Musings on Rules, Irrational Ideas, and Art

Musings on rules, irrational ideas, and art, and how they may become useful to both individuals and society. This is simply a thought exercise.

Any idea that seeks to enable or restrain human choices, is a rule. Rules have existence, most notably in ethical, legal and religious systems. All beliefs in religions and philosophies include at their core, a belief in rules. Belief in rules is generally regarded as good, however rules must be chosen wisely.

Rules can be measured as beneficial or pleasurable, conversely harmful or painful, but they cannot be proved “false”.

If it is simply an idea with no possible ability to falsify or verify, that cannot be acted upon like a rule, is irrational. Examples of irrational ideas that are subjective are values and ethics such as good, evil, beauty, and ugly. Objective and irrational ideas would be of deities, demons, or ghosts, for example. You either believe in them, you do not believe in them, or you suspend judgement. The only good way to decide how to make any of these choices is to listen to your gut instinct and trust in what it tells you. If an irrational idea moves you to happiness and causes no harm to others, there is no harm in believing in any of these things. If it brings pleasure to others with no ill effects, even the better.

Rules derive their ultimate worth from what effect they create when putting them into practice. Deities and other irrational ideas are not valueless, as these ideas can be acted upon through worship, abstinence and practice. However, right understanding towards these ideas means everything, for we must measure how much good or harm such an idea can create through our actions in this world.

Pleasure and pain are the only two objective measures of good and evil. Actions can be measured by how much harm or good they bring to others, so while we cannot prove or deny an idea of deities either way through science, we can measure how much pleasure or pain is caused by a particular action relating to the rules of the deity to a population, and therefore rate the value of that deity objectively.

What may be pleasurable or painful for one person may not be pleasurable for a group of people. If the pleasure is only benefitting a small group, and the effects have measurable damage for the whole of the group, it is a bad idea. “Your freedom ends where the freedom of others begins”.

A good deity does not seek to harm or reward us in a special way. These things are due to the randomness in the world. As deities are irrational ideas, they must observe their own rules, and we cannot “know” the mind of the deity in any sort of objective way. The rules can be measured for their value, but claims of divine sanction are valueless. The minds of deities are hidden from us.

A deity or perhaps number of deities can be seen as rulegivers through a process of revealed knowledge through images or thoughts in a meditative state. I cannot dismiss this possibility, as it has been verified that people can have such thoughts and images and the existence of the deity cannot be proven false. Again the rule must be observed: if the knowledge revealed is a rule that causes harm or pain to others, it must be dismissed as a bad rule and the person who gives this rule must be regarded with extreme suspicion, as they may be acting in pure selfish interest without any thought to others.

But even if one is an agnostic or atheist, an understanding of the need for rules and the measure of good works can still be followed. An atheist can take this same teaching and listen and apply and test a rule revealed to them through the same process of mental images and thought from observation of the world.

People who seek to harm us, have no access to justice or injustice, as they do not seek to follow the rules to neither harm or be harmed. For these rules can only be extended to others who follow them.

If we do not put our thought and awareness into action to reason out the effects of our actions from rules we follow, we are no better than wild animals, and thus have abandoned our civilisation and freedom to gamble with disaster and chance, and chance is what rules our lives when we are unable to exercise the freedom to make decisions or reason the value of the rules we choose to follow. It is undesirable to let rules control us without judgement for their effects, for we then have no freedom to discriminate possible effects of our actions and discern our errors, and thus chance and fatalism have ruled the day.

The messages of rules may be expressed through any kind of art, but the expression of rules through art is not the rule itself. The rule is the message, the art is the thing. Mistaking this rule can lead to idolatry, to confuse the physical representation of a rule with the rule itself. This basic separation between the material thing and the immaterial idea must always be taught.

Laws are iron rules that cannot be broken through freedom of choice, due to the fact they are part of the fabric of the world. The laws of physics for example.

Some further aesthetic thoughts.

If your art has nothing that truly moves your body completely to express to others, it’s probably not good art.

