Essense of Richard Stallman’s Free Software Idea

Can a system support the benefits to many entities that had previously been confined to a single entity?

Furthermore, can this be done without support of law or government, since laws can be reshaped to benefit the few at the expense of the many?

I believe the answer is yes, and with Richard Stallman’s Free Software, we saw it in action: a form of sharing and mutual aid that is common inside an community or corporation, but not between organizations.    Inside a company, there is free license to use others works without compensation.   In the case of software, this would mean using each others software code and maintenance labor to help another group’s project.    In 1976, all written ideas were suddenly property, so cross-organizational efforts required explicit licensing.     This is especially difficult in the case of individual programmers that are not in an organization, or in an organization that does not do that kind of licensing, such as a University.

Therefore we have seen a system created that regulated a set of shared benefits between organizations that mimicked the efficiency in a pre-property world.

What kind of benefits might be shared in this way?   Housing is one.

Some types of organizations, such as Universities, Churches, and hospitals have operated subsidized housing for their community.  Universities house faculty and students; churches house priests and sometimes homeless people; and hospitals support doctors in training. When corporations created housing for their employees, in the form of “company towns”, the practice was often documented as becoming abusive, so is largely gone.    (The town of Empire Nevada was  company town built by a gypsum mining company, which was the last company town in Nevada going out of business and evicting everyone in 2010).

Is there a way to have a set of housing that is subsidized for the benefit of many organizations of the same type rather than for just one organization?    There is subsidized housing for some groups of people, such as low-income families, set up by the government, or regulated by the government.    If the government did not require these houses to be built they are unlikely to be built and sustained.

So how about another class?   I believe there may have been housing for union members, but I am not sure of this. (anyone know?)

Can this work for those that choose to work in non-profit or public-benefit organizations, whether it be all such organizations or a set of them?  Therefore, a set of housing units can be developed for those that want to work in these organizations as a form of subsidy that would be enduring.

If we could get the incentives right, as Richard Stallman did, we could have housing for public benefit workers that provides an ongoing subsidy to those choosing to serve the public.   If done right, then there would not need to be government subsidy or even specific laws past to do this.

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Michael Hart of Project Gutenberg Passes

A dear friend and an inspiration unfortunately died yesterday.  Washpost obituary.

He dedicated his life to getting books to everyone in the world. He did
this with no compensation and lived a life of near poverty. But he
always shined with good cheer, optimism, and high respect for others. I
got to know him through Project Gutenberg twenty years ago. Visiting him
in his house was a joy– it was stacked high with books all around, and
a glowing green terminal in the basement where he first helped type in
the classics and then lead thousands of volunteers to bring over 37,000
books online as beautifully edited ebooks. A forward thinker, in the
same light as Richard Stallman and Ted Nelson, who saw how the world
could benefit from our digital tools. Every reading device I have ever
come across always started with the Gutenberg Project collection
including our Internet Bookmobile.

On first meeting him, I remember dodging traffic with him as we walked
calmly across Lakeside Blvd in Chicago (which is a highway and extremely
dangerous). He said he did this in normal course when he was growing up.
The cop let us get away with only a warning.

Another Michael flare is that he wrote email that was “right justified”
by changing the words to end at the right place– I have never known
another to do this. He said that he did this to avoid text editors
reflowing his text and “destroying my phraseology”. For instance below
are two letters from this summer, and I included Greg Newby’s obituary.

A special man, a guiding light, a good friend. I miss him.   Lets build that billion book library that he is dreaming of.

-brewster

On 7/16/11 4:38 AM, Michael S. Hart wrote:

A Graceful Exit

As most of my friends know, I have accomplished all of the goals
I have set for myself throughout my life, and I think I can say,
without fear of too much repercussive responses, that the career
I have chosen in eBooks has been a success in terms of what I've
been trying to accomplish for these last four decades.

At the same time, I do realize that other persons have had other
ideas/ideals about eBooks, who have called me everything from an
outright raging Communist, to sincere Socialist, to unqualified,
in terms of membership. . .not ability. . .member of Capitalists
Exploiting The World. . .no kidding.  I do realize that is might
be difficult for persons living on the other side of this world,
given the information they have to work with, to view me, or any
other American, as anything other than a Capitalist Imperialist,
so I bear less in the way of ill feelings about this.

However, now the time has come to talk of other things.

