In a previous post we saw that the authorities get involved in defining safety and quality parameters for taxis and buses.
In the case of buses, they also become involved in continuous financial subsidies in some cases. To recap, in that post we also highlighted that a bus was a shared taxi, albeit often larger than the average taxi, that goes from point-to-point and also which attempts to track a fixed schedule as closely as possible.
It could be noted that the taxi and bus business areas are in fact part of the same thing ; the presence of the highly controlled and rigidly designed bus services, means that the more flexible taxi counterpart has to exist to pick up the slack between actual customer wants and needs and what has actually been provided for through central planning. However, the temptation to interfere is obviously very strong and taxis also become partially controlled via slightly different law and regulation. One could take this a logical step further and include trains.
In a sensible rationalisation of policy, one would hope that these forms of transport could be unified under a fairly sparse set of laws. Unfortunately, entire ecosystems have sprung up around these existing modes of transport. I use the word ecosystems and not industries, because for every company involved that would be considered an industry player or a support player there are also activist and campaign groups, policy units, consultants, academics, newspaper columnists, think tanks, bloggers and so on. These sub-ecosystems of transport have solidified. It is important to remind oneself now and again that they are indeed sub systems of the super set: moving people around. If things changed significantly then it might be that none of these parties lost out, but there would be a period of significant uncertainty where a large amount of creativity would be required and this probably never seems pleasant to incumbents. There might also be significant new players as the balance of power shifts, along with the controlling ideas. This can be as important, if not more important, than anything else occurring at the time. Unfortunately, any attempt to change things rapidly and significantly can often lead to the opposite effect: a hardening of wants and needs around existing ecosystem forms ; often these tend to be the most simple forms. If the wrinkles on an individual’s wants and needs are allowed to show through, then they might be found to be slightly different from that of another. They might also be able to be met with a variety of different and achievable actions.
If the incumbents think someone causing disruption on their patch is an irritating thing, then they can find comfort in the knowledge that things aren’t a barrel of laughs for the protagonists in a story of necessary change. You can envisage the following conversational exchange, as they arrive in one of these solidified transport sub-ecosystems:
[drawl*1] :
Yer not from round here are ya son ? That ain’t the way it works.
[Stuttering voice of naive protagonist, whilst casting a quizzical eye on the nations finances*1]:
It … er … it … it’s working !!?
This can be a lonely role because, even if there is a justified majority view at any given time, fluidity ideally needs to arrive on the early side. Disruption of this type might at least be creative disruption: taking it on the chin early. Whereas, this type of disruption, I find, will ultimately be less so.
A utopia might be where where each individual person is an angel: a celestial diplomat who has graduated with a double first in philosophy and creativity and who has a penchant for combining two apparently conflicting ideas, whilst leaving as much of both ideas intact as is more than humanly possible. To get almost scientific for a moment: this would allow a free collision of wants and needs without friction, where friction is merely defined as a set of activities that is not entirely attractive*2 . Strangely enough, a ‘super’ entrepreneur looking to meld together and warp whole ecosystems in response to significant external changes, can be one to get closest to this role ; even if not oft recognised for doing so. The term entrepreneur covers a broad church of people: some will find time to do more entrepreneurial work in the course of their ‘normal’ job, others are adding value in a smaller area: some in new ecosystems and some in well-established ecosystems ; others will simply push an ecosystem of their own to the exclusion of all else; the power of other ideas may be subdued for a time, but it cannot be entirely extinguished or change form in the face of such a forceful approach. There are advantages and disadvantages to all of these at various stages and when compared against differing benchmarks of success. There is certainly no attempt whatsoever to imply any other angelic qualities outside this narrow definition! Serious and proper diplomats manage the interface frictions between boundaries of countries: merely larger ecosystems where coercive power has naturally coalesced*3 in some, possibly temporary, balance and where the phrase not entirely attractive would not seem to do justice to what might occur if creativity broke down. However, as these high level ecosystems can have much less internal fluidity, particularly if a status-quo is being sought for stability purposes , then there can be far fewer options for a sensible variation in the external projection of wants and needs*4. An exchange and celebration of entrepreneurs on all sides, rather than just of trade, might not be such a bad thing. Because alas, angels are a matter for religion, theology and Christmas nativity plays and I have yet to meet a real one, so we get by as we must.