In art, there is no difference between communication and expression. In beauty and ugliness in art, there is no standard except your subjective gut feeling about what is beautiful or ugly. Beauty belongs to the irrational senses and cannot be given objective moral value. Beauty in nature is created this way as well. While it can be judged beautiful or ugly, this decision can never be objectively rational. Again, this does not mean it is good or bad. It only means it is irrational.

The Canon, the Measure, is the scaffold of these ideas, that braid the matter of daily life into the strong ropes of civilisation.

The Long Tail of Snake Oil

For those living creatures that are unable to form compacts not to harm others or to be harmed, there is neither justice nor injustice. It is the same for all tribes of men unable or unwilling to form compacts not to do harm or be harmed — Epicurus, Principle Doctrine 32

I think history will eventually say, Chris Anderson’s “The Long Tail” was an interesting book for the fact that it was probably one of the most damaging ever to be applied to the digital economy.  One is better off reading The Black Swan: The Impact of the Highly Improbable by NNT, Steven Strogatz Sync: How Order Emerges From Chaos In the Universe, Nature, and Daily Life, and Benoit Mandelbrot’s The Misbehavior of Markets: A Fractal View of Financial Turbulence – for a better idea of how bad power laws can be in economics. The “Long Tail” is very correct in that this is how the market works, it is incorrect in letting anyone think that you will get rich from it, and that it is “good for you”.

You might get lucky. You might lose your shirt. You might run around in the end of the Long Tail like a rat in a maze. Indeed, the rats in the maze are most content creators in Second Life.

If you all want a taste of history, then read the last book (Book 6) of De Rerum Natura by Lucretius, for his poetic retelling of the plague of Athens (David Sedley commentary), based on the Plague of Athens account of Thucylides.

Lucretius bears a message about Epicurus. From Book Six no. 17

He (Epicurus) understood that the pot made the flaw, and that by this flaw an inward corruption tainted all that came in from without as though it were a blessing; partly because it was leaking and riddled, so that nothing ever sufficed to fill it; partly because it preserved it befouled, as one may say, with a noisome flavor everything that it received, as soon as it came in. Therefore with truth-telling words he scoured the heart, he put a limit to desire and fear, he showed what was the chief good to which we all move, and pointed the way, that straight and narrow path by which we might run thither without turning; he showed what evil there was everywhere in human affairs, which comes about and flies about in different ways, whether by natural chance or force, because Nature had so provided, and from what sallyports each ought to be countered, and he proved that mankind had no reason to roll the sad waves of trouble within their breasts.

For Epicurus’ Swerve in Lucretius’ epic poem is exactly this phenomenon, too. Sadly, it is also Adam Smith’s Invisible Hand. It doesn’t lead to good markets, not without good money management, and right now, this especially does not exist in the USA with Bernanke at the helm.

If you want a taste of physics research, then check out the UPenn research on Brownian motion, where the scaling is asymmetrical. The good news about this is that Daniel Dennett’s Freedom Evolves is probably right about free will though. But too bad for Chris.

http://www.upenn.edu/pennnews/article.php?id=1035

I view “The Long Tail” as a plague now. I once liked it, but after seeing it used in practice everywhere, I see how bad it really is. Richard Dawkins is your man (The Selfish Gene) if you want to know how bloody nature is, tooth and claw.

Nature is not intrinsically good. It is not intrinsically evil, either. It is wild, untamed, rough, and undomesticated. The waves can rise high and crash suddenly like a tsunami. It sure as heck isn’t improving the human condition to go back to nature. We want freedom, but maybe not that much freedom. Justice is desirable too.

Seeing this book applied to currency markets is an even bigger disaster. No wonder Chris Anderson doesn’t like Second Life anymore.

The Swerve is Real

Adam Smith was missing something from the whole picture.

http://www.upenn.edu/pennnews/article.php?id=1035

This is the swerve, the clinamen of Epicurus. This is what Louis Bachelier and Adam Smith didn’t know about motion.

You cannot have one invisible hand bringing the market into equilibrium. You need TWO HANDS. The money needs to observe equilibrium in order to be stable.

This is the motion of things that are self movers. When there is an asymmetry. Human beings are self movers, and this is the most basic of self movers, a tiny object that is longer in one direction than another.

Money itself needs to be smooth like Brownian motion and it is not!

