Tagged: example

how much does running a car cost?

I’m returning to education, and because of the rural area in which I live, I shall need a car to get to schools to do supply on a daily basis. So, I shall have to ‘buy’ a car. Which brings into question how much a car costs to run, the issue of ownership, petrol costs, taxes, and so on. Also, a brief look at current ‘alternative’ solutions like Zipcar and a local car-trader down the road who is trying to compete with a low-tech solution, and then we’ll look at how an ecosquared car use may be financed. And if cars don’t rock your boat, we’ll look at other applications of the same math such as with health, revealing a fundamental core to economics: the relationship between capital (a static fund) and regular payments.

front_s

everyday running costs of ownership

Screen Shot 2014-01-05 at 15.17.00

These costs are ‘reasonable’ for running an average car; with new cars devalue, replace the ‘maintenance’ costs with devaluation. ‘Upgrade’ is the amount of money that is put aside to pay for a new car; eg sell a car at a loss of £500 over the year will mean that the new one will be bought to re-coupe that loss; that is, it will cost £50/month to just stay ‘level’.

Still, if you have a car, these costs are reasonable. That’s £3000 to £5000 a year! Cars burn money…

running costs of rental

Screen Shot 2014-01-05 at 15.26.15

Roughly £400, which is £250/£100 more than ownership. No head-aches of ownership. New car. Surely there should be a non-new rental deal out there? There was, but more of that later. Let’s look an a new ‘alternative’ to rent/buy.

‘alternatives’ like zipcar

Screen Shot 2014-01-05 at 15.38.21

 Based on a trip daily to work and back, clearly Zipcar isn’t the right solution. Another one is Uber, but that’s beyond the horizon at the moment; it’s touted to do to logistics what Amazon did to book-selling, and everything else-selling, kinda. It’s what ecosquared will be competing with a few years down the line, if we’re not clever.

a guy down the road called Darren…

I spoke with a guy last night, Darren Sharpe, an interesting guy. He was ahead of the curve and came up with ‘rent-a-banger‘, basically renting out non-new cars. He ran this for 15 years, but the insurance was a real head-ache, and people abused the system; as we know people take care of things they own, and tend to trash or neglect rented cars, flats, tools — a mentality shift which is critical for longer term sharing solutions.

Now, Darren sells five-year old cars for £2k, and guarantees buy-back at £50/week. So, if you want to return the car say 10 weeks down the road, he will buy it back for £1,500. Thus, cost of use is £200/month PLUS £100/£200 ownership costs. That is, using Darren’s system you need £2k capital, and it costs £150/month more than ownership.

summary of current offerings out there at the time of writing

Screen Shot 2014-01-05 at 16.16.08

Looks like ownership is still the cheapest way to run a car, with all the head-aches that ownership entails. Basically there is a financial separation between the players: the owner of the car, those who build the roads and the insurers, the car-mechanics who maintain it, and the company employees who supply the petrol. They are all working together, using the same economic system, with the belief that competition provides us with the best service at the lowest cost.

ecosquared?

Well, it depends on what scale the ecology is at. Let’s say it we have levels of social saturation, which I’ve used before, but in reverse order this time, from the ‘fantastic’ to the realistic, me now looking for a car:

  • Yellow Saturation with massive game-changing coverage
  • Blue Network where a wide sector of people are sharing within ecosquared protocols
  • Green Team of a few people connected and using the protocols
  • Red Solo just starting with only you using the protocols

Yellow Saturation

A world where there are enough people in the network to own Esso; where the users and employees of the petrol stations are the shareholders, have %-equity. Nobody is making a profit from the petrol you get at the station. You drive up, fill up the tank, resource use is tabulated, you drive away. No money transaction. Of course, your petrol use may be higher or lower than others, and this is related to how often you use the car. Remember, none of it is yours: its an economy of use, not possession.

(By the way, Esso is evaluated at $300b. 100million people putting in £3000 each (the cost of petrol for a year for some folk) could buy Esso outright. That’s something to think about. An FTP open moneystream of $300b; that’s everyone on the planet contributed $40 each. Will we ever reach this ‘fantastic’ situation? Well, we have the protocols. We have the intention and love and trust between us as friends and family… we just lack the trust in their operation. We are trapped by our traditional mechanics.)

