What Do Governments Need Most?

I have often engaged in intense discussions about the value of entrepreneurship skills and whether these can apply in diverse industries and sectors. To my mind, a very capable entrepreneur could run other institutions in either the public or third sector. In spite of that, it is clear that people with such diverse skills are few and far between. 

Looking at the story about Andrew Flanagan who runs a children's charity in the UK leads me to the view that it is indeed possible to find people who can cross from private sector firms and into social and policy entrepreneurship.  As Randeep Ramesh of the Guardian states, there are universal principles and good sense that allow for managerial efficiency to lead to improvements. These changes may include staffing, operational issues and financial management. The most profound one though is the very perceptive reasoning that charities should not seek to supplant or supplement government in provision of public services. Flanagan argues correctly that instead, these charities should see themselves as think tanks that generate and test new ideas that may be recommended for wider implementation. 

Implicit in that profound and correct finding is the fact that citizens should require that failure in the provision of public services is sometimes as much a failure of good ideas than the absence of material resources. 

How Real Capitalists See the World

While a disproportionate number of people are occupied with the Occupy Wall Street protests, it is amazing that the numerous good things that come from principled capitalism are altogether ignored. Leaving aside the predictable views of some of those supporting and opposed to the Occupy Wall Street protests in New York and the rest of the world, I came across this short but really good NYT story about what real capitalists can and often do to benefit society.

Worthy of reading for oneself, I find it profound for the reason that it highlights the exceptional degree of generosity from Robert and Dorothy King. Having built their own enterprise and made substantial sums, they have opted to make a donation of US$ 150 million to Stanford University to establish the Stanford Institute for Innovation in Developing Economies. Its purpose is to study the creation of programmes and businesses through which a large difference could be made.

To my mind, this gift is profound for a couple of reasons, including the fact that it is an expression of generosity at a particularly difficult moment when many people may be anxious about the possibility of a second recession and its possible effects on further erosion of their wealth. Equally important is the fact that as the political hacks are looking for people to blame and make some political mileage from the ongoing controversy, this family has demonstrated that real capitalists go ahead with their work, support what hey can and leave everyone to judge the result. there's no better way to defend capitalism. As I said in an earlier post, this couple makes me shout, "Capitalism Rocks".    


  

Rolex Dials Tiger's Number

Tiger Woods has been a subject in this blog post in two related ways. The first is when I questioned whether endorsements by celebrities really do improve sales while the second was the belief expressed here and here that Tiger Woods would regain his high ranking and be a dominant player again. At the time when the conventional wisdom holds that Tiger's days are all gone, a sponsor no less prestigious than Rolex has appointed Tiger Woods as a spokesman.

In addition to relating the story behind the creation of the unique brand, Slate magazine's Seth Davidson interrogates this decision and concludes that this firm is sure that Tiger is momentarily at a disadvantage but will regain his form in the future. Trust a corporation that is organized in a different way to understand that Tiger is still a class act in his game. A good bet that will pay off.  

Polemics of Demography and Fear

I stated in this last blog post  that I would not put up a link to all those lamentations that the world is overcrowded o account of unverified claim that the there are now 7 billion living souls. One must accept that in the same world where the costs of circulating ideas has fallen much more than the population has risen, people are bound to find all sorts of preposterous connections and cause alarm. Reading this piece in the NYT, I had to renege on my light promise not to link to these pieces. 

Taking without question that the human population has reached a new record, a number of institutions are trying to tie their neo-Malthusian argument to environmental conservation. Among the arguments is that the levels of greenhouse gases being produced on a per person are so high that every new birth adds to the warming of the planet and therefore to almost certain environmental catastrophe.   

Such campaigns may be well-timed but that does not imply that the claims are sensible. As contrarian voices quoted in the piece mention, family size reduction cannot be the solution to global warming and environmental conservation.fertility rates are higher among poorer populations in South Asia and sub-Saharan Africa but it is these populations that also generate the lowest levels of carbon pollution per person.So yes, I want spotted owls and polar bears to survive but it makes no sense to me to claim that birthing families are responsible for my never seeing a live one. That is not the real trade-off. 

7 billion Time Bomb That Will Not Explode

7I decided to write the blog post today without any reference to articles primarily because most of what is being expressed about the world's population today is plainly overstated. For some reason based on forecasts and population models, it was decided that October 31, 2011 is declared as the day when the World's population reaches the 7 billion people mark. As usual, the neo-malthusians see this as another opportunity to scare people with the old and tired ideas about mass starvation and humanity running out of resources because over-population. Needless to say, this is all nonsense to me.  

I agree that a large part of the world's population today still live in materially deprived and sorry situations. I dispute the claim that these people living in sections of Africa, south Asia and Latin America are surplus and that the rest would of necessity be better off if they has just not been born. As if requires restatement, I concede that poverty is real and with employment, the primary issues that should concern people. At the same time, I am an unequivocal supporter of both the provision of contraceptives and maternal healthcare. What I find completely preposterous is that most articles in the major news outlets, including some that I have linked to before are using this opportunity to ring alarm bells about a crowded and heating planet.

So let me end with this: please stop patronizing poor people throughout the world and instead save our minds to think about providing females with more than basic education and opportunities for their advancement. Thereafter, get out of the way and let the population care for itself. 7 billion is not a problem, poverty and inflexible thinking are!  

Tax Code Madness

Despite my admission to libertarian attitude, I find it difficult o maintain that all problems are created by government. the one area where I think politicians give government a bad name is in trying to argue for why tax rates should be at one level or the other. That aside, I am keen to ensure that a limited government as measured by the proportion of wealth that it extracts from working people is kept to a bare minimum and the regulations for compliance as simple as possible. 

With that in mind, I see that nothing demonstrates the fact that when it comes to taxes, most politicians are all thumbs by the fact that the tax code of the US government runs into millions of words. granted that some politicians with an ideological persuasion may want to exaggerate its length, a tax code that is several times larger than the constitution of the US demonstrates that it was designed to fail. writing in Slate, Brian Palmer tries to make sense of the estimates given by some politicians in the republican party and says that all considered, the tax code could be in the 3-10 million range depending on whether supplementary notes and consonants are included or not. however one measures it, the tax code that long is not useful. No wonder one sees politicians coming up with beautiful-sounding but arbitrarily determined measures as 9-9-9.  

Random Error By Random House

The Internet makes publication of information easier but also exposes authors and corporations to full public glare for small but potentially embarrassing errors. I received a link to read an excerpt of John Grisham's latest book, the Litigators and noticed a very odd thing. Looking at the price stated for the Hard Cover version of the book on the website by Random House here today led me to wonder whether a novel would really be on sale for US 250 per copy, when the paper back is less than US$ 10 and the large print at US$ 29. I had to compare prices and looked up the cost on the Amazon website and confirmed my bet that there is an error on the Random House site. Now, if the webmaster for Random House would just make the correction. This is creating the impression that the the publisher's pricing mechanism is poorly informed as Amazon's price at US$ 15.22 is several times cheaper.