As said by my friend Sin Trenton: The invisible hand snatches your money and gives you the finger when it can.

How to Build High Pressure L$ Pipes

Epicurus says there are two kinds of motion, the straight and the swerve.  Aetius 1.23.4 Dox.Gr.

I have a few ideas regarding money that would probably work for the brewing LindeX problems. I visualise good money as the stable pipes in which the flow of profits from goods and services pass through. The pipes are subject to high stress, from both the volume of trade and unforeseen natural occurrances and business cycles. They must be built well to withstand the pressure. Though pipes may occasionally fail, I want the failures to be manageable and foreseeable, so they can be replaced and fixed as needed.

Two major problems and some suggestions to fix them:

• L$ is being used as a store of value, and fiat currency or inworld land ownership is a better choice.
• The velocity of L$ exiting Second Life is too slow.

L$ is being used as a store of value, and fiat currency or inworld land ownership is a better choice.

Using L$ as a store of value, corresponds to a reduction in land tier fees which are not being paid for. The LindeX has taken this role over, as well as other currency exchanges, as the transaction fees are passed on to the buyer of the currency for the most part. It’s free as in beer money, no recurring subscription fees or even a bank charge. And its not surprising that those who are profiting from the free money train do not wish to change it.

The velocity of L$ exiting Second Life is too slow.

Our money supply situation is like a sink slowly filling with marbles of various sizes, and only smaller marbles are falling through the drain. The obvious way to deal with the sink issue is through charging a demmurage fee, for storing the L$ . The intent is to speed up the velocity of money, thereby helping relieve Supply Linden of the task of selling more L$ to maintain the velocity of money through the system.

My suggestion would be to subtract a fixed x amount for every y number of lindens, at the end of each month. Say 1 linden for every 50 lindens, for example. Once you hit zero lindens in your account, you are no longer charged the fees for holding L$. Fees are only due if you have L$ on your account. An exemption can be granted to special avatars who run currency exchanges, but must be a designated avatar, and should be charged for the privelege.

The other issue is to deal with the speculation problem on the LindeX. This is best met with a percentage rate US dollar fee depending on the amount of L$ you had for sale at the end of each month. The issue here is that it will be gotten around by cancelling and relisting.

Easy way to deal with that is to charge it over an average of the money held over a period of time with limit sales and buys, and once money is set for a limit sale on the Lindex it automatically counts against this fee and the ticker is on. If you have sold the amount that month that you originally listed, great you don’t owe the fee. If you cancelled the remaining order, you still have to pay a fee for the whole amount you bet, sorry. Market sales and buys are exempt from the demurrage fee.

Call it risk management fees to penalise people for risky behavior. As the L$ is emphatically not meant to be a store of value, this would be the most useful for the inworld problem.

While these will raise the velocity again, another issue is that there are already many many L$ that need to be swept out of the system. This can be dealt with through charging L$ for land setup fees and all auctions of land in Second Life for a time, to quickly drain the excess money supply temporarily, getting people back into land ownership. This is a temporary stopgap to drain the supply.

A further idea for internationalisation and stability, is to integrate L$ to US dollar or Euro sales, allowing a choice of fiat currency in which to sell to. This is to allow stability to invest your L$ into a variety of currencies, better reflecting market conditions in fiat currency trading. A main feature of this plan is that the L$ cannot be exchanged directly into any other virtual world currency, it can only be exchanged into other fiat currencies, which can be then transferred out through Paypal. It is possible to add other ecurrency options besides Paypal as well, to extend reach to other countries that cannot use it.

I hope I have put forth some useful ideas to help make the money supply situation in Second Life more shockproof. While markets are wild and difficult to control, we can still build something better than a liferaft to surf the market’s giant waves.

Lava Tubes of the LindeX

“Poor Wretch”, men tell themselves. “One fatal day has stolen all your gains” — Lucretius, De Rerum Natura 3.898 – 899

It’s well known that volcanoes can undergo a long dormant period before they erupt in a cataclysm. The dormancy may span over many human lifetimes, but the volcano still lives. This is why geologists place monitoring stations around volcanoes, to detect the movements of magma underneath.

