Navi Radjou and Jaideep Prabhu write:  In a famous 1937 essay, the economist Ronald Coase argued that the reason Western economies are organized like a pyramid, with a few large producers at the top and millions of passive consumers below, is the existence of transaction costs – the intangible costs associated with search, bargaining, decision-making, and enforcement. But with the Internet, mobile technologies, and social media all but eliminating such costs in many sectors, this economic structure is bound to change.
Indeed, in the United States and across Europe, vertically integrated value chains controlled by large companies are already being challenged by new consumer-orchestrated value ecosystems, which allow consumers to design, build, market, distribute, and trade goods and services among themselves, eliminating the need for intermediaries. This bottom-up approach to value creation is enabled by the horizontal (or peer-to-peer) networks and do-it-yourself (DIY) platforms that form the foundation of the “frugal” economy.

Two key factors are fueling the frugal economy’s growth: a protracted financial crisis, which has weakened the purchasing power of middle-class consumers in the West, and these consumers’ increasing sense of environmental responsibility. Eager to save money and minimize their ecological impact, Western consumers are increasingly eschewing individual ownership in favor of shared access to products and services.

As it stands, nearly 50% of Europeans believe that, within a decade, cars will be consumed as a “shared” good, instead of privately owned, and 73% predict the rapid growth of car-sharing services. BlaBlaCar, Europe’s leading car-sharing service, now transports more passengers monthly than Eurostar, the high-speed rail service connecting London with Paris and Brussels. And the better-known service Uber is causing panic among taxi companies worldwide. Despite recent controversy, the company, founded in 2009, is valued at more than $40 billion.

This shift in consumer attitudes extends far beyond transport. The peer-to-peer home-sharing service Airbnb now rents more room-nights annually than the entire Hilton hotel chain. And the peer-to-peer lending market, which bypasses banks and their hefty hidden fees, surpassed the $1 billion mark in early 2012.

The global market for shared products and services is expected to grow dramatically, from $15 billion today to $335 billion by 2025, without requiring any major investment.

The nature of horizontal networks supports this prediction. Such networks begin working long before they reduce transaction costs. By enabling ordinary people to do at home what, a decade ago, only scientists in large labs could do, the Internet economy is lowering the costs of research and development, design, and production of new goods and services in many sectors.

The transition to a frugal economy is happening. Traditional companies must get on board – or risk becoming obsolete.

Computer programmer Lauren Mosenthal and her partner, Eileen Carey, came to California attracted by possibility.   The only problem with their dream is that Silicon Valley has never produced a female Gates, Zuckerberg or Kalanick. There are a few high-profile female entrepreneurs in the Bay Area, but despite the very visible success of corporate titans Meg Whitman, Sheryl Sandberg and Marissa Mayer, who signed up with companies after they took off—their numbers are relatively minuscule.

Despite that discouraging fact, the two women spent their 20s deep inside the valley’s bro community—a culture that has been described as savagely misogynistic. In inverse ratio to the forward-looking technology the community produces, it is stunningly backward when it comes to gender relations. Google “Silicon Valley” and “frat boy culture” you’ll find a financing system that rewards young men and shortchanges women.

Shanley Kane is a young tech industry observer and founder of Model View Culture, an acid-penned, widely read website on which she routinely exposes and excoriates the white brogrammer establishment. In an interview with MIT Technology Review in December, she said venture capitalists talk about the need to get 10-year-old girls into science in order to bring up the numbers of women they will fund, but don’t fund the ones already in the industry. “We are not getting hired, and we are not getting promoted, and we are being systematically driven out of the industry,” she said.  Women in Silicon Valley

Charalampos Economou writes:  The structural adjustment program in Grrece has failed to deliver the expected results. Indicative of this is the fact that government deficit in 2013 reached 12.2% of gross domestic product (GDP); debt went up to 174.9% of GDP; unemployment reached 27.5%; more than a third of the population (35.7%) is at risk of poverty or social exclusion; and the inequlaity of income distribution increased. Public health expenditure decreased by €4.2 billion between 2009-12, and more than 2.5 million people lost their health insurance.

In this context, Syzria’s election win came as no surprise. Based on an alternative policy proposal of a national reconstruction plan, the party put forward an optimistic vision that was desperately needed.

The plan focuses on four major pillars to reverse the social and economic disintegration, to reconstruct the economy and exit from the crisis. The four pillars are: confront the humanitarian crisis; restart the economy and promote tax justice; regain employment; and transform the political system to deepen democracy.

The plan includes free electricity to households under the poverty line and meal subsidies to families without income.  Syriza has also promised to provide free medical and pharmaceutical care for unemployed people without health insurance — a big problem in Greece that impacts on access to care.