Yes, I do have one more impossible goal I dream of, but I do not
believe I can accomplish it in the same manner I accomplished an
assortment of previous goals, with a combination of persistence,
ability, and convincing others to give me unofficial assistance,
as I face a combination of limited time, limited resources and I
must admit, declining energy levels, though I still manage to do
more work than I ever did before.

However, I do realize that without some serious changed in life,
there is little possibility of accomplishing my last goal with a
lifestyle continuing in the same vein.

Therefore, I now would like to remind you of my last goals:

1.  A Billion eBook Library

2.  Spending More Time In Hawaii

3.  Working To Create A Graceful Exit

Here are the details:

A Billion eBook Library

Premise #1:

There are ~25 million books in the public domain.

If we do ~40% of these that will be ~10 million eBooks.

Premise #2:

There are ~250 languages with over a million speakers.

If we do ~40% of these that will be ~100 languages.

Conclusion:

10 million eBooks translated into 100 languages yields

ONE BILLION eBOOKS

Note:  I realize how impossible this sounds, given the
powerful lack of interest by thousands of translators,
and other experts I have contacted, but given previous
personal experiences shared by each of you and myself,
I think we must realize it IS possible, even if we are
going to have to do all to much of it ourselves.

Nevertheless, I plan to devote a serious amount of the
time I have remaining to doing the setup required.

2.  Spending More Time In Hawaii

As most of you know, Hawaii was just too laid back for
me to stay there more than a month at a time when this
opportunity first appeared.

However, you must also realize that from 1999 to 2011,
I obviously have aged 12 years, and the difference for
me between 52, when I could still pretend to be ~40's,
and today, when there is little pretending possible, I
am now much more likely to spend at least half my time
there, if not even more, given that I might expect the
pressures to increase to abandon my Illinois residence
for various and sundry reasons we should maybe discuss
when we get together next.

However, I can tell you that pressures of Winter, here
in Illinois, plus those of advancing age, make it more
and more difficult to look forward to more of this.

I should add that even though Spring is my favorite of
all the seasons, this spring was an effort, but with a
lot of luck I once again managed to do all I planned.

However, I must also admit that this, too, will get to
be more and more difficult as the years progress.

Therefore I am very glad to announce that I have a job
with John in Hawaii that will, when needed, provide me
with the ability to live in a neighboring apartment to
John's for as much of the year as I would like, and we
will see how this works out starting this Winter.

3.  A Graceful Exit

I would like to support all the efforts I have before,
plus the final one I have listed above, without any of
repercussions that could take place with I shuffle off
this mortal coil.

In some ways I would like to simply work behind scenes
as much as possible so I won't be missed when I'm gone
from those activities, but I also realize that my name
just might be worth something in public relations so I
leave some of that decision open for your advice.

As John and Greg can testify, I am still capable of an
awful lot of Newsletter writing, though it does take a
toll, particularly when I have lots more to do for the
other portions of my life.  Again, I leave this open a
lot for your advice.

Please refer to the previous message I sent about work
on setting up a new, and much different kind of setup,
for The Billion eBook Project, I will resend it.

If I/we play our cards right, perhaps I can leave this
scene without causing undue trouble, and perhaps I can
even manage it in absentia as some kind of motivation,
perhaps setting some goal, perhaps even some rewarding
procedures for accomplishment.

I, personally, do not think the world at large really,
sincerely wants to provide literacy and education from
anyone to The Third World, in spite of all lip service
to the contrary. . .so I warn you that the possibility
exists that this project will not be supported from an
outside set of sources that I still plan to approach--
so you might find that you are more on your own that I
would like to hope, and that you might have to expect,
really, a future that is more like the past, in terms,
sadly to say, of having to do a LOT of this work on an
individual basis more than having the world's support.

I hope you feel up to the task. . .you will be tempted
more and more to rest from exhaustion as you get older
and older. . .the all nighters will turn into just get
up early when the air is clear, but you will also find
that what you can accomplish in those fewer hours will
be more than you ever did before, because experience's
power is greater than you might think today.

That is what I leave you with. . . .

Another goal that is nigh well on to impossible.

Little hope of finding any real world support.

And the hope that your experience will leverage future
endeavors for you as much as it has for me.

I hope you can put enough into these efforts that I am
able to depart as gracefully as is possible these days.

