustees once said to me as we stood at the back of a room while a politician took all the glory for our hard work, "you can get a lot done if you don't mind who takes the credit".  Yes

Risking the appearance of weakness takes strength. And the market knows it.

My one disagreement. The market doesn't know anything. Look at the state its in.

A nail through it from Jim Kunstler

I've been reading him casually for a number of years, I check his weekly screed more to take the temperature than get any actual information because I'm already right on board with his perspective. But this week has two special points.

One is that his usual colourful rant has the darkest tone I have ever seen him use and two is this section.

Scary People, Scary Times - Clusterfuck Nation

The most striking feature of the current scene is the absence of a coherent vision of our multiple related predicaments and how they add up to a valid picture of reality. To be precise, I mean our predicaments of 1.) energy resources, 2.) vanishing capital, and 3.) ecocide. This inability to decode the clear and present dangers to civilized life is a failure of leadership and authority without precedent in the American story.
On the eve of the only other comparable national convulsion -- the lead-up to the Civil War - a strenuous public debate was able to focus on the salient question of the day, namely whether human slavery would continue in this country. Lincoln and Douglas parried for hours in the hot sun, arguing unscripted in complete sentences without the aid of teleprompters or offstage spin doctors. Yet no one above age of nine failed to understand what was at issue.
Note the diminishing returns of technology at work in our time, making it impossible for us to think straight, despite the proliferation of snazzy devices, programs, networks, blog-clouds, and the pervasive, non-stop spewage of so-called information all intended to enhance communication. What did Lincoln have to work with? A pencil.

The issue is not how cool are our tools, the issue is what we use them for and I have long said that ICT is a huge accerlerator. It wont change who you are or how you or your organisation wporks at first, but it will massively amplify everything about the information environment you inhabit.

I'm pretty sure we have all, always, been about as deluded and ignorant and resistant to change as we are now. But with the advent of these technologies we are being exposed to both the best and the worst in us at very speed; whatever and whoever we are is laid out in an instant for the world to see in all its icky, mindless detail.

As well as its massive positives, electronic communications of all kinds have enabled the publication of our anger, hatreds and perversions and my view is that the good has outweighed the bad by a long way.

But, as Kunstler suggests in this piece, it is now amplifying our fear, ignorance, confusion, desperation and panic.

18 months ago I watched one Saturday morning as my old dog trotted up the garden path, cast around the hedges and the shed, under the Pururi tree and flopped down under the cool shadow of the worm farm, panting as he tried to escape the pain inside. I said to my wife then what I am feeling now as I read Kunstler's piece, "that's not good". In three days my old dog was dead.

Got that feeling again.

The dead web

Little flurry at the moment on whether "the web" is dead or not and Rob Beschizza has an interesting take on the Wired article Is the web really dead?

In fact, between 1995 and 2006, the total amount of web traffic went from about 10 terabytes a month to 1,000,000 terabytes (or 1 exabyte). According to Cisco, the same source Wired used for its projections, total internet traffic rose then from about 1 exabyte to 7 exabytes between 2005 and 2010.

So with actual total traffic as the vertical axis, the graph would look more like this.

Clearly on its last legs!

Assuming that this crudely renormalized graph is at all accurate, it doesn't even seem to be the case that the web's ongoing growth has slowed. It's rather been joined by even more explosive growth in file-sharing and video, which is often embedded in the web in any case.

I've been saying for years that the web is just a transitional phase of the net on the way to whatever is coming next but that I had (and still have) no idea what that next was.

I was pretty clear though, about what I meant by "the web" was websites as such.

Browsers force us to "go" to a web "site" to get information or interact with people on "forums", a website is not an end, its an intermediary between me and the person who posts the information to it, its a middle and a technology dedicated to disintermediation will leave it behind.

The WEB used to be the end in itself, but now it has been swamped by all these other tools. Is it dead? No, although the whole IPv4/6 shemozzle could be a nasty blow to the groin, but it is shifting from being the destination to being the carrier. Newspapers probably wont die out completely, neither will radio or TV, so I don't expect html to disappear any time soon, but for those of us who still remember the excitement of "having a website", that web is going fast.

