Friday, May 29, 2009

Should Artistes Take Royalties from BNP?

Successful artistes rarely face a dilemma like this, where a group or organization dedicated to a racist ideology uses songs from successful musicians to promote its causes. It is easy to understand why the these artistes are determined to stop the use of their music by the BNP. The main concern is that they see this as creating the impression that they do favour the views of the British National Party.

To my mind, this is a case where the strong intellectual property rights that artistes and music companies receive may earn artistes lots of money but may undermine other centrist ideas that they may hold. The structure of these contracts mostly allows the corporations to take all control of marketing hence their tendency to try and maximize sales. As the story suggests, it is unlikely that any such concerns would be relevant as the contracts are drafted to emphasize the commercial aspects of the productions. Few of these artistes considered the possibility that BNP would use their creations in this way.

My view though is that I sympathize with these artistes and understand their concern that their music is being used in ways that they consider inappropriate, but this is merely the unintended consequence of the strong intellectual property regime that exists and that they must find a different way to deal with this. I do not see any courts compelling the music marketing corporations or the BNP to stop trading in that music provided they observe the existing laws and contractual terms.

Their legal options are probably many and these do not have to involve litigation. Instead, they could in turn produce other songs that support political parties or organizations committed to equality and tolerance. Perhaps the most potent one in my view would be to take the royalties emanating from the sales by the BNP and donate that to other groups whose philosophies and ideologies would counter those espoused by BNP. To my mind, that would turn the tables on BNP by encouraging it to work, albeit indirectly, for the other side.

Wednesday, May 27, 2009

How Should Irn Bru Formula be Protected?

If I was asked what is Scotland's greatest export, then I would state without compunction that this is Whiskey and to a lesser extent, the Kilt. I thought a while back and realized that measure for measure, bottled water and Whiskey are the drinks that are more expensive than petroleum. This is significant factor because in the case of whiskey, there is no coordination of prices by countries. So while I am not sure now how closely the firms that produce whiskey do compete, I still think that it is a far more open market than the petroleum market.

The main point of this post though is that quite apart from the more recognized whiskey production, Scotland produces a less recognized but equally valuable beverage that goes by the very Scottish name of Irn Bru. And I am amazed at this because when I took the Whiskey tour in Edinburgh a couple of years ago, I never heard mention of this drink produced by the company of similar name. Like whiskey, Irn Bru is also fascinating in the sense that its exact composition is only known to two people and one of whom has had to transfer the production process to his daughter who will take over from the patriarch.

As the story in the Guardian states, the only two people with knowledge of the formula may not travel on the same plane. I surmise that the purpose for this is to prevent the loss of the formula in the event of a plane crash. Well, the Irn Bru corporation should take my advise and review the data because the probability of a plane crash for miles travelled is much much lower than that for other forms of transportation. In my view, the greatest risk that the corporation faces is obviously related to the loss of the formula but the coincidental death of the custodians of that intellectual property from a plane crash is not only highly remote but is also not at the top of the list of risks.

My suggestion then is that the formula should be cut up and encrypted and then stored in very secure but diverse locations and may be referred to by a select number of people. That is infinitely more secure than having the formula inside the heads of two people who are then prevented from travelling together by plane or car. This is ridiculous for a corporation producing Scotland's most popular fizzy drink.

Wednesday, May 20, 2009

Is Cash for Grades Really Bribery?

Roland Fryer Jr. of the University of Harvard has been an advisor to educational officials in New York who are interested in raising achievement by students in schools. the unquestioned realization as that performance for students was falling or poor in specific schools that are primarily in deprived neighborhoods. His primary response was to design an experiment in which students would be promised cash or cash equivalents in prizes that are conditions to the improvement on their grades or attendance of classes.

To the extent that I can tell, the preliminary results of this experiment has demonstrated beyond doubt that students respond to the incentives by raising their grades substantially and that this is attributable largely to the incentives scheme. Naturally, it is an experiment that some purists appear to question and the thesis of their opposition is based on the fact that this amounts to bribery of students to study because it robs education of its intrinsic value.

In the critique published here, Prof. Alex Standish seems to be unhappy with the approach and suggests that this is an extreme form of commoditization of education. I am unsurprised that a professor holds such a purist view of education in spite of the fact that states have had a longstanding problem in raising the grades and educational interest of disadvantaged youth. My hats off to Prof. Roland Fryer and I wish that the experiments go ahead because the investments in education that most societies make make it necessary to raise achievements especially for students for whom there is a high opportunity cost to staying in schools. To my mind therefore, if additional phones and calling minutes is what it takes to raise their interest in educational achievement, then Prof. Standish ought to reconsider his ideas. I suspect that education became a commodity long ago and one that racial minorities among other distinctly disadvantaged groups rightly considered costly.