Hoping to thank you soon for your time & consideration,

Michael

On 8/9/11 4:18 PM, Michael S. Hart wrote:

The Impatience of Olde Age:  Part 0

With your permission, the three of you, I would like to start
presenting via email what I had intended to wait until we are
all together in once place at the same time.

This past 10 day, up until yesterday, I had been working just
about as hard as I possibly could every single day to get the
house and everything else prepared for my upcoming trips from
here to John's in Hawaii and Brewster's in San Franscico, for
the purpose of doing this in person, and it sill might happen
that way, but I just do not have the patience to wait and see
how it all works out.

So, please RSVP ASAP and give me permission to start sending,
in hopefully easy to digest pieces, some messages about those
steps I have in mind for the future.

Hoping to thank you soon for your permission,

Michael

This is an obituary from Greg Newby, a close friend of Michael–

http://www.gutenberg.org/wiki/Main_Page

Michael Stern Hart was born in Tacoma, Washington on March 8, 1947.
He died on September 6, 2011 in his home in Urbana, Illinois, at the
age of 64.  His is survived by his mother, Alice, and brother,
Bennett.  Michael was an Eagle Scout (Urbana Troop 6 and Explorer Post
12), and served in the Army in Korea during the Vietnam era.

Hart was best known for his 1971 invention of electronic books, or
eBooks.  He founded Project Gutenberg, which is recognized as one of
the earliest and longest-lasting online literary projects.  He often
told this story of how he had the idea for eBooks.  He had been
granted access to significant computing power at the University of
Illinois at Urbana-Champaign.  On July 4 1971, after being inspired by
a free printed copy of the U.S. Declaration of Independence, he
decided to type the text into a computer, and to transmit it to other
users on the computer network.  From this beginning, the digitization
and distribution of literature was to be Hart’s life’s work, spanning
over 40 years.

Hart was an ardent technologist and futurist.  A lifetime tinkerer, he
acquired hands-on expertise with the technologies of the day: radio,
hi-fi stereo, video equipment, and of course computers.  He constantly
looked into the future, to anticipate technological advances.  One of
his favorite speculations was that someday, everyone would be able to
have their own copy of the Project Gutenberg collection or whatever
subset desired.  This vision came true, thanks to the advent of large
inexpensive computer disk drives, and to the ubiquity of portable
mobile devices, such as cell phones.

Hart also predicted the enhancement of automatic translation, which
would provide all of the world’s literature in over a hundred
languages.  While this goal has not yet been reached, by the time of
his death Project Gutenberg hosted eBooks in 60 different languages,
and was frequently highlighted as one of the best Internet-based
resources.

A lifetime intellectual, Hart was inspired by his parents, both
professors at the University of Illinois, to seek truth and to
question authority.  One of his favorite recent quotes, credited to
George Bernard Shaw, is characteristic of his approach to life:

“Reasonable people adapt themselves to the world.  Unreasonable
people attempt to adapt the world to themselves.  All progress,
therefore, depends on unreasonable people.”

Michael prided himself on being unreasonable, and only in the later
years of life did he mellow sufficiently to occasionally refrain from
debate.  Yet, his passion for life, and all the things in it, never
abated.

Frugal to a fault, Michael glided through life with many possessions
and friends, but very few expenses.  He used home remedies rather than
seeing doctors.  He fixed his own house and car.  He built many
computers, stereos, and other gear, often from discarded components.

Michael S. Hart left a major mark on the world.  The invention of
eBooks was not simply a technological innovation or precursor to the
modern information environment.  A more correct understanding is that
eBooks are an efficient and effective way of unlimited free
distribution of literature.  Access to eBooks can thus provide
opportunity for increased literacy.  Literacy, the ideas contained in
literature, creates opportunity.

In July 2011, Michael wrote these words, which summarize his goals and
his lasting legacy: ?¢‚Ǩ?ìOne thing about eBooks that most people haven’t
thought much is that eBooks are the very first thing that we’re all
able to have as much as we want other than air.  Think about that for
a moment and you realize we are in the right job.”  He had this
advice for those seeking to make literature available to all people,
especially children: “Learning is its own reward.  Nothing I can
say is better than that.”

Michael is remembered as a dear friend, who sacrificed personal luxury
to fight for literacy, and for preservation of public domain rights
and resources, towards the greater good.

This obituary is granted to the public domain by its author,
Dr. Gregory B. Newby.
_______________________________________________
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AP piece on the Physical Archive of the Internet Archive

The AP wrote a article and made a video about the physical archive of the Internet Archive.   This is our storage system for millions of books that I wrote about on the Archive Blog.   We hope to expand it to music and movies as well.