In the future, one could easily imagine a world where a TEXXI type ecosystem had become established with supporters, critics and other players all on board. At this time, it might become part of the problem. For now, it is very much part of the solution.
If ecosystem members in a maturing system are part of a natural resistance to change, then the temporary power they possess to lobby and influence law and regulation, such that it becomes specific to the current form of the ecosystem, is even more problematic. This occurs intially both as a failure of creativity within the community and a desire by the democratic authority to control interface frictions with other ecosystems. The democratic authority ends up joining in as a fully signed-up ecosystem member, rather than watching wisely from afar. As the holder of the ability to coerce, it will become tempted to control, insofar as it can do so without a break down of order within the ecosystem. Once the wants and needs of the members become enshrined in law it becomes much harder to adapt when change is required. I suggest that now is such a time.
With the ecosystem established, rules and regulations start to proliferate. Some of these will come from the authority itself and some will occur as the result of lobbying by the other ecosystem members. Neither of these seems to be of benefit to the wider community very much; they might not be of use to the ecosystem community in the long run either.
Often, from a free-market viewpoint, we say that a particular intervention by an authority in these markets, by way of a law or regulation, is arbitrary. Others argue strongly that this is not the case. Rather than get into any significant problems of terminology, let us consult another authority before progressing further. The dictionary I have chosen holds the following relevant definitions for the word :
ar·bi·trar·y/?ärbi?trer?/Adjective
From now on we will use these definitions. If anybody really means something else then this part won’t be of much interest.
When the authority is responding to the existing ecosystem communities, I am not sure we can say that a response is arbitrary. It might be that it should be resisted, but surely it is not arbitrary? In the case of the other option, we can dismiss the first definition out of hand. Why? Because one man’s reason or system is never exactly that of another mans. We will almost certainly be unable to prove this beyond reasonable doubt. Maybe if someone can find a rule, not historical, of an order of unreasonableness that might qualify then this would be interesting. On number 2. we will likely get more mileage. Maybe the various authorities should check their rule books and ask if each and every regulation is really required. A facilitator might achieve something useful without applying a rule. Friedrich Hayek*5 seems likely to be correct when he says that if an extension to the law is not required to prevent the total breakdown of society, then it should remain silent on the matter. Here we would be talking of the breakdown of the ecosystem. Even on the occasion that a rule is put in with the best of intentions, it will have a set of unintended consequences that might come back to bite us. This is because there must be a flip-side: a yin to the yang.
So, what level of involvement does TEXXI need to have with the authorities to proceed with it’s business plan at any time? An appropriate legal basis was put together by a barrister, our then legal director, at the time of inception ; put simply it cleared us for activity without any necessary involvement of the authority in the UK. Normally, because the authority has become the ‘mother‘ of the ecosystem, we have pursued a letter, if not of endorsement, then of clearance. The degree to which this is obtained has varied because any new addition to the family could cause disruption among the other members: ‘groundings’ might even be required at a future date. Any tendency to a lack of creativity by any party, as mentioned earlier, might lead to fisticuffs on the street : if you doubt me then sit around a taxi rank and observe the goings-on. We are talking here of the drivers rather than anything else, although depending on the time of day others might join in. Concerns about putting a TEXXI meeting point near a taxi rank and in the thick of the action, where it needs to be in some locales, arise from this analysis.