Sad End for a Despot

"For the region, today’s events prove once more that the rule of an iron fist inevitably comes to an end. Across the Arab world, citizens have stood up to claim their rights. Youth are delivering a powerful rebuke to dictatorship. And those leaders who try to deny their human dignity will not succeed". Barack Obama 

Light Still Travels Fastest

A couple of weeks ago, I posted this piece and made reference to a scientific experiment whose results suggested that some particles could possibly move faster than light. A careful review of the conditions of the experiment has been conducted with the result that the time differential occurred in the conditions that were set to measure the speed. This means that as I suspected, there was a measurement error in the set up and this created the distortion. While the explanation here requires better than average knowledge of physics, I think that it is still intelligible. As it explains, the measurement error did occur due to the experimental conditions.

I am unsure whether to be glad that my hunch was confirmed but I am still amazed that the error arose from the careful arrangement which was intended to provide accuracy. May I go on a limb now and state that time travel may never be possible. And that is not to state any new thing. 

Creative Destruction in Publishing Industry

In my view, it is in the decade after the Internet bubble ended that it is becoming clear that there are solid businesses ideas that can be based on the Internet and digital capabilities today. Amazon is one of the few corporations that seems to be particularly savvy at taking on old businesses using the Internet as a plank of the strategy. David Streitfeld writes that publishing firms are watching in disbelief as Amazon is cutting down the number of people in the transactions chain and contracting authors directly before publishing their work.

This bears a number of advantages for the author in terms of time saved and a chance to publish book. On the other hand, authors are sure that there income will be entirely dependent on the recorded sales as there is no upfront bonus payment. because a number of authors are taking up this offer with alacrity, I am certain  that in spite of the complaints, it seems that this approach is a useful alternative to the vertically integrated structure that traditional book publishers prefer.

There's no guarantee that the publishers will be wiped out but I think that as I have stated here and here before, publishers should not defend a flooded shore. They must move to higher ground and ensure that Amazon does not wipe them out. A book publishing and author payment model based on sending papers to physical book stores will not suffice. This is an industry that i would watch and while I do not advise on stocks, I would downgrade and keep downgraded the stocks for most publishers until it is clear that they have real understanding why they are losing readers first and now authors. Is this creative destruction at work?  

Demand for Counterfeit College Diplomas

A couple of weeks ago, I suffered the considerably minor inconvenience of missing the deadline for registration for a course due the fact that I misplaced the original copy of my college diploma. I was led to note that there is such a disproportionate great reliance on proof of college attendance through the presentation of paper credentials. And this requirement of proof of graduation is itself creating unintended effects by providing incentives for counterfeit papers presented to some employers who are none the wiser.

Reading this article by Schmidt and Al-Jawoshy of the NYT, I was reminded that the demand to produce certificates and diplomas as proof of educational attainment and therefore professional suitability for jobs is indeed serious. As the story states, a professor in one of the largest universities in Iraq has paid a dear price and is possibly in danger of further harm for his principled effort to stop the issue of diplomas to unqualified people. It should not be a life and death matter to defend the credibility of a university's certification system but perhaps a private sector business may develop from this.

Similar to Shaffi Mather's business that I blogged about here, I see an entrepreneurial opportunity for a firm to charge a fee to certify qualifications at college level in a place such as Iraq and possibly universally. 

How Cafes Allocate Seats

A small cafe that i visit from time to time has a growing clientele of two types. One category are those who come in for a quick bite over lunch and intend to get a quick meal and depart soon after without spending much time. A different category includes a number who are often alone or in pairs and sit in the cafe occupying the most comfortable seats while working on their laptops or tablets for extended periods of time. A couple of days back, I was there and noted that the lunch hour was very busy but a number of seats were occupied by single patrons whose were occupying spaces for up to four people because of the arrangement of seats.  

To my mind, given the fact that the second category of patrons were bound to stay for long on account of the complimentary wireless service, they were displacing the first category of patrons who were often in multiples but who could not together fit into the space that was occupied by the loungers. This presents a problem because it is obvious that the revenue from the first category of guests would be more than the rest and their displacement may lead to loss of revenue. My solution is that the cafe should consider auctioning the best seats in the cubicles or require that a minimum expenditure be required during the busy hours in order to maximize revenue. This may appear unfair but it is clear that the patrons who come for a quick lunch are the more profitable and therefore pay for both the space and the complimentary wireless service.  

iSalute Steve Jobs

Its a pity that my first two blog posts for the month have been about truly remarkable men who are no longer in this life. I intend not to compete with the brilliant pieces telling the story of Steve Jobs and highlighting the strength of his character and toughness of the man. Sometimes, it is sufficient to merely state that this was a remarkable man who death reminds me of a deep mystery of life itself and the limits of human understanding of our world. Fare thee well, Mr. Jobs. iSalute the life and your singular achievements. 

Steinman's Nobel Comes Three Days Late

There are all kinds of sensible reasons one can consider for why the Nobel Prizes are not awarded posthumously. Among them is to ensure that the prestige of the award is provided to the individual who carried out often important and difficult work. It is therefore a sad coincidence that the committee for the Nobel Prize on Physiological Sciences sent the happy message of the award to Ralph Steinman and learned that he passed on a few days prior to the announcement.  

Certainly a well-deserved prize and his name goes to the record of winners except that the repository of the award will not have his lecture for the prize. Congratulations are due to Ralph Steinman as this statement confirms that in spite of his demise, he reamins a winner. 

Atul Gawande on Finding and Executing Ideas

"But finding a good idea is apparently not all that hard. Finding an entrepreneur who can execute a good idea is a different matter entirely. " Atul Gawande in The Checklist Manifesto p.171.

Pankaj Ghemawat's World is Not Flat

The orthodoxy today has it that the world is integrating at a furious pace on account of growing market influences and technology is making borders completely irrelevant. I have been surprised with the fact that this is taken as a given by businesses and even some politicians. That was until I read this book by Pankaj Ghemawat  and to my consternation realized that the flat world ideas that circulate are grossly overstated and misleading.

And it is relevant that this academic is not only highly regarded and qualified to address that subject but is keenly aware of the benefits that would issue from increased globalization. It is just that he is alert to the fact that having plucked the lowest hanging fruits, everyone seems to be taking the superficial level of integration as real. As the indicators that he adopts show, the world is far less globalized than even leaders of firms that operate on a global scale are aware of. In this interview with Leslie D'Monte, he observes that "there is social pressure to believe that the world is flat", and that has prevented dispassionate examination of the subject.

Bucksbaum Bequest Credits Couple and Capitalism

I am an unqualified admirer of capitalism and freedom not only because there is no better alternative but mostly because such an alternative would hardly emerge.  A very substantial and well-considered bequest by Carolyn and Mathew Bucksbaum to the University of Chicago's medical school well demonstrates the immense social and moral value of capitalism. As stated by Dirk Johnson in this NYT story,  the bequest of US$ 42 million of money earned is to be dedicated to research and teaching medical practitioners to treat patients with empathy. This idea behind the bequest  Bucksbaum Institute for Clinical Excellence is informed by the experience of Mrs. Bucksbaum at the hands of a less-empathetic doctor.

No doubt the couple are worthy of a national award from the President but the main lesson for me is how effective real capitalism is in channeling funds towards causes that nobody pays for. And it is quite laudable that the couple did not throw a small portion of that money into a lobby group to ensure that government pays for that need. A story like this becomes useful for demonstrating the fact that while markets may be amoral, high-minded philanthropy such as this is only possible with capitalism. Capitalism rocks!

Moving Faster Than Light?

