Economic fallacies abound at the UN

The recent United Nations High Level Meeting on Wellbeing and Happiness has shown how widespread certain economic fallacies are among the great and the good. Of course we knew this before, but it gives me a special chill every time some high level world leader opens his or her mouth and says something like:

The GDP-led development model that compels boundless growth on a planet with limited resources no longer makes economic sense. Within its framework, there lies no solution to the economic, ecological, social and security crises that plague the world today and threaten to consume humanity.

That was the Prime Minister of Bhutan, but lots of people feel the same way. GDP, unreliable measure that it is, tells us very little about what is actually happening in the economy. The raw aggregate tells us PQ (nominal GDP: the price level multiplied by total output) from which economists and statesticians attempt to extract Q (real output or "real GDP") which is supposed to measure how much stuff is being traded in the economy.

First of all, one of the primary fallacies of modern day environmental movements is that there are limits to the size of the economy. To understand why this is a fallacy, let's think a bit about what economic growth means in real terms. Typically it means that more stuff is being traded, or that the value of the stuff being traded increases. Less valuable resources are converted into more valuable ones using energy and human ingenuity. The limiting factors that control how much value is added are a) the amount of energy available for that process and b) how ingenious the process and product are. Energy is always finite, but there are no known limits to human ingenuity. We can always make what we're making more efficiently, and we can always find a way to make it more useful. Computers are an almost perfect example of this. They keep getting cheaper and more powerful, with no end in sight. Once we reach the limits of elemental semiconductors, we'll just move on to something even faster more efficient and just better in every way. What that is remains to be seen, but graphene, optical chips and quantum computing are all watchwords for the near-computing-future.

The same reasoning applies to all things. They can always be made more cheaply, of higher quality and greater utility. That fact means there are no currently known practical upper limits to the economy. And I very much doubt there ever will be. GDP for its own sake is stupid, but if the market is allowed to function, there are no limits to GDP, no limits to personal wealth.

We also cannot run out of natural resources. Every now and again you will hear the doom-mongers say that we only have 20 years left of silver or whatever. That's nonsense. They seem to miss the fundamental fact that after silver (for example) has been mined it doesn't actually disappear, it is made into goods. We therefore cannot "run out" of it - if we ever reach a point where all practically exploitable mines have been exhausted, we will just recycle the silver we've already mined into the most useful forms. The price system will take care of that automatically. This applies to all rare resources and yes, that includes oil, coal and the rest of the non renewable energy resources. We genuinely can "run out" of them but when we do we'll just make more any way we can from raw materials using some other form of energy. It's already been done.

We desperately need an economy that serves and nurtures the wellbeing of all sentient beings on earth and human happiness that comes from living life in harmony with the natural world, with our communities and with our inner selves. We need an economy that will serve humanity, not enslave it.

If there's one sure way of making people poor, its denying them the market. Goods sold on the market are sold because they help people's wellbeing in some way. They help serve people. Whether that is a function of producing things or just being useful to people in itself, all things are sold because people want them, and people want them because they are useful. In economic parlance, they "give ease". The reason we do not live in harmony with the natural world, whatever that means, is because a) few naturally produced resources are useful in their totally natural form and b) if we did then most people would have to die, because farming is unnatural and the level of population the earth can sustain without agriculture is extremely low. Living in harmony with nature is living in slavery, because no matter how ingenious a plan it cannot be implemented without changing nature in some way. You cannot build a house without annexing some ground that could have been used by nature for plants. All of this is to say that humans are meant to be masters of nature, the Bible even says so. This does not mean that we may destroy it, of course, but we may certainly change it so that it better serves us. That's what we have been doing ever since we began to exist, and nothing will ever stop us doing it. Mastery of nature is what provides us with wellbeing in terms of medicine, easy labour, high food production, comfortable living and work spaces, pleasing entertainment. If you want to give that up and live like a savage again feel free, but don't complain if no one else does.