Onward!

 

 

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Growing Our Own Food

Leveraging recent developments, I believe we can build small-scale farms that are low-labor and low-water-usage that grow enough chickens, fish, and vegetables (not sure about grains) to feed many families.   Small scale meaning less than 1 acre and low labor meaning it does not take over your life.   A gentleman’s farm that actually feeds a community.

This can bring us healthier food and lifestyle as well as a sense of food security.   Serving as a model and example for others in case of a food shock, some bottom-up research and development could help society in the case of need.

I wrote an essay about my researching the subject.

But please read and comment.   Word File, PDF, other formats.

http://www.archive.org/details/GrowingOurOwnFoodAndOtherEssays

aquaponics

 

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What should be the school year be for custom schoolers?

Our family has built a “custom school” around our 14 year-old child with hired teachers, and it is working out fantastically well.    He is learning more than his former classmates, according to his former teachers that have evaluated him.   He is excited about reading a wide range of books, which is new.   And I am glad he is learning the beauty of mathematics, not just the mechanics he was taught before.    Together we decided to continue for another year at least.

But what should we do about the school year?   Should we match his older brother’s high school schedule?    We started out the year that way, but have changed.   He now takes a class whenever both he and his teacher is in town, and we feel free to have him take trips with us all through the year.   Right now is now at a 2 week birder camp which he saved his allowance for.   The teachers have been thankfully flexible with our schedule, and it we are flexible around theirs.    So we have adopted a flexible schedule that has many weeks off each year, but not all gathered together.

This has allowed us to go on trips together, for his teachers to take him on field trips, and for him to stay learning more consistently.    A language teacher complained that the summer months set students back by many weeks.

There is value to having time off to play, relax, and develop hobbies, but is our spreading this out throughout the year a better course?    It is too early to tell, and I am not quite sure how we will be able to tell, but our son does not seem to feel that he is being cheated out of summer vacation– he is getting trips and independence sprinkled throughout the year.

If anyone has any experience with this, please comment here, or write to us.

 

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Really Owning our Homes: Home/Land Security

What if most people owned their homes free and clear, in other words, debt free?   If we were renting, what if the rent were less than 1/2 of what it currently is because we only paid for upkeep and taxes, and not debt payments of the owner?    With most of us paying 30-60% of our income in rent or mortgage, this would be a huge subsidy.   Better than that, it would give us a sense of security.   If we owned our homes, if bad times hit and we lost our jobs then we could settle back into our house, reduce our expenses and pull through.   Maybe we could call it Home/Land Security 🙂

People are happier when they are not scared of losing something they can not afford to lose.    Losing one’s house to foreclosure means your credit is a wreck, usually one is out of money, and you have to leave your house– a bad combination.    Having to move apartments to a less expensive part of town possibly means changing jobs or schools or neighborhood friends that could support you.   Starting over another notch down can hurt a great deal.    This essay attempts to show a way to really own our homes.

The key to home security is to pay a small part of our income for our housing.     That way when we have a dip in our income we do not have to leave our home.

At this point, the reader might be saying: “well that would be nice, but that is just not my reality.”   And unfortunately, that is correct, that is not most people’s realities.   So we need a new reality.    We need to fix a system, or we need a new system, in which our housing is not a dominant cost in our lives.     How do we do this?   Lets find the cause.

The cause is perpetual debt financing of housing.   Let me explain.    The rent or mortgage we are paying is mostly interest payments on debt.   This is because most mortgages are for 30 years, and most Americans move before 7 years.    When they move, they get a new mortgage that resets the 30 year clock, and they start paying interest again.    The United States government encourages us to just pay interest and never own by giving a generous tax deduction called the Mortgage Interest Deduction.    If we are renting, then most of our rent is going towards the owners mortgage, so again this is just debt financing of housing.

It is perpetual debt payments because people do not do what our ancestors did: build a house as we could afford it, and then pass it on to the children.    We now move and the only way we could afford to buy a house is to take out a mortgage.   A mortgage we are very unlikely to ever pay off.

Even we were the statistically odd ones that does pay off their mortgage, once the house is sold, it will likely be sold to someone that can not afford to pay cash for it and it will again be a debt burden to someone.     Requiring that people not move for 30 years and pass on their house to their children does not seem like a good solution.    Lets try another.