[Taxi Queue vs. TEXXI Queue: click to enlarge]
Unfortunately, mother is also rather busy and requires a legion of nannies to administer her affairs. If the children can start to look after themselves a bit then mother would no longer require as many nannies ; so the nannies must get to work and look busy. Whilst mother has also developed some sophisticated parenting skills over the years, her young nannies have had less time to do so. A tendency to mollycoddle with rules will cause mother problems at a later date when the super-set ecosystem needs to become more fluidto balance the books*6
In my experience, forms of transport have more rules and regulations than anything I have been involved in. An aficionado on the subject might be able to report how it actually compares. Although, I have previously been more familiar with the faster flowing technology industry models, which are not so locale dependent, don’t have so many ‘bodies on the ground’ and are more remote, at least for now. It might be interesting to make the brief observation that reasonably creative, but disinterested and minimal rules from afar, are sometimes looked upon with fond memories by those who have to tolerate overly fussy, clumsy rules from proximate and interested parties. Admittedly, there are advantages and disadvantages to each. There also seems to be comparatively much more passion within this transport ecosystem and maybe oddly, the temporary sub-ecosystems: a transport debate could turn out to be one of the more lively events that one attends in a lifetime.
Now, I love my mother, but I do not consult her on financial investments, foreign exchange option pricing, or how to navigate my way out of a seemingly impossible fiscal crisis caused by a lackadaisical concentration on issues that matter. She will not be able to do these things on our behalf. Regardless of apparent evidence, believe it or not, this last thing is about as difficult as putting on a hat*7 ; if we could just be enabled to get on with it.
An investor in TEXXI might ask to know why it is necessary to make a blog post demonstrating a clear understanding of this ecosystem? There is nothing new here after all, everybody understands these analogies and always has. Well, the licensed taxi firms will look to the authority for a firm lead ; this authority has the power to shut down their business or make life difficult for them at the very least. It is important to know how mother is thinking. To know how mother thinks, you must understand the ecosystem.
So, if mother is not showing any hostility at the outset, beyond a stern look and participating in a fairly harmless, domain marking exchange of quoting obscure rules and regulations to establish primacy, for which we are very thankful, then it would be nice if she were not giving only some of the children pocket money*8
In some cases buses receive subsidies. The provision of night buses is one of these cases. Although, given the current fiscal situation, some of these subsidies are being rescinded or reduced in quantity ; this would seem to be long overdue. On the face of it, a shared taxi with eight people in it would seem to be identical to a bus with eight people in it. The one possible exception being that the people will be moved door-to-door rather than point-to-point. Although, the taxi could agree to reduce it’s level of service to ensure exact equivalence for the purposes of our example.
I have heard, that a bus subsidy, or any ‘green’ subsidy for that matter, can be justified on grounds of economic externalities*9 If I were to break out from the necessary generalities of this blog post for a moment and champion TEXXI’s cause alone, politics is a dirty business after all, then I could point out that the authority could do much worse than deviate from it’s initial course by loaning this money to TEXXI. However, we don’t like the authorities becoming involved like this ; they don’t have any money anyway ; they would have to prescribe activity in what I perceive to be the wrong form ; we would have to insist on a pre-paid resource just to interface on the paperwork and it probably won’t benefit them much to manage it either: spending 50% to ensure the other 50% is spent ‘correctly’ probably isn’t the best way to conduct projects*10
So, we can look to Boris Johnson, the Mayor of London, and Eric Masaba, CEO of TEXXI, for an indication on how to proceed. Eric has suggested that the banks themselves provide a set of syndicated loans to each TEXXI locale and Barclays Bank already has form in working with Boris in the area of transport schemes. These will be loans: we won’t force the banks to take share ownership. Further, there are no guarantees. From bicycle schemes to transit exchanges, just because something worked in one place does not mean it will work in another. It is best to plan to be flexible. Why is this breaking out of generality? Because it champions TEXXI’s cause against other possible borrowers. TEXXI will borrow ‘on behalf’ of the authority and receive money as a private enterprise. TEXXI is a business that was explicitly designed to benefit from a required reordering of the countries finances whilst still allowing people to get about. This process was slowed by bailout activity, possibly forgivable for some of the reasons we discuss here, but which could have been shown in advance not to work. The investment field is sensitive and requires fairly uniform treatment. If someone is playing with the thermostat to solve problems elsewhere then they should be held accountable*11 for the other problems this causes. I am not sure about externalities myself, but if we are going to make advanced, arm-waving computations ….. now this is a justifiable externality. People can be satisfied that there has been no free lunch*12 ; in fact it cost several trillion dollars and much grinding and gnashing of teeth.