The idea that the economy enslaves us is, again, a common fallacy. I stated in a previous entry on money that we are not serving Mammon but other people. The very division of labour that provides such bounty would allow someone to work only a few hours a week for all the food he needs. If that same person wanted to live off nature he would be forced to work constantly just to stay alive.

Prime Minister Thinley concluded by reminding the gathering that “business as usual cannot go on and tinkering with the existing system will not do… we need a fundamental transformation”.

A fundamental transformation. Well, yes I'd like to see free markets everywhere. That would be a great fundamental transformation. Time to get the State out of the way of commerce so that resources can be exploited more efficiently. I wonder what sort of fundamental transformation he has in mind, and whether it will be popularly demanded or simply imposed by force.

Learning mathematics needn't be hard

I've been mulling for a while now about the factors that make some people like maths and some people hate it, for some people it comes easily, for others every step is a struggle. I have come to believe that nearly all people are capable of mathematical thinking, but that external factors affect how well they can put this into practice.

Consider the following: a 16 year old student will be very familiar with basic addition and subtraction. What would happen if you assigned 100 problems of this very easy difficulty? Would he get a perfect score? I very much doubt that he would. I have often observed that highly capable students are prone to "silly mistakes", nearly all of which are incorrect addition or subtraction. In the past I put this down to a feeling of ease or simplicity - the student doesn't properly respect the need for vigilance in these simple matters because the difficulty is trivial. They assume they they will not make any mistakes, even though they often do and that these mistakes are just as damaging to the final answer as forgetting how to solve quadratic equations.
Recently I have broadened this conception and done a little research which has been most enlightening. Before I give you my full theory, let's consider a different problem.

The same student as before is not at all familiar with matrices. Now imagine he were asked, without much theory, but just enough to satisfy the teacher that he "should know" how to do it, to find the matrix inverse of a 3x3 matrix and multiply it by the original to produce the 3x3 identity matrix. Most people would not be able to do that even if all the correct theory were right in front of them. You must slowly be intriduced to the fundamentals of matrix multiplication, the meaning of the determinant, indentity matrix, matrix inverse and so on, and at that point he may be asked to combine all those pieces of knowlege to solve this particular problem. This is a perfect case of "too hard" - the problem is tractable but too much is expected of the student. He doesn't have the necessary framework and to ask him to develop the framework as he is answering the question will result in frustration, distraction, boredom and, if the task is difficult enough, the student will give up.

Now the third, "Goldilocks" case: the same student, having knowlege of trigonometry, is asked to determine the volume of, say, a tetrahedron in which the sides are length l. The student knows everything necessary to complete the problem, but has to apply it in a way he may not have done previously. He feels energised and confident that he can solve the problem, and does not become bored or frustrated but solves the problem flawlessly.

If you hate mathemathics the third scenario may seem remote or unrealistic, but I hope that what is to come will change your mind.

What struck me when I considered the above three situations is that it is very similar to a curve I had seen before - one to which I linked on this very blog. If you scroll down in that PDF you will see a curve that shows the relationship between speed and concentration. As you can see at low speeds performance is low, and it increases with speed up to a point, after which it declines again. The fundamental idea has been known in Psychology for about a century and is called the Yerkes-Dodson law, after the authors who developed the theory. Personally I believe that the curve should look like some sort of log-normal curve, but the essential thought is there. There is a zone of optimal stimulation or arousal (stop giggling) which produces the best performance, and movement of the stimulus either way will decrease performance. I believe the same is true for mathematics - if the problem is too easy or too hard, you won't learn much and your answers will often be wrong. If the problem is just the right difficulty, you will get the most correct answers and feel the most stimulated. You may even enjoy it. Believe it or not there are people who enjoy mathematics, and my model predicts that they will be skilled at knowing their "zone" and staying within it.

