- Where Cash Is King In Europe
How much cash do you have with you at the moment?
As Statista’s Martin Armstrong explains, the answer to this question will probably depend, not only on your bank balance, but also on the country in which you live.
As figures from the Access to Cash Review show, there are significant cultural differences in the use of cash in Europe.
You will find more infographics at Statista
In Greece and Spain, the vast majority of in-person purchases are made with cash – 88 and 87 percent respectively. While in Sweden, Denmark and the UK, most items are paid for digitally.
In the report, which focuses on the UK, despite the relatively low share of people relying on cash in their everyday lives, it was found that over 8 million adults – about 17 percent of the population – would struggle to cope in a cashless society.
- Could Brexit Trigger The Demise Of Sterling As A Reserve Currency? – Part Two
In part one of this series we looked briefly into the history of sterling crises that originated after the end of World War II.
Two important aspects were highlighted. The first is that over the past seventy years, a depletion of international sterling reserves has routinely coincided with exchange rate crises, whilst the second indicates that a slew of sterling downturns since 1945 have weakened substantially its role as a reserve currency.
We will now examine why Britain leaving the European Union through a ‘hard‘ Brexit may prove a harbinger for the first major sterling crisis of the 21st century.
In 2018 the media began publishing what mutated into incessant warnings about the dangers of leaving the EU with no withdrawal agreement. The majority were and continue to be focused on possible disruptions to food and medical supplies, the UK’s beleaguered car industry and the prospect of a Brexit induced recession.
What has not been given the same degree of analysis is the impact a no deal scenario could have on the position of sterling as a reserve currency. Ever since the post referendum decline of the pound, it generally only attracts attention if its value against the dollar rises significantly above daily fluctuations, or declines a percentage point or more amidst fears of a ‘disorderly‘ exit.
Let’s briefly summarise the few occasions where the pound’s reserve status has been called into question since 2016, as well as matters interconnected with the subject.
May 2016
A month before the referendum, ratings agency Standard and Poor’s issued a warning that sterling could cease to be a reserve currency if the UK left the EU. They also declared that Britain’s triple A credit rating could come under pressure. The line was that national governments might seek alternatives to the pound as a store of value should a leave vote materialise. As for why they could do this, a breakdown in existing trading arrangements, a depreciation of sterling and an increasing current account deficit were all cited as reasons by S&P.
July 2016
With S&P having stripped the UK of its triple A credit rating (as they suggested would happen following a leave vote), Reuters reporter Jamie McGeever penned an article which detailed how the decline of sterling since the referendum had so far been the biggest of any of the world’s four major currencies since the collapse of the Bretton Woods system in the early 1970s.
The day after the vote (June 24th) saw sterling’s value drop by 8%, marking the largest one day fall in the pound since the introduction of free-floating exchange rates following the collapse of Bretton Woods.
October 2016
Five months before Article 50 was invoked, Standard and Poor’s issued a new warning about the pound’s reserve status. Ravi Bhatia, the director of sovereign ratings for Britain, was reported by The Independent as saying a ‘hard‘ Brexit eventuality could jeopardise sterling’s reserve currency role. Bhatia summarised reserve status as countries having trust in a currency, with governments and traders content to hold assets in a particular denomination.
At the time of S&P’s latest intervention, the pound was down 17% against the dollar since June 2016.
S&P were at it again later in the month, with the Financial Times detailing that pronounced falls in sterling could end up ‘reducing confidence and eventually threaten its role as a global reserve currency.’ They added that sterling would no longer be considered a reserve currency by the S&P if its share of reserves dropped below 3%. They currently stand at 4.49%.
On top of this, S&P warned of further cuts to Britain’s credit rating should they ‘conclude that sterling will lose its status as a reserve currency or if public finances or GDP per capita weaken markedly beyond our current expectations‘.
November 2016
Reuters Jamie McGeever followed up his article from July 2016 by questioning the pound’s position in global foreign exchange reserves. Here, McGeever linked sterling’s role as a reserve currency to the UK’s current account deficit, which to this day remains one of the largest in the world. He pointed out that this particular deficit requires hundreds of billions of overseas capital inflows every year to balance Britain’s books. According to McGeever, central bank demand for sterling reserves are a vital and stable source of these inflows. He went on to report that the amount the UK needs to attract in order to balance its books is around £100 billion a year.
S&P’s fellow ratings agency Moody’s were credited by McGeever as warning about the danger of ‘substantial and persistent‘ capital outflows, and how this would raise serious doubts about the pound’s reserve status.
McGeever also quoted Brad Setser, a senior fellow at the Council on Foreign Relations and former economist at the U.S. treasury, as saying that a fall in reserve share to 3% would be sterling ‘punching a little below its weight‘.
August 2018
As no deal Brexit coverage gathered momentum in the press, an article again published by Reuters on sterling’s future as a reserve currency gained next to no attention. This time it was the turn of Bank of America Merrill Lynch (BAML), who made a connection between the UK leaving the EU with no withdrawal agreement and central banks selling the pound in response. BAML estimated that a 1% decline in sterling’s share of international reserves would equate to upwards of £100 billion of selling. This calculation was based on the pound’s average share of 3.6% of reserves since 1995. Should banks re-denominate their holdings in line with this long term average, the theory goes that this would point to over a £100 billion reduction in reserves.
BAML stressed that this potential scenario would be off the back of a no deal exit from the EU. ‘Central bank flows are an important source of flow which could determine whether sterling succumbs to a more protracted current account crisis‘.
December 2018
As demonstrated above, both Jamie McGeever at Reuters and Bank of America Merrill Lynch have touched on the subject of Britain’s current account deficit. Latest figures released in December showed that the deficit in the third quarter of 2018 was the highest in two years at £ – 26.5 billion (4.9% of GDP).
When you look at how this was interpreted within the financial media, the link back to sterling’s position as a reserve currency – although not raised directly – lingers in the background. The current account deficit has not only called into question its sustainability, but also whether foreign investors will continue to finance the deficit to the same level by purchasing UK assets after Brexit.
Other noteworthy data released at the same time as the current account numbers included a cut in investment by firms of 1.1% from July to September. This represented three consecutive quarters of cuts, the first time this has occurred since 2008-2009. Households were shown as net borrowers for the eighth straight quarter – the biggest stretch since the 1980s. Lastly, the UK’s household savings fell to 3.8%, the lowest on record.