Sometimes, geologists are able to predict an eruption with enough forewarning to evacuate nearby residents and divert jet aircraft, through use of such monitoring. Still, the volcano may launch a surprise high into the air. Such is the world of complex systems, and they are both terrifying and awe-inspiring.

The profits and prices of commerce, and magma seem to have something in common. A plug in a volcano can create the illusion of a sleeping giant, but a keen ear to the earth may detect something different. Perhaps a new bulge on the side of the mountain might signal a worrying sign that the magma is actually on the move and pooling in new locations.

Unfortunately, profits and prices are too often confused with money. They are all separate things. Money is simply the medium that economic information flows over. It is the pipes for the information that flows through it. Profits and prices are the information which flow through the pipes of the money system. We need better pipes, and not lava tubes one sees in volcanoes in nature. I would prefer to have indoor plumbing, and possibly a toilet and sewage system also!

So now I will concentrate on money, and not on the profits and prices which are entirely separate.

While we can do nothing about the fickle whims of volcanoes except improve forecasting, money is an invention of human society and possible to domesticate. Money is an instrument, a tool, an invention. While it may be affected by events in the natural world, it does not have to follow a cycle, an oscillation, or a severe eruption.

Imagine money as a high pressure water line. Most of the time, it’s completely safe. But if poorly maintained, or an unforeseen disaster that breaks the line, then we may have a failure. Disasters can and do happen in real life, and they are often unavoidable. Generally workers can cap the line, and bring the system back to stable conditions. Unfortunately, economists often behave more like astrologers than engineers, using sound math to describe a world that doesn’t actually exist in reality. I would describe this as “poor maintenence”. It’s much like staffing the astronomy department with astrologers. Sadly, this is not far from the truth for much of Western civilisation’s existence. Astrology is the last remnant of the completely debunked Ptolemaic model of an Earth-centered universe.

So as they say, follow the flow of money and there may lie the answer to your problems.

Stipends were reduced from their former 500 L$ benefit to 300 L$, making it no longer advantageous to own a Second Life premium account due to the amount of the stipend. But this did nothing actually. All users did was not upgrade to a subscription account, while many downgraded, and all began buying more L$ over the LindeX.

As I showed before in my previous article, fewer merchants are making enough money to cover land tiers through content sales, it has shifted disproportionately to top tier content creators, thanks to content theft sharply reducing the middle range content sales. This means less land rented overall inworld, and a shift to cheaper land rentals on mainland, where tiers are lower. Land barons bicker and fight with each other as they compete for what’s left of people who are willing to buy L$ for paying tiers, and fight over innovation of the Second Life platform in general. Blaming different groups of content creators, such as scripters or sculptie makers, who have in demand and difficult to learn skills. But they are not the cause, this is just a scapegoating, not unlike the screaming about Jews poisoning the wells during the Middle Ages in the Black Death. Just a cynical ploy to eliminate a marginalised group of people doing a job many Christians at the time weren’t allowed to do (moneylending) to better one’s own economic position during a disaster. It was wrong then, it is still wrong now.

Innovation for the Second Life platform is vitally important and will go a long way to alleviate content theft. Scripters do valuable work for hire and sculpt and texture makers create full perms items for use in derivative products. While the full perms trade is not a bad thing, the content theft has insured that there is less variety of full perms items for sale to the middle and lower range content creators. No ability to determine if an item is a derivative of a full perms item, or if its a high value original good. This causes errors in signalling value and actual scarity of resources involved in creation of goods. No ability to determine a copy from an original or an authorised derivative places ripped goods at an even competition with legitimate content sales. Of course, even popular full perms building supplies are ripped and resold in competition with the originals, sometimes in an effort to quell competition from a rising rival, sometimes just to make quick L$, or both. If the item is popular on Xstreet, one can be certain it will be ripped to ride on the back of the new fad.

So now I have established that we have well off content creators, and land barons pushing L$ through the LindeX.

Where is their money going?