One of the things about science is that it is based on a set of very well-understood and predictable laws. Discoveries about the laws of physics do not come too often anymore because most of the fundamental principles are well understood and applied. Of those laws, the constant on the maximum speed of light in a vacuum is taught without question at high school level.  A couple of days ago however, the Opera laboratory publicized results suggesting that they had conducted experiments that suggest that it is possible for some particles to surpass this constant.

This is still being tested but its implications, as stated in the article in the Guardian here, are undoubtedly profound. To start with, if the results are verified, then it would require a review of the known laws of physics. New hypotheses would emerge and this result would even create the possibility that time machines and short cut dimensions in space do exist. My strong hunch is that an error may have occurred but its worth waiting for verification. On the other hand, the professors at the Opera lab may have earned a future Nobel prize in physics.

Turkish Club Opens Up to Better Fans

Depending on what one reads, the conventional wisdom driven by sports journalists is that the typical sportsman earns too much money and does not behave well-enough to be an examples to the younger people. Predictably, this view goes unquestioned and is trumpeted again and again whenever a player is found to have committed indiscretions whether in public or on the pitch. My view though is that more often, the sports fan and especially the soccer fun in the leagues of Europe exhibit far worse behaviour. They are not called out for that behaviour because the sports associations and the teams often rely on their continuing to buy expensive tickets for matches and supporting clubs through the purchase of merchandise.

Fenerbahce, a Turkish soccer club was condemned to play a match in an empty stadium following crowd trouble. That club instead turned this situation around by distributing free tickets to women and children by banning all males aged 12 years and above. As reported on Louise Taylor's blog here, the match went ahead and the crowd turned up in full support of the teams with no crowd trouble. I see this as an extremely intelligent way for the club to try and build a fan base among women and children while denying trouble making men an opportunity to watch the matches live. 

Clearly, this cannot work throughout a season of more than 25 games but it is an important symbolic gesture to a new audience. That the racist chanters and violent mobs were kept from the stadium was victory in itself. 

Roland Fryer Jr. Becomes a MacArthur Genius

The MacArthur Foundation presents very generous awards to professionals in diverse fields to enable them to extend their work. This involves an annual payment of US$ 100,000 per year for five consecutive years. I am glad to note that Roland Fryer Jr. is one of the recipients this year especially because he does wonderfully insightful work by use of the powerful tools of economics to investigate issues of race in the United States. Prof. Fryer's work stands in a good place for his professional interest tend to cover important areas in which the findings could inform direct policy in areas such as education and use of experiments. Congratulations to the 22 professionals. More brain power to all of them.

Is China Really As Powerful as the US?

Judging from the immense trouble that president Obama of the United States is having in getting politicians to work behind a coherent and mutually agreeable plan, one can safely assume that the country is bound to delay recovery and have its preeminence in the world eroded. This state of political discord has not only led to concern about the functional health of that political system but that this undermines the nation's ability to deal with big problems related to large deficits and long-term problems in financial undertakings.

In spite of the undoubted disfunction in the political process and its effects on the economy, I maintain that the US still has some time before any economy, china included, can get to surpass it in factors of material economic and military dominance. Simon Johnson, writes in this article that a book that is due for publication later in the fall suggests that China may have already surpassed the United States in world dominance. To be clear, the author of that book, Arvind Subramaniam, is a vey competent academic and his views ought to be given serious reflections before reply. That notwithstanding, I still applaud China's very successful development experiment over three decades but it is unlikely that it has surpassed the United States yet.

Looking at the World Bank's latest data on Gross National Income (GNI) on  a per capita basis still leaves China at one tenth of US equivalents in nominal terms. to my mind, given the extreme importance of total income in determining dominance in scientific, commercial and cultural affairs, I think that China's dominance may be real but it is not yet close to the United States today. I will read the book after its publication and comment on the claims and data deployed to support the claim.  

Yasheng Huang Tells The India Vs China Story

Many comparisons of the development experiment between China and India and pitch conveniently on the side that commentators favour. As a result, there is very little clarity of thought about why China has indubitably raced ahead of India in economic growth, notwithstanding the absence of liberalization on the political affairs in China. Many people therefore readily assume that India's main problem seems to be its extremely open political system which makes it a disadvantage in terms of quick execution of development plans. Yasheng Huang's presentation to explain the differences is a tour de force in the TED talk below on that subject in which confusion and cliche's have endured.

 

As Huang maintains, it is a fact that India has not done so poorly but has been compared with a ver successful China. It is equally instructive that the slow reform in social policy that would register achievements for India's women is a critical barrier to its ability to compete.  

Planning Fallacy

David Brooks of the NYT bases his last article on a book to be published soon that is written  by by Daniel Kahnemann. As David sees it, the book is an injunction against the very solid belief in planning and the general tendency to assume that what is planned is carried out and that the results of a planned process are superior. He uses the lessons from the book to analyse the goings-on in the US today and concludes that the nature of political leadership means that problems must be tackled even when solutions are not at hand and where government intervention is not likely to yield a quick or sure solution. A good piece from a journalist whose articles often predictably start from objective observations and then end up with a conservative pill as the solution.

Why Terror is a Poor Political Tactic

This is a significant week for all people concerned with public affairs for it sent minds back to the dreadful event in New York a decade ago. For all the evil, that event necessarily changed many people whether believers in freedom or not because it suddenly put those who favour wide freedoms on the defensive. Ten years later, the guy who took responsibility for the attack on the US has been taken out and everyone reflections on the extent to which all the predictions about impending woe have come to fruition or not.

To my mind, it is very clear that notwithstanding the ability of terror groups to harm people here and there, the whole world accepts that perhaps we either are all stronger than we imagined or the terror groups not as formidable as was imagined. Placing facts as they are, most people ceded freedoms at airports and accepted statist interpretations of the events with minimum fuss.In spite of the initial success in scaring people to surrender freedom, few people would say that mass murderers intent on causing terror have won. And yet the missing piece is why it has all come to nothing and the terror groups are nowhere near achievement of whatever amorphous goals that they claim to advance. 

Steven Pinker in this well-composed article provides an incisive view for why groups that deploy terror and fear as a political tactic almost always fail. His conclusion is that these groups gain recognition but that terror tends to feed on itself with groups collapsing through overreach and senseless violence. 

Levitt on Adoption

When I started writing this blog, I promised myself to try and make comments as opposed to merely linking to other blogs or articles. Below is a speech by Steven Levitt about his family's experience with adoption and its outcomes. This truly speaks for itself.

HT: Freakonomics Blog

Quoting Kenneth Elzinga

"The truly influential economist is one who affects how economists view fundamental problems in their own discipline and affects how non-specialists come to view the world of economic reality." Kenneth Elzinga.  

Widening The Pool of Donors

Because I think that many market arrangements are amoral, it is understandable that market transactions sometimes yield results that many consider absurd or even undesirable. Again, as a libertarian, my instrument of analysis is the degree to which those transactions were predicated on individual freedom for the parties. the area of bio-ethics is loaded with emotion and delicate sensibilities regarding how human beings may sell body parts or even price and transact on products that allow for conception of children.

Reading an article in NYT today, i was struck by how people assume that such transactions are free of trade-offs. Jacqueline Mroz writes about the call to regulate through limitation, the number of times that a single donor of sperm may b allowed to conceive babies. Starting with the fact that some concerned parents realized that the a number of donors have fathered a large number of children, they state that limits are demonstrably necessary in order to prevent the possibility of incest. 