Solution

What if any particular house is paid off once and then stays paid off?  What if we fixed the system such that a mortgage, if one exists, is passed on to the next owner on the same terms until it is paid off, and then a new mortgage can not be placed on the house?    Then owner of brand new house would slowly pay off the cost of building of the house, and once that is done, then all subsequent owners would just pay for the upkeep.    The advantage is that the cost of ownership would be much less and stay low forever after.   The disadvantage is that the owner does not then put extra money into a speculative investment that then might pay off (or might not depending).   Fortunately there are many other ways to speculate with the money that would be saved from paying mortgage interest.

This would mean that those of us living in 50 year old houses would not pay for the interest and principle of the house.   This would mean that a house would not be an investment for the owner, but rather it would be a place for the owner to live in security.

The original builder of the house would pay the construction costs through a 30 year mortgage as they do today, presumably because the banks would make sure the government does not take away this bonanza system for them.   But those that come later do not have to refinance the house as if it were brand new when it is indeed a 30 year old house.

How do we get there?

Given that almost everyone is up to their necks in debt, how do we change this system?    If we could get cooperation from the government, it would be must easier:  first take away the mortgage interest deduction tax credit system, but even this is unlikely because so many people profit from it.    So if we assume we will get no help from the government, can we still get it to work?

Maybe there is an incentive to those that purchase or already own apartment buildings and homes to commit to passing on the mortgage and not putting on new debt.    The mechanics of how one prevents any future owners from putting new debt on the building is doable I am told by lawyers, so lets assume that it is possible.

In fact there are those that take the debt off of houses and keep them off– such as universities sometimes for their faculty and churches for their pastors.   These are organizations that think long term.    Is it possible to find incentives for individuals to also think long term where the benefits will come to those that come after them?    I believe there are.

One incentive can be a lower cost to purchase the house in the first place.   An informal poll by Jordan Modell, who is exploring setting up a credit union for the Internet Archive found that if one were offered a 20% discount on a house then people would give up the possible future upside on selling the house.    This 20% might come from a community foundation could see it as in grant for the future, or even structure it as a long term debt that gets paid back as an extension of the mortgage.

Another incentive could be to a foundation that wants to endow an organization or a set of organizations with inexpensive housing for their workers such as teachers or workers in public benefit non-profits.    This way a foundation could do a cash calculation to find that this form of investment is an enduring way to benefit a cause that could rival putting an endowment in the hands of investors.

There could even be some people that just decide that it is the right thing to do, and put this “no new debt” restriction on their property voluntarily.    Maybe the house or apartment building could be named after them forever as they are giving a gift to all future residents.   This, I believe, can be tax deductable if the entity that will watch over the “no-lien” restriction is a non-profit and therefore could be seen as a donation to that non-profit.

The government could help by taking away some of the bank benefits like the mortgage interest deduction which helps prop up house prices, or even offer a tax benefit for those that donate any future upside on their home investment.    But we do not have to wait for the government to start getting rid of debt on our houses once and for all.

The point is– there are ways that people can own their own homes, really own them, and have the security that comes with that.

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Structural Change for the Public Benefit: A Lesson from Open Source Licenses

Forty years ago there was a political agenda in the US and much of the world that had merit:  fix the issues of ecology, control the expanding power of the multi-national corporations, regulate or phase out nuclear technologies, address the population explosion, and abandon American wars in distant countries.   Then why have we seemed to make either little progress or made progress only to see backsliding?   Change, when we achieved it, does not seem to stick.    Laws were made and then undone.   The Environmental Protection Agency was created and then undermined.  Another example is AT&T was broken apart, just to re-join again.  In the United States we have seen both major parties in power, the electorate evenly split, but little enduring progress on key issues.

I think the answer can be found when we did not achieve structural change for the public benefit.

“Structural change”, in this context, is a re-aligning of forces underlying decision-making.   It has the effect of locking in a change thereby making it difficult to undo.   Structural change to an industry changes how the actors interact and who does what.    Without structural change, things can devolve to their previous status.

“Structural change for the public benefit” would be rule changes on interactions, and these rules are typically set by governments.      But we are experiencing a problem.   Even democratic governments are no longer responding to public interest as one would expect.   This is quite noticeable in the United States.