The general idea

So, now that we know this, how does it help us teach and learn mathematics? Firstly I am going to assume that the precise shape of the curve is immaterial. It is enough to know that the peak exists and that straying too far from it will impair learning.
The teacher's job, then, is to find out where the student's zone is and shepherd him in that direction. This is already practiced to a limited degree in the classroom - students who quickly grasp the current topic are placed in accelerated or advanced groups so that they don't get bored. Students who struggle with math are often placed in classes where the problems are easier. While there is some sense to this I believe it misguided. The assumption is that some students have a peak which is shifted more towards the "hard" end, and these are placed in the accelerated class, and some have a peak shifted to the "easy" end, and these are placed in the - well, let's face it - the dumbed down class.
However, this is not the teacher's only job. Current education models force the teacher to plough on with material even when significant portions of the class don't understand it. Separating the students by their ability is a bandaid fix for this situation. It would be far more beneficial if the underperforming students' peaks could be shifted to the right. I believe the way to accomplish that is not to teach them mathematics but logic and problem solving. These are mental tools essential for mathematical learning and yet few schools make any serious attempt to teach them. The results are obvious - some gifted students somehow end up with a decent logic and problem solving framework (perhaps those with high intelligence can simply work it out themselves without being taught?), and shoot ahead, while most of the others can barely add 2x + 2x.

To my mind this leads us back to Classical Education in which logic is taught before complex mathematics. Although most students cannot be redirected easily on to the different path that Classical Education takes, they can certainly be taught the basics of logic and problem solving required to learn and enjoy mathematics.

There's that unicorn again ...

Last time I found something totally rediculous written by an MMT theorist I remarked on facebook: "Modern Monetary Theory: one minute everything makes sense, next minute a unicorn is driving down a marshmallow freeway in a gold-plated Lamborghini with triangular wheels."

I haven't yet gotten around to creating that wonderful image, but I did see something that made me think of it again:

Inflation is caused by aggregate demand growing faster than real output capacity.

This is typical of the rubbish MMT comes up with. There is a grain of truth, but stated as it is it has no bearing on reality. It is impossible for "aggregate demand" to grow faster than "real output" in the truest sense, because everyone has to earn money before they can spend it. Saying demand grows faster than output is like saying that people are spending more money than they are earning. The only way that demand could possibly grow faster than output is if fiat money was being introduced into the system - then some people would be able to spend more money than they had earned. Who are those people? Well, they are the people who receive the new money first without producing anything in return for it - typically welfare recipients. In reality it's broader than that because new money goes everywhere bank loans and government spending go, so you cannot be definitive about it, but the fact remains that the government and banks are creating money, which is allowing some people, perhaps even most people, to spend more than they have "earned."
So the constant assertion by MMT theorists that expanding the money supply is not inflationary is simply false - it is inflationary and Friedman was quite correct when he said, "Inflation is always and everywhere a monetary phenomenon." It is a result of an increase in fiat money supplies. Government deficits are inflationary, even if bonds are issued. The only just way for a fiat money system to exist is under constant money supply conditions - no growth or reduction in the money supply at all by anyone.

MMT or Money Matters noT

I'm really very sorry to inflict this on my readers but I simply have to talk a little bit about this MMT stuff. I was reading an article today on BillyBlog and part of it nearly made me cough out my own uvula.

It starts well:

The essential idea is that the “money supply” in an “entrepreneurial economy” is demand-determined – as the demand for credit expands so does the money supply.

It goes on:

As credit is repaid the money supply shrinks. These flows are going on all the time and the stock measure we choose to call the money supply, say M3 (Currency plus bank current deposits of the private non-bank sector plus all other bank deposits from the private non-bank sector) is just an arbitrary reflection of the credit circuit.

OK, no problem with that so far ...

So the supply of money is determined endogenously by the level of GDP ...