Conclusions
Looking back on the EU referendum of 2016, my perspective is that the depreciation of sterling in the aftermath cannot be construed as a crisis. Before the result was confirmed, the pound was trading as high as $1.50. Once the reality of the leave vote had dawned, an initial sharp drop of 8% was followed by further declines leading to a low of $1.19 recorded in January 2017. In seven months, sterling had shed as much as 20% of its value (for a limited time at least).
The reason why this is not befitting of a crisis is due to global reserves of sterling remaining consistent throughout the period. Indeed, international reserves of the pound grew in 2018 amidst the rising uncertainty of the Brexit withdrawal process.
At no stage so far have the Bank of England acted to defend the currency from speculators or central banks adapting their compositions. Their initial reaction post referendum was to cut interest rates by 0.25% and expand quantitative easing by £60 billion.
Fifteen months later, with inflation running at over 3% and the value of sterling remaining suppressed, the BOE raised interest rates for the first time in a decade. They followed this up with another quarter point hike in August 2018.
It is logical to think that the impact of a ‘hard‘ Brexit on sterling would precipitate a far steeper decline than witnessed three years ago. Consider that the fall witnessed then was simply off the back of a referendum result. Nothing material had changed in the relationship between the UK and EU.
I believe it is also logical to surmise that in response to a renewed depreciation, not only would inflation pick up once more, but the Bank of England would defy conventional wisdom and raise interest rates. The bank themselves have indicated that the most likely ramifications of a no deal Brexit would be inflationary. They continue to state publicly that the response to such a scenario would likely be to tighten rather than loosen monetary policy.
However, this does not account for what would happen to global reserves of sterling. Historically, exchange rate crises have seen a depletion in reserves of the pound. Whereas inflationary pressures take time to feed through the system, a run on sterling can materialise in a matter of minutes. Therefore, it is conceivable that the Bank of England could raise interest rates in response to try and stabilise the currency, a measure entirely separate to their mandate of 2% inflation.
Allied to this measure would likely see the BOE convert foreign currency holdings into sterling to counteract international holders dumping the pound.
As documented in part one, the BOE hold close to $150 billion in foreign currency total reserves. Total reserve assets amount to around $180 billion. The majority of these assets are denominated in dollars and euros.
How sustained any selling could be is impossible to gauge at this stage, as is the scale of damage which may be inflicted on sterling reserves.
If warnings issued by Standard and Poor’s and Bank of America Merrill Lynch are taken at face value, the pound is in danger of diminishing to the level of no longer being a global reserve currency should a ‘disorderly‘ Brexit happen. Only if this does occur would we be able to assess the validity of their warnings.
Anyone who regularly follows communications emanating from national central banks, the IMF and the Bank for International Settlements will have seen a developing narrative of ‘money in the digital age‘ and how currencies in future could be provided. The combination of a possible ‘hard‘ Brexit and an escalation in the ‘trade war‘ between the United States and China may not only put sterling at risk, but also the role of the dollar as world reserve currency. Brexit is one strand of what I have suspected for some time is an attempt by globalists (think the IMF and the BIS) to administer institutional reforms in the manner of a currency framework, which would mean a realignment in currency compositions with the IMF’s Special Drawing Rights part of this process.
As ever, to achieve this scale of reform globalists would require sustained crises events to distract away from what are long held intentions. Will Brexit and actions stemming from the Trump administration prove to be to their benefit? 2019 will surely begin to answer that question.
- Yellow Vests Ransack Masonic Lodge
A group of Yellow Vest protesters ransacked a Masonic lodge in the French village of Tarbes during the 17th straight weekend of anti-government demonstrations, according to La Dépêche.
After around 450 protesters gathered in Tarbes, a small group split off around midnight – reportedly shouting “We’re going to be freemasons!” – as they threw rocks at the lodge and broke down the door of the secretive organization’s meeting place.
The group flipped over furniture and generally made a mess, however it does not appear they defaced any of the lodge’s wall hangings.
Four ceremonial swords were stolen, however they were later returned.
In a statement, the Grand Lodge of France condemned the “unspeakable acts that are part of a context of surreptitious threats and hate speech against Freemasons.”
French interior minister Christophe Castaner reacted over Twitter on Sunday, writing: “After the Jews, the Freemasons … When stupidity competes with intolerance the worst.”
- Is The Boeing 737 Max Crisis An Artificial Intelligence Event?
Authored by James Thompson via The Unz Review,
Conventional wisdom is that it is too early to speculate why in the past six months two Boeing 737 Max 8 planes have gone down shortly after take off, so if all that follows is wrong you will know it very quickly. Last night I predicted that the first withdrawals of the plane would happen within two days, and this morning China withdrew it. So far, so good. (Indonesia followed a few hours ago).
Why should I stick my neck out with further predictions?
First, because we must speculate the moment something goes wrong. It is natural, right and proper to note errors and try to correct them.(The authorities are always against “wild” speculation, and I would be in agreement with that if they had an a prior definition of wildness).
Second, because putting forward hypotheses may help others test them (if they are not already doing so).
Third, because if the hypotheses turn out to be wrong, it will indicate an error in reasoning, and will be an example worth studying in psychology, so often dourly drawn to human fallibility. Charmingly, an error in my reasoning might even illuminate an error that a pilot might make, if poorly trained, sleep-deprived and inattentive.
I think the problem is that the Boeing anti-stall patch MCAS is poorly configured for pilot use: it is not intuitive, and opaque in its consequences.
By the way of full disclosure, I have held my opinion since the first Lion Air crash in October, and ran it past a test pilot who, while not responsible for a single word here, did not argue against it. He suggested that MCAS characteristics should have been in a special directive and drawn to the attention of pilots.
I am normally a fan of Boeing. I have flown Boeing more than any other plane, and that might make me loyal to the brand. Even more powerfully, I thought they were correct to carry on with the joystick yoke, and that AirBus was wrong to drop it, simply because the position of the joystick is something visible to pilot and co-pilot, whereas the Airbus side stick does not show you at a glance how high the nose of the plane is pointing.
Pilots are bright people, but they must never be set a badly configured test item with tight time limits and potentially fatal outcomes.