Equity based corporations, with their unlimited lifetime, can press to restore previous privileges over the course of decades.   Politicians in the United States are influenced by those companies that fund the rising campaign expenses, thus making our laws reflect the interests of the companies that can pay the most.   Long term pressure from companies can reverse laws that were once thought of as progress on some of our agenda.

So if we can not turn to government for setting rules for public benefit, which is fundamentally their role, what can we do?   Turns out there is an example from the technology sector that can hold back some of the corporate forces.

During my career in high-technology the spread of the Internet, Free and Open Source Software, and the World Wide Web have had large scale impacts on industry and culture.    But the openness of the Internet is looking shaky based on the failure to secure government support for “net neutrality” thereby allowing infrastructure control to be dominated by a few large corporations.     If allowed to run its course, a few companies can determine what new services will be introduced on what terms.    This will mean that distribution can be controlled as in the days of the private railroad companies in the United States before Anti-trust legislation broke them up and lead to regulation.

The World Wide Web, an system based on open protocols also has implicit rules of good behavior that has allowed it to grow. In the last 6 years, Google has come to dominate a key unregulated component, search, and then break some of the implicit quid-quo pro between the search engines and websites– a balance where sites would allow to be indexed in return for search services directing users to that site.    Google will index others by “crawling” the site and keep the content on their servers for purposes beyond search, and prevent other search engines from crawling their content sites such as Google books and youtube.    Other search engines that try to download Google books automatically are locked out, and the same with those trying to index YouTube. So the World Wide Web has not effective regulation to prevent dominant players from hijacking the system.

Free and open source software, however, has an idea that might lead it to have a very long life despite corporate interests interrupting government or fair markets.

Central to free and open source software are licenses which, in turn, are based on copyright.    When copyright was expanded to envelop everything expressed in the United States in 1976 via a radical rewriting of copyright law, the effect was an enclosure of ideas.   This law granting monopolies to those that never had it, never expected it, nor in many ways wanted it.   But because everything expressed was suddenly controlled by someone, it caused communities based on sharing to break.   The first dramatic one was in software with the Lisp Machine operating system ceasing to be a community project and an object owned by MIT, which it then sold to a corporation.    The result was the software, which was the combined efforts of hundreds over the course of years, died with the short lived company, and one of the authors, Richard Stallman, set out to find a way to keep this waste from happening again.   He invented a system-within-the-system– he called it copy-left.    It as a set of sharing rules that had the effect of re-establishing some of the freedoms we had before the 1976 copyright law.    These sharing rules are fascinating and have been very successful, but the key point here is that a “structural change for public benefit” without government help.

The “structural change for public benefit” brought about by the Free and Open Source licenses and the movement were dependent on the government having made monopoly restrictions very strong.    These licenses used the system against itself in a way that a whole industry to, in effect, voluntarily rewrite law.    This was painful and slow, but showed it was possible.   This system is robust because it only depends on strong monopoly restrictions.   If these restrictions were repealed by the government, then we would have most of the freedoms that have been re-established by this scheme.    So it works either way.

This is not to say it is desirable.   It is much more desirable to have a government that is responsive to public interests.   But since this seems to be receding at least in the United States, it is helpful to know that structural change can be enacted that provide relief from extreme laws by leveraging these laws.

In another article, I will suggest we can create enduring public benefit in housing by leveraging this approach to structural change.

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Housing Trust: Leveraging Free and Open Source Software Ideas to Improve Housing

Idea

What if an individual homeowner could designate their house to become and then remain a debt-free house and forever serve a particular community, such as non-profit workers?

Free and Open Source Software Inspiration

This is inspired Richard Stallman’s Free Software idea that lead directly to both Open Source software and Creative Commons.    His approach relies on a background of restrictive laws, in his case copyright law after the passing of the radical 1976 rewrite which made everything expressed copyrighted and effectively forever.   Stallman’s brilliant insight in 1983 was that since the government made all expressed ideas subject to ownership, those owners could put covenants on their use.    His covenant was to voluntarily give up some of the privileges of the monopoly ownership.   This was not needed before the law became so restrictive, but became needed because the community nature of writing software became precarious (the world lost the Lisp Machine Operating System, for instance, which caused Richard to invent Free Software, but this is a longer story).   His ideas spread to every nation and now a very large percentage of all software used is Free or Open Source.

What if homeowners could forever benefit in the same way that software writers were helped by Free and Open Source Software licenses and create communities where helped by Creative Commons licenses?   Here is how this could work.