Content creators and land barons sell their L$ on the LindeX to get dollars which they then cash out. The LindeX automatically matches buyers with sellers. I documented in May 2006, a hole, a gap, a “spread” that widened when Linden Lab changed the website to include a “Basic” interface. Some may explain this away as “arbitrage” but it is a classical case of information asymmetry in transactions. One side has better information than another, and it was those people who paid enough attention to the LL blog, who found out when the interface had changed and how to set it back to advanced to place limit sells again. Many content creators did not realise what to do, and switched to selling their L$ through “Market Sell”. The site did not indicate to these sellers clearly that they were cashing out for the worst rate. Naturally people listed limit buys to take advantage of the mistaken market sells. A lot of free money was made during that time, as it took a while for sellers to realise they could list limit sells again and close the transactions gap. This further expanded a sizable class of currency speculators, who do nothing but play the spread on the LindeX, waiting for opportunities for people to do dumb things, and take advantage of a widening in the spread.

The tide eventually flipped after stipends were reduced. More people started to buy through the viewer through market buy. Limit sell allows someone who is speculating on the LindeX, to often get a better than the 3.5 transaction fee that LL charges, so they can make a profit from buyers in the viewer and small market buy sales on the website..

At all times, users who buy through the viewer don’t get the best rate on their L$. Alongside the currency speculators, are also land barons and some high tier content creators, as all of them have to push L$ through the LindeX to dollars in order to cash out and pay tier.

However, the one thing that prevents this from being a frozen and deflated economy, and who is stopping customers from getting completely fleeced from making accidental market buys during a “fluctuation”, is Linden Lab with Supply Linden. They are selling L$, lots of them. While I do think they are doing a good short term job, preventing the prices of L$ going through the floor unexpectedly, they are doing something bad for the longterm, too.

Supply Linden is increasing the money supply, and much of this money is going into the hands of speculators, top tier content creators, and land barons who don’t sell it quickly. Many people who are smart enough to list limit buys of currency likely buy their L$ to Supply Linden, who takes your dollars and the transaction fee for them.

I can see why inflating the currency might be a good thing for LL in the short term.

It keeps the L$ from having a significant value, which could cause them serious issues with the Federal Reserve and other central banks. Most western countries forbid complementary currency. LL surely doesn’t want a strong L$ competing with the US dollar. As soon as it did, the US government would be around eventually to haul the computers off.

LL also wishes to keep the money stable, that it doesn’t fluctuate in price a whole lot. This is not only to help customers buying through the viewer not get fleeced too badly, although it sometimes happens, as in December 2008, when the LindeX precipitously dipped as someone must have fallen asleep at the Supply Linden wheel. It is also so that prices remain more stable in Second Life.

So what’s the problem?

Supply Linden is pretty risky. Although the speculators make less money than before, LL is having to pump the economy full of L$ which are not leaving the economy through enough sinks. Speculators are actually more risky now than they ever have been before, and the toilet is stopped up.

The money remains in SL as the sinks are not sufficient, or in the LindeX buy sell orders, or on other currency exchanges, but its not circulating in the economy, and Supply Linden was slowly deflating it. This is good and bad. Good in that the money is not moving. Bad in that the money could move FAST in a point of financial crisis and destabilise the whole Main Grid. At the moment, large amounts of L$ remain on the LindeX, recycled as much as possible to get extra money on the LindeX like a free cash machine.

Sometimes Supply Linden falls asleep, and the exchange rate falls through the floor. The exchange rate however is masking the money supply issues. The money supply is inflating, while we are technically in a deflation due to shifted increased demand for L$ from the premium accounts to buying over the LindeX. If there is a panic of the high powered money in the hands of speculators sold over the exchanges, it’s highly possible we will be in a full blown hyperinflation. This would be devastating on inworld business, both content creation and land. Imagine prices having to change by the minute because of the exchange rate becoming weaker and weaker to the dollar.

Linden Lab is not making enough money on the LindeX, while watching their profits eaten by fraud. Sales from Supply Linden and transaction fees don’t cover the fraud issues. User growth in SL is now flat, while transactions remain high. A worrying trend if anything goes wrong.

So yes, I want to suggest some fixes to the LindeX so that we have the velocity of money, which Supply Linden provides, but without the money supply inflation problem. If that’s not possible, one can glean from my critique of the current situation, how to lay the groundwork for a possible sensible working money system for other virtual worlds, in order to enable a stable commerce system.