While I fully understand the concern that may emerge from in-breeding, I am not sure that this endeavor to limit donations is useful or intelligent. To start with, the real possibility of mutations arising from such relationships is undeclared and that is perhaps it is inestimably low. In addition, I am not sure that the reason that a small number of donors have such a high rate is possibly explained by the demand for specific characteristics that these individuals bear. Finally, there is always the possibility that the donated items may be exported across countries to ensure that the likelihood of mutations is reduced and diversity of genetic resources expanded. The approach  being led by sledgehammer regulation is not as smart as imagined.        

Coase Theorem for Wealthy Londoners

My view about the limits to property rights is that all individuals with legitimate rights should explore all means for use of their property with no hindrance. As I read this article by Sarah Lyall, it came to me that a number of property owners in London are choosing to construct pools, theaters and other amenities underground. At first glance, it looks as if this is inordinately expensive but it is just possible because property costs are high and it would not be possible to make acquisitions to allow for the lavish extensions that these owners desire. Because of the limits to extension of property into the sky, these fairly affluent people are choosing to dig underground in order to add to the facilities available to them.

Apart from the illustration of the fact that planning and zoning rules could lead to absurd consequences, I think that this situation reveals that these neighbours should be schooled in the Coase Theorem. Indeed, the excavation and construction creates inconveniences and burden to people in those neighborhoods. And yet, the rise of suits merely suggests that appropriate rules for governing downward expansion are not properly developed. I have not property considered the means for reaching a workable formula but the suits will merely lead to bureaucratic and stiff regulations to the chagrin of all. 

Vettel is Not All Time Best in Formula 1

Journalism is a profession that has immense value for bloggers and it has been the basis upon which a large proportion of this blog has based analysis or commentary. Many people seem to think that it is only in the area of political coverage does partisanship overtake objectivity but I consider that sports journalism too is especially prone to commentary that includes exaggeration or even outright misstatements.

Take as an the example of this piece by David Coulthard, a retired driver on the Formula 1 circuit, writing in the Daily Telegraph. It is true that during the last race, the Red Bull team for which Sebastian Vettel is a driver took the top two positions on the podium as they have dominated racing this season year and the last. The performance of that team has been very good and it has been the most consistent over the last couple of years. That notwithstanding, the article gives the impression that Sebastian Vettel's dominance is so pronounced that he is altogether worthy of the consideration of the crown of the best driver ever.

I disagree with this for the reason that comparisons across time as David Coulthard makes should of necessity come with a caveat that time references are tricky because of change of rules and circumstances. Secondly, it strikes me as odd that he chooses to concentrate criticism of Michael Schumacher and Lewis Hamilton as drivers who supposedly rely on the ability to steer very firast and therefore inferior to the more rounded Vettel. That criticism is allowed but is too limited to the supposed faults of two drivers alone that it makes it unworthy of much consideration.  Knowing as swell that the writer raced against Michael and obviously came out second best means that he is unlikely to be as fully objective. 

To my mind, he should be aware or honest to state that the consistent change in regulations makes the sports particularly prone to shifts in dominance that may have nothing to do with the capability of individual drivers. Formula 1 is also peculiar in the sense that drivers are hostage to the reliability and consistency of their teams. As it is today, the Red Bull team has a superior car in stability and fitness for the rules and the rest are catching up. To conclude, while I defer to his opinions ideas because I have been close to but never driven a Formula 1 machine, I am also reasonably certain that the differences in capability between the drivers is much smaller than that between the cars. Formula 1 is at least as much about  engineering as much as it is about the and capability of individual drivers. That explains why drivers in the same team tend to finish in roughly same positions. One would expect David Coulthard to know that or ask for data to prove that.

Burying Doha Development Agenda

I must admit that for a long time, I have wondered whether the World Trade Organization's Doha Development Agenda wold yield its expected fruit. Reading a number of articles by those in the know, it appears that the Doha Round was all along set for massive disappointment and failure. Jean-Pierre Lehmann writes in the FT (gated) and openly calls for an end to the pretense to end and for Doha to be buried because its long been dead.

I have closely examined and participated in a couple of mMinisterial conferences but I was not always sure that the outcome would be such a mess. With the benefit of hindsight, it is clear that this Trade rRound was bound to be long and difficult on account of the different expectations between member states. I am sometimes left aghast when I hear that there is a developing country and developed country divide with China, iIndia and Brazil being the torch bearers for the developing nations. The poor definition of sides is part of the problem because it encourages the argument of victimhood into debates with expectations of market opening by the "northern" countries.

Jean-Pierre Lehmann's assessment is plausible but I disagree with the claim that fact that Pascal Lamy's exit would in itself render the WTO's future as safe. As a custodian of the affairs of the WTO round on behalf of the member states, Lamy's demeanour has been exemplary and the problem here is with the intransigence of the members as opposed to the secretariat of the WTO. I am not sure that the WTO can be saved if the Doha Round fails completely especially since the piecemeal approach to trade reforms is the "modus operandi" for many of its members. As a system of exchanging concessions, the WTO seems to be reaching its limits and there's nobody to blame but is members. 

Why Blame Powerpoint?

I learnt from watching this Ted Talk by Julian Treasure that silence and listening is an invaluable, if increasingly rare, skill. As a result, I try to keep at least three minutes of absolute silence every day and dedicate that time to letting my mind go through small thoughts. A few days ago, in my musing, I wondered why one I always hear more calls for banning things than for letting people decide for themselves.

Looking at an article in the Guardian, I received an email link to this piece by Julie Bindel covering the quest by a determined political group that wants to ban the use of Powerpoint in Switzerland. I agree too that some of the worst presentations that I have sat through were by people who misuse of Powerpoint while thinking that flashing pictures and flying bullets on the screen is replacement for intelligible presentation. It may well be that the existence of Powerpoint reduces the cost of producing full colour gibberish. Despite that fact, it seems that this political party is mistaken in thinking that use of flip charts is a solution. tTo start with, it is obviously paternalistic for anyone to insist on another's use of flip charts in addition to the fact that this solution fails to reckon with the fact that poor presentation is often a sign of poor public speaking skills and cluttered thinking. In my view, one cannot resolve that merely by changing presentation tools.

This reminded me that it is often much easier to build a political case around what should be banished from society than what decisions should be reversed. To my mind, it would be helpful for people who sit through pPowerpoint presentations to remind presenters that colour and theatrics do not a good presentation make. pPerhaps it would help for someone to just stop a presenter and ask, "Assume that you did not have the graphics, what would you want me to know?"    

No More World Records for Women

The World Athletics Championships, which I call the truncated Olympics will begin in the South Korean city of Daegu in less than 24 hours. This competition is held every second year and in my view, represents the a more accurate view of capability in sporting events than the popular and congested spectacle called the Olympic Games. I was musing about what the probability of world records being broken until I encountered a fantastic piece of sports and science journalism by Edward McClelland in the Slate Magazine.

It tackles the issue of doping in sports today and traces the story of the effect of steroids and related substances on the performance of individual athletes. An interesting point that emerges is that while both male and female athletes have a history of doping in athletics, the effects of doping onf female athletes seems to have endured. It is a curious fact that the average record in athletics events for women is 21 years old while comparable figures for men is one third of that. It raises the interesting finding that in the days before detection could occur, female athletes gained a disproportionately large "premium" from doping than male athletes did. The explanation is plausible because most of the hormones used are male hormones that appear to give a larger boost to women before the reacheds a point of diminished returns. 