The Air France 447 crash had several ingredients, but one was that the pilots of the Airbus A330-203 took too long to work out they were in a stall. In fact, that realization only hit them very shortly before they hit the ocean. Whatever the limitations of the crew (sleep deprived captain, uncertain co-pilot) they were blinded by a frozen air speed indicator, and an inability to set the right angle of attack for their airspeed.
For the industry, the first step was to fit better air speed indicators which were less likely to ice up. However, it was clear that better stall warning and protection was required.
Boeing had a problem with fitting larger and heavier engines to their tried and trusted 737 configuration, meaning that the engines had to be higher on the wing and a little forwards, and that made the 737 Max have different performance characteristics, which in turn led to the need for an anti-stall patch to be put into the control systems.
It is said that generals always fight the last war. Safety officials correct the last problem, as they must. However, sometimes a safety system has unintended consequences.
The key of the matter is that pilots fly normal 737s every day, and have internalized a mental model of how that plane operates. Pilots probably actually read manuals, and safety directives, and practice for rare events. However, I bet that what they know best is how a plane actually operates most of the time. (I am adjusting to a new car, same manufacturer and model as the last one, but the 9 years of habit are still often stronger than the manual-led actions required by the new configuration). When they fly a 737 Max there is a bit of software in the system which detects stall conditions and corrects them automatically. The pilots should know that, they should adjust to that, they should know that they must switch off that system if it seems to be getting in the way, but all that may be steps too far, when something so important is so opaque.
What is interesting is that in emergencies people rely on their most validated mental models: residents fleeing a burning building tend to go out their usual exits, not even the nearest or safest exit. Pilots are used to pulling the nose up and pushing it down, to adding power and to easing back on it, and when a system takes over some of those decisions, they need to know about it.
After Lion Air I believed that pilots had been warned about the system, but had not paid sufficient attention to its admittedly complicated characteristics, but now it is claimed that the system was not in the training manual anyway. It was deemed a safety system that pilots did not need to know about.
This farrago has an unintended consequence, in that it may be a warning about artificial intelligence. Boeing may have rated the correction factor as too simple to merit human attention, something required mainly to correct a small difference in pitch characteristics unlikely to be encountered in most commercial flying, which is kept as smooth as possible for passenger comfort.
It would be terrible if an apparently small change in automated safety systems designed to avoid a stall turned out have given us a rogue plane, killing us to make us safe.
- More Desperate Hong Kongers Are Living Illegally In Steel Shipping Containers
Though it recently entered correction territory following the longest streak of falling prices since 2016, Hong Kong’s housing market remains one of – if not the most – unaffordable in the world.
And as struggling locals look for somewhere – anywhere – to live for a relatively modest price, more are turning to an innovative, if illegal, solution. According to Bloomberg, the latest housing trend in the New Territories, a region of Hong Kong that is mostly wetlands, parks and mountains, is building illegal houses out of prefabricated steel boxes.
Locals call them container homes. And while they’re growing in popularity, almost all of them are illegal, having been built on land not zoned for housing, and/or without the government approval necessary to ensure it meets standards for ventilation and fire-safety.
After walking through a deserted plot of rural land on an unevenly paved road, Gilbert Wong arrives at a metal-fenced gate that looks like the entrance to a warehouse, or maybe a car park – ubiquitous in Hong Kong’s New Territories.
But behind this seemingly hostile facade is Wong’s humble home: a prefabricated steel box that looks a lot like a basic shipping container. Such dwellings, dubbed container homes, have become an increasingly popular option for residents squeezed out of the world’s least affordable property market.
The vast majority are also illegal.
“Of all the prefabricated homes in the style of a container that I have seen in ads or online, I can tell you 99.9 percent aren’t in compliance with the law,” said Vincent Ho, a managing director at surveying and property consultancy firm Freevision Ltd.
Estimating the number of container homes is difficult because they’re usually tucked away in far-flung areas across the territory, but orders for containers have doubled since 2016, with 40% built specifically for dwelling purposes, according to Ivan Chan, a director of portable building manufacturer Markbox. Chan’s company is producing about 200 containers for living every year. The most popular costs about $19,000 – roughly half of the down payment for an apartment.
The low-cost of container homes has attracted some government interest, with the city authority launching a project to build 90 legal container homes to be placed in the city’s poorest districts, where they will be a “stop-gap” option for people waiting for public housing.
But already, the average waiting time for the program – which was launched in 2012 – has more than doubled to five-and-a-half years.
Even middle-class Hong Kongers are opting to try the container home life, despite the longer commute times they face from living in more remote parts of the territory. And the downsides like leaks during severe weather.
Wong, 30, didn’t have a container home in mind when he and his girlfriend started to look for a place to live last year. But they quickly realized apartment rents were way out of their budget.
It took the couple about a month to settle on their current 19-square meter home that rents for HK$4,500 a month. To rent just one room of a similar size in a nearby apartment costs roughly 20 percent more than that.
The couple like the cheap cost and the air quality is better than on Hong Kong Island. There are downsides, however. Container homes aren’t built to withstand extreme weather, so when Typhoon Mangkhut hit last September, there were leaks. The remote location also means the couple spend more time, and money, commuting.
Wong said he didn’t ask whether the home was a legal residential property when he moved in, and doesn’t plan to. He admits there’s a chance the land it sits upon hasn’t been zoned for residential use.
But until circumstances change, Wong plans to stay put.
“Home prices will definitely remain high,” he said. “There’s a mentality among Hong Kong people that one must own an apartment, and that pushes up prices.”
And though the average home price fell more than 10% by the end of 2018 from its peak in August, sheer supply-demand dynamics suggest that the city will remain extremely unaffordable for the forseeable future, virtually guaranteeing a niche for the container home market.
- The Sharing Economy Was Always A Scam
Authored by Susie Cagle via OneZero.Medium.com,
‘Sharing’ was supposed to save us. Instead, it became a Trojan horse for a precarious economic future…
Founded in 2014, Omni is a startup that offers users the ability to store and rent their lesser-used stuff in the San Francisco Bay Area and Portland. Backed by roughly $40 million in venture capital, Omni proclaims on its website that they “believe in experiences over things, access over ownership, and living lighter rather than being weighed down by our possessions.”