The Problem with Housing Debt

At this point, most houses are put back under mortgage every time it is sold.   Since houses are sold every 6 years, on average, and mortgages are typically 30 years long, houses can stay under mortgage debt forever.   Also, the owner is mostly paying interest rather than principal in the first 6 years, so when the house is sold, the owner must pay as much money to get out of a house as they put in.  Therefore house prices must go up continually if have the owners are not to lose money.   This is not only unlikely and unstable, it becomes a burden on future generations with increasing debt on old houses.   So instead of buying and owning a house outright, most people owe a monthy mortgage payment.   This has many of the insecurities of rent, so that if a person loses their job or has a medical emergency, then they can lose their house through foreclosure.   And losing one’s house through foreclosure is more painful than moving out of a rented house.    Also, since the market adjusts to what people can pay each month and this stays fairly stable, the price of the house is largely determined interest rate.   If the interest rates go up and down from 6% (1965) to 14% (1985) and them back to 4% (2005) , then the price of houses fluxuates wildly which causes all sorts of havoc.    All in all, it seems like a bad idea to have most houses under debt.    What if we can get some houses out of this?

Using the Free Software idea, what if homeowners could voluntarily take their house out of the perpetual debt cycle and therefore secure a home that people can own outright?   This would be a sacrifice to those first owners, but some might see it instead as an investment in the future.

Possible Benefits from Debt-Free Housing

Actually, there has always been debt-free housing such as pastor’s houses, student dormitories, fraternities, and some university faculty housing.   Also, a hundred years ago, mortgages, if they existed were short, and people paid them off.   But this is now the exception.     The idea here is to make it easy to free houses from debt on a distributed and grass-roots way without requiring being part of a large institution.

  • Quality student housing, such as the cooperatives around many colleges,
  • Support teachers, non-profit hospital workers, or other public benefit workers in a community that may be priced out of living near where they work,
  • Enduringly affordable housing for low-income people that is owned not rented,
  • Housing for retirees so they can stay in their communities as their income drops,
  • Quality housing for single parents, or other needy populations.

How to Permanently Free Houses from Debt

I can think of two approaches for homeowners to create debt-free housing , one is to have a non-profit have an ownership interest in the house, and this is explored in other posts on this blog.    Another is to put binding restrictions on the title and file it with the county.  This needs more investigation, but here is how it might work:

An owner of a house can deed a house to become a “Trust House” by adding a standard document (“Deed of Trust”) the title of the house filed with the government.   A new non-profit Housing Trust organization, I believe is needed to help administer this system.  This could have a volunteer board elected from former owners of Trust Houses.

Required Covenants in the Deed of Trust:

  • Governance:
    • Owner of this Trust House agrees to be a Trustee on nearby houses,
    • Trustees for this particular house are the geographically nearest Trust House owners, say 11 of them.  This keeps governance local and resilient,
    • The Housing Trust has the right to seize the house if the Trustees determines these Covenants are broken,
    • In case of foreclosure, or not paying taxes…  what happens?
    • Removal or modification of the Deed of Trust can be requested by the Trustees but a larger number of Trust House owners must be involved to  decide what to do, say 23 of them.
  • No New Debt:
    • No new liens may be placed on the house: original mortgage, if any, gets passed on as-is or same terms.
    • No material benefit can be derived by one owner as it passes to the next  (no “key money” as they call it in NYC as some rent control apartments are passed on)
  • Optional Covenants can be put on the property by the original purchaser such as: characteristics of the preferred futures buyer, and how often these characteristics are enforced.

Voila!   Houses shed their debt once and for all.

Questions:
Can restrictions like this be placed on titles?
Should this be done with contract law instead?
Can mortgages be transferred?  Do we need special mortgages for this?
How many people would do this?
How can this go wrong and not serve the purposes we are intending?

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Custom Schools with a Class size of 1 or 4

This last September, our 13-year-old boy, Logan, rather than return to his San Francisco private school began taking lessons in a custom school his mother and I created around him. I don’t use the word “homeschooling” because that may conjure images of workbooks on the kitchen table with a parent being the major teacher. Logan, in contrast, is being taught one-on-one English and history by a former school teacher, learning Chinese language and culture from a young Taiwanese woman who has tutored before, Geometry from me three hours a week, in addition to a birding class taught mostly to adults, and a science class for homeschoolers at our local science museum, the Exploratorium.

