Competition for Trainers Gaining Momentum

A while ago, I covered here and here the story about the innovative footwear that is based on the principle that running barefoot is a natural way to prevent injury. It is not surprising that a number of corporations with an interest one way or another are contesting the fact. This story in the NYT covers the small trend for certain runners to either go unshod or take up the new foot covering that mimics the bare foot.

It is fascinating that in spite of the claim that trainers today have integrated better technology and new products, the author avers that the proportion of injuries to athletes has not reduced at all. What is not in doubt is that the claim about these innovations is leading to an upward creep in the prices of trainers and an expansion in the total expenditure on trainers. In order to hedge their bets however, they have responded to the trend and are producing rival coverings that emulate the Five Fingers running shoes.

An interesting read in itself, I will watch this industry closely not only because I have run a couple of marathons casually but also because this is an education in how markets for new products form and how established products are replaced or not.

Why Sports Franchises Should Adopt Experiments

US sports franchises ordinarily employ very sophisticated marketing ideas. However, the teams have all had to review these marketing methods because of the direct effects that the economic crisis has had on consumer spending. This has been manifested in the inability of sports franchises to fill up stadiums and get the sales for their products moving.

So it appears that sports team have had to devise new incentives to try and raise attendance at sports events and to raise the sales of merchandise. As Vincent Malozzi reports for the NYT here, the New Jersey Nets basketball franchise has started to offer ticket buyers free jerseys. It is trying to put together the jerseys as a compliment to the purchase of several tickets while allowing for the reversible jerseys to also bear the names of competing teams.

While the story does not mention what the relative prices of the jerseys and every seat are, it is understandable that the promotion of a competing team is not necessarily a loss. The reason being that a league is such that all teams have an interest in promoting the entire package even if they are competitors for the prizes. This means that even strong teams need the others I the franchise in order for the NBA to continue to thrive. Because it is really difficult to tell whether these initiatives will be the most effective, it would perhaps be better for the marketing teams in each franchise to devise different incentive schemes and adopt an experimental method for determining which is the most effective. The incentives scheme that presently exists cannot be fairly compared to an alternative and proved to be the better. But to my mind, it is clear that marketers are not applied economists.

Market Signals from Cash for Clunkers

My view about the Us government's stimulus programme is that it really did help the economy from a faster slide and a worse crisis. In spite of this general approval, I was most upset by the support for banks considered too big to fail on the one side and the support given to US-domiciled car manufacturing companies based in Detroit. To my mind, there was no justifiable reason to save firms that were out of touch with their main customers and produced cars that nobody bought.

As if that was not enough, the stimulus plan had this bright idea of subsidizing US citizens who wished to but new fuel-efficient cars. By all accounts, this part of the stimulus has also been successful and has had to be shut a little earlier than initially anticipated. For all its successes, this NYT piece leads me to surmise that the way in which the plan worked out showed very strong consumer choices. Two facts stand out. The first is that a majority of the cars purchased by US citizens taking advantage of the subsidy were Asian made. This stresses the fact that even with a subsidy, fewer US citizens are willing to buy the cars manufactured by some of the US firms that benefited from a subsidy too. Secondly, the cars that have been surrendered under the programme are also overwhelmingly those produced by the same US car makers. Essentially therefore, there is some kind of substitution away from some of the US manufacturers towards the Asian cars.

To my mind, the lessons are clear here. The Detroit corporations have some carching up to do and it may even be too late for a number of them.

Bank Secrecy and Public Good

Swiss banking has acquired an enviable reputation for efficiency and solidity in keeping assets safe for individuals with large incomes and assets. Indeed, one of its main selling points has been the bankable value of Swiss bank secrecy as a recognized character of most of those banks. I have been at a loss about the virtual arm twisting that has led Swiss banks to accept the release of details of a number of account holders who may have evaded taxes in the US and European countries.

Lacking the clarity and certainty that has been expressed by various liberty-loving and libertarian bloggers on the one side and state agents arguing for the right to find and punish banks that collaborate with tax evaders, I have eschewed a contribution to that discussion on this blog or elsewhere. However, reading what I think is a mildly tilted but passable opinion by Holman Jenkins Jr. of the Wall Street Journal here, I consider that I could venture with my views too.