And the cost of petrol is much lower in certain countries, those which have decentralised their government. Just like Esso is %-equity crowd-shared, so is ‘government’. A double win for the folk who manage that first!

Blue Network

A car-pool where insurance is brought within the fold. That is, a crowd-owned insurance company. Again, no-one is making money out of us. When an accident occurs, it is covered by FTP. Of course, it comes down to trusting people to drive cars around. Do you give a super-dooper car to a young man? Only if he proves he can drive well. Insurance companies have the math worked out in terms of rates of injury etc. We should be using this math to simply reduce costs of premium, or in our case FTP contribution towards this BitCar project. Money is not put into the organisation competing with other organisations, a massive marketing and advertising game, both externally and internally.

Screen Shot 2014-01-05 at 19.00.08

This is from Direct Line’s 2012 Annual Report (p98).Operating costs 25% of revenue, over a £1billion. That’s a lot of ‘financial’ machinery being paid for.

In terms of ecosquared, we don’t want an insurance company; in fact, we don’t want any company for that matter. We simply use the assurance we have between us: MTTP for p2p, and FTP for one to many. If some network of people give a flash car to one of their group, and they don’t have the resources locally to cover it if things go wrong, then they will require other networks to subsidise them. This is the typical fission-fusion and 1:5 grouping that all kids are familiar with by the age of 11. Not complicated. Fractally complex, but essentially — mathematically and psycho-socially — simple.

Green Team

For this to work, the team has to be concentrated. That is, people who live close by, who share the same garage for example. Each participant ‘owns’ their car in the sense of paying for Road Tax and Insurance (£50-£100/month). Instead of paying for when the car breaks down, a contribution is made to keep the car running smoothly. How much? Depends on how many cars are in the network and the size of the garage, but let’s say around £50/month. They may need to take more people on during periods of stress, or pass cars on to other garages if the demand is too high, as occurs nowadays. And when things are slow, cars are invited in to upgrade them. The objective is to keep cars healthy, so that they do not ‘lose’ their value. Courses are put on to invite owners to be involved in the maintenance of their cars.

Instead of saving funds in private banks, or accessing credit, participants GIFT(£50/month) for the use of the car, FTP{Bitcar}. This accumulated FTP (within a year, 10 car-owners accumulate £6000) not only attracts other car-owners to the network, but can operate like insurance, and to buy in new car, perhaps when a member of the community gets to driving age.

Red Solo

Difficult. Two things possible: hack ownership, and share %-equity in the income enabled by car-use.

hacking ownership

Let’s say I manage to generate the funds to ‘own’ a car at £2k. Let’s say I give-it(car)-forwards-to the ‘BitCar’ project. I also give-it(£50)-forwards-to FTP. Which means I have 100%-equity in all three ecosquare value vectors, Vp Vk Vi, namely the Aggregate (ie the car), FTP or Moneystream (which will be £300 by summer), and SEA.

Who knows how I can leverage this in the future? Perhaps attracting others to the Bitcar project? Perhaps someone may wish to GIFT(car)(£50). Perhaps, I will be able to give my car to someone (rather than selling it), and produce the dynamics described in the Green Team? Either because I leave the country and don’t need the car, or I buy a new car. Perhaps I can use the FTP to buy a new car, and thus include the car within the BitCar network?

So, running costs are identical to ‘ownership’, only difference is, the money that normally goes into the ‘bank’ (for whatever nefarious purposes they put it to) when saving up is replaced with FTP, an open-money-stream:

Screen Shot 2014-01-05 at 16.38.51

invest in people, not things — we are the ones ‘making’ the money anyway

Secondly, an alternative way of thinking about this, is to think what the car enables. I will be able to teach, making around £80/day after tax. The car enables this. Without the car, I can’t get to school. So, in a way, the person who gives me the car, is enabling me — they deserve some %-equity in my income. If I make £1600/month, what %-equity would they want? Same goes for the garage mechanic — how much %-equity do they deserve?

Whoever has contributed the car (£2k), the mechanics at the garage (£50/month), I still have to pay for insurance and road tax (£50/month). Based on a plan which is half-way between rent and ownership, at around £250/month, those who supply the car should get around £200/month, which is 12.5%-equity of my income stream.