Pardon my French but WHAT THE FUCK? MMT is constantly throwing up rubbish like this that just makes you think you've gone mad. He is arguing that the central bank does not determine the money supply, it is determined by the amount of credit lent out of banks. I actually have no beef with that as a statement of truth, I mean I hate it with a passion but it's still just as true. But the other real problem here is that he seems to be saying that the central bank does nothing that affects the money supply, which is plainly false and he must know it. The central bank determines interest rates for the entire economy, and thereby directly controls the amount of money that is lent out, since low interest rates will result in more lending (in the short term) and high interest rates less. The reason for that is that the interest rate it sets is fairly arbitrary, but whatever it is the economy can only support x number of dollars borrowed at some interest rate and it can support only fewer dollars lent out at a higher interest rate, since the only projects getting loans at the higher rate will be those that are forecast to provide a higher return, allowing the interest to be paid off. The actual number of dollars in bank reserves is irrelevant, only the interest rate those reserves produce is relevant.
So the money supply is determined by the interest rate, and the interest rate by the amount of bank reserves (rather, by the percentage change of those reserves), and the bank reserves are controlled by central bank ... so how is that not the central bank determining the money supply? Yeah it doesn't actually go, we need $5T this year, we'd better print it up, but it has every intention of changing the money supply when it changes interest rates, because it's targeting inflation, so why not call a spade a spade?

He also seems to assume that the amount of money in the economy is supposed to increase with GDP. This is one of the more pervasive myths of economics. The quantity theory of money says, broadly, that the money supply at one time t has some value x. It would have value x no matter what the total number of dollars actually was, since money's only function is to enable trade and it will serve that function whether a cent buys a paperclip or a nuclear power station. Decimalised currency can be divided into arbitrarily small units so we can always make change no matter what we buy. Bill seems to completely ignore that by assuming that the money supply should grow with the economy. In fact it does not have to, all that matters is how exactly it changes in size. If a market amount of labour is required to produce it then all is well. If the cost of producing it is way below its "value" in the economy, then the first spenders get by far the most benefit from its creation. The latter state is the current situation in every country on earth and is 90% of the reason we are in so much debt right now. Governments and banks create the money and they get the benefit.

Later he continues:

To repeat, bank lending is not “reserve constrained”. Banks lend to any credit worthy customer they can find and then worry about their reserve positions afterwards. If they are short of reserves (their reserve accounts have to be in positive balance each day and in some countries central banks require certain ratios to be maintained) then they borrow from each other in the interbank market or, ultimately, they will borrow from the central bank.

Again, no arguments there, but there is a little fly in the ointment called the interest rate. As I have argued previously, fewer people will be credit-worthy at a higher interest rate than at a lower one, so while banks are not technically reserve constrained they have to raise interest rates if their reserves are being persistently depleted, both in order to increase profits and to decrease the number of people making demands on their reserves. If they do not they will always have to borrow reserves and that is more expensive than having them in the form of demand deposits, their profits will fall relative to the other banks and they will be driven out of the market.

More than anything else the MMT school totally ignores the movement of real wealth in the economy, which is the whole point of the thing. Economics is not just about making the numbers work, it's about real people trading real things for real benefits. The MMT model places the central bank and the government firmly in control of the economy, and as such is really another form of statism, which all economic models are at some level apart from the laissez faire Austrian school. In a way it is the worst because it understands the full implications of state control of the money system. It encourages the state to use its power for good but never questions whether the state ought to have the power at all, which I believe with all my heart it should not.

We must bring back market money. It has been totally abandoned and we are blessed with the collapse of our economy as a result. We must bring back sound money, sane interest rates determined by the market, end fractional reserve banking forever, and abandon the idolatry of a government solution to every private problem.

You saw it here first

It seems very much as if a Japanese company has gone and taken my idea: you can now buy a Geiger counter attachment for your phone. If you recall just about a year ago I said that radiation detection could be part of an expanded sensor suite in smartphones.