The argument is very sensibly laid and the fact that male records in similar events have fallen many times more than the equivalent for females lends this theory a lot of explanatory power. However, I am sure that the abolition of the existing records to ensure that they are broken again is an inferior choice. pPerhaps the IAAF should design an award system based on how close any athlete gets to the record that has stood for longer. Besides, while it is justifiable to view suspiciously some records that have endured for long, it would be naive to assume that today's male athletes are not cheating in a way that is not possible for female athletes to do. 

Why Fifa is Corrupt

The title to this blog post would not surprise anyone who knows a little about the politics of international soccer. many English newspapers have written extensively about the lack of transparency in the game especially after the curious award of the next two tournaments to Russia and Qatar. It is not as if the world federation of national soccer administration just became corrupt when it's Executive Committee overlooked a very strong bid and denied England the opportunity to host the tournament. To my mind, the fact that FIFA is a strict monopoly is also part of the reason why it is corrupt.

As Brian Phillips traces the corruption through a historical view, I consider that FIFA's monopoly status does make it particularly attracted to exclusive dealing as a standard business approach.    The organization earns a up to 87% of its finances from the Wold Cup tournaments held every four years and which involves political bidding by countries trying to get into a beauty contest and related underhand dealings in order to be host. this structure is typical of monopolies which first asserts itself by choosing safe avenues for revenue and does not offer the biggest asset to bidding through auctions. It would make perfect sense for the organization to auction the right to hosting tournaments to countries and have the prize go to the highest bidder. That it will not subject to a market test its best assets is evidence of the contentment of monopolies.

It is also worthy of notice that while the corruption in the assignment of hosting and marketing rights has a vicarious effect on fans and the the global audience, it is worrisome that the trend shows a steady decline in the democratic credentials of hosts. And yes, while even the citizens of non-democratic countries are soccer fans, their governments are more likely to have wasted public money in hosting the tournaments and paying bribes to secure those rights. It is clear that FIFA has great potential to grow both revenues and raise public welfare but that is not the least concern when governments can underwrite the costs of tournaments while FiIFA's bosses keep the big money and the glory.   

  

Padraig Backs Tiger's Return

http://www.free-extras.com/images/golf_ball-2698.htm

I had initially thought that Tiger Woods would resume his dominant position very quickly after resolving his personal problems. Its clear now that I was wrong about the timing but I still maintain that superlative performance for which Tiger was known would not disappear in a flash. Obviously that view is not considered sensible in light of the player's performance over the last couple of tournaments. I am glad to see that Padraig Harrington, acknowledges here that Tiger's performance is far better than what the rankings show and is cautiously optimistic that Tiger is still capable of breaking the record of 18 Golf Major wins.

That claim does not sound unreasonable to me despite the caution behind the voice. For the same reasons that I mentioned here, I am sure that Tiger Woods is not to be considered a marginal player. He will win more majors and I would place a wager on his breaking jack Nicklaus' record.  

Looking at Boeing 787

Image Credit: Boeing Image Neg. #K63968
http://www.boeing.com/companyoffices/gallery/images/commercial/787/k63370.html  

I recently acquired interest in and posted here on the economics of commercial passenger airlines. I was rather surprised that commercial airlines have been unable to raise the travel speed across destinations for more than three decades. And this is especially interesting because in that time, there have been substantial technology improvements that would make improvements in speed easily possible. To test this hypothesis, I have been looking out for specifications on the Boeing 787 Dreamliner.

Brett Snyder, writing at the CNN page takes readers through the new features that would improve passenger comfort. I noted that the article completely makes no reference to gains in speed across destinations. As the blog post argued, the barrier is not necessarily technology but the costs that would go with increased consumption of fuel at higher speeds. Commercial flight is an industry which faces hard constraints set by fuel costs.

Are All Postal Services Slowly Dying?

Annie Lowrey writes a piece in Slate showing why the restrictions on its operations have left the US Postal Services with a revenue model that is causing increasing revenue losses and shrinking earnings at the same time. the article reminds me that one of the industries that was conventionally considered almost obsolete on account of the rise of email was the postal services. And it is indeed true email communication has dented revenues for post offices that rely on delivery of letters.

Reading the reference piece, it reminds me about how difficult it often is to completely retire an organization that is established in the public sector. I think that the rise of the internet and web-based email was a significant blow to the business model of most postal services but that need not condemn them to guaranteed death. In the case of US Postal Service, one sees that politicians and unions state the intent of ensuring that the organization survives but act in ways that undermine that survival. In the end, it is the public that must continue to provide subvention or pay for the massive debt that the service runs. Among the ideas that constrain the US postal Service is the insistence in maintaining numerous offices while also controlling the price of basic mail delivery.  It is as if some people in authority do not understand that the price ceiling limits revenues due while the reluctance to close offices raises costs. From the description, the US postal Service does a good job but is hamstrung by bad economics.

I would like to examine a postal service in a nation with a substantial land mass and population that runs on a profit or is able to meet its costs. I will post a blog here as soon as I find one example. 

Amazon Takes on Publishers

This blog has covered posts such as this one on Amazon Kindle and its rising effect towards digitization of books and a reduction in the role of publishers. To my mind, it is clear that book publishers are burying their heads in the sand in the same manner that music production corporations did in the early part of the last decade and lost. Among the many things that publishers fail to understand is that the availability of digital books is placing them in a situation where they must justify their value in the book publishing value chain. 

I am therefore elated after reading here that Amazon has created a crack on the door by directly publishing a book by Timothy Ferriss. This is clearly not the first book that has been converted directly into a digital book but it shows that Amazon is now considering direct competition with publishers.As the story confirms, the foray into direct publishing is a well-considered one as the corporation has created a strong complement of professionals with editorial and publishing capability. This mans that more authors will be given the option of considering direct publication through the channels provided by Amazon. And I can bet that an increasing number will take that option.    

Ford Ka Not The Car To Steal

Reading this story in the Guardian has led me to the realization that the Ford Ka is subject to far less auto theft in comparison to other models. Despite the fact that that story has not stated the proportion of automobiles that were used to reach that conclusion, it is still worth examining the reason that this car is less  prone to attracting thieves. To start with, a former car thief suggests that it is because the Ford Ka has less attraction for vehicle thieves. One might see that as an explanation but it is insufficient in my view. This is because there are several smaller cars of that nature in the streets of European cities and yet this car appears to be less attractive to a thief. It cannot be just that car thieves are repulsed by the size because the leader in stolen cars is the Toyota Yaris.

As reported, the Volkswagen Touareg is second most vulnerable to theft, followed by the Volvo XC90 and the Porsche 911. To my mind, these next three are easily attractive because they are high value vehicles with respectable resale values. The quoted ex-burglar seems to understand this and states clearly that this category of cars are well built and have power. And these vehicles are often lost through the momentary carelessness of owners which makes the thief have access to the keys. It is less likely that they do not have safety features thus that would be more difficult to disarm. I find this counter intuitive because I guessed that the high value vehicles would be conspicuous and better protected.  