To begin with, businesses of every kind should design and retain the liberty to emphasize features that would give them an advantage over others based in different countries or nations. For that reason alone, there is nothing completely objectionable about Swiss banking institutions stressing the secrecy as a sacrosanct feature in their service to clients. As Holman Jenkins Jr. states, this specific feature was developed by the Swiss legislature entirely for defensible purposes aimed at preventing the confiscation of private property by the government of Nazi Germany. To his admission too, the author states that the feature was neutral and allowed both some Nazis and the Jewish families to shield their property from confiscation.

Later however, the deployment of bank secrecy as a business feature has given Swiss banks a bad name and this was bound to boomerang badly sooner than later. To start with, many African and Latin American despots and killers are known and suspected of holding comparatively large fortunes in Swiss banks. Often after the demise of these despots, Swiss banks have hidden behind this secrecy feature to prevent national governments from claiming property that was stolen from national treasuries, all in the name of absolute bank secrecy laws. This has been a frustrating state of affairs for many residents of developing nations and has made a useful instrument highly suspect and the banks largely despised.

So while I am loath to concede to government wide regulation and forced participation in a disclosure scheme, I think that the banks could have preempted this loss of public confidence by refining the secrecy laws to allow fewer despots and thieves from escaping with large sums of cash. To my mind, a person who relocates his assets across countries to evade taxes is, strictly speaking, breaking the law but cannot compare to outright killers and thieves whose money has been parked in Swiss banks for decades. Unlike Holman Jenkins Jr., I am less inclined to accept that the the problem was that the banks deployed Swiss banking too widely, but agree that it indeed was cheapened by making outright killers keep dollars that they obviously did not earn and that were stolen from national treasuries. Swiss banking has a valuable attribute but it made itself cheap by keeping assets for killers and outright thieves.

Retiring Racehorses

Joe Drape's interesting article about the lives of retired thoroughbred horses here has just reminded me about the similarity between retired racehorses and athletes. The first comparable feature is that both racehorses and professional athletes compete for prizes in sports disciplines with a very fat tailed curves. In essence, a very small proportion of athletes and racehorses win a majority of the prizes available both in volume of races or overall value of prizes. In the story of the Tour of the Cat, one is not surprised that this racehorse won US$ 1.1 million over a nine year career and is already unfit to compete further due to injury and advanced age. It is quite akin to the work life of professional athletes who earn the large portion of their incomes early in life and are often forced into retirement by age, injury and often by both.

The comparison breaks down because retired athletes receive financial advise and are able to keep aside some cash for their retirement while the money that is won by horses is often fully taken over by their owners. So whereas both have retirement homes of sorts, the horses do really badly because with broken down bodies and increasingly injury prone, they are conveniently taken for slaughter or auctioned off to kind keepers. Still, it is worthy of mention that a number of athletes end up being destitute as well in spite of their incomes. Again, the solution here may involve mandated savings for horses as well since many sports franchises require athletes to receive assistance with planning that for their retirement. A pity that it would be difficult to impose that on horse owners who may appropriate the entire race income and dispatch the horse back to an undignified retirement.

The reason for this tendency to abandon horses is clear. Competition is so intense that the owners of racehorses have to nurture several horses but only manage to recoup profits from a much smaller number of winners. Aging or injured horses are then caught in this game of numbers and are dispensable. Sad but a fact.

Politicians on Facebook

I have recently acquired an intense interest in the use of quantitative measures to explain political and other facts. However, I have had to blink after seeing something about the number of visits to Facebook sites by various politicians in the US. I will refrain from a very hard interpretation of this fascinating chart appearing here on the Daily Dish Blog but it tells a story about where the real following is. So what's one to make of it?

My Hat Tip to: Patrick Appel

Quoting Alan Greenspan

"We often forget that to function effectively, a competitive market must be voluntary and free of significant threats of violence, and that trade must be unencumbered. remember markets are not ends in themselves. they are constructs to assist populations in achieving the optimum allocation of resources".-Alan Greenspan in The Age of Turbulence p. 461.

Proof That DNA Evidence Can be Fabricated

I consider that the use of cutting-edge technology is an imperative in the provision of public goods and services. Therefore in spite of my real skepticism for some functions undertaken by governments, one area where I support it is in the provision of public safety as a public good. But having read Actual Innocence, and encountered the critical ways in which DNA evidence has been used to free people who were wrongfully convicted for murder, I have had enormous respect for DNA evidence in forensics and law enforcement.

My impression from that book was that thanks to lawyers such as Barry Scheck and the Innocence Project, DNA evidence is really a neutral factor in criminal prosecutions because it can work (sometimes retrospectively)to clear innocent accused and expose police and prejudicial prosecution and corruption. So in a way, the oft-stated conservative mantra that only criminals need to fear was partially justified.