Counter-cyclical thinking

As a bit of a cotnrarian, I'm interested in this. The nitty-gritty of whittling down your possessions

Boing Boing readers had a lot to say regarding yesterday's post about Kelly Sutton, the fellow who has gotten rid of almost everything he owns apart from his digital / Internet technology.

Right now we are in the process of adding things rather than taking them away for a very simple reason; redundancy.

Kelly's (new) way of life is utterly dependent on lean supply chain dynamics and the ubiquity of the power grid at the very moment when both of those models are coming to an end.

He assumes in his piece that, if something needs fixing, he can buy the tools he needs for the job at an affordable price, then dispose of them, buying new ones as needed in the future, same with his bed and remaining household furniture.

While he claims to be more environmentally friendly, he is in fact depending on a enviromentally destructive model. Right now I'm buying things that I hope will last, will serve me and my family for a long time and, even if they are only needed once a year, are to hand immediately to perform the task so I can get on with my life.

Image that, instead of just whipping down to the hardware store for a drill and bit, you had to wait in line for 2 hours before the store opens to see if the shipment of drills had arrived, then hope to get one and hope that they also sent bits in the package or risk having to do it all again tomorrow.

Think it can't happen? I have a mate whose partner has a container of chinese vaccum cleaners at her yard, the hoses don't fit the machines. the company in China that she pays to ensure that this thing doesn't happen almost certainly didn't actually check, even though they now have to ship the container back to China, repalce all the hoses and reship to NZ.

Why would that be? Because as long as it happens only once in 100 times, the profit from being paid for something you don't actually do, then rectifying the problem, is still higher than employing reliable staff to actually do the work.

Then there is the power grid. A full-on commitment to a digital life is wholly dependent on having electricity, not just in his home, but everywhere that he might be. Right now, today, there are counties in the US ripping up tarmac country roads and replacing them with gravel because they can't afford to maintain the blacktop any more. How long before their grid maintenance goes the same way?

Living the lean life is great, right up till the moment when some critical part of the system fails. And BTW, in lean systems the only parts that are left are all critical.

Which is why I'm investing in redundancy. In the last month I have loaned a power cord to one neighbour, a hedge trimmer to another, taken my pruning shears to the kiwi fruit vines of a third and nailed up a board over the window of a fourth who was burgled while they were out of town.

Not-often-used stuff that I have been able to provide.

• Spare power cord
• Hedge trimmer that I haven't used in months
• Secateurs
  
• Lopper
• Board
• Nails (I have a couple of kilos of about 10 different sizes because you can't nail up a piece of 3 ply on a window frame with a 100mm nail)
  
• Hammer
  

Now think about what would have to happen if all of us were living the same way that Kelly does.

Couldn't put it better

Dave Snowden nails it. Cynics are the ones who care

In any organisation the ones who enthusiastically take up the latest management initiative are with the odd exception either happy clappy idiots or self-promoting sycophants. The cynical guys at the back of the hall are generally those who care about the organisation.

Yep.

Anger, rage and their causes

Thanks to Johnny for the pointer to Rob;s piece on anger Why are so many people SO ANGRY!

But I had an aha the other day as I was listening to a program about reconciliation in Rwanda. The big point is that I picked up is that this anger is NOT stupid. It is rooted in something that is very real for those that feel it. The piece made the point that I was being stupid by thinking others as stupid and that I would do better to have some compassion and think more about WHY they were so angry.

So why the anger?

I've had my rages, no doubt I will have more in the future. Big ones, ones that scare my dogs and my wife and me as well. They all of them, without exception, have the same cause.

My recognition that the consequences that I have just experienced are my own fault. Something goes worng and I can see that it is because of my own laziness, incompetence, ignorance, arrogance, carelessness, greed or some other quality that I find repellent. They are all summed up by a word that Rob uses that is exactly on the money; "stupid".

Stupid is doing something that, with a little thought, a modicum of intelligence, a split second of extra care would have been avoided and yet failing to give that and suffering a bad consequence. Stupid is the recognition that I am responsible for the outcome when there was no need for it.

Having to recognise my own stupidity is the biggest driver of all. For me it is also cumulative. I can cope with a couple of stupids per day, but when I get to the 5th or 6th I am ready to blow. The bigger the stupidity, the harder it is to express and the bigger the blow when it comes.