Warren Buffet on Shared Tax Sacrifice

Despite my being a libertarian, I find it completely annoying that people ascribe their reluctance to pay taxes on non-existent reasons. Writing in the NYT, Warren Buffet bells the cat by stating and refuting the unreasonable stances maintained by politicians who are opposed to taxation by using wealthy investors as cover. Many people assume that the claim that taxation of incomes reduces incentives for investments is established in theory and empirically without question.warren Buffet states that the idea that all taxation is harmful to investment is ideologically driven but is not supported by his own experience or knowledge. hHe makes a valid case that is hard to refute but will not necessarily shut up the ideologues of zero taxation.  

Because the article speaks for itself, I see no need to paraphrase it as I am not close to paying US$ 6 million in annual income taxes and neither do I pay income taxes to the US government. However, I will state that it is understandable for any person to desire to keep as much of his earned income as is possible but that there is no reason to think that a no tax movement is automatically consistent with being necessarily libertarian. In other words, it is not honest to overstate the need to maintain low tax regime or the value of absolving super-rich from paying taxes.     

Rodrik's View on Extrapolation of Growth Data

To my mind, Dani Rodrik is without doubt one of the foremost Development Economists and one to whom I take time to read even when I do not agree or understand his points about the government's role in development. Among his consistent and lucid ideas is the view that industrial policy does have arole to lay in the growth and ultimate development of a country. Having seen the vast number of failed attempts at driving the economy through government's choice of growth sectors, I find this view to be more nuanced than either his detractors or others who approve government action do admit.

That notwithstanding, I am always in Rodrik's corner with regard to assessments about the longer term prospects of selected economies. His article on Project Syndicate demonstrates that nuance again by carefully asking for a review of the conventional opinion that emerging countries and developing countries generally are bound to contribute in a large way to growth in the world economy in the future. As he argues, the US and European nations are faced with both systemic and structural problems that require deft management while most of the rest of the world has had comparatively impressive growth over the last decade.

Dani Rodrik asks the important question about whether developing countries can drive forward the world economy. Judging from his well-argued piece, it is possible that hope on the part of commentators appears to triumph over reality and the empirics of the historical record. many of the forecasts about the world transformation away from the west is based on extrapolation of impressive growth in leading countries and even smaller economies of Africa. It is rather naive to expect all these countries to maintain these rates of growth indefinitely. It will be a very difficult task that requires structural reconfiguration of these economies in an way that is not only historically unprecedented but lead to uncomfortable political relations. Irrespective of one's views about the conclusions, the argument is that extrapolation of today's growth rates one way or the other as a substitute of broader analysis is unwise.      

Kenya Tries to Burn Ivory

Source: www.weforanimals.com/free-pictures/wild-animals/elephants/1/elephant-3.htm

Asian and African elephants are without doubt threatened by illegal poaching and are faced with extinction of stocks in some parts of the world. The major risk for elephants comes from the strong demand for ivory for ornamental and other personal uses. And yet the approaches that advocates and some governments take are merely symbolic and have no demonstrable effect on conserving the species.

Looking at this piece in the BBC news site and another at the Kenya Wildlife Service site, it occurred to me that the symbolic value of setting alight a bundle of recovered elephant ivory was widely broadcasted internationally. Going by that story, that is the third occasion in which Kenya's president set fire to a pile of ivory in order to send the truly powerful message of the country's commitment to conserve its elephants. It is debatable whether the conservation effort would be better off with the sale of that stock of ivory in order to use the proceeds to finance conservation. What is clear to me is that knowing the chemical composition of ivory, it is unlikely that the product can really be set on fire and ultimately consumed. 

And that brings me to my main point about symbolism in conservation. It is undeniably important to send a clear signal that a country or territory intends to conserve its wildlife. What one wonders about is whether it makes sense to put together a spectacular pyrotechnics show and hope that many people are not familiar with simple precepts of chemistry. To my mind, to ban trade in ivory is not the optimal way of achieving conservation objectives but still understandable because a market design solution exists. It is worrying when the symbolism goes from rejecting discussion of market solutions and to ignore the laws of chemistry. Kenya may ban ivory trade but nobody can burn ivory. It pays to recall that like teeth, ivory does not catch fire. 

Tim Harford on Originality of Ideas

"Most original ideas turn out either to be not original after all, or original for the very good reason that they are useless. And when an original idea does work, the returns can be too high to be sensibly measured." Tim Harford in Adapt. p. 83.

How the Middle Class Takes Shocks

Searching the name Simon Kuper in the Amazon page will show that he writes very insightful books on the use of economics thinking in the analysis of soccer. He is also a contributor to the Financial Times and has a very informative piece here on the vulnerability of middle classes world over. It is pertinent because the whole world is presently riveted to the remote possibility of US debt default and the less remote one of Greek default and the subsequent contagion throughout interconnected financial markets.

The piece is perceptive and insightful in taking the focus to individuals and households and therefore, considering the micro-level effects and how these impose suffering on account of shocks to the income of individuals. Arguing that those who fall through the "trapdoor" tend to lose faith in the values that support capitalism and suddenly become vulnerable to support conspiracy theories and belligerent leadership, he seems to accept that a sudden economic shock has effects that go beyond the economy.

A response to this thesis requires proper consideration but I think that the government of Greece needs to make tough decisions today because the earlier decisions have been poor and have built up into a far larger problem requiring more sober policies.  And as that happens, I hope that the narrative that develops is not a distorted one rather than one that faces the tough facts as they are. Some Greek people lived far beyond their means and relied too heavily on public subvention.  Still, I am impressed with the thesis about how some people's political opinions evolves with the changes in their economic circumstances.   

Is Netflix the Panacea for Piracy?

This time, the blog takes a break from the concluded deal between the players union on the one side and the team owners on the other. Farhad Manjoo educates me with his articles on technology and business but I think that the latest piece on Slate is just plain wrong. The gist of his argument is that because of the ease of use of the Netflix subscription service, the piracy of digital entertainment in the form of movies may soon die down. he is obviously mistaken for a number of reasons.

I think that Farhad contradicts himself when he mentions early on that Netflix envisages a decline in the growth of subscribers on account of an upwards adjustment of subscription rates. One would think that he would then extend this argument further by stating that why are the subscribers unwilling to take up the service. My incomplete answer is that many of them know that with a certain level of difficulty, they would still be able to get alternatives or even similar movies through various channels including piracy. Secondly, I suspect that  a large proportion of the individuals who download unauthorized versions of entertainment are based in countries in which the streaming service is not available and are thereby unaffected by the availability of streaming services in the US. A third reason is that Farhad makes the big assumption that individuals think of unauthorized content and streamed content as alternatives and therefore consume one to the exclusion of the other.

To my mind, there is no reason to think that the pirates will be held back just because there is an expanded list of movies on Netflix. tThe solution instead is for the owners of these works to understand that while the material is rolled out by geography, the pirates think of the entertainment world as very integrated one. 

NFL Vs Players Union III

In this last blog post, I suggested that the owners of teams somehow used strong arm tactics to scrape away two percentage points from the players and that the real cost of this concessions would be borne by future players. In fairness, the owners also conceded to putting aside some money to ensure that retired players will receive some payments. However, I am surprised that the general assessment seems to be that this deal was fair.