Screen Shot 2014-01-05 at 18.02.15

After one year, the ‘owner’ has recouped their investment, and the garage has made £323.99, regardless of the repairs. Total, £2400 to use the car.

Now, with this kind of relationship, if I kept using the car by the end of the second year, the car-gifter will have made £1722.78 ‘profit’, and the garage another £750 from the second year to cover the costs of maintenance. Total, £4800 to use the car over two years.

A few questions may come to mind, about what the gifter of the car may do — perhaps offer a better one, and if so, what is the rate now? And does the garage-mechanic keep getting more and more until they are taking all of the 12.5% equity reserved for car use? Well, funnily enough, no. It tends to a number. After 10 years, for example, the car-gift owner will be getting £50/month and the garage-mechanic £150/month. Perhaps the car will require that amount of maintenance, but probably not.

the core of economics: numbers and time

Whatever your interest is in cars, the math pattern deserves attention. Why? Because it shows the relationship between capital and regular investment. Think about this in a completely different field — health. Do you pay for health treatment when something goes wrong (capital), or should you be paying a regular investment for health (regular)?

This relationship is at the heart of all our finances: the difference between a static lump sum and regular payment.

FTP, the accumulation of money as an index of trust within a network, combines both: regular payments to a static ‘standing wave’ of money. Where is this money? Well, it is like a bank, but unlike a bank, accumulated FTP does not get used. Like MTTP guarantee, it remains in escrow between the parties. So, FTP acts more like a guarantee, to be released if not enough revenue is generated from what is co-created; to ‘buy out’ those who do not wish to have %-equity in the co-created product.

The thing to get your head around is that %-equity is at the base of new economics, ecosquared or otherwise. Moneyflow is secondary.

And there is a race going on: as capitalism gets finer and finer in resolution, turning everyone and his dog into a capitalist, versus the sharing economy, where we are all part of a greater whole, a collaborative commons, where we share everything. Capitalism has massive momentum, institutionally, mechanically (financially), and psychologically. The internet has cracked open a massive opportunity in the form of open-source and it rejuvenated the commons and after a decade a massive sharing meme. But are the proponents of the sharing economy fooled by their relative luxury, royalty within the citadel playing games because they live in a world of material abundance?

It’s a tough call, and we each have to make it. We do so in our daily actions. We do so with every single financial transaction. I for one, am not convinced, as I turn to ‘buying’ a car, filling it with petrol regularly, and fueling the current system which is so destructive to our environment, and our collective soul.

building a house ecosquared style

How would I go about building a house if I wanted to do so using ecosquared protocols? I will look at three conditions of social saturation:

  • Red just starting with only you using the protocols
  • Green with teams of people connected in a network using the protocols
  • and Blue where a wide sector of people are sharing within ecosquared protocols

There are many factors to building a house and different ways to categorise its construction, let the following payments are estimates for building a three-bedroom house using traditional economics suffice:

  • land cost, buying land, £100k
  • labour, 40k
  • materials, £120k
  • selling of house £260k +/- whatever the ‘market’ price of such a thing is in the current market

Screen Shot 2013-08-23 at 14.34.29

red solo

Because you are the only person using the protocols, their use is rather limited. Land will be bought, as normal, though you may want to consider the land to be ‘commons’. The materials will also be bought. However, it may be possible to phrase the contracts with suppliers as an MTTP contract. Certain resources may be accessed again in the future, and rather than thinking the money is for the materials, it is more for the relationship to the materials supplier. They just happen to be giving you the bricks, cement, cables, etc.

Labour is conducted as MTTP, whether people understand it or not, it does not matter. It may be possible to open up the potential for a ‘crowd-funded’ house. That is, when the house if finished, the distribution of it worth (if it was sold) would be shared by the value attributed to people’s contribution.

When the house is built, it is ‘open-source’. It is nominally, legally owned by you, but in your mind it is simply the place where you happen to live. Neither the house or the land on which it is built is owned.

Building a house during Red Conditions, means this is more a mental exercise, a thought-experiment, than anything else. It does open up the necessary mentality for future growth however, both in terms of the people engaged to build it, as well as engaging others who have self-built.

Screen Shot 2013-08-23 at 14.36.39

green team

A team gathering to build a house is a little like a ‘barn-building’ community, or a ‘building society’. People are aligning to create a house together, and if they can build one, they may help others as a team so that everyone who contributes ends up living in their own home.

