Technology and Education: MIT Takes A Dip

It is possible that I have not searched diligently enough but I have not seen any publication with a coherent view for how education in general and learning will be affected by the rise of the new tools and ideas from the digital field. The closest I came to how much the Internet and related tools will affect education was in the Biography of Steve Jobs in addition to the report by MacArthur Foundation on The Future of Learning Institutions in a Digital Age. The former states that Steve Jobs thinks that the major effect of technology would be in digitization of text books and learning materials. The advantage here would be that updates would be regular, less costly and that the parents and the public sector would take the initiative away from publishers.  I thought then that that was not really profound but that Jobs was being uncharacteristically real in the possible effects on education from technology. The latter publication was more sanguine but also profound in stating that most learning will involve de-centered teaching and with young learners getting skills from diverse places and methods.

I accidentally encountered this piece by Tamar Lewin of the NYT in which it is reported that the MIT has introduced an e-learning course for which it will be possible to gain certification and credentials. This new development is a step forward because open courses have been offered by leading universities in the world but many have not had certificates and my interpretation was that this would eventually lead to the death of certificates and "credentialism". My reading of this is that universities may be responding still to the heavy demand for certificates as evidence of proficiency.  What is profound is that the costs of acquiring good quality education are tending towards zero. This is worthy of keeping a keen eye upon.    

Contrasting Income Growth for Africa and Asia

Keen observers of the growth trajectories of countries cannot help noticing that apart from the larger economies in Asia, sub-saharan africa has registered unprecedented growth levels in the last decade. The argument is relevant because one of the major problems that the latter region has had is the inability to hold on to an upward growth momentum for meaningful periods of time. Instead, Africa's example has been fluctuations of growth rates that coincide with commodity price changes. The summary of this experience from the mid-1970s is that dependence of petroleum and agriculture-based commodities is not a reliable path to growth and improvement of welfare. 

And that's why the contention is that it is yet not possible to state with confidence that sub-saharan Africa has overcome the mix of economic and political problems that it faces. That brings me to this fascinating article in the East African which makes the credible and well-based claim that the countries in the eastern region of africa will be leaders in overall growth in the coming two decades. It is an article worthy of reading because it is based on a complicated but sensible method for assessment of the complexity of an economy and concludes that the countries of the region under reference have economies that are more complex and diverse in production than is warranted by the incomes today. 

The author of the article concentrates on a list of manufacturing firms to illustrate the claim derived from the index of complexity. it is less clear to me that all these firms confer a comparative advantage to the region because it is unlikely that all are able to compete internationally. My view is that given the fact that manufacturing industry is a smaller proportion of the overall GDP of these countries, there is scope for growth but not necessarily for all existing firms. A final point that is worthy of note is that in spite of the prediction that the region will lead in GDP growth, it will still fall behind India and China in respect of per capita income growth. I think the reason is that this region has a large and youthful population and is expected to maintain strong moderately population growth for a few more decades.  

Apple's Effect on Competition in E-Book Market

This blogger has maintained in posts including this that the book publishing industry has chosen to go the way of music producers by burying their heads in the sand. iIn particular, I am of the view that it is preposterous to sell digital copies of books at the same cost as the paper version. For a while Amazon seemed to be acting in the interest of the reading public by ensuring that new publications were available at lower cost in digital format and thereby ensuring that the gains from digitization broke the existing model of book publication and pricing.

Indeed, there was a danger that Amazon could have used its market power to depress the margins for publishers. And then came Apple with a deal for the publishers for an agency model for digital books on the iPad. This gave greater power to the publishers as they were able to apply new clout to ensure that books were sold through an agency model with retailers keeping 30% of the sale price. The effect of this is that prices of books not only went up but that the odd fact of digital books going at higher costs became real again.

Juliette Garside reports on the effort by antitrust officials in Europe who are questioning the new arrangement. Their main claim, with which I am in agreement, is that the agency model has placed consumers at a disadvantage in the sense that books have gone up by a margin of up to 50%. To my mind, there is no price war anymore as the publishers are back in the driving seat, with Apple's help, and are dictating costs and seeking uniform prices again. Like most windy antitrust cases, this will probably go on for long but on this score, i am confident that the bureaucrats are on the side of the consumers.   