How about taking another approach? Why not just get on and implement TEXXI without ever mentioning an authority again? The public authority could decide to label TEXXI as a social networking application as related to transport. This would place it in a tangential ecosystem. After all, we highlighted the many social search and search elements from 2005 onwards and even put together a legal case in two countries which, under one valid interpretation, does not fall within any transport law whatsoever*13
And why not create an App within this established technology ecosystem? For some reason this word is now mentioned with a new found reverence since Apple released their App Store. Well, TEXXI has Apps and will have more Apps as part of what it does: maybe we could write one this afternoon. That doesn’t seem very interesting in isolation and is hardly very respectful of the well thought out operational and marketing concept that Eric Masaba has created. Alongside, one might add, an impressive understanding of the macro-drivers that will 
enable it to work. Even the slowest clown, should surely be able to work out that people who come up with such a level of analysis cannot have ignored other matters and it would be highly unlikely that some form of this sophistication would not be carried into most other areas. Nevertheless, this is not a pissing contest*14 and it may be that we are making the same mistake about others when interpreting some of the wider fiscal management decisions, the handling of the financial crisis and in other matters where we have thought to offer helpful suggestion. Yes, that is correct: that would make us clowns too. Moving on, this approach will not solve any wider problems in the slightest and finally, it will not provide us with a great new take on the world of transport because it is not where this technology ecosystem is going with respect to transport. And ultimately these systems will collide. We need to involve ourselves in the transport ecosystem fully for these reasons.*15
A good authority, adhering to a set of libertarian principles as much as possible, does not involve itself in private markets. Now, here are two additional points to make here. The first is that the authority is already involved in social networking transit applications in the form of the bus.*16 The second point to make is that competitors to TEXXI are surely approaching, if at a glacial pace, from the direction of the search type businesses: think Facebook, Google, Foursquare et al. and group purchase type businesses: think Groupon et al. These businesses mainly follow the vision of the Silicon Valley technology giants. Currently, they could be considered to be involved in this second ecosystem, a transnational ecosystem limited to the world of online ‘search’ or the ordering of information. Granted, it is possible that these transnational technology ecosystems could permanently solve the problems of driver fisticuffs on the taxi ranks with the addition of autonomous vehicles*17 If the vehicle takes a disliking to you, then that is your problem*18 However, there are some other issues to consider here.
Reacher Gilt
Ignoring for a moment, that these ecosystems could become very large without much thought paid to years of experience in building democratic institutions in an attempt to harness and control power: they will soon start to rub up against other ecosystems of all forms. And in fact have done already done so on plenty of occasions.
Continuing our examination, we note that the more dominant players in any ecosystem will start to monopolise any coercive powers that have been created in the form of rules. It is a mildly amusing phenomenon, due to the way power networks and markets collide in the real world*20, that those who seek rules and regulation as protection from economically powerful entities tramping all over them or behaving in a reckless manner, are likely ensuring that these same rules will be co-opted for use against them at a later date*21. With the barrier to entry and the barrier to comprehension raised and the ecosystem form solidifying around the rules, new entrants will find it very hard to bypass those selfsame entities with innovation. If that particular ecosystem becomes a dominant one in the higher set, then these members will start to have access to some really coercive power. The same, funnily enough , is true of taxation. There is a question as to whether it would have been better for the written manifestations of this power, that is the lesser rules and regulations, to be kept to a minimum in the first place. Ultimately, some democratic process must be available to allow for the possibility that after any power has been used and abused that it can be clawed back. However, this does not mean that the authority needs to be dabbling in all of the specifics.
Just as the High Court has been scrambling after an understanding of how to apply itself to personal online publishing, next time the authorities might want to be ahead of the game. If they really do not wish to involve themselves in what could be considered private arrangements then , given the trends of recent years, this would be a shock. I hope it remains true; it would be galling for a British entrepreneur to watch them respond only visibly at a later date, when they could have so easily responded before. Doubtless, many would be gushing about the new craze and lamenting that Britain is unable to achieve these successes whilst, yet again, failing to comprehend very much of anything about why it could not be achieved. Newsflash: it is quite capable of doing so.