The land is ‘owned’ but is shared in a collective sense. Again, not much meaning here unless the team actually build on mutual, shared ground.

The labour can be paid for via MTTP, and if within the team, it is volunteered. Subjective enumeration is the basic means of tracking people’s contributions. This should map in some way to the current market costs, for laying foundation, brickwork, panelling, flooring, electrical system etc. It should be possible to estimate the ‘return’ to each contributor via SEA should the house be sold.

Resources are bought off market. Again, this is a standard ‘trade’ exchange, money for resources, however it may also be clothed as an MTTP contract, to invite suppliers into the ecosquared supply chain.

The finished house is owned collectively, but is occupied by whoever is living there. The current inhabitants are stewards of the building. This should enable greater flexibility in terms of movement should people want to relocate to other parts of the city, country or the world, by swapping households.

The ‘market-value’ of the house is in terms of traditional economics. In terms of ecosquared, the building has no financial value whatsoever. We may attribute subjective enumeration, presumably by the inhabitants, but this relies on allowing SEA to apply to things. The principle, the practice, is that once the house is built, it is ‘free’. It is a resource to be tracked, to be used, but not to be tabulated with a monetary value.

old fashion barn raising

blue network

Let’s assume that the ecosquared network has end-to-end chains of supply. This means that the build team are simply sharing their resources, as do the suppliers. There is no payment for anything. Materials are given. There may be MTTP contracts, and of course subjective enumeration, depending on the scale of the network.

If this is integrated with an end-to-end supply chain of food too, so that material suppliers and build teams are given food, then the system gets close to becoming fully self-sufficient. Of course, this is still within the current market place, with externalities like oil perhaps, or electricity from a central power grid, and so on, which need to be ‘paid for’. This is balanced by ‘income’ by the entire network as normal jobs. Some participants may take an income as ‘joiners’, ‘bricklayers’, ‘construction workers’, ‘farmers’, ‘teachers’ and so on. Such individuals sell to the current market, and this money is distributed via SEA to all participants within the network.

Because most of the daily resources are internally sourced, whether it happens to be the bricks for the newest buildings or the lettuce in the salad, there is no need for money, personally. Luxuries may be bought by individuals, but this kind of behaviour is frowned upon since the community is still paying for certain collectively required resources, such as electricity, petrol, etc. Once these collective requirements are covered, which is a calculation based on resource allocation and nothing more, the moneyflow which ends up with individuals is spent as each individual sees fit. Because of the way the system works, those who accrue the most money are those who produce the greatest value within the community. This may be related to jobs that people do not want to do, such as working in the sewars, or who happen to provide more invisible skills and services, self-development, social integration, educating kids, etc.

The point is, with the accumulation of material products, as houses, schools, farms, factories, enter into the ‘commons’, so there is no need to pay for these. These resources are shared. Their use is what is tracked using SEA as well as resource allocation economics. There are no owners, so no burgeoning externalities. People are being useful to one another, giving of their produce, whether it is planting a seed and then giving the resulting carrots to others, tutoring kids at math, or constructing bricks. Everything is given freely, and tracked with SEA. Money loses its internal necessity at the rate of which things are being produced within the ecosquared entity; money is no longer needed to ‘buy in’ resources.

 

challenging observation

You decide when these periods of time occur, when we shift from Red to Green to Blue conditions. The rate of social adoption depends on each one of us, individually and collectively, personally and globally.

At some stage, entire communities can become self-sufficient, where money is no longer needed to ‘buy-in’ resources, since they are all generated within ecosquared, food, materials, energy sources. This constitutes the Yellow Condition. Once these conditions apply to all communities globally, then we will have shifted from our current economic system to an economics based on giving, and GIFT will have been completed.

Could something like the Ha-ha’s be used to build a house? Current estimates are about 6 months to build a house. Would 1000 participants be willing to put in £100 to get a house built, using ecological designs, minimal electricity usage, etc — and that house be ‘owned’ by the collective? The current system for enabling ha-ha’s is not strong enough to support this kind of initiative because we can’t track SEA. However, one day the system will be more rigorous, and if participants put £100 per month into these initiatives rather than a mortgage, the world may look rather different in a decade or so.