Yeah it's not on board but close enough

Most people don't know but all camera phones are equipped to detect radiation already - their camera sensor. Another enterprising programmer uses this fact to turn the stock iPhone into a radiation detector - albeit not a very good one. Simply stick some black tape over the lens to block out the flood of visible light and bam, instant Geiger counter. In the article the software provider clearly likes my vision of smart phones too:

The team behind the app plans to develop a tool that uses data gathered from various users to generate a map showing radiation levels in different locations - hence the wiki prefix. With the ultimate vision of developing a platform that uses a network of devices - particularly smartphones - as a sensor network to measure various aspects of environmental quality, the company also has plans to develop apps to measure Wi-Fi waves, relay antenna waves, magnetic fields, earthquakes, greenhouse gases, UVA/UVB light, oxygen and temperature.

UV, check. Temperature, check. I like the way they think!

In other news, the Geneve Motor Show is showing off a few extended range electric cars, which you no doubt recall me praising back in November. I won't claim originality for that one, but really, the motor show has gone electric-mad. Infiniti paraded their sports coupe and even Tata waded in with a frankly astonishing effort. Naturally many other manufacturers are there with pure electric cars - no one will want them now guys - but frankly electric cars are a bith 19th century now. Petrol-electric, or for the pure-as-the-driven-snow eco mentalists, diesel-electric, will rule the road from now on. Batteries are too limiting and the fuel cell car is really still a pipe dream in terms of costs. We have petrol stations now, the technology works now, the price is within reach now. Hyrdogen has none out of three on that score, and pure electric? Don't make me laugh. No one with the choice of buying only one car will have an electric, since you can never go on a road trip as the Top Gear team showed with amusing results last year. In the words of Clarkson: "You just have to hope that [your girlfriend] doesn't live at the other end of the country."

STOP PRESS Scientist announces results of experiment without using a control group

A recent article in The Conversation has me wondering what Linda Weiss did to become a scientist. She argues that all economies benefit from the interaction of the State, and that some how the evidence for this is that all contries have experienced government interference in their economy:

State “guidance” of the economy, in the broadest sense, is the shared history of all countries that have successfully industrialised.
... It is not that one set of countries practise “free-market capitalism” while another set practise “state-guided capitalism”. It is closer to the truth to point to the differing ways in which all economies – whether emerging or advanced – draw on state involvement in guiding and shaping development. It is recognition of this point that is long overdue in mainstream economic and political thinking.
... it has been the rapid rise of China and other emerging giants, India and Brazil – the so-called BICs — that has done more to challenge the Washington Consensus idea that state activism is always inimical to economic prosperity.

So, all countries have experienced state guidance of industry, their industry has grown, and this means that state guidance is a good thing. That's like saying that all people die, people are a good thing, therefore death is a good thing. All cats have four legs; my dog has four legs, therefore my dog is a cat.

I hope that by now you are getting the picture: she has taken a sample of all cubes and says there's no such thing as a circle. You must have a control group in any experiment - in this case it would involve looking at economies that were not controlled by the state. Since no such economy has ever lasted long, at least not recently, we have no data on that front. However, the Adam Smith Institute has an article that examines the next best thing - plotting economic prosperity against state interference in the economy, and it tells a rather different story:
As you can see there is definitely a correlation there, and it doesn't come down in favour of state interference. I'm not going to call that a clinching argument - clearly there are other factors at play since for a freedom rating of 7, for example, there is a wide variance of GDP per capita, but it strongly supports the case that government interference is killing the economy, not helping it.

Can we get rid of Money?

No.


But in case you want more detail than that, let me start at the beginning: a site which has disappointed me far more than it promised: the conversation, specifically an article published yesterday about the possibilities of living in a Money-free society. I think I am just going to have to Fisk it. Full marks for being non-mainstream (I'm totally joking, this is fairly mainstream now: capitalism is what is on the margin these days), but I'm not convinced.