At this time, I remain highly sceptical as to the eventual lack of involvement. Those people who are advocates of discussing things first need to address why it is that those who don’t, but who are awarded financial power and who end up crashing in and settling out their problems with post-facto compensation*19 are the ones that seem to succeed. I can tell you from experience that it is not good enough to simply blame the private corporation big-guns. For to discuss something of this type it seems, is to see nothing occur at all.
So, what do we like to see from the authorities both nationally and more specifically in the various regions? They don’t need to involve themselves in markets where participants can do more on their own with encouragement, competition and the occasional reprimand. The preference is for an approach of keeping order with effortful effortlessness and by reducing expectation of involvement in every dispute or discomfort. A warm welcome would be nice; a significant level of respect for the fact that maybe we have calculated the externalities that will be forced back into their closeted and protected world with much greater acuity than they have; a level of respect for a different way of doing things that is equally valid; a willingness to keep the super-set ecosystem fluid; a recognition they will respond in a firefighting fashion later anyway whether they like it or not; for them to notice that TEXXI is an extensively reasoned enterprise, regardless of whether it is entirely correct or follows their way of reasoning and doing things all the time. And nationally to broker major finance deals, which never seems to be a problem when the inclination takes them , to compensate for other distorting activity. For our part, we can recognise that they may have been right all along. It is possible that not much needs to change, or not in this particular way. Whether or not trying something a little different would actually cost the authority very much I don’t know. If they are wrong then they will be awarded plenty of time to contemplate on what they could have done differently: shoulda, woulda, coulda.
Finally, you will note that most of my analysis concerning how these ecosystems form and behave within a democracy is not evidence based. It is assembled from personal thoughts and observations, both of the real world and of technology systems ; you are therefore free to dismiss it if you have not done so already. This is worth highlighting, because the results of depending on mythology and illusion can be serious. I will finish this post by asking a question ; what do you think?
Notes
*1 -
*2 Caution: if you extend the frictionless model (the angel analogy) to the friction model to try and understand something further about what is going on, then you need to be aware that this implies that pretty soon you will be searching for a universal definition of attractive. Of course, no such definition can be arrived at. Some might say that this should be strongly avoided also.
*3 Naturally coalesced , as used here, is a euphemism for violent bloody wars fought over hundreds of years.
*4 A diplomat’s ‘essential to manage commodity resource’ for the long term in foreign lands, can become an ecosystem ‘super’ entrepreneur’s ‘need 50% less of that’ in ten minutes. Well, this is possibly exaggerated, but proponents of public choice theory have a strong point regarding other factors that might be in play here.
*6 One issue with doing everything by central planning and negotiation and avoiding more free-market competition in a wider set of areas, is that everybody can feel they have an opinion that is equal to everyone else in the design of that particular system. The first thing that will be discussed and negotiated away is an understanding of whether that system can support itself. As this continues over time, there will be less and less understanding of whether any individual system supports itself, but the cost will have to go somewhere. It doesn’t disappear. People can also feel warm and fuzzy in their protective layer of institutions, credentials and structured careers. However, what this is far from good at doing is engendering a real understanding and curiosity at the individual level, not only of standard business and costs , but more importantly of macro-drivers, trends and other things of this nature. Essentially, a wider understanding of why things are the way they are. Because these cannot be avoided. Externalities will be generated on third parties, based on our activity, by those who manage things on our behalf (or fail to manage them, as we found out in the recent financial crisis). Some might observe: “An opinion is important, but costs nothing to give.” Actually, it can cost quite a bit ; just not upfront. Throw out an opinion to someone without understanding what your personal cost basis is and you might find out you didn’t really want to make the comment. If you understand the basis, maybe you still throw out the opinion, but this is a more informed position. Those blaming lightly regulated free-markets for the financial crisis, might like to explain in the same breath: why they thought house prices, including the price of their house(s), could rise several tens of percent in a few years and that this was not a problem? This doesn’t mean you need to do everybody’s job after a tiring day doing your own, but you cannot, in the end, assign away this responsibility and expect not to incur consequences. And no amount of regulation would achieve the outcome. Hint: by the time you are marching, it is too late. Right OK, lecture at an end. What time is Location, Location, Location on the box?
