Monday, 5 November 2018
Blogger Ref https://wiki.p2pfoundation.net/Transfinancial_Economics
The following link has very important implications for economics especially for TFE which is described in the above link..
Delphine Strauss in London
Andy Haldane, BoE chief economist, says economists should embrace data flood
It should be said here that Andy Haldane also knows about Transfinancial Economics, and the notion of "mapping the economy in real time..." is clearly indicated in the following article. Though Big Data is part of the TFE Paradigm it is only part of the whole picture for a modern futuristic economics... See https://wiki.p2pfoundation.net/Transfinancial_Economics
The goal of mapping economic activity in real time, just as we do for weather or traffic, is “closer than ever to being within our grasp”, according to Andy Haldane, the Bank of England’s chief economist. In recent years, “data has become the new oil . . . and data companies have become the new oil giants”, Mr Haldane told an audience at King’s Business School earlier this month and released on Monday. But economics and finance have been “rather reticent about fully embracing this oil-rush”, partly because economists have tended to prefer a deductive approach that puts theory ahead of measurement. This needs to change, he said, because relying too much on either theory or real-world data in isolation can lead to serious mistakes in policymaking — as was seen when the global financial crisis exposed the “empirical fragility” of macroeconomic models.
Parts of the private sector and academia have been far swifter to exploit the vast troves of ever-accumulating data now available — 90 per cent of which has been created in the last two years alone. Massachusetts Institute of Technology’s “Billion Prices Project”, name-checked in Mr Haldane’s speech, now collects enough data from online retailers for its commercial arm to provide daily inflation updates for 22 economies. The Alan Turing Institute — the UK’s new national institute for data science — runs a programme, with funding from HSBC, which aims to use new data to measure economic activity faster and more precisely than was previously possible. National statisticians are taking tentative steps in the same direction. The UK’s Office for National Statistics — which has faced heavy criticism over the quality of its data in recent years — is experimenting with “web-scraping” to collect price quotes for food and groceries, for example, and making use of VAT data from small businesses to improve its output-based estimates of gross domestic product. In both cases, the increased sample size and granularity could bring considerable benefits on top of existing surveys, Mr Haldane said. The BoE itself is trying to make better use of financial data — for example, by using administrative data on owner-occupied mortgages to better understand pricing decisions in the UK housing market. Recommended Analysis UK politics & policy Starting gun prepped in race to replace Mark Carney at Bank of England Mr Haldane sees scope to go further with the new data coming on stream on payment, credit and banking flows. “Almost all economic activity leaves a financial footprint,” he said. “In time, it is possible that these sorts of data could help to create a real-time map of financial and activity flows across the economy, in much the same way as is already done for flows of traffic or information or weather.
Once mapped, there would then be scope to model and, through policy, modify these flows.” New data sources and techniques could also help policymakers think about human decision-making — which rarely conforms with the rational process assumed in many economic models. Data on music downloads from Spotify, used as an indicator of sentiment, has recently been shown to do at least as well as a standard consumer confidence survey in tracking consumer spending. “Why stop at music?” Mr Haldane asked. He saw potential to create a gaming environment “to explore behaviour in a virtual economy where players can spend or save, and one could test their reactions to monetary and regulatory policy intervention”.
Tuesday, 31 July 2018
Now, the UK is testing the most intriguing example yet: blockchain-based tracking of welfare spending.
The proposition is simple: have a blockchain-based system monitor exactly where the money handed out to welfare recipients is being spent. That’s it. It’s always been possible on the small scale, but difficult to impose as a wide ranging policy for two main reasons: There are way too many people receiving welfare for human-driven oversight to be practical, and because people are inherently resistant to the idea of a human being following another’s financial life like that.
Distributed ledgers can undoubtedly remove the first problem, providing a means to actually deliver oversight on the scale required — but can it, and should it, remove the second problem?
A big issue is security. One thing that makes distributed ledgers secure is that they are publicly viewable, and long-lived by being distributed across many computers. As we’ve seen over and over in the past several years, however, no security regime in flawless. And even if it is flawless today, the information indexed in that ledger remains sensitive for a long time, meaning that some future computing breakthrough could retroactively expose a bunch of people who aren’t even receiving welfare any more!
There’s a fairly simple fix for this, however: use only non-identifying signifiers for welfare recipients in the ledger itself, and maintain the database of signifier-to-legal-name associations on a more classically protected government database unconnected to the ledger itself. Any attacker would need both the ledger info and the database of associations — and if we’re worried about attackers getting our information from classically secured government databases, we need to worry about a lot more than stolen welfare tracking.
The bigger issue is not the security of the data, but the use of it. So, you’ve tracked welfare spending — what now? The obvious application is to take punitive measures against those who misspend, to lower the payment amount as a disincentive to spend poorly, and to lower waste of money intended for the essentials.
According to a UK government report released earlier this year, “the [Department of Work and Pensions] pays out roughly £166 billion of taxpayer’s money in welfare support per year. Some £3.5 billion of that sum is overpaid through fraud (£1.2 billion), claimant error (£1.5 billion) and official error (£0.7 billion) 2 of which £930 million is recovered.”
However, given the passion that currently exists for privacy and digital liberty, it seems far more likely that any such spending-tracking system would have to be fully anonymized to be implemented on a wide scale. It would track statistical-level trends in welfare spending, following faceless numbers and looking at population-level spending habits. This could have all kinds of utility without having to record who buys what, when.
In the case of a welfare distribution scheme, this means that the recipients would be using a digital currency to make their welfare purchases — not so much physical food stamps as digital stuff stamps. Adoption wouldn’t be the biggest problem, since a government could theoretically require some or all business to accept their crypto-currency when offered. There are some nice aspects to this right off the bat, such as that drug dealers and other frequent recipients of misspent welfare funds are likely to have a harder time redeeming government crypto-bucks than supermarkets and children’s clothing stores.
Food stamps have some pretty major downsides associated with them, more notably the stigma associated with receiving and spending them. A digital stamp could possibly alleviate that, making the use of this welfare currency visually indistinguishable from the use of, say, Apple Pay. It could also do away with the restrictive nature of physical service vouchers, allowing people to, say, hunt for a good deal online and make a purchase without having access to credit.
The current, relatively primitive level of advancement in the software could actually undercut it from a cost-saving perspective, as cryptographically securing all these transactions and could take an enormous amount of electrical power. Unless the distributed ledger system itself is improved, this and most other applications of it will be pretty much unachievable on a large scale. But with so many big powers working to get a more efficient solution in place, it makes perfect sense to be thinking ahead to the potentially revolutionary ways we might apply it, once we’re able.
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