If you’re in the Bay Area, you can currently rent a copy of The Life-Changing Magic of Tidying Up by Marie Kondo from “Lan” for the low price of $1 per day; “charles” is renting a small framed lithograph for $10 a day; and “Tom” is renting a copy of the film Friends With Benefits (68 percent on Rotten Tomatoes) on Blu-ray for just $2 a day. Those prices don’t include delivery and return fees for the Omni trucks traversing the city, which start at $1.99each way.
In 2016, Omni’s CEO and co-founder Tom McLeod said that “lending enables Omni members to put their ‘dormant’ belongings to good use in their community.” That same year, Fortune said Omni “could create a true ‘sharing economy.’” For a while, the tenets of the sharing economy were front and center in Omni’s model: It promised to activate underutilitized assets in order to sustain a healthier world and build community trust. In 2017, McLeod said, “We want to change behavior around ownership on the planet.”
Just three years later, those promises seem second to the pursuit of profit. In 2019, the Omni pitch can be summed up by the ads emblazoned on its delivery trucks: “Rent things from your neighbors, earn money when they rent from you!”
For years, the sharing economy was pitched as an altruistic form of capitalism — an answer to consumption run amok. Why own your own car or power tools or copies of The Life-Changing Magic of Tidying Up if each sat idle for most of its life? The sharing economy would let strangers around the world maximize the utility of every possession to the benefit of all.
In a 2010 TED Talk, sharing economy champion and author Rachel Botsman argued that the tech-enabled sharing economy could “mimic the ties that used to happen face to face but on a scale and in a way that has never been possible before.” Botsman quoted a New York Times piece in saying, “Sharing is to ownership what the iPod is to the eight track, what solar power is to the coal mine.” In 2013, Thomas Friedman proclaimed that Airbnb’s true innovation wasn’t its platform or its distributed business model: “It’s ‘trust.’” At a 2014 conference, Uber investor Shervin Pishevar said sharing was going to bring us back to a mythical bygone era of low-impact, communal village living.
More than 10 years since the dawn of the sharing economy, these promises sound painfully out of date. Why rent a DVD from your neighbor, or own a DVD at all, when you can stream your movies online? Why use Airbnb for a single room in your home when you can sublease an entire apartment and run a lucrative off-the-books hotel operation? Uber, Lyft, and Airbnb — startups that banked on the promises of the sharing economy — are now worth tens of billions, with plans go public. (Lyft filed for an IPO on March 1.) These companies and the pundits who hyped them have all but abandoned the sharing argument that gave this industry life and allowed it to skirt government regulations for years. Sharing was supposed to transform our world for the better. Instead, the only thing we’re sharing is the mess it left behind.
The first glimpses of the sharing economy emerged years before the term came into popular use. In 1995, Craigslist mainstreamed the direct donation, renting, and sale of everything from pets and furniture to apartments and homes. Starting in 2000, Zipcar let members rent cars for everyday errands and short trips with the express goal of taking more cars off the road. And CouchSurfing, launched as a nonprofit in 2004, suddenly turned every living room into a hostel. This first wave of sharing was eclectic and sometimes even profitable, but before the mass adoption of the smartphone, it failed to capture the public’s imagination.
Though its origin is vague, many credit the introduction of the term “sharing economy” into the broader tech lexicon to Lawrence Lessig, who wrote about sharing in his 2008 book Remix: Making Art and Commerce Thrive in the Hybrid Economy. The Great Recession was just setting in, and the sharing economy was touted as a new DIY social safety net/business model hybrid. The contours of the term were never particularly clear. It was used loosely to describe peer-to-peer projects and tech-enabled rental markets but also included old barter, co-op, and casual carpooling models. The sharing economy was a broad, eclectic movement with ambitious if utopian goals. The online magazine Shareable launched in 2009 to document this “movement of movements.”
Sharing would help reduce overconsumption and our impact on the environment. Venture capitalist and tech trend spotter Mary Meeker saidAmericans were moving from an “asset-heavy lifestyle to an asset-light existence” with the sharing economy leading the charge. Environment and politics researcher Harald Heinrichs suggested the sharing economy was a “potential new pathway to sustainability.” Greenpeace’s Annie Leonardframed sharing in opposition to consuming: The sharing economy, she wrote, would “conserve resources, give people access to stuff they otherwise couldn’t afford, and build community.”
Sharing also promised social benefits. It would be the instrument by which we’d be able to know one another again, a counterbalance to the alienation of a burgeoning tech dystopia. Sharing economy expert April Rinne said sharing would recreate the social fabric of tight-knit communities. “Engaging in collaborative consumption — and getting used to it — lowers the trust barrier over time,” she wrote at Shareable. New startups like TrustCloud would gather all of our disparate platform ratings and social trails from across the web and compile them into a new kind of social credit score that would enable trust and accountability in the sharing economy.
The new opportunities to earn money by freelancing part-time as a handyman, innkeeper, or taxi driver would bridge the wealth gap and ameliorate global inequality. In 2013, CNN contributor Van Jones said that sharing could lead us to “a more sustainable, prosperous future.”
Adam Werbach was president of the Sierra Club and a corporate sustainability consultant before he co-founded the used goods sharing marketplace Yerdle in 2012. A sort of proto-Omni, Yerdle’s original tagline was, “Stop buying. Start sharing.” The site incentivized renters to rent their own things by rewarding them with credits and keeping used goods recycling in the Yerdle community.
“There was a mix of venture-backed companies, social-benefit companies, and nonprofits all in the space, all fighting for it. And all of the companies were small, and all the founders hung out — it was a community,” Werbach says of those heady early times.
“I had hoped this would be the taming of capitalism.”
Janelle Orsi, attorney, co-founder, and executive director of the Sustainable Economies Law Center, used to call herself a sharing lawyer, which, she says now, “a lot of people thought was a joke.” Orsi helped set up small workers cooperatives and worked on cottage food legislation to make it possible for people in California to sell food they cooked at home on a small scale both on and off digital platforms.
For Orsi, the sharing pitch had some value in selling an idea that was uncomfortable at the time. “It took a certain kind of community-oriented person willing to take a risk and book an Airbnb or get in an Uber early on,” says Orsi. For her, and likely for many of the early sharing adopters, truly cleaner, lighter living through platform technology was seductive and incredibly promising. But that innocence was short-lived.
“I had a very grassroots community-based vision of it,” she says.
