The Internet, Government Hyper-regulation, and 0% Interest Rates

I was thinking this morning about all the large changes I’ve seen over the past 10 years or so. And there were three main differences I could discern.

  1. Technological: The rise of the internet.
  2. Legal: Government hyper-regulation (e.g. smoking bans)
  3. Economic: Zero interest rates.

Might these events be connected? If so, what connects them?

I’ll start with economics and zero interest rates. And I’ll use Idle Theory as the connecting idea.

Most people think of economies as making and distributing physical stuff: cars, houses, carpets, clothes, food, music, etc, with economic growth meaning Having More Stuff. But in Idle Theory an economy is seen primarily as something that reduces human work, and increases human idleness. All the technological innovations throughout history, starting with the flint axe and the wheel and the candle, and continuing with steam engines and aircraft and satellites and computers, have really only ever served to reduce human labour, and increase human idleness. Economic growth isn’t really growth in the amount of stuff we’ve got, but growth in idleness. Economic growth means life gets easier. But it also means that there’s a maximum degree of idleness that can be attained: 100% or perfect idleness, when nobody has to do anything in order to survive, and further growth is impossible.

In normal historical times (i.e. the past 10,000 years) economic growth has been painfully slow, but with the great burst of technological innovation that began with the industrial revolution of the last few centuries, economic growth has accelerated. And interest rates very roughly measure the economic growth rate, the rate of increase in idleness. If bank interest rates are high, depositors will keep their cash in banks. And if they’re low, they’ll invest their money in profitable, idleness-increasing enterprises – cars, computers, roads, etc – where they can get a better return. So interest rates reflect underlying growth rates.

But for the last 10 years we’ve had bank interest rates at 0%, which ought to have stimulated new enterprises, but seems not to have done so. Why’s that? And one possibility is that we’ve begun to approach 100% idleness, and it’s getting more and more difficult to increase idleness further. The real underlying economic growth rate is approaching zero. And that’s why we’ve got zero interest rates.

Now onto the internet.

Economic growth is driven by technological innovation – flint axes, wheels, steam engines, satellites, etc. And what has been the latest big human technological innovation? The internet.

The internet has brought about a communications revolution. 30 years ago, if I’d wanted to speak for an hour with somebody in Boston from my home in England, I could have done it, but it would have been very expensive. I can’t remember what international call rates were back then, but I’d guess that an hour long phone call to Boston would have cost several hundred pounds.

But now I can not only talk to Emily in Boston for hours, but I can also see her, and it costs me nothing at all. Or next to nothing at all. And I can also store videos of these conversations on YouTube for nothing at all as well. Furthermore I can buy stuff online on the internet. Just yesterday I bought a meerschaum pipe, which will arrive in a few days time. The internet is changing the way trade is conducted. Do we need shops and stores any more? It’s changing international relations (or at least Anglo-Bostonian international relations). And it’s changing the way news media operate, as more and more news is disseminated instantly all over the world, making local news organisations like the New York Times or the London Times redundant. Do we need newspapers any more? And it’s changing the way education is being done: I can now watch Richard Feynman lecturing on Quantum Mechanics. Do we need schools and universities any more?

We’ve now got free global instant communication. And so at least in respect of communication technology we’ve achieved near-perfect idleness, in ways we haven’t yet managed with transportation and most other industries. So the internet has brought (and is still bringing) a very large step increase in idleness. And no further increase is possible.

And now onto government hyper-regulation.

Why are governments everywhere getting bigger and bigger? One possible explanation is that as social idleness rises, and fewer and fewer people are engaged in productive work (making stuff), more and more people become engaged in unproductive work in government (which makes next to nothing). As the economic engine becomes more efficient at freeing people from work, it can be taxed more and more heavily by government, and these government taxes are used to grow the government, as new departments of this and departments of that and ministries of X and Y and Z are added. I’m not sure, but I suspect that the British MI5 and MI6 are named after rooms 5 and 6 in the the Ministry of Information. A hundred years ago, room 5 of the Ministry of Information was probably occupied by a man called Carruthers who spent his days filling out the Times crossword. But now it’s got its own headquarters and even its own flashy website (which almost certainly means it needs its own web designers as part of its IT department). I can well imagine that it has thousands of employees. And the same is true of every other government department, both at national and local government level.

And what does government spend its time doing? It spends its time governing. And governing means watching and controlling and regulating. And so as government expands, there is more and more surveillance, and more and more rules and regulations. Five hundred years ago there was probably fewer than 1 person in 100 who worked in government. Now we seem to be heading towards a circumstance where 99 people in every 100 are working in government, and all of  them regulating the conduct of the one remaining person doing any useful, productive work.

And as government grows it always needs to find new things to regulate that nobody ever tried to regulate before. And so we have bans on smoking in pubs, and regulations on carbon dioxide in the atmosphere.