Ode to Christopher Hitchens

While 2011 may have been a year of confusion and economic difficulty in Europe, nothing beats the very interesting outcomes for a number of despots. I am certain that nobody would have guessed that Muammar Gaddafi, Zine Abidine Ben Ali and Hosni Mubarak are no longer leaders and some barely alive. And one would think that the troubles facing Syria's Bashar Assad and Khalifa's of Bahrain would be enough for the year and yet another strong arm leader, Kim Jong Il,  with no respect for life and political opinions has passed on in North Korea.

And yet to be philosophical about it, the latter passed on on the same date as Christopher Hitchens, an unapologetic advocate for reason and vociferous defender of the right to free expression. There is no better way to tie all this together than to refer to this fantastic piece by Hitchens on life in North Korea. In there, he talks about his visit to North Korea and the experience with the effects of aggressive ideology and the use of conflict to organize all society. Most interesting is the fact that the separation of the Koreas and the racist nationalism of the North exists side by side with the fact that the average citizen of this totalitarian regime is six inches shorter than those of south Korea. I agree as well with the statement that nothing is more totalitarian that "racist nationalism". 

Champagne or Wine for Consumption Growth

Many times, economists and business people use the movement of inventory and other consumption indicators as proxies for the state of the economy. Consumer sentiment is a reliable one but it is often not possible to conveniently aggregate all consumption in even the smaller economies, leave alone one as large and complicated as the US. Writing in the NYT here, Adam Davidson explores the simple ways in which consumption of certain items reflect the recovery of sustained lack of confidence in the United States today.

As the article states, the trend in consumption of some items are far better indicators of the improved economic conditions than others. To my mind, it is sensible that the rising purchase of high cost wines may not be a representative of the whole economy because this good is primarily consumed by high income individuals whose consumption is not affected much because they have not had a squeeze on incomes. This merely shows that tracking the sales volumes of high cost wines is not the most useful way to assess the state of national consumption. It turns out that lipstick and nail polish sales go in different directions and that the latter has lost the predictive ability perhaps because of a structural change in the industry and consumption. It turns out that while sales volumes of high cost wines is not useful, the most consistent predictor is the consumption of champagne. And with the figures suggesting that consumption champagne going up, US citizens are popping corks for the right reasons. The world needs the US citizens to pop the champagne corks.

Intelligence and Creativity

"Intelligence is not enough for creativity. So intelligent people defend the position given them by their intelligence  by claiming that creativity is not a learnable skill but an inborn talent-which they cannot be expected to acquire".  Edward De Bono in, Think! Before Its Too Late. p. 25

Tiger Wins Again

I have stated here and here before that the general view among sports commentators that Tiger Woods is unlikely to regain imperious form and win golf tournaments had to be wrong. As the Guardian reports, Tiger's performance at the Chevron World Challenge tournament shows that this player still maintains the skill set that has enabled him to retain the admiration of dispassionate sports fans.  In my view, while one win does not mean that the player will continue to do so, it merely states that the bets against Tiger winning a major again must shift decisively because this player has time, history and skill on his side.

It is understandable that there are the questions about what the strength of the field was, but a number of those on the list were far ahead of him and yet he won. Skeptics must be allowed their say but many professional golfers would like to take away the Chevron Challenge prize while only a select few do.

Watch the guy.   

Is Facebook Like a City?

To be honest, I have not figured out exactly how the leading enterprises in the social media industry will be able to convert the large user-base into a revenue model. I am certain that the answer is out there but unlike a majority of people who are enthusiastic about the rise of these new industries, I do not mind being educated on how that will happen. I would be ready to bet that it will be very hard and that at best, only a handful will succeed in finding and executing that revenue plan.

To me, the most obvious value in social media today is that they represent a platform for rich and real time data that is subject to interesting analysis. That idea resurfaced as I was going through this original take on Facebook by Wabi-Sabi and Ikeda at the Foundation for Economic Education (FEE). I am sure that these two are not the first to compare that formidable network to a real-life phenomena but I find their comparison to the growth of cities really interesting. Going on a  limb, one could say that the linkages between people on Facebook would be parallel to how cities grew and that those links are in turn measures of prosperity in the way that cities represent dense networks for economic activity. 