“And then all of a sudden, here comes the big tech companies. It was totally hijacked.”
Perhaps no company is as emblematic of the sharing economy sector and its rapid evolution as Lyft. Zimride, Lyft’s original parent company, was a service that focused on college campuses and long-distance rides in areas with few other transit options. Co-founder Logan Green told reporters he was inspired by the slow grind of Los Angeles traffic, thick with single-occupant cars. If he could find a way to entice more people to carpool, Green reasoned, there would be less traffic on the road.
In 2012, Zimride launched Lyft to service shorter rides in cities. Lyft advertised “friendly rides,” encouraging passengers to sit up front alongside the driver and pay a suggested donation if they felt like it. The company argued that because the platform only acted to connect riders and drivers, with payment optional, it couldn’t be regulated as a taxi service provider. But just a year after it was spun out, Lyft instituted set ride fares and had already raised $83 million in financing. It was a sharing economy success story: In 2015, Lyft was recognized by the Circulars economy awards at Davos for “helping to decongest roads.”
Over the first half of the 2010s, the so-called sharing economy evolved into a powerful new multibillion-dollar economic model. At about the same time, the definition of “sharing” began to shift. Sharing still referred to the peer-to-peer model of leveraging underutilized assets — sharing our goods with each other — but it was also increasingly applied to more traditional centralized rental models.
Seemingly everything was a part of this new economy: bike-sharing sponsored by multinational banks, apps that allowed people to rent parking spaces on public streets, and platforms that allowed for the peer-to-peer sale of used clothes. Sharing was the donor-funded nonprofit Wikipedia, and it was the massive unicorn WeWork. When the Avis Budget Group bought short-term car-rental service ZipCar in 2013, investor Steve Case said it was an indicator of the sharing economy’s growing potential. “Sharing is not a passing fad,” he wrote in the Washington Post. “Fasten your seatbelts: It’s just the beginning.”
Even though the term “sharing” was quickly being drained of any meaning, industry insiders still touted its social benefits. In 2014, Airbnb global head of community Douglas Atkin told a sharing economy conference, “The sharing economy deserves to succeed. There’s a decentralization of wealth and control and power. That’s why this economy is a better economy.”
Bythe mid-2010s, the narrative around the innovative, cure-all sharing economy had started to sour. As platforms banking on “collaborative consumption” edged toward multibillion-dollar valuations, sharing began to feel naive.
“I sort of observed the shift happening beginning in 2016,” says labor attorney Veena Dubal, who was working with freelance taxi drivers in San Francisco before sharing hit the road. “There was a moment of novelty but then a realization that these were the same things. Just much cheaper and unregulated.”
Three years ago, in a piece co-authored with entrepreneur and model Lily Cole, Adam Werbach also suggested that corporations had hijacked sharing. “Whilst modern rental platforms offer enormous value… they do not reflect the sentiment of sharing that has defined communities as communities for thousands of years.” They offered another word instead: rent.
In some instances, the sharing economy appeared to inflame the very problems it purported to solve. The supposed activation of underutilized resources actually led to more, if slightly different, patterns of resource consumption. A number of studies have shown that the ease and subsidized low cost of Uber and Lyft rides are increasing traffic in cities and apparently pulls passengers away from an actual form of sharing: public transportation. Students at UCLA are reportedly taking roughly 11,000 rides each week that never even leave campus. In putting more cars on the road, ride-hail companies have encouraged would-be drivers to consume more by buying cars with subprime loans or renting directly from the platforms themselves.
Alongside making it easy to rent out spare rooms, vacation rental platforms encouraged speculative real estate investment. Whole homes and apartment buildings are taken off the rental market to act as hotels, further squeezinghousing markets in already unaffordable cities.
Early sharing champions were ultimately correct about technology enabling a shift away from an ownership society, but what came next wasn’t sharing. The rise of streaming services, subscription systems, and short-term rentals eclipsed the promise of nonmonetary resource sharing. The power and control wasn’t decentralized; it was even more concentrated in the hands of large and valuable platforms.
Why go through the trouble of swapping your own DVDs for a copy of Friends With Benefits, after all, when you can stream it through Amazon Prime Video for $2.99? The idea of paying for temporary access to albums rather than outright owning them may have been galling at first, but we’re increasingly comfortable with renting all our music, along with our software, and our books. Downloading and sharing the materials that live on these streamed resources is impossible, illegal, or both.
The new trust never materialized. Government regulation typically plays an important role in mediating consumer relationships with corporate firms and for good reason. Peer-to-peer platforms can make discrimination easier, and they often claimed limited or zero liability when things went wrong. New social media reputation tools couldn’t prevent inevitable problems, especially when sharing companies did not institute background checks for their freelance workers or inspect homes and vehicles for safety.
Sharing didn’t deliver broad financial stability either. The jobs eventually created by the sharing economy were poorly regulated and hastened the broader growth of contract labor, pushing down already low wages for freelancers and employees alike. A few frequently quoted studies have claimed that soon, most of us will be freelancers. But most of that freelance work appears to be extremely part-time and merely supplemental income, and ride-hail driver turnover in particular is high.
Sharing doesn’t have the positive market power it wielded 10 years ago. Since 2016, tech entrepreneurs and their promoters in the press seem to have largely ditched the language of sharing. It’s now about “platforms,” “on-demand services,” or, most recently, “the gig economy.”
Labor attorney Dubal is not thrilled with the new “gig” language either. The term may seem honest — it places the precarious nature of the contract labor front and center — but it doesn’t assuage broader structural concerns. “Even people who’ve stopped using the ‘sharing economy’ haven’t necessarily seen the light in terms of what kinds of work the company has propagated more broadly,” Dubal says. “They’ve normalized unregulated business.”
Some of sharing’s earliest, most outspoken champions have distanced themselves from the term. Originally launched in 2013 as “a grassroots organization to support the sharing economy movement,” the nonprofit Peers purported to “grow, mainstream, and protect the sharing economy,” essentially acting as a corporate lobby firm for sharing, on-demand, and gig startups. Peers’ partners included Lyft, Airbnb, TaskRabbit, Getaround, and dozens of other mostly for-profit companies. The organization said the bulk of its funding came from “mission-aligned independent donors” and foundations, but it also had investment from Airbnb.