But all these multiplying rules and regulations don’t make life easier for people: they invariably make life harder for them. And as they make life harder for everyone, they stifle innovation. And as they stifle innovation, they slow and stall economic growth. In fact, they may even produce negative economic growth, and decreasing idleness. Just imagine what would happen if you had an idea for a new means of transportation that used a metal frame with a wheel at each end, and pedals to turn the back wheel via a chain. Do you think you’d get that one past Health and Safety regulations? Not a chance.

So here’s how it all ties together: The technological innovation of (among other things) the internet has resulted in a step increase in human idleness, and a corresponding step increase in the size of government and the scale of government regulation. The step increase in restrictive government legislation has actually exceeded the step increase in idleness (and freedom) brought by technological innovation. So that’s why we’re enjoying 0% interest rates, and will most likely soon be seeing negative interest rates.

What’s probably needed is technological innovation in government. At present the British people get one chance every 5 years or so to elect a new government (we’ve got one in two weeks time). So they effectively have no say in their government at all. But if, thanks to the internet, we no longer need shops, newspapers, schools or universities, why do we still need parliaments and congresses and senates? Why not have have e-parliaments and e-parties in which everyone can e-vote, and which is conducted as efficiently and minimally as online shopping? That way we might begin to reduce the size of government, and halt and reverse the tide of hyper-regulation, restore economic growth,and start to see positive interest rates again.

About Frank Davis

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18 Responses to The Internet, Government Hyper-regulation, and 0% Interest Rates

  1. Rose says:

    “But if, thanks to the internet, we no longer need shops, newspapers, schools or universities, why do we still need parliaments and congresses and senates?”


    You must admit we do pomp and ceremony very well.

  2. Dirk says:

    Somerset Maugham wrote: “Work? They work for work`s sake. They haven`t got the brains to realize that the only object of work is to obtain leisure.”

  3. Yvonne says:

    The Harrogate Agenda is a start,
    I think the ultimate aim is to have every tax, law etc put to a public vote rather like your e-vote.

  4. According to Chris Snowden’s twitter , UKIP have as expected sold out smokers. Seems Pat Nurse was right. Apparently also , again according to CS, UKIP want to shut the pubs at 23:00 and close bookmakers. Anyone still think that the future after Brexit is going to be bright for anyone but the Nanny State-istas?

    • Frank Davis says:

      So you prefer the EU smoking ban with its show trials for prominent offenders?

      Anyway, several reports have reached me now that UKIP’s former promise to introduce smoking rooms is now absent. It should be interesting to see by how much their vote will collapse.come 8 June.

      • So you prefer the EU smoking ban with its show trials for prominent offenders?
        Would I prefer a show trial under EU law to one under Post Brexit UK Law (because you can bet they’ll come in very soon after Brexit)? Very much so. May has made very clear that as soon as she can the Supreme Court will be brought into line, she has never forgiven them. At least a trial under EU law might mean there *may*, just *may*, be an effective appeal to the ECHR or whatever , in May’s Post Brexit Paradise there will be none. Which is what she has wanted all along.
        Funnily enough I recall warning Pat Nurse years back (here? Simon’s page?) , back when she was a bit of the Smoker Poster Girl for UKIP , that UKIP would shaft smokers the first chance they got. Knowing me, I probably used those very words.

      • smokingscot says:

        @ Frank

        Their manifesto reads like a hard line Tory job, very probably because Suzanne Evans is a died in the wool hard line Tory.

        The headline is the complete about face on pubs, as BD pointed out.

        However I believe this has more to do with crippling the very large pubs that can afford to stay open until 2 in the morning – and are associated with that business of binge drinking. Perhaps that’s to appease some in UKIP who operate smaller places and with minimum wages at £7.50 an hour, it’s simply not viable for them to employ shift staff.

        I’m not making any excuses for them, the party has been taken over by frustrated Tories and lost touch with their core supporters. And I would find it very difficult to vote for them simply because of their policies on EU nationals (those in before 23 June 2016 are okay, those who entered after that date have no rights). Nor immigration (one in, one out).

        Our beef is NOT with EU citizens – and I will not have some desperate bunch try to hijack that underlying principle. Nor will I support them on immigration simply because we the UK have 900,000 people living in other EU countries.

        So no I do not want to see any influence that makes it difficult for us lot to retire where it’s less stressful and a whole lot warmer.

        Re their volte-face on smoking rooms and such, well I don’t believe any of us expected they’d form the next government – and during the time Carswell was the only UKIP MP, he did nothing, simply because it would have been doomed to failure.

        The party has twisted and turned a lot since the referendum – and I suspect their internal squabbles were one reason why Farage quit his role. But Banks has left the party as well and as soon as the deal’s struck with Brussels all the UKIP MEPs are out.

        Both of them know perfectly well the effect of the smoker vote, so I wouldn’t bet against them forming another party – and this time they’ll know to avoid escapees from other parties.

  5. C.F. Apollyon says:

    “That way we might begin to reduce the size of government, and halt and reverse the tide of hyper-regulation, restore economic growth,and start to see positive interest rates again.”