But the ten contributors to a new book I co-edited, Life Without Money: Building Fair and Sustainable Economies, offer strong, radical responses to defenders of capitalism and the so-called “free world”. They set out money-free models of community-based governance and collective sufficiency, arguing that production for trade contorts and destroys humane and natural values.

'Radical' and 'strong' responses, good, we need ideas. 'So called "free world"', good, we are definitely not in one nor is virtually anyone on the planet. OK money-free governance. Where to start, really. Firstly for the whole of human history the rise of civilised society has always been associated with the rise of money. We have been scrambling for a good form of it since, well, forever. The minute you want to stop growing wheat and start doing something else and trade that for your grain, you need money to know what things are worth and whether you're getting a good bargain. Production for trade creates peace, because it's cheaper to trade than to sieze - it's a better use of your time. Production for trade improves quality because all things are produced by experts, except the very cheapest, and even with them experts have helped make them as cheap as possible. Production for trade improves efficiency because everything has value.

They offer strategies for undercutting capitalism by refusing to deal in money, arguing that we need to replace monetary values and relationships by accounting directly in social and environmental values.

How do we know what these hypothetical values are, and how much value should be assigned? The price system automatically values things according to their scarcity, utility and so on - who is in charge of valuation in this money free society?

... capitalists and workers alike fear more and worse instability in global financial markets.

Ahhh yes, I do agree with that. Financial instability is a serious problem, and one that didn't exist when the market was allowed to provide money. Now that money is created on the whim of politicians and bankers, the market has little say on its production. That uncertainty alone is worth noting, but fractional reserve banking has done far more to ruin the market than any mere currency manipulation. By periodically expanding then contracting the money supply, fractional reserve banking gives rise to the business cycle, in other words it causes recessions. So they do have a bit of a point about this money system being no good, but I maintain that even with its evils it is billions of times better than having no money at all.

Even those of us who are not managers or workers are intimately integrated into the monetary system; everyone’s fortunes depend on satiating Mammon.

For the wealthy north, overconsumption is a very real sustainability-cum-economic challenge: if everyone decided to live modestly capitalism would disintegrate. Growth is capitalism’s achilles’ heel. While overconsumption in the north demands that we develop less materialistic ways of living, it is simply impossible to imagine either individual entrepreneurs or national GDP “degrowing” without a planned economy, at which point we have only two options.

That's not in fact true. People's fortunes depend on satiatin other people! Isn't that wonderful? A person's earnings are commensurate with how well they serve other people. There are exceptions of course, but this is the rule. What exactly is overconsumption? Throwing away newly made LCD TVs? Yeah, but no one does that. Built into the term overconsumption is an ideology that believes there can be too much wealth, that people can be too prosperous. That is simply false. There is no such thing as being too wealthy, there is only being too poor. Too poor to live. Everything above that level is wealth beyond the dreams of the 100 billions who have gone before us.

Materialism is another loaded term. We worship stuff. We see an ad, we buy its product. We are mindless consumers, endlessly throwing away our old stuff when we see the new. No one in the real world acts like that all the time. Do you? Are you therefore the only thinking person in the world where everyone else is a mindless spendaholic? Some people act like that some of the time about some things, but usually it is impossible for a product to become really popular unless it is really good. Consumers demand quality and they demand it cheap. They don't demand something that needs to be replaced every five minutes, and if a company tries to sell it to them they will fail.

Yes, we have a lot of stuff and yes, it's a lot more than many people have, but the fact that they don't have it is not our fault, and certainly not because we have stolen their reseources and there's nothing left for them. Africa is awash with natural resources, so is South America, Asia, the middle east. They have more stuff than they know how to use, but aren't as wealthy as us. The reason for that is simply that we have had a better currency system for longer, meaning we have had greater division of labour and therefore better experts making better stuff for cheaper, for hundreds of years, but most especially the last couple of centuries. Money makes us wealthy.