 

I don’t know what to call this educational environment, but “homeschool” does not seem to describe it.  In talking with other parents, we have found that this type of free-form schooling is not uncommon: one parent called himself a “general manager of education” as he explained that he did not teach so much as arrange, and in their case they leveraged the local community and junior colleges with one of their children taking their first college class at age 11. Whatever this school is, Logan is fully engaged, our family is closer than ever, and I am starting to think we are onto something. To put a name on Logan’s new school, I will call it a “custom school.”

 

While we just started this program with Logan, we are encouraged to continue and explore how schooling might be reorganized for some classes of students. This has gotten me thinking about how far this could spread and possibly leveraging the charter school system to build a new type of public school, one that has a class size of 4, but that is getting ahead of myself. Please allow me to explain how I have gotten here.

The rest of this post is in this pdf file, with a supporting spread sheet and article.

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Who Wins from Inflation?

“No one wins from Inflation.”    “We must slay the Dragon of Inflation.”  “Inflation hurts everyone.”

Call me skeptical, but I am starting to question statements that start with “everyone” and “no one”.    Let me take a couple of recent examples.    “No one could have seen it coming” was invoked by the early George W Bush administration about the events by al Queda on September 11, 2001, when we later learn that they were warned specifically about this with a major intelligence briefing just a month before.   They hid the major reporting by their department and the briefings from the previous administration and claimed: “No one could see it coming.”    This turns out to be a lie.

Another claim of “No one could have foreseen this” came from the banks when the mortgage bubble popped.    With the failures starting in mid-2007 and leading to a full-out financial crisis in 2008, there were cries of “no one could see it coming.”    Well, this turns out to not be true.    The biggest investment bank, Goldman Sachs, not only saw it coming, but sold its toxic assets to its customers (not disclosing that they were betting against them), and made sure when the bubble burst they not only did not suffer, but they greatly profited.    There were those that saw it coming.    “No one could see it coming” was a lie.

Lets turn to inflation.   The term that I see is “no one benefits from inflation.”   This should set off alarm bells in the same way as “no one could see it coming” but as best I can find it does not, at least not in main-stream public discussion.

But there are winners  when there is inflation:   Debtors win.   More specifically, those with fixed-interest debt win.    If your net worth is negative, in other words, you own more than you own, and the debt is at a fixed interest rate, say now at 4.5%, and then inflation goes up to 12% as it did in the 1980’s for a number of years, then it is a good deal for you.    Granted there are rocky paths and there not everyone’s wages go up, but on the whole prices and wages increase during inflation.  After a few years your cost to replay the debt decreases relative to wages and after several years the debt burdent is largely washed away.   Paying the interest and principle on the loan is then relatively easy as wages increase.

This is what happened with my parents.    They mortgaged themselves to the hilt in the 1960’s with a 6% mortgage, then inflation came back up, and the price of the house went from $65,000 to many hundreds of thousands.   Paying the mortgage became easier, and better yet, they sold the house to make hundreds of thousands of dollars.   My father told me that he made more money on the houses he lived in than the pension he got for from his fortune 500 company.

So inflation does help people, it helps debtors.     And there are many debtors.    If inflation came back now, then everyone with a mortgage would be helped with that debt, at least those with fixed-rate mortgages.    This is most of America.

Why is this not proclaimed?   Well, because there are some losers:   creditors.    So creditors would like there not to be inflation because it would devalue their asset: a loan portfolio.      But who are the creditors now?   There are banks, but more on this in a minute.   There are also individuals: those with fixed savings.   Many of these are those that made money off of real estate when the last round of inflation came through.    So this arguing against inflation comes across as knowing hypocrisy from this segment.

A major creditor would be the banks that made many of the loans in this country: mortgage banks.   But it turns out that those banks now sell over 90% of those loans to a couple of tax-payer backed banks:  Fannie Mae and Freddie Mac.    These special banks, it turns out, now own most of the mortgages in the United States, so they stand the most to lose from an increase in inflation.    But since they are owned by the taxpayers, and most taxpayers have mortgage debt, and since taxpayers vote for those that control Fannie and Freddie…  Wouldn’t it be in American’s best interest to increase inflation therefore lower their debt burden?  Since the private banks  passed off the inflation downside to the taxpaper by passing on credit risk, the banks would not be against this.

So why has it not happened?   Well, when it does, I am sure there will be a major cry:  “No one could have seen it coming.”

 

 

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