Interestingly, I almost never get angry at others for their actions, I am the only one that I hold to these standards. There's a piont at which "I should have known better and I failed", and that's where it bites.

The kid who skyved off school and ended up in a crap job for little money and no respect feels it, the middle manager who slides through the company working the ladder but not being noticed then gets fired because they create no value fells it, the retiree who believes the smart young man when he says he can do so much better with their money than they can then loses it all feel it, the consumer who doesn't read the fine print and gets ripped off by the clever but corrupt company feels it.

I am having many fewer moments of rage as I get more used to the idea I am not important enough that I shouldn't have to deal with these petty problems, that I have things to do and I have the time to do them.

I built a new platform for my garden shed and discovered after I assembled it that it was 10cm too long in one direction. In the past I would never have attempted it except as a distraction from my more important work. Such a discovery would have driven me off the edge. But this time I was pleased. First because I had detected the error in time, second that I had screwed the pieces together so all I had to do was unscrew them, cut off the bits that were too long and screw them back together.

It happens all the time but it causes no anger because getting it right is what I am here to do now.

Now consider the bigger scale. Back in 2004 or so I had a conversation with a professor at the University of Sydney, smart guy, runs a world-renown programme in his field. He proudly told me that whenever he had a raise, say $100 a week, he looked at how big a debt he could service with that cash, borrowed it and invested it in the share market.

I told said professor in no uncertain terms that his strategy was stupid and dangerous compared with ours. While everyone else was leveraging their real estate we were paying off our mortgage, while everyone else was "investing" in such hare-brained schemes we were saving. We experienced a good deal of mild contempt for "not getting it".

Right now I know who is likely to be in the better position. It is axiomatic that the greatest number of people pile into the bubble just as it bursts. As we have watched a succession of bubbles burst we can be sure that many millions of us are staring massive financial failure in the face.

And at the base of that failure there is one simple truth. We had the choice. Our choice was not to play, anyone else could have chosen not to play as well. A basic understanding of maths and money and the intelligence to act on that could have protected people from their own greed for status and fear of its loss.

As that certainty grows ever clearer and people discover that they can't do anything to mitigate it, they will experience their own stupidity and that will drive them to rage.

That is what we are going to have to deal with in the next decade. My partial solution would be to bankrupt the banks, allow everyone who has an unsustainable mortgage to write it off and never, ever, be allowed to borrow another cent again in their lives.

There would be an outcry from savers who would lose their savings and people who expected to live off their 'investments" but since they will lose all that anyway, they will in fact be no worse off than they are going to be anyway and they will live in a place with a lot less fear, a lot less desperation and a great deal less rage.

That would be worth it. Of course it would also require intelligent, informed, open public discourse, and an acknowledgement at the highest levels of the reality we face and its causes.

So it wont ever happen.

The cocktail umbrella paradox

Umair lays out something that I've niggled about for years. When it comes to assigning resources to productive activity, how do we make that decision? If the choice is between a cocktail umbrella maker and a child health programme, why can the cocktail umbrella maker ever win?

Chad Syverson asks a very interesting question: what are the fundamental determinants of productivity? He reviews many of the orthodox answers, nicely and concisely.

My answer, as I've discussed at length, is a little different. Though all the factors Chad reviews are certainly important - high quality inputs, managerial practices, competition, input market flexibility, and the like - I'd like to ask a question. What if there's a missing variable entirely from the production function as we know it?

I suspect there might be - and I call it ethical capital.

Read the whole thing.

In a world of ever scarce resources we will face this question more and more often in more places. It bubbles under the radar at the moment, occasionally surfacing as someone tries to deal with health care rationing and how it is done, but its coming up in other places too,

Right now we are having a public discussion about whether "healthy" food should be zero-rated for GST/VAT. The figleaf is that we should be encouraging healthy food choices but the sub-text is that more of us are waking up to the reality that, in food producing nation, we have more and more of our community going to bed hungry, waking up hungry and having to make do with crap food.

The real question is how do we prevent, or at least hide, malnutrition for a bit longer and probably, how do we get to blame the malnourished for their plight because "healthy food is zero-rated so your malnutrition MUST be your own choice."

