Personal productivity and the social networks

Date:       27 Aug 13
By:           Frank Gue, B.Sc., MBA, P.Eng.,
                Burlington, ON Canada L7R 2B5
To:          Editors, The Economist
Re:          “Net gains and losses”, Aug. 17
 

Dear Editors:

 
Of course the Internet has not resulted in a net improvement in productivitybecause it has been taken over by Internetrivia.
 
Anything that consumes two to five hours per day per citizen, much of which is NVA, will destroy both production and productivity.
 
Further, the Internet’s collateral damage includes:
 
*  distracted driving is now Ontario’s #1 cause of auto fatalities in Ontario
*  children do not stick their noses out the door to play most days
*  adults arrive at work exhausted, having spent hours of their supposed time off on employer’s business
*  the Internet is a big contributor to the obesity pandemic; it’s the Couch Potato Syndrome x 10
 
Some of us saw it coming and resolutely avoided being Linkedin or Facebooked or Whatevered.  I, personally, just don’t have the time.  Internet banking, factory scheduling, e-mail, Christmas greetings, etc. fine.  Most else, simple NVA.
 
Cheers,
 
F.

 

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Damping the economic oscillator

Date:     9 Sept 13

From:    Frank Gue, B.Sc., MBA, P.Eng.,

              2252 Joyce St., Burlington, ON L7R 2B5

To:         Editors, The Economist, London, UK

Re:         “Horns of a trilemma”, Aug  31

 

Dear Editors:

 

“Footloose capital generates bubbles [and] crises,” you say.

 

Correct; and one root cause is the seldom-acknowledged difference between Value Added (VA) and No Value Added (NVA) economic activity, especially by High Frequency, NVA Traders (HFTs).

 

Financial transactions outnumber real-goods transactions by hundreds to one; and an increasing proportion of these transactions are “hot money” movements by HFTs who are pressing the IT community to shave more microseconds off their money transfer times.  It is not credible that microsecond dwell times of trillions of dollars of hot money constitute a VA element of the economy, when authentically VA investment in factories, farms, and mines has a dwell time of years.

 

In the apt electronic-engineering analogue of boom-bust, we suppress unwanted oscillation with negative (counter-cyclical) feedback.  This attacks all three pro-cyclical elements of the boom-bust; feedback, amplification, and time phasing.

 

Now: Which of these three can we use to damp boom-bust? Devices like capital controls tend toward unintended consequences, bureaucratic and political mismanagement, and distortion of desirable, VA trade in real-goods and services.  Increases in capitalization reduce amplification and are already, slowly and in the face of many bankers’ reluctance, being imposed (anyone for 25%?  50%?).  Some way of derailing the feedback paths seems quite impractical in the light of our fabulously capable communications systems.

 

An effective, little recognized and less used device is to disrupt the time phasing for the HFTs by simply delaying transactions.  Perhaps the Chinese are still doing this.  VA investors would grumble but understand the reasons; their VA work takes months or years to set up anyway, so a day or two is neither here nor there.  HFTs would see their asset turnovers, upon which their return on investment depends, greatly reduced; hopefully most would go out of business.  The loss of jobs and reductions in GDPs of which we are warned would be the best of kind of creative destruction, since their jobs are NVA made-work done with Monopoly® money.  A major source of public dissatisfaction, the often-vast difference between the personal earnings of honest VA workers and those of NVA HFTs, would be reduced.  Much public good would result from the simple tactic of delaying capital flows.

 

Cheers,

 

F.