There's more. If everyone decided to live modestly there would be no significant difference. People would work, producing much higher quality goods that would be much more expensive. That's pretty much it. It does rather depend on your definition of modestly. If you mean giving stuff away then no, not everyone can do it or you're back to where you started. If you mean saving more and investing that will only grow the economy faster. If you simply mean working a lot less then people would find something else to do with their time.

There is the option of state-planned economies, which are out of favour among the left and right alike. The problem with planned economies is working out how everyone gets a say in what is produced. If distribution is more on the basis of need, it would appear money has little function. If we were to have less we would be very concerned to make sure we had enough and the kinds of things we feel we need, or badly want.

Production is not about what we need. We have filled every need by 9:30 AM. If we only produced what we needed we'd go home and, I dunno, probably just have quite a lot of sex all day. Actually, we wouldn't. We'd make other stuff - art, literature, science, travel, philosophy. Humans are made to produce! We produce, non-stop, all day. In the old days all we could do in a day was grow enough food to feed ourselves. Nowadays we can produce vastly more. If you sent everyone home after an hour's work (to pay their food bills), they'd start new companies and create new stuff because people don't like to be idle, they value their time and their labour, and they use it to improve their lives. So what would happen if you stopped people working at work is they'd go home and work. So if everyone's physical needs are met with an hour's labour, what are the rest of the hours for? They meet the needs of other people, and other people in turn meet their needs. How do they know what to do, what people want? The price system. The price system gives everyone a say in what they want, because if they want something they'll exchange some of their hard-earned for it, if not, they won't and no one can make them. That's why it's a free market. There is no other way to efficiently organise an economy, because there are too many variables. By reducing everyone's wants to one signal - the price - money serves the indispensable function of telling people what other people want. An enterprise is profitable if people want what it has, and it fails if they do not. There is no choice but to serve the customer.

On the other hand, non-market forms have the distinct benefit of offering individuals and neighbourhoods economic democracy.

As I was saying, price is the ultimate democracy. What somone is willing to pay for something is their vote. You cannot have prices without money.

But the economic infrastructure of a world in which we could all have a say in how we live our lives is sketched out in the final chapter of Life Without Money, which offers a model of a “compact society”. “Compact” because all the main relationships and structures would be based on legally enforceable voluntary agreements, rather than monetary contracts.
Instead of establishing tiny self-sufficient households, we’d work collectively, with a range of connected local households occupying a basic unit of a neighbourhood, the size of which would be flexible and dependent on the local ecology. Local collective sufficiency would be the key aim of every neighbourhood, sourcing materials for, and making, food, clothing and shelter as well as other basic needs, through appropriate technology.

Wow - by working together people can have more than if each worked by himself! If only we could apply that to the whole world, imagine what we could do! Or rather, forget what we ever though we couldn't do! We could conquer the galaxy! But how can we work together efficiently? I know, let's use something rare and long lasting to trade with. We could strike it into coins and call it - I dunno - Monay ... Monet ... Minno ... Money!! Some people wouldn't even have to farm for a living they could spend all their time inventing cool stuff to make our lives even better!!11@!@!!!!!!ONE

Of course, there are likely to be needs or wants that people could not source or create locally. Ideally, these would be obtained from a neighbouring area or through the least environmentally and socially expensive option available at the time.

Hmm yeah, good idea. Let's trade using a universal system of account. It so happens I already invented a name for it: Money (C) [TM]

Establishing and maintaining collective sufficiency would require every individual to work out what they would need over a year, assessing local potential, planning how to meet the needs listed, working out how surpluses might be generated, and negotiating with other units to fulfil their needs. The internet facilitates this kind of collective research, planning and negotiation, which would involve numerous compacts.

That sounds like a lot of hard work. How do you know what things are worth? No one can know everything! Oh, phew, they don't need to, they only need to know the price. Well that's a relief. Oh, wait, you want to do this without money accounting? Crap. Crap! CRAP!!!