*7 Blackadder: ”I was merely pointing out that sneaking aristocrats out from under the noses of French Revolutionaries is about as difficult as putting on a hat!” via http://www.imdb.com/title/tt0526725/quotes
*8 Even worse, some siblings are having to work and contribute to a pocket money pot that is then distributed as mother decides. If anybody has attempted that system in their family at any time then I would be interested to see how it worked out. Although, coming from a science and engineering background, I do understand that fundamental forces which do not appear at the micro-level can start to appear at the macro-level. For example, Erik Verlinde is a theoretical physicist who holds a theory that gravity does not exist as a fundamental force at a microscopic level, but very obviously seems to do so at a macroscopic level: that is the nature of complex systems. So, it is not always possible to imply how a large scale system will work from a small scale demonstration.
*9 SOCIAL COST = PRIVATE COST + EXTERNALITY via http://tutor2u.net/economics/content/topics/externalities/what_are_externalities.htm
*10 “They Meant Well: Government Project Disasters” http://www.amazon.com/gp/product/0255366019/ref=cm_li_v_cd_d?tag=linkedin-20
*11 This is the second reference to Eric Verlinde’s theory of gravity in this post. In this case we note the equivalence to the laws of thermodynamics and temperature differentials or of the gravitational attraction of denser volumes of matter. And why not throw in yet one more way of trying to convey this? If you support the investment returns of any subset of a set of possible investments over the whole set, either directly or indirectly, then you will cause money to flow away from the excluded members.
*12 “is a popular adage communicating the idea that it is impossible to get something for nothing”: http://en.wikipedia.org/wiki/There_ain’t_no_such_thing_as_a_free_lunch
*13 The basics of the argument here is simply that TEXXI is a social networking tool for the purposes of placing people in groups. These groups happen to be suitable for moving these people in one vehicle due to the information people contributed. The taxi firm is then provided electronic apparatus (applications), that could be classed as being similar to a phone or a despatch system. This will provide them the information they require for a booking. It is important that the taxi firm accepts the booking because there are various rules and regulations that cover this process. A similar argument, and careful restriction on activity, covers the promotions teams for activity against taxi touting ( Criminal Justice and Public Order Act 1994). However, if an ecosystem member doesn’t like something, you can bet they will kick up a fuss at some point and cause a pointless challenge. At a very minimum it will give a focal point to grumblings. Certainly, they will try to influence the authority with it. When it comes to these types of matters, free-marketeers have a strong point about the law remaining as silent as possible.
*14 If we were to consider an analogy to the foreign exchange business for a moment, we would say: to be really successful you cannot have your exotic options risk control (despatch system for TEXXI grouped trips) separate from your vanilla options risk control (despatch system for standard taxi trips) and do high quality volume business with the necessary settlement quality to attract customers. It should be obvious what the settlement side of the business is in this case ; a much higher volume of lower size transactions are the order of the day.
*15 On the subject of the law trying to remain as silent on unessential matters as possible ; if you are going to have a pissing contest then do it against the wheel of your hackney carriage (or maybe not) . This Commons debate from 17 th July 1963 is interesting : “In addition, there are quite a few amusing provisions which remain on the Statute Book, and which, incidentally, after I had given notice to introduce the Bill, I saw referred to in an interesting book, “Taxi”, by a writer called Levinson. He says, for example: I think it was a glaring omission on the part of the Home Office lawyers not to have made ample provision for a cab driver in that respect.
meaning that he had, by nature, to relieve himself.
But perhaps, I’m wrong. Some of the older taxi-drivers swear that somewhere tucked away in one of the Hackney Carriage Acts is a regulation that allows a taxi driver to urinate against his cab. There are different schools of thought is to how this should be done. The Home Office can be very concise about these things. Some taxi-drivers say that if is legally permissible to urinate against the nearside of a taxi and others say that it is an offence to urinate anywhere except against the spare wheel.
That is among the other regulations.”