Housing guarantees, rent subsidies, transport discounts for long-term unemployed and those under the poverty line aim to tackle issues related to poverty along with the restitution of the €12,000 annual income tax threshold and restoring the minimum wage to €751.

The health sector will be one of Syriza’s priorities, with an emphasis on securing access for the uninsured to health services, staffing the national health service with the recruitment of the necessary number of medical and nursing personnel and increasing the budget for health.

Deliverying health care will be done through an increase in public spending to be covered  by decisively combating tax evasion and smuggling, and by establishing a public development bank as well as of special-purpose banks financed from the so-called “comfort pillow” of the Hellenic Financial Stability Fund and other specialized European instruments.

The most difficult task the party has will be to convince the EU and troika that a new European deal for Greece is needed in order to secure a socially viable solution to Greece’s debt problem.

James Pierson writes: The Bureau  of Labor Statistic’s Consumer Expenditure Survey, a detailed study of the spending patterns of 35,000 randomly selected households, paints a grim portrait of middle class families trying to maintain their standard of living in the face of stagnant or falling incomes and rising costs for necessities like rent, transportation, and health insurance. Middle class families – defined as those falling in the middle quintile of the income distribution with incomes between roughly $35,000 and $60,000 in 2013 – reported incomes that were essentially flat between 2009 and 2013 and expenditures that increased by slightly less than 3 percent. Households in the income quintiles just below and above the middle reported similar patterns of flat incomes and slightly increased expenditures. During these years of “economic recovery” – 2009 to 2013 – consumer inflation increased by nearly 9 percent, leaving real incomes for the middle class that were much lower at the end of the period than at the beginning.

Americans have never favored radical schemes to redistribute income because of their faith in social mobility and the belief that they can get ahead on their own. A stagnant America, lacking growth and broad opportunities for advancement and achievement, would represent something new and dangerous for a nation whose ideals and institutions have been built upon a foundation of abundance.

The United States, in short, needs a new focus on economic growth and especially a new “growth agenda” out of Washington to replace the emphasis upon redistribution, regulation, and gender and race controversies that have defined the Obama years. The party or candidate that can deliver such an agenda will win the support of grateful middle class voters – and along the way they may just succeed in saving their country from tearing itself apart in fruitless battles over dwindling shares of a stagnating economy.  Is Growth Necessary

Suzanne Moore writes: Who will look after the super-rich and think about their needs  Private security costs a fortune, and with the world becoming an increasingly unequal place a certain instability increases. It could be dangerous!

Very smartly, Oxfam International is raising such questions at the World Economic Forum at Davos, where the global elite gather to talk of big ideas and big money. Oxfam executive director, Winnie Byanyima, is arguing that this increasing concentration of wealth since the recession is “bad for growth and bad for governance”. What’s more, inequality is bad not just for the poor, but for the rich too.

The economic climate is often represented as a natural force, like uncontrollable weather. It’s a shame that the planet is getting hotter, just as it’s a shame that the rich are getting richer. But these things are man-made and not inevitable at all. In fact, there are deliberate and systemic reasons as to why this is happening.

The rich, via lobbyists and Byzantine tax arrangements, actively work to stop redistribution. Inequality is not inevitable, it’s engineered. Many mainstream economists do not question the degree of this engineering, even when it is highly dubious. This level of acceptance among economists of inequality as merely an unfortunate byproduct of growth, alongside their failure to predict the crash, has worryingly not affected their cult status among blinkered admirers.

Even the mild challenge of Thomas Piketty, with his heretical talk of public rather than private interest being essential to a functioning democracy, is revolutionary in a world which buys the conservative idea that the elixir of “growth” simply has to mean these huge extremes in income distribution.

That argument may now be collapsing. The contortions that certain pet economists make to defend the indefensible 1% are often to do with positing the super-rich as inherently talented and being self-made. The myth is that everyone is a cross between Steve Jobs and Bono; creative, entrepreneurial, unique.

There are always those who will side with the powerful against the powerless, and economists specialise in this.

When we talk of neoliberalism, we are talking about something that has fuelled inequality and enabled the 1%.

Oxfam’s suggestions at Davos  are attempts to claw back some basic rights, with talk of tax, redistribution, minimum wages and public services. But isn’t it rather incredible that a charity has to do this? The Occupy movement has dissipated, but we are seeing in Europe, primarily in Greece and Spain, a refusal to accept the austerity narrative that we appear to have wolfed down here in the UK.

The neoliberal project may fail not because of huge protest, but because reduced income means reduced demand. Never mind the angry proletariat, a disappointed middle-class is something all politicians fear. To stem inequality, it is imperative to stop seeing it as inevitable. It’s a choice. A choice very few of us have any say in. The poor are always with us. And now the deserving and undeserving super-rich are too? That’s just the way things are? No. This climate can also change.