By 2016, Peers had pivoted to portable benefits — an infrastructure to sustain gig workers as they labored without an employment safety net. Peers became “an organization for people working in new ways,” and it merged with the newly created Indy Worker Guild. Peers co-founder Natalie Foster went on to co-found the Economic Security Project, which lobbies for a new solution to help struggling gig workers and job-havers alike: universal basic income.
In 2018, April Rinne, who previously pushed the sharing economy’s promise of a “tighter social fabric,” acknowledged “the dark side” of the sharing economy but wrote that “the challenges faced by the sharing economy today are largely a result of its success.” Rachel Botsman, who argued that sharing would allow us to trust one another again, now writes about how technologyand the concentration of power on large centralized platforms has led to “an erosion of trust.”
The demand for Botsman’s mythical community-shared power drill never seemed to materialize. Neighborly goods-sharing platforms Crowd Rent, ThingLoop, and SnapGoods are all many years dead, and meal-sharing Josephine ended long ago. CouchSurfing has gone for-profit, with venture capital investment.
It turns out sharing “is not really a mass-market idea, which is sort of depressing,” says Werbach, who’s pivoted Yerdle into a logistics firm for large brands interested in re-selling their used goods. “Kindergarten teachers are interested in that, but consumers are really interested in what’s in it for them.”
Some of the early, true sharing believers have decamped for the growing platform cooperative movement. “Now there’s a whole consortium of platform cooperatives,” says Orsi of the Sustainable Economies Law Center.
And these companies don’t bank on sharing. Organizations like Loconomics, Fairbnb, and Stocksy see their efforts at cooperative consumption and production less as altruism and more as collectively owning the means of production.
Sharing tapped into economic anxiety, isolation, and frustration with contemporary U.S. middle-class life in a unique and ultimately profitable way. It was another iteration of Silicon Valley’s excruciating trope of changing the world by way of disruption, wrapped in a soft packaging of eco-friendly, feel-good liberalism. We were encouraged to give companies like Lyft and Airbnb a chance, to nurture them and help them along for the greater good. If we didn’t believe in sharing, we weren’t just cynics but enemies of progress.
Many of the corporations and the pundits who sold us on the promises of sharing stopped using the term because consumers no longer found it believable or attractive. But it was consumers who really did sharing in. A true sharing economy is full of friction and discomfort, and the margins — if there are any to speak of — are paper thin. Real sharing is time-consuming and not particularly profitable for anyone.
In order to make money, especially the kind of money that tech investors expect, venture-backed companies couldn’t just activate underutilized resources — they had to make more. For-profit businesses demand growth, and platforms demand scale. More than a decade into the sharing experiment, we’ve been able to fully assess the costs. Capitalism wasn’t tamed, as Werbach had hoped — it was stoked.
“Now it’s just a transaction,” Werbach says.
“It doesn’t need to be dressed up in any language about changing the world or whatever.”
And though sharing is largely dead, other tech-driven models have taken its place: VC-backed enterprises that still skate on the promise of solving inequality, promoting justice, fixing broken systems, and doing what regulators and big, old businesses have failed to do for decades.
These days, it’s not a shared drill that’s redefining trust and supplanting institutional intermediaries; it’s the blockchain. Botsman now says that the blockchain is the next step in shifting trust from institutions to strangers.
“Even though most people barely know what the blockchain is, a decade or so from now, it will be like the internet,” she writes. “We’ll wonder how society ever functioned without it.”
The ambitious promises all sound very familiar.
- DHS Facial Recognition Scanners To Be Deployed At Top 20 Airports By 2021
The Department of Homeland Security is rushing to implement a March 2017 executive order issued by President Trump mandating the use of facial recognition to identify “100 percent of all international passengers” – including American citizens, according to BuzzFeed.
Originally signed into law by President Obama in 2015, Trump’s EO accelerates the program, which will be implemented by US Customs and Border Protection (CBP) in 20 top US airports by 2021 (Of note, seventeen international airports already use facial recognition, including “Atlanta, New York City, Boston, San Jose, Chicago, and two airports in Houston”).
Many major airlines are on board with the idea — Delta, JetBlue, British Airways, Lufthansa, and American Airlines. Airport operations companies, including Los Angeles World Airports, Greater Orlando Aviation Authority, Mineta San Jose International Airport, Miami International Airport, and the Metropolitan Washington Airports Authority, are also involved. –BuzzFeed
According to a 346-pages of “as-yet-unpublished” documents obtained by the Electronic Privacy Information Center and reviewed by BuzzFeed News, US Customs and Border Protection is furiously rushing to meet the deadline for this “biometric entry-exit system” – which will use facial recognition technology on more than 100 million passengers in as little as two years, or roughly 16,300 flights per week.
As BuzzFeed notes, the biometric systems are being implemented “despite questionable biometric confirmation rates and few, if any, legal guardrails.”
What’s more, there are no limits to how airlines can use facial recognition data.
These same documents state — explicitly — that there were no limits on how partnering airlines can use this facial recognition data. CBP did not answer specific questions about whether there are any guidelines for how other technology companies involved in processing the data can potentially also use it. It was only during a data privacy meeting last December that CBP made a sharp turn and limited participating companies from using this data. But it is unclear to what extent it has enforced this new rule. CBP did not explain what its current policies around data sharing of biometric information with participating companies and third-party firms are, but it did say that the agency “retains photos … for up to 14 days” of non-US citizens departing the country, for “evaluation of the technology” and “assurance of the accuracy of the algorithms” — which implies such photos might be used for further training of its facial matching AI. –BuzzFeed
“CBP is solving a security challenge by adding a convenience for travelers,” said an agency spokesperson in an email to BuzzFeed. “By partnering with airports and airlines to provide a secure stand-alone system that works quickly and reliably, which they will integrate into their boarding process, CBP does not have to rebuild everything from the ground up as we drive innovation across the travel experience.”
Meanwhile, it appears that CBP has simply skipped part of the “rulemaking process” – foregoing public feedback prior to implementing the technology. Beyond “privacy, surveillance and free speech implications,” this is worrisome according to BuzzFeed, which notes that last summer the ACLU reported that Amazon’s facial recognition technology falsely matched 28 members of congress with arrest mugshots.
According to a Homeland Security OIG report, CBP was able to provide biometric confirmation for just 85% of passengers processed, while mexican and Canadian citizens were “particularly problematic” reports BuzzFeed.