However, Andrew Pollack's interesting piece in the NYT today states that scientists in Israel have demonstrated that DNA evidence can be fabricated. To my mind, this does not on its own discredit DNA evidence as much but is a mere reminder to law enforcers generally and judges in particular to treat evidence carefully and to allow for wider and dispassionate scrutiny. Indeed, the point of the story is to illustrate that the firm called Nucleix has developed a mechanism for distingusihing between authentic samples and manipulated ones.

Having read the book stated above, I am not sure that the average criminal would be interested in fabricating samples to incriminate another person. Instead, it is the police and prosecuting authorities whose evidence must be subjected to stricter tests. The real concern for anyone with a liberatarian inclination is the possibility that one's DNA material may be illegally harvested and published. Still, I am sure that the response is not to banish technological development as much as ensure that there are appropriate legal remedies for such action.

Usain Bolt Takes 36 Strides to the Record

I have reviewed casually the data from the Olympic games from last year. I told myself that the men's 100 meters sprint record was in my view off the curve that within two games, the timers would have to include at least three decimal places. My reason then was that with a world record established at 9.69 seconds by Usain Bolt, it would be soon not be possible to break that record by large margins.

Its  its a good thing that I did not place a large bet on that because Usain Bolt run a race at the World championships that set the record at 9.58 seconds. To my mind, it was not just the way that this runner made the world's best trained sprinters to look ordinary but the margin was huge in two ways. In my calculation to cut down that record of 9.69 seconds over a year by 0.11 seconds is an amazing feat notwithstanding the new training methods and technological aids. tThe second point is that his challengers run a fast race that would have won Ggold medals for the first four, two games ago.

As the story in the Irish Times here states, he did it all in 36 strides. That does not sound too many but they were really quick slides. Just like a bolt of lightening. It just makes me wonder how far the record can go and with the impression that Bolt has some more sprint power in reserve, we need not start taking 4 decimal places yet. nNot until bBolt is done with running.

Australia Needs Effective Camel Population Control Solution

We live in a world in which sensitivity to the effects of human and animal activity to the environment is facing sharp scrutiny every day. So Australia has designed a camel population control policy that relies will rely primarily on shooting the animals from the air. Without doubt, animal rights activists are unhappy as they term this particular approach as completely brutal and unnecessary. As this story states, it appears that all the discussion is based on contentions without new and alternative proposals coming to the fore.

What most impresses me about the story is the fact that the camel population, which is estimated at 1 million, is expected to double in another nine years. The effective growth rate therefore is close to 8% annually. At this rate of growth, it is clear that a working solution is required. And I am pretty convinced that there's definitely a far better solution that could be brought to bear on this problem than that at hand. Again, admitting my bias towards solutions developed from competition, I am certain that for a prize equivalent to the anticipated cost of the camel population cull, a far better market derived option can be developed and put to use.

For instance, using a proportion of the Australian $20 million as a prize, the Australian government should set out a competition on the development of a viable population control plan that could be implemented across a time frame. In my view, the prize money could then be paid out in slices depending on the achievement of certain metrics. This can be done and I would myself enter that competition encouraged by even a small proportion of that prize.

So what would I propose? I cannot state this off the top of my head now but I think that the chosen approach would probably involve a variety of solutions as opposed to a silver bullet model. It is possible that a 900 kilogrammes animal could yield meat for export, with skin used as leather and live animals being auctioned too. I would wager that a composite solution comprising a market mechanism would emerge that would bring back a significant proportion of the Australian $20 million.

Barefoot Trainers Are Here!

A couple of posts ago I made reference here to a review of Christopher McDougal's book making the argument that humanity is especially evolved for running barefoot over long distances. In addition, I presented an anecdote about my experience running two marathon races in new trainers and the effects that this had. Concluding that blog post, I argued that there was little chance of my running the marathon unshod even while admitting that expensive trainers are not always worth their cost.

Clearly, an entrepreneurial firm agrees with my contention about the comfort that comes with running with trainers and has designed an alternative form of trainers. Vibram's Five Fingers running shoes mimic the effect if running barefoot and illustrate to me the ingenuity of firms in responding to the needs that people have. While acknowledging this factor, I am sure that even Vibram has tow challenges because at £98.99 Sterling, these are still an expensive and specialist pair. Secondly, the marketers of the pair of alternative footwear will probably face the task of selling the item because it does not compare well to conventional trainers and sneakers on the aesthetics side.