    Hmmmm….beginning(s), reduction(s), restoration(s) and reversal(s)…all in the name of restoring a balance to a perspective, meaning “an end.” Sounds like business as usual to me.

    Cancer eh? Maybe the notion of growth and our notions of this notion are wrong? Sometimes growth/a growth/growing is not such a great thing. I recall getting an erection on a bus ride into work one day, and no matter how hard (har) I tried, it would not go down…meaning, at some point (har) I was going to have to stand up (har) and get off (har) the bus, walking by seated passengers with an unruly tent-pole doing battle with my zipper. I was wearing dress-slacks since I worked in US Customs at the airport at the time, so my boner was very….prominent.

    Yep…we appear to be well on our way to making “fewer and fewer people who are engaged in productive work (making stuff)” – I paraphrased you there
    But Hugo had an interesting article this week about “junk”…and more specifically…junkyards. Government can and does work themselves out of work, they just tend not to notice. And even when they do, they are gonna find another way to do the same thing via the non-represented that somehow got missed when everyone else was being catered to. Gee, I wonder how that happens? ;-)

    I dunno…lotta themes here and there about doing the best we can with what we have. I dunno who in the fuck ever really knows “what they have when they have it”…but I would say such a revelation would be a blessing, since “having” tends to be tempered with time in the “you never really know what you have until it’s gone” kinds of thinking within the herd. That’s bullshit.
    Innovation does not imply growth, nor reduction(s), nor anything else other than perspective and perspectives within the timeframe of time in which it spawns.
    That’s just my thinking tho.

    ^Pixies – Gigantic^

    • Frank Davis says:

      no matter how hard (har) I tried, it would not go down…meaning, at some point (har) I was going to have to stand up (har) and get off (har) the bus

      If you could’ve managed to think about Deborah Arnott for a minute or two, it would’ve subsided in no time. And might not have come back up for a week or two.

      • C.F. Apollyon says:

        I was twenty at the time, so I doubt it. Plus I have a thing for older women…so…yeah. (I was dating a 36 year old woman at the time)

        I have no idea who she/Deborah Arnott is, but I just looked her up on Google, and there are several. The anti-smoking one has two children, so I guess she likes to fuck. We have at least that in common. /shrug

        Dunno. I find it difficult to hate anyone regardless of how much they may hate me, and I tend to like those with whom I disagree and/or disagree with me, just as much as I like those who I agree with and/or agree with me. Prolly because I do not understand the benefit of neither construction nor destruction without their associated polar opposite coexisting in the same space and spaces. /I shrug again

        Today’s article is great read Frank. Thanks for it. :-)

  6. Clicky says:

  7. Frank Davis says:

    This is interesting.

    Foxy’s Tamarind Bar – Live Webcam
    Started streaming on 20 May 2017
    Live all day every day, from Foxy’s Tamarind Bar on Jost Van Dyke in the British Virgin Islands.

    I watched for about 10 minutes wondering if it was a No Smoking bar.. I couldn’t see any No Smoking signs. But I couldn’t see any ashtrays either. Nobody seemed to be smoking. But eventually one guy sat down at the bar and lit up.

    Jost Van Dyke is a small island about 2 km by 5 km at latitude 18.444748 degrees N,longitude 64.748524 degrees W. Richard Branson owns an island nearby. I suppose he must drop by from time to time.

  8. waltc says:

    What you’re talking about sounds like what Djilas, under Yugoslav communism, called The New Class– the bureaucrats and appratchiks who run everything for and by their own interests and just for the fun and the sake of running things. Staying busy. Exerting power. Maintaining elite perks. In the west, most begin as the sons and daughters of the upper middle class, go on to the ivy leagues and emerge with a sense of their own superiority. They don’t represent the people whom they look upon with contempt, they merely represent themselves

  9. smokingscot says:

    Just been to their site. It’s wide open on the seaward side – and built that way.

    It has a first floor – same setup.

    No idea what their security arrangements are for night time, oh and they have CCTV

  10. Joe L. says:

    Why do we still need parliaments and congresses and senates? Why not have have e-parliaments and e-parties in which everyone can e-vote, and which is conducted as efficiently and minimally as online shopping?

    With an e-system such as this (assuming it could be made secure and tamper-resistant), we could do away with elected representatives and political parties altogether. Our governments would become true democracies, where the entire population is allowed to vote on any and all issues.

    Not only would this system eliminate countless superfluous government jobs (and with them their excessive salaries and pensions), but it would also decimate lobbying and corruption.

    However, the catch-22 is that a systemic change like this would have to voted in by the very people it would be cutting out. Sadly, short of widespread rioting, it doesn’t stand a chance of happening.

    • Frank Davis says:

      And because it would be a true democracy, there would be the danger of a tyranny of the majority.. I think that this is why the US constitution has so many chacks and balances built into it.

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