“The low 85-percent biometric confirmation rate poses questions as to whether CBP will meet its milestone to confirm all foreign departures at the top 20 US airports by fiscal year 2021,” said the audit – while a spokesperson said that the rate has risen to 98.6% since the report.
“I think it’s important to note what the use of facial recognition [in airports] means for American citizens,” said Jeramie Scott – director of EPIC’s Domestic Surveillance Project. “It means the government, without consulting the public, a requirement by Congress, or consent from any individual, is using facial recognition to create a digital ID of millions of Americans.”
“CBP took images from the State Department that were submitted to obtain a passport and decided to use them to track travelers in and out of the country,” said Scott.
“Facial recognition is becoming normalized as an infrastructure for checkpoint control,” said ACLU senior policy analyst Jay Stanley. “It’s an extremely powerful surveillance technology that has the potential to do things never before done in human history. Yet the government is hurtling along a path towards its broad deployment — and in this case, a deployment that seems quite unjustified and unnecessary.”
CBP has suggested that privacy concerns are overblown, and that “CBP is committed to protecting the privacy of all travelers and has issued several Privacy Impact Assessments related to [its biometric entry-exit program], employed strong technical security safeguards, and has limited the amount of personally identifiable information used in the transaction,” according to an agency spokesperson.
“THE MOST OPERATIONALLY FEASIBLE AND TRAVELER-FRIENDLY OPTION”
According to CBP’s Concept of Operations document released in June 2017, “Airlines, airports, TSA, and CBP are facing fixed airport infrastructure with little opportunities for major investment, increased national security threats with pressures for solutions, and increased traveler volume.”
“Collectively, this is a status quo that is not sustainable for any of the main stakeholders, and failure to change will ultimately result in increases in dissatisfied customers, use of alternative modes of travel, and vulnerability to serious threats.”
In June 2016, CBP began its first pilot for facial recognition technology in airports at the Hartsfield–Jackson Atlanta International Airport. Once a day, for a flight from Atlanta to Tokyo, Japan, passengers’ passport photos were biometrically matched to real-time photographs. Before travelers proceeded to the passenger loading bridge to board their flight, CBP officers told passengers to scan their boarding passes, then a camera snapped a digital image of the traveler’s face; a CBP-developed back-end system called the Departure Information System used facial recognition to automatically compare photos during boarding against a photo gallery. Everyone between the ages of 14 and 79 was expected to participate. –BuzzFeed
CBP says that the stated goal is to “identify any non-U.S. citizens subject to the exit requirements who may fraudulently present” travel documents, and that the agency has “no plans to biometrically record the departure of U.S. citizens.”
That said, the CBP also says that it “does not believe there is enough time to separate U.S. citizens from non-U.S. citizen visitors prior to boarding” … “therefore, facial images will be collected for U.S. citizens as part of this test so that CBP can verify the identity of a U.S. citizen boarding the air carrier.”
Once a traveler is identified and confirmed as a US citizen, the CBP claims their image is deleted.
Three months after the 2016 pilot, CBP switched to monitoring a daily flight from Atlanta to Mexico City. By the end of November that year, the test was being run on approximately seven flights per week.
The result of these tests? “CBP concluded that facial recognition technology … was the most operationally feasible and traveler-friendly option for a comprehensive biometric solution,” according to a DHS Inspector General audit of the government’s facial recognition biometrics program.
As the system expanded, in June 2017 CBP replaced it’s Departure Information System with a more advanced automated matching system known as “Traveler Verification Service” (TVS) which could “[operate] in a virtual, cloud-based infrastructure that can store images temporarily and operate using a wireless network.” Once a passenger boarded a plane, TVS transmits confirmation of a biometric match across other DHS systems, according to BuzzFeed.
CBP says it allows U.S. citizens to decline facial verification and to instead have their identities confirmed through the usual manual boarding process. “CBP works with airline and airport partners to incorporate notifications and processes into their current business models, including signage and gate announcements, to ensure transparency of the biometric process,” an agency spokesperson said in an email to BuzzFeed News. But of 12 flights observed by OIG during its audit in 2017, only 16 passengers declined to participate.
According to Delta, less than 2% of its weekly 25,000 passengers going through the Atlanta airport’s Terminal F, which features “curb to gate” facial recognition systems, opt out of using the tech. –BuzzFeed
my Emirates flight from Dulles is using facial recognition scans on passengers as a part of the pilot with CBP. I asked the airlines about whether they had informed people and let them know about their options to opt out. They pointed to a board, not super visible from the queue pic.twitter.com/VNs5u6N1XZ
— Mishraji (@Tanvim) March 8, 2019
Meanwhile, CBP is allowing people wearing “religious headwear” to pass through security checkpoints at the discretion of airport personnel.
Read the rest of the report here.
- Schlichter: Has Nervous Nancy Lost Control Of Her Crazy Party?
Authored by Kurt Schlichter, op-ed via Townhall.com,
The only thing that should keep you from roaring in laughter as Nancy Pelosi freaks out trying to keep a lid on the freak show that is the Democratic caucus is the knowledge that the freshmen freakettes giving her fits would impose an ideology of tyranny and murder if given the chance. But you can still allow yourself a good giggle as you watch Nancy’s dreams of a Democrat majority die on the altar of anti-Semitism, taking away your health insurance, and banning cheeseburgers.
This was on display as the Democrats struggled to find a way to publicly pretend to condemn their superstar bigot’s hatred of Jews without annoying all the Democrats for whom hatred of Jews is a key component of their intersectional web of leftist prejudices. Nancy essentially tried to excuse it by explaining that Rep. Ilhan Omar (D-Berlin) is too stupid to know she’s anti-Semitic which, to be fair, is plausible.
She could only get her caucus to agree to condemning all prejudice, sort of, including the tsunami of prejudice against Pacific Islanders that we all see around us so much in our daily lives. Take that, people who hate Pacific Islanders.
Of course, the Democrats never named the actual bigot because the Democrat base is affirmatively pro-bigotry. They hate Jews, Christians, white people, dissident non-white people, men, women who like men, and people who blaspheme against the creepy climate cult, among others. The list of Bad People Who Are Bad goes on and on – the key element of intersectionality is that it always intersects with ugly prejudices against groups that leftists see as insufficiently supportive of their sick ideology.