Alex Marvez of Fox Sports covers the emotional session during which the agreement was declared to the public and concludes that there appears to be no ill-will between the sides. tThis may well be but as stated, i I think that the NFL is not only a cartel that hinders competition between franchises by sharing revenues and thereby dividing the market but that owners are aware of the very short careers of a majority of players and exploited it to the maximum. Looking at what has been declared of the collective bargaining agreement, i I am not sure that there was a commercially compelling reason for players to agree to the salary cap and cede 2% points in the overall revenue.  In light of the brinkmanship and tough negotiation, I see no reason to revise my view that players ceded much more and are the weaker side. I hope that further facts and analysis shows me otherwise for I wish to be better educated on the economics of the NFL teams. My best wishes for the next decade.

NFL vs Players Union II

I blogged here a while ago about select details about the financial structure of the NFL and the impending dispute with the players union. For some reason, I understood it that there would be brinkmanship on either side before an acceptable settlement comes up before the next season commences. Jeremy Singer-Vine goes through what is the preliminary proposal presented by the owners proposing that players would be entitled to 46-48% share of revenues as opposed to the even split that characterized the last agreement.

To my mind, the players seem to have ceded quite some ground with that 2-4% spread because I see nothing that shows that the economics of the NFL has changed substantially. Indeed, while this proposal is not concluded yet, reflects the vulnerability of players to the factors that the first blog post revealed. That players have a perishable lifespan in the game allows the team owners to wield substantial economic power. In addition, the existing players have merely preserved their pay by pushing the cuts to younger layers who will face the pay ceilings and salary caps.

The lesson: When two unions engage in discussion with each other, it is future workers that pay the cost. This may be worth bearing in mind in the season of sports and impending political lockouts.        

Sales Tax: Amazon Has A Point

Farhad Manjoo often does a fantastic job at the Slate Magazine in explaining the confluence between technology and business, but in seeing technology as business. His latest piece addresses his view on taxation by different US states on the taxation of goods sold by Amazon. As usual, the coverage of the issues is comprehensive.I am less sanguine about the conclusion that Amazon is reluctant to collect taxes on behalf of states because it has no incentive to do so. 

It is obviously true that Amazon is aware that a tax levy on goods that it sells would cause a reduction of quantities purchased. However, the view that Amazon is capable of putting up a system that would track and keep data on taxes due to each state enable the is only half true because keeping this clearing house is not without cost. In essence, I am reluctant to blame Amazon for the fact that states impose taxes that not only reduce trade but also impose tracking costs on businesses.With that in mind, it may be that the states that impose taxes externalize the problem of maintaining records while picking their revenue. I think Amazon is right to state its concerns about that. 

Rybka Plagiarized Code

My recent reading of the book from which this profound quote was extracted led me to wonder about the pressure and interesting life of top chess players and how they incorporate machine learning in their games. bearing in mind that Gary Kasparov, the world's highest ranked player lost to a computer a while back, it occurred to me that computer games would be the next platform for learning for elite players.

That's why more i was quite enamored with this occurrence where it was discovered that the Chess champion among computers known as Rybka, was disqualified for unauthorized use of code from other programmers. The hilarious title of the story aside, it is an illustration that the programmer of the four time champion learned from other open source codes and used it to enhance the performance of Rybka. Come to think of it, any champion could borrow Alekhine's defense or Capablanca's openings without being accused of plagiarism but once the play is in machine language, then different rules apply.        

The Age of Benevolent Dictators

A few months ago, I found myself in a discussion with an acquaintance who had visited the Libyan city of Tripoli in the last year. It is to be recalled that at the time, Egypt was in political turmoil due to unrelenting pressure by the citizens for resignation by the president and the leadership. As is common, there were various ideas about how far the series of protests would go throughout the nations of the Middle East and the north of Africa. The discussion started with arguments about what the trajectory of protests would take and which country would next be under pressure. My interlocutor stated firmly that Libya's government would have no reason at all for worry because of the better quality of life that it accorded its citizens. In his view, many people would willingly trade off political freedom for economic prosperity and that was it. While I do not recall exactly the words uttered, the libertarian bone in me was  disturbed by the assertion that benevolent dictators are going to be more safe and better for development outcomes.

Today, I got a copy of this piece by the Centre for International Private Enterprise (CIPE) that places a dispassionate argument dispelling the myth of the stability and prosperity of states under the rule of "benevolent dictators". Admitting that there are a number of seemingly prosperous states that have had authoritarian governments, the article makes the important point that this is no reason to conclude that democracy should be secondary to strong economies. And yet, the clear evidence that democratic systems have endured into prosperous economies does not seem to correlate with preference for the former. At the same time, it is clear that democratic systems may be difficult to work under but these governments are more likely to be interested in achievements that go beyond keeping the chairman and his comrades in power.  

For all its conciseness and clarity, this article is unlikely to convince everyone that democratic freedom is also most stable avenue towards economic prosperity. One need not only look at Intrade's main board on the chances of Gaddafi's survival to understand that this quest for benevolent dictatorships is ill-informed. We now know that among the governments in the neighbourhood of the Middle east, it is the Libyan government that has the toughest choices ahead of it now. It is also less likely that the regime will survive intact as there are some irreversible changes already afoot.

Is Tiger Beyond His Best?

A couple of weeks ago, Rory McIlroy won the US Open Golf Tournament for 2011 with an impressive and dominant display that started the comparisons to Tiger woods. Clearly, the winner deserved the glory and provides proof he is one of the top players and not just a rising star. And that brings me to the consideration about the prospects of Tiger Woods in the game.

I stated a while back in this post that Tiger Woods will be back after his tribulations and that he will still be among the players to beat. With more than a year gone since that assertion I think that I would still wager a considerable sum on his return. Tiger's injuries notwithstanding, my confidence in his ability comes from the fact that he plays a sport in which the physical diminution of skills does not occur as quickly and the range in ages of the top players is among the widest in professional sports today. Secondly, the skills that are required to perform in golf are built over time and may be improved over a longer stretch and this gives Tiger a significant advantage.

For that reason, articles such as this about Tiger being invincible probably overstate Tiger's supposed decline, if any and fail to mention the fact that PGA Rankings released last month should be read cautiously. For instance, while the ranking system places Tiger as seventeenth, it is clear to me that this is largely explained by the fact that he has played the least among all players ranked above him. Tiger will be back.

Duncan Watts Explains Market Bubbles

Reading Duncan Watts piece in Slate Magazine a couple of days back, I was reminded about one of the blog posts a while back on social media. To my mind, it is almost certain that the potential of social media as a whole is being overstated but the enthusiasm for investors and users makes this a difficult argument to make. The poignant point in Duncan Watts' argument is that it is not possible to tell what will constitute success for a firm and so the valuations and assessments on profitability are in many instances just guesses cushioned with convenient justification and hope. It is this enthusiasm that in turn leads to market bubbles irrespective of the industry.

Thus the limits of human ability to tell the future is part of the factors that generate bubbles. Hence by the time everyone agrees to the fact that an industry went through a bubble, it is merely because there has been a backward connection of dots to include stories that make the outcomes almost inevitable. As he concludes, the only certainty at the end of the bubble is that many people suffered genuine confusion and it is the subsequent neat story that is less credible and contrived.

And that explains why his book, Everything is Obvious will probably be one of the business books of the year. And that's because we will be referring to its sometime soon after the social media space has gone through the cycle described in the article. 