Others say it is in bye-laws of various kinds. This possible myth comes up many times. It is of interest that the matter is not clearer. Putting a five year expiry on some of these minor rules and regulations could be a good idea, with a provision that they cannot be extended unless ‘fully debated’. In the age of computers this should be easy to manage. Five is chosen arbitrarily. I am sure somebody would find a way around this however.
*16 A moment of pantomime with the reader? oh, no they’re not …. oh, yes they are. They are. Think it through.
*17 “Google tests cars that drive themselves” via http://www.bbc.co.uk/news/technology-11508351?utm_source=twitterfeed&utm_medium=twitter
*18 “All Watched Over by Machines of Loving Grace”, a series of short films by Adam Curtis : http://www.bbc.co.uk/programmes/b011lvb9
*19 “Privacy Policy Attorney | FTC & Google Set to Settle Privacy Policy Claims” via http://tcattorney.typepad.com/contracts/2011/04/ftc-and-google-set-to-settle-privacy-policy-claims.html
*20 Power: we don’t have time to write a treatise. So, here we go, a rapid 101 type aide memoire for what we all already know:
I have some money. I choose how to spend my money. If I am prepared to spend more money than someone else on something that I want or need then, if there is only one of that thing, I will deprive the other person of it. This power is a power of deprivation. In a sound money system and with a flow of money based on skills, efforts , fitness of product or commodity and with plentiful opportunities, the power might also be described more attractively as one of limited power through choice. A store of this power is called capital. That is theory. In reality none of this can be ‘fair’. Attempting to make it entirely fair is an error. Some refer to this as economic power. The money is flowing around a human social network. People introduce many other factors into how they allocate their money. This could be why some sub-networks of people retain economic power and others never attain it. In general, people like money. It allows them to do things. A legislator or rule maker likes money to one degree or another. Rules are things you must follow or have damage done to you: your reputation damaged by a very powerful root certifier (criminal conviction) and possibly your liberty curtailed. This is the more sophisticated version of being beaten with a baseball bat. You could still be beaten with a baseball bat, or worse, because not all coercive power and the effects of it, pass through institutions. In some places much less coercive power is controlled through institutions than in others. Investigation, interpretation and enforcement are nodes in the process of institutional coercion. The law should be evenly applied. This is the theory. Real coercive power still sits locked away into the human social network which controls the nodes of all processes. Power can flow for many reasons: externalities (meaning that a lever of negotiation is not what it was) , negotiation, favours, and so on. Access to the significant, and scary, instruments of power which become accumulated to larger social networks (often countries), may or may not occur through institutions, which can slow and diminish the power of an individual or group in favour of others, if they do not comply with many sensible rules. And ensures that coercive power to all levels is executed based on a clear set of rules: The Rule of Law. A store of this power is often called political capital. People with political capital still like capital. They also like to borrow capital because it can, at least temporarily, buy them some more political capital. If they borrow too much, then they will pass some power to those who provided the capital. People with capital like political capital. Sometimes rules appear by a strange process of transference: a rule that seems to benefit someone with a lot of capital, but for which no capital was transferred, will appear. This strange process repeats itself in reverse for the expenditure of political capital. This is because they like to hang out together, but do not like to be seen together, which is a paradox. One man, one vote can help to ensure that those who have access to the instruments of power through institutions need enough of this type of capital to retain their total levels of political capital. Phew! That got that out of the way. Disclaimer: I said this wasn’t a treatise.
*21 It is a pity that regulation insisted on the use of the credit rating agencies in the first place. This may have been to avoid people investing money recklessly, being ‘ripped off’ and also to steer people in the direction of specific investments by vested interests; one effect being that people had to think less (remember how bad an idea we just said that was). The CDS market, now considered to be an uncontrolled enemy by some, showed these problems in a more timely fashion. Although, now we have arrived at this point conversely, there are only two or three points to politically control (unless your paper is to be marked by someone else ; by this I mean another country).
Essay: published version 1.1
Matthew Burden is the COO and co-founder of TEXXI. To view his full LinkedIn business profile please go to the Contact TEXXI page.