Which is Nancy’s problem, because she won the House back last year by hiding the left-wing evil bubbling under the surface of her party’s collective dogma. She defeated the feckless Paul Ryan – what a loser – by running candidates in largely purple suburban districts who promised that if the voters tossed out the squishy Republican incumbent, the sensible Democrat moderate challenger would not go to Washington and do anything kooky. And, of course, the Lucy’s football phenomena was in full effect as these Nanchurian Candidates trooped up Capitol Hill and promptly got sucked into the crazy.
Suddenly, instead of playing the fake moderate game, Nancy’s minions had to suck up to a bunch of braying bimbos from safe blue seats. All the nonsense Reps. Talib, Omar, and Ocasio-Cortez spewed on social media and MSNBC thrilled the Democrat base. But what Normal people heard was, “We hate Israel. We hate the idea that you can have cars. We hate you.”
And the fact that these commie-come-latelys are so inept is icing on the cake. Rep. Omar couldn’t help but run her fool mouth about what she really thought of the Jews. Rep. Ocasio-Cortez could not manage to let fly with her Green New Deal without making the rookie mistake of telling the people what was actually in it. Free money for those unwilling to work? Maybe that dog hunts among the simpletons in her New York City district, but in America, not so much.
Not only does it rile up Nancy because these clumsy radicals have stolen the spotlight and made it immeasurably harder to pull off her “We’re sensible” scam on the swing seat suckers but it rankles because none of these debutantes have paid their dues. Nancy and the rest of her leadership worked for years and years accumulating power, rising through the ranks, and when they finally regained power suddenly these newbies who paid no dues but have a lot of Twitter followers showed up and took over the Democrat agenda.
That’s got to be infuriating, and you can see it when Nancy talks about them – she can’t say it out loud, but you know what’s running through her mind is, “Who the hell do these upstarts think they are?”
Well Nancy, they seem to be your party’s future.
The thing is that the Democrat base loves them. These radicals are out of the moderate closet and letting their freak flags fly. Death to Israel! Death to borders! Death to private property. Death to Big Macs!
Nancy could barely manage to applaud (while staying seated) the idea that America will never be socialist. These radicals are now forcing her to stop hiding the party’s real objectives far too soon. The truth was only supposed to come out after they had hold of total power, not so early that we Normals could wake up and stop the onslaught. But now, 2020 is going to provide a whole bunch of great questions to smart Republican candidates, in the off chance there are any:
Do you support the Democrat plan to ban cars and planes?
Do you support the Democrat plan to take away your private insurance and force you onto government healthcare?
Do you support the Democrat plan to abandon Israel?
Do you support the Democrat plan for open borders?
Do you support the Democrat plan for illegal alien voting?
Do you support the Democrat plan to allow doctors to kill babies?
Even the wimps in the purple districts, the gooey mommies who found Trump icky and their Fredocon hubbies who said “Yes, dear” to wifey’s command to vote against the part of Bad Orange Man last November, are going to think twice about backing these nutty Dem plays. It’s all fun and games until Alexandria Ocasio-Cortez shows up and tells you that you gotta lose the SUV you use to cart Kaden and Ashleigh to soccer practice.
The moderate Dems will have to turn on the radicals or get turned out. It already happened once as a couple dozen Dems joined Republicans to add an amendment to a gun grab bill that mandated reporting illegal aliens to ICE if they tried to buy a firearm. Ocasio-Cortez and her group opposed it. In fact, the Lil’ Kommissar even threatened to put these rebels on a list to be terminated (via primary now) for daring to *squints real hard* want to report to immigration authorities any illegal aliens trying to illegally buy guns.
Do it, AOC. DO IT!
Nothing like intra-pinko cannibalism. Turn the Democrat Party into the Donner Party. While you consume each other, I’ll be here gobbling cruelty-free, carbon neutral popcorn.
But, of course, there is always a chance that things don’t go the way we hope, and that there are enough historically ignorant suckers in the big blue cities to allow these freaks to take over the levers of power. Sure, the Democrats’ pain is hilarious, but the fact that a major political party has surrendered itself to the zealots of an ideology that has murdered 100 million people is not so hilarious. Maybe if the socialists get in charge here, they won’t bring misery and murder. Maybe the ones in Congress now are so smart and competent that they can actually make this blood-splattered ideology work. But it’s going to be a hard sell for the Dems to get us to bet our lives on it.
* * *
I write about an America split apart into red and blue in my novels People’s Republic, Indian Country and Wildfire, and if we let these psychos prevail, then we’ll be lucky if that’s the worst thing that happens.
- JFK Canvas Bought for $16,900 Set to Sell For $50 Million
A major upcoming auction of a painting by Robert Rauschenberg is set to “prime the market” for the late artist, according to a new Bloomberg report. And the early signs of what his work will fetch look to be optimistic, to put it lightly. The artist’s 1964 work “Buffalo II” is set to be auctioned off by Christie’s on May 15 and is estimated to be offered for $50 million. That’s triple the artist’s auction record and 300,000% more than what the original buyers of the work paid.
The canvas is in the style of a collage and depicts president John F. Kennedy.
The canvas was created shortly after the President’s assassination and was purchased from art dealer Leo Castelli, who represented Rauschenberg at the time. The upcoming sale of the piece will likely “reset” the artist’s market, breaking his $18.6 million auction record and the records of other contemporary artists like Jasper Johns, whose “Flag” sold in 2014 for $36 million.
Sara Friedlander, Christie’s international director and head of its postwar and contemporary art department in New York told Bloomberg: “Everyone has been waiting for this painting. It’s the very best of the silkscreen paintings that’s left in private hands.’’
The canvas is part of a collection owned by Robert and Beatrice “Buddy” Mayer, who was an heiress to the Sara Lee fortune. In total, Christie’s is set to offer more than $125 million of Mayer’s works. This collection includes Roy Lichtenstein’s $30 million 1962 “Kiss III,” and other Impressionist and modern art, in addition to Chinese ceramics and Latin American paintings.
Mayer was a Montreal native, art patron and an activist who was a founding member of the Museum of Contemporary Art in Chicago.
“It was a very exciting, politically charged time. And that’s the art they wanted to buy,” Friedlander said of its owners.
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