Tuesday, May 19, 2009

Wikipedia: User Beware

There's a rising realization that disparate networks throughout the web are capable of devising and generating knowledge for a variety of matters. One of the more cited illustrations of the power of these networks is the relative success of Wikipedia. In truth, while I have also made use of select references from Wikipedia and especially regarding definitions for technical terms, I have had reservations of the veracity and accuracy of some fact based information on the site.

It looks that the Achilles Heel of Wikipedia was best illustrated by most recently by a student who inserted a sleeper fact that was later quoted without verification by journalists. Writing in the Irish Times here, Shane Fitzgerald explains the motivation for that experiment. As he explains it, it shows that this concern about both the possibility of manipulation and misinformation are more likely than is recognized.

What most surprises me is that some very well regarded authors of books have used Wikipedia as references for assertions in their books. I am sure that editors should consider that again in spite of the fact that even peer reviewed papers are found to contain errors. To my mind, all this states is that when a source begins to be used without critique, then its limitations are bound to be overlooked.

Thursday, May 14, 2009

Norway Bucks the Trend

A number of Northern European countries have attained a very high level of human and material development. More particularly, the Scandinavian countries have some impressive achievements in life expectancy, educational attainment, comparatively low unemployment rates and high income levels. Even among them, Norway stands out at this time in economic history for the reason that it has totally escaped the ravages of the economic crisis facing most of the world.

As this article states, the leadership in Norway ascribes their unique and comfortable position to prudent economic policy management and the placement of some limits on markets. It does help that Norway also has a large natural resource endowment starting with petroleum to other metals. To its credit, the country has records a high level of state capability and foresight as evidenced by the establishment of a sovereign wealth fund.

While Norway's leaders relish their contrariness and emphasize the fact that it is a cohesive and socialist model, I think that their use of the socialist model is altogether inaccurate. Fine, the country has very robust and overgenerous safety nets but its approach to economic affairs and prudent public finances has allowed substantial private sector growth. It is also material that the country has a small and homogeneous population.

As the article concludes, it is essential to note that this prudent management ought to contend with the effects of the generous safety nets which appear to have discouraged some workers. It is not clear from the article whether the number of lay abouts is as large or even growing but the growth model that Norway has chosen clearly has trade offs. Not every country can pull this off but the bigger question is whether this model can be maintained indefinitely.

Tuesday, May 12, 2009

Oprah Markets for KFC

Endorsement deals of enormous amounts are common for celebrities of all kinds. I have wondered often how profit-seeking firms determine the price and the size of any endorsement deals that they offer. I am quite impressed that Oprah Winfrey's feature about a chicken give away by KFC has resulted in such an overwhelming response from the public that the franchise has had to cancel the promotion.

This leads me to note two things. First is that Oprah Winfrey is capable of pulling consumers towards a brand. The second and more material question is whether KFC took account of the fact that the economic situation added to Oprah's promotion could lead to such a response. In short, the KFC's marketing managers should be thankful to Oprah while their supervisors ought to take them back to school. they have not figured out yet what moves their product.

Wednesday, May 06, 2009

Testing Demographic Forecasts

Apart from environmental concerns, the one other area that has a lot of unworthy theories is the argument for population control. Well-meaning people argue often that the population growth rates in the world are far too high and have become a real threat to future human survival. Adrian Stott Brendan of Optimum Population Trust placed this response in rebuttal to an earlier article by Brendan O'Neill of Spiked Online that covered the OPT conference arguing for population reduction or control. Both articles are well argued as polemical pieces and worthy of reading on their own.

Martin Walker of the Wilson Quarterly takes a very empirical approach to exposing the assumptions that demographic forecasters frequently make. As a result, it is found that the forecasting record for demographers since 1970s has been very poor. One of those silly assumptions is the tendency to assume that high or very low population growth rates will maintain indefinitely and therefore claim that population growth rates in developing countries generally and sub-Saharan Africa in particular are a source of future threats.

As the evidence of population tracking shows, demographers are often flummoxed when they have made forecasts based on present circumstances. The major effects have been that the suggestions of European population shrinkage has not materialized everywhere as the forecasters assumed. Instead, there has been a sustained rise in births in the UK, France and Sweden. The second is that the concern that the racial profile of the European countries is not changing as first as was feared by cultural purists.

Needless to state, I remain a skeptic of population growth as a danger and have virtually no respect for Neo-Malthusian ideas. To my mind, these alarmist simply exploit the fear of nationalist domination. I am prepared to wager the bet that the population of sub-Saharan African nations populations will not match those forecasts because increased education, urbanization and improved health care. That African populations are still desperately poor is indubitable and in my view, population control is not the way out of that squalor.

John Kay on Mark to Market Accounting

Another worthy quote from John Kay. Can someone use this as the heading for a chapter in business school text books?

"If a question has no right answer in principle, then people will argue for the answer they want in practice. Financial markets want steady growth in reported earnings and that is what finance officers gave them." John Kay