A slow tragedy unfolds next door

At a top level, this story from the weekend is not that surprising, its obvious that the grinding of the credit crunch is far from over and anyone who believes the happy-talk about recovery is moderately delusional. But the data are continuintg to tell that tale anyway. House values losing ground

House values across the country are losing ground because of cautious buyers and high levels of distressed sales pulling down prices.

QV Valuation's June index - calculated from the previous three months' market figures - is 5.2 per cent above the same period last year. This followed the 5.6 per cent reported last month, which was down on the 6.1 per cent of the previous month.

The national average house sale price actually rose to $404,715 last month from $403,070 in May but because of a change in types of sales taking place.

Glenda Whitehead, of QV, said winter sales levels were 20 per cent below the long-term average. Fewer new properties were coming to the market. However, this was normal for the season rather than due to the Budget's measures on property.

Any impact on the market would take over 12 months to measure as various tax changes were brought in.

Ms Whitehead said buyers were very cautious and selective and properties with perceived flaws such as structural problems, or poor maintenance, were proving harder to sell.

The budget mention is a change to the way depreciation is allowed in accounting for rental properties. Years ago I owned a couple of units and we were allowed to depreciate them at 2.5% on top of any maintenance costs written off, despite the fact that the face value of the property was demonstrably increasing.

That often made the difference between having a taxable income and having none, allowing us to take tax-free money out of the operation. That loophole has been closed this year and, while the results might not show up in the stats for a year, the property next door is turning into an example of the perfect storm.

Just under a year ago I met my new neighbour, a youngish woman who proudly proclaimed that this was her seventh investment property and she intended to rent it out. Knowing that she had paid $420k for it, when it had not even fetched a bid at $350k, I knew she was in trouble from the start.

• It is a 2 bedroom house on a large piece of suburban land so she could realistically expect not more than $350 a week if she was lucky.
• The rule of thumb for rentals is you need to collect per week the price of the property with the last 3 zeroes knocked off, ie $420. Not going to happen with a small house, a big lawn to mow and in a suburb at the bottom of the scale (Our schools are decile 1)
  
• But if she has 7 rental properties she is almost certain to have followed the trend by buying one, taking out any increased value in higher leverage, using that as a deposit for the next one which would be 100% mortgaged, then using the inflated value of both properties to cash out the deposit on the next and so on. All it needed was a slight change in the interest rates or the tax position and she would be in trouble, falling prices would lock that in.

Sure enough, a couple of weeks ago, the tenants told me that she was putting the house on the market and that they had several friends who found themselves in the same position, within a month of the new tax rules taking effect.

The fact that she was to ask for $130k MORE than she had paid shows that she is still living in the old never-never land and interestingly, in the 2 weeks since, there has been no site visit by the real estate agents and no for sale sign at the gate.

Perhaps the agent gave her a quiet, but firm, reality check.

Meanwhile, the tenants have found another place to live and will move out after the end of the week.

So then she will have no tenants and no way to re-occupy the place because getting new tenants while the place is for sale is not going to happen. That she was to ask $550k suggests that she is in serious need of cash, which she isn't going to get.

Realistically, the house needs $125k spent on it and that means a sale price around $300 or less. But she can't sell for that because it wont clear the debt.

I'll bet that she lies awake late at night these days, worrying. I'll bet that she is far from alone. All over the English-speaking world there are people like her, who followed the advice given to us by our former financial adviser in Sydney who, when we paid off the mortgage, said, and I quote, "right, time to get you into more debt". Then proceeded to advise that we remortgage the house and use the cash as a deposit on an "investment" which would be 100% indebted.

His justification was that with such huge negative gearing, we would "get a tax refund" at the end of the year.

We fired him on the spot because even in 2005 we could see coming down the pike exactly this moment. We didn't know when, but the words "certainty" and "soon" featured in the conversation.

But there are plenty of people who could do enough maths to calculate their tax refunds who still lacked the basic numeracy to figure out that there was some unknowable level of this kind of financial strategy that would lead to disaster, and that the one thing you don't want to have in a debt crunch, is debt.

My main concern is what happens to my neighbourhood where there are houses like that all over the place, unsellable and untenantable for any wortwhile return, owned by people whose finances are melting down. Having one next door that could be heading for derliction is not a good thought. If I win the lotto I'll buy it just to keep it from falling over.

Taking a ticket should probably be my first step. I wonder how much they cost?