What must be stated though is the fact that markets respond to opportunity and perhaps for this item of footwear, the cost may be absorbed entirely by those who are specialist runners for whom it is obviously good value. I now wait to see whether the East African elite marathoners will be asked to endorse the product. More power to the markets.

Broadband Arrives in Africa

It is unimaginable to many people outside Africa that the eastern coast of the world's second largest continent was the sole area with no undersea communications cable. Thankfully, this distinctive measure of underdevelopment is now coming to and end through the development of a number of undersea links to the eastern coast of Africa. Bearing names such as The East African Marine System (TEAMs), the East African Submarine System (EASSY), Seacom and others, the world is finally fully connected.

Cat Contiguglia of NYT covers the amazing series of infrastructure development for Africa and traces some of the expected effects on business and other measures of human developments. Clearly, the west African coast was long connected by cable but this has not had as much effect as the is now expected.

That African citizens have relied on slow satellite communication for so long when the better alternative was available is a story about the national monopolies that did little but bar competition and better service. It is essential to note that the diverse set of investments imply that there will be a degree of competition which will lead to a reduction in prices for communications generally. In spite of the enthusiasm for the new dispensation, I wonder where the extra capacity in large bandwidth will be applied.

It is clear that there may be scope for developing call centers but the worldwide competition in this service is already high and the premium has been largely harvested by India and other English-speaking Asian countries. I fear that in this business, Africa generally may have come to the table too late as usual. My cynicism notwithstanding, the mere drop in costs of telecommunications will lead to innovations and costs savings all around. My own bet is that it will not necessarily be in the call centres. As the main story states, there are businesses that will probably rue the arrival of the Undersea cable. let's see creative destruction at work too. I will be watching as new businesses develop but also as others are rendered obsolete.

Another Reason not to Buy Expensive Sneakers

I have run a city marathon in the tropics on two consecutive occasions a couple of years ago and learnt that running the marathon is an extremely painful endurance event. Because I ran as a full amateur and with less than a week of training, I was quite pleased to have done it in time slightly less than four hours. Another of the major mistakes that I and my brother made was to purchase moderately costly running shoes just before the race day. Needless to mention, the shoes were comfortable for the first ten kilometres and a real pain for the rest of the race. Blisters are common for professional runners too but to have lost toe nails is evidence of that imprudence because there are things even the best running shoes would not give.

Karen Knee's book review looks at states the argument by the author that running unshod is the perfect way to run comfortably over distances while avoiding injury. Christopher McDougal writes in the book that he took up running years back and over time came to realize that the Tarahumara are able to maintain pace and cover long distances not only because of their innate ability but because they run in flat rubber sandals. Other biological evidence show that the human species is specifically engineered for long distance running because of the ability to dissipate heat through sweat and that the pace of breathing is also independent of stride. In addition, it states that the upright posture is complimented with tendons which enable the human head to stay upright while running.

The book reviewer has made the book's arguments really well and I find the thesis really fascinating. Still, when I run the marathon again in October of this year, I will recall all this but remember that running shoes can still be very comfortable even if unnatural and predisposing towards injury. In the long run, I still will prefer running shoes. Are Nike's sports shoes engineers listening?

Oxfam Enters Used-books Market With a Bang

It is without doubt that Oxfam is one of the world's most influential advocacy organizations addressing poverty in low-income countries. the organization also has very wide recognition and undertakes a lot of activities related to international trade and how the rules work against the interest of many low-income countries. However, I respectfully classify it as a capable organization whose advocacy is sharp but whose discomfort with market mechanisms almost leads many to think erroneously that developing countries should eschew all international investment and competition. In particular, I find the Fair Trade argument unconvincing, if not altogether disingenuous.

Steven Morris' article in the Guardian here illustrates the fact that I was perhaps wrong in my assessment regarding that organization's understanding of how markets and competition work. Indeed, Oxfam has employed a very market savvy model and infused competition in the used books market in specific cities within the UK. In addition to providing competition to second hand booksellers, it also classifies the books and uses an auction model to raise the value of rarer texts. While I understand the complaints by its competitors, it is clear that Oxfam's entry into the used books market and choice of location is demonstration of the value of markets. Now I hope that it will support free trade and competition within the low-income countries that justify its existence. May the Oxfam bookshops continue to thrive.