Story From A Lost Picture Now Found

Six years ago, I visited the city of Bangkok in Thailand for the first time and was fortunate to have a day to spare as a tourist. In my minimum travel, I concentrate on taking pictures of places of worship and was lucky to have camera around to take pictures at the The Grand Palace complex that neighbors the Wat Phra Kaew. The picture accompanying this blog post was taken during that trip and because I do not take notes, I could not recall the real name until I referred to a guide book today. However, I could still remember clearly that it was a set of temples near the palace and that one of the beautifully decorated temples held the most sacred statue in Thailand, the Emerald Buddha. 

In a separate place nearby is an abandoned palace for the royal family in Thailand. Both the temple and the palace side of the complex bear perfectly manicured lawns.

As I recall, the place was so full of tourists and guides and there are portions of the temple that require the removal of shoes with warnings that they are not always safe there is no guarantee that one will find a pair left behind. Somewhere within the temple complex is a very well-crafted and accurate model of the Angkor Wat complex in stone. It is only upon my visit to the latter, four  five years later did I recall the craftsmanship and its apparent accuracy. The enduring question in my mind then is why palaces and temples are either very close or combined in a single complex as in both Wat Phra Kaew and the Angkor Wat.

Economics: Barrier to Faster Commercial Flight

Writing in Slate Magazine, Brian Palmer presents an extremely informative and correct argument for the fact that in spite of the development of flying capability, airlines are not getting passengers faster to their destinations. The argument is simply that fuel costs limit the speeds at which these airlines would operate since faster machines that are already available, would run on more fuel.As it is argued, a 10% gain in flight speed results in 21% increment in fuel consumption. What this means is that mass raising the speed of getting airlines to travel between cities is not a matter of technology but economics. In other words, it is possible to substantially shrink the time between cities such as London and New York but the time gained would not be worthy of the additional costs of fuel.

Meaning that planes will not cross continents much faster and will instead get more comfortable. How's that for a lesson on trade offs and opportunity costs?

  

Is College Education For All?

In my libertarian stance, one of the few areas in which I concede to the need for government to spend public money is in public education. A republic of educated people is probably going to do better with respecting rights of individuals than any other alternative. And yet I am easily frustrated by the simple arguments about whether everyone should go for a four year college education or not. To my mind, this question is an obvious red herring because clearly, not everyone who is capable of going through the college curriculum thinks it worthy of his time.

My sense of worry that policy debates in education are getting increasingly pedantic was elevated when I read this article under the title, "Should All Kids Go to College?". Granted that questions like these are often posed so that the author could tackle both sides of a difficult and polarized subject, it is clear that it adds to the confusion.  It is abundantly evident that not all kids should go to college because not all kids want to and because one does not have to attend college at a pre-set time.

In conclusion, primary and high school education are worthy of worrying about in terms of the numeracy and literacy of minors. I am not sure that it is a policy issue to worry about the specific drop out rates in college since universal completion at college rates should not be expected. At the same time, the crude argument that there is an inherent and real distinction between vocational training and academic training is patronizing to poor kids and outrightly preposterous. Many people who maintain the argument that certain classes or people ought not to be taken through academically rigorous courses assume that competence is one equals inability in the other and cite the greatly admired apprenticeship system in Germany. Well, they are probably wrong because I have met a German professor of political economy who is also an apprentice in carpentry.  

Facebook Needs Revenues More Than New Subscriptions

It is a fair question to ask whether there is a return to a technology bubble as happened in the early part of this century. The only difference this time may be that it is driven entirely by what technology pundits and the press have aptly named as the social media. Clearly, the leader in this is Facebook which has accummulated more than half a billion users. Charles Arthur of the Guardian cites information here suggesting that it is beginning to plateau in the US, Russia and parts of Europe.

While I claim no special knowledge of the economics and drivers of the industry, I think it is unlikely that the reduction in the pace of growth of new users should worry Facebook's management. To my mind, the strong pace of growth over the last  few years is itself remarkable and was bound to reach saturation at some time in the future. The critical thing that social media corporations must worry about now is to build on the back of their strong subscriptions, the appropriate revenue models that begin to show profits. Students of business should keep a keen eye on this industry.  

The Outlier in The Middle East

Governments in the Middle East and Northern Africa have approached the clamour for political and social change in very similar ways and with little success and at great cost to lives of innocent people. The exception seems to be the Kingdom of Saudi Arabia where the monarchy has responded by opening the treasury and expanded welfare programmes and redistribution of the rents from petroleum to citizens through a variety of methods. As Neil MacFarquhar of the NYT states, it is clear that the strategy is to disarm the calls for political reforms by redistributing oil money from the state to citizens through increased construction of housing, raises in pay and contributions to clerics who are friendly to the establishment.

This approach is understandable since Saudi Arabia has comparatively large oil reserves and receives substantial rents for that every year. It is therefore capable of maintaining this distribution to placate citizens and momentarily quell any rising discontent. It is less clear that this approach is bound to work for a long time especially as public expenditures must have a limit and affects the development of private sector. That aside, this political trick should worry watchers of the oil markets because if this approach is maintained into the medium term, then it affects the incentives in the country to play Saudi Arabia's conventional role as the moderator of oil prices. I hope that the monarchy sees this as an opportunity to buy some time and start its reforms because it is unlikely that perpetual appeasement is a good trade off for reforms.

Quoting Gary Kasparov

Reading Garry Kasparov's book, How Life Imitates Chess, I underlined very many passages in the book and now find myself having to choose only one for this post. It is found on page 212 of the paperback version.

"When preference overrides objectivity to too great a degree, our growth is inhibited."

Walmart's Final Frontier

Many households in sub-Saharan Africa are especially vulnerable to shocks generated by rising costs of food and fuel. the reason for this is that in spite of the recent economic growth registered in many African countries, the majority of people still live on very low incomes. That the south African competition Commission and the Tribunal have allowed the formal entry of Walmart to take over a leading grocery chain in that country is both fascinating and portentous of good things to come. As argued here, South African unions may be concerned about the entry of Walmart into that country but its lower income people would benefit immensely from this.

The entry of Walmart in a continent that requires serious retail market development is understandably causing concern but increased competition in retail markets is a precondition for further growth. let African urban centers be the final frontier for Walmart. I hope to follow its progress in future blog posts.   

Boris Johnson Argues That Rugby Causes Less Violent Crime

Sometime last week, the UEFA Champions League finals took place in Wembley Stadium in London. The general conclusion was that on that day, the better club, FC Barcelona of Spain won the trophy. As is expected, the punditry went out to express opinions and theories on why FC Barcelona completely dominated the match and what that implies about the football tradition of England, where the vanquished team is based. As usual, most of the commentary was not worthy of reading, leave alone taking seriously.

In my view, the standout analysis of the match and its outcomes came from the Mayor of London, Boris Johnson. His article is definitely worthy of reading and reflection upon. And yet, he too missed a delicate point and made a common error. By way of summary, his argument is that the dominance of FC Barcelona suggests that the approaches chosen by English teams is manifestly inferior. Going further, he posits that England may be better suited for rugby, the sport in which it has produced a recent world beating team. No errors so far, except that he alludes to the fact that rugby is a distinct sport in the sense that areas with the highest participation in rugby are also areas with the lowest levels of crime.

Be that as it may, it is still a leap in abstraction unless he can prove that the direction of causality heads from Rugby towards low violence. Is it not just possible that areas that experience low levels of violence in the first instance are attracted to rugby? Mayor Johnson, correlation is not causation.