Walmart Cashing Checks Now

Because of my enduring fascination with how retail markets generate value within economies, I am an unqualified admirer of businesses such as Amazon and Walmart. Indeed, my admiration of these two is most evident in the fact that they remain the most cited business institutions on this blog. Of the two, I am especially enamored with the creativity of the Walmart as mentioned here, among other spots on this blog. It has gone beyond its classical business model of low cost retail products and logistics to ensuring that it plays a role in competing against banks in reducing the banking charges that greatly irk many low-income earners.

Andrew Martin and Stephanie Clifford file a piece in the NYT detailing how Walmart utilized customer feedback on their real costs of banking charges. this information was directed towards ensuring that the check cashing costs offered by Walmart are sufficiently competitive to ensure that its share is growing in that area. In my view, the retailer has responded well in not only demonstrating that the fees are not close to the marginal costs as they should be, but also that the competition is adding value by saving money for clients who may save it or use it to acquire more groceries.

To my mind, the move by Walmart in providing an alternative avenue for check cashing is demonstrably useful but also highlights the inefficiencies in the banking charges. The high degree of automation in the financial services industry makes me to think that Walmart may still have a margin even after lowering the costs. Predictably, the banking institutions against whom this new move presents a rising threat respond in a manner that betrays their callousness by asking for Walmart to be regulated too. This posture is baffling to me because one would expect that they would instead ask to be released from regulations in order to be able to compete even further. instead, the argument for regulation in the piece is one that would raise Walmart's costs as opposed to a response that would reduce the banking institution's costs and ensure that costs would stay low. Walmart is beating these banks at their game.           

Umberto Eco on Simple Things

"Its only publishers and some journalists who believe that people want simple things. People are tired of simple things. They want to be challenged. " Umberto Eco

NBA and Players Reach Tentative Agreement

This has been a turbulent year for the sports franchises based in the United states because of negotiations regarding the sharing of revenue between players and the team owners. The NFL reached an agreement in which players ceded a portion of future revenues in order to end the lock-out. On the other hand the NBA season has been delayed by months and there was the remote possibility that the season would be cancelled altogether due to the great chasm that could not be bridged.

It seems now that the team owners and the players union have reached an agreement and the season is due to start with the first matches scheduled on Christmas day. As this article in the Guardian states, the full details of the settlement are not out yet but the detectable anxiety to get an agreement going in order to redeem the the season in shortened form is a major factor. To my mind, it is clear again that the brinkmanship on the part of the owners seems to have led to capitulation by the players. When the full details of the agreement are released, it is almost certain that it is the players who will have yielded more ground. 

Reviewing Rugby World Cup 2011

Many sports fans are today aware of the fact that statistical analysis of sports events has become common. This often manifests itself in the application of statistical techniques to purchase players and even in choice of play during set pieces during play. the one place in which the reasoning with data is more overt and subject to clear assessments is in the development of predictive models for ranking teams in a tournament.

A couple of articles written by Eoin O'Connell here and here in Significance Magazine presents a clear narrative on the author's reasoning about the pools, the form teams, and determinants of qualification towards the finals. This model is fascinating because his predictions correctly names seven of eight teams that qualify from the pool stages. While the predictor model is narrated, it is easy to see how the logic of the model worked and how it turned out where results did not go as predicted. Going towards the semi-finals and finals, the second piece states clearly that New Zealand team has the advantage of form and superior performance during the pool that makes the team less likely to lose. the model proves correct though the Wales replaced Ireland as the other finalist. The narrative is impressive as it highlights a systematic and approach to analysis of the games with data used to strengthen the stories. What one concludes is that home advantage and team form is a hugely powerful predictor of the outcome.

NBA Players Union in Good Hands

This year has seen some titanic battles and negotiations pitting players unions against team owners in the major sports franchises in the United States. It started with the NFL Players union against the owners which I blogged about here and here. I maintain my conclusion in this post that the players seem to have conceded far too much.

Since then, the comparable parties in the National Basketball Association have also been in discussions that have led to the cancellation of the first twenty games of the season. I was pleasantly surprised to find that the NBA Players Union have added Kevin Murphy of University of Chicago to their team as an advisor. Reading this perceptive interview on the issue shows that the players are really in good hands. To start with, the guy understands the economics of the teams and understands that his duty is not to push for any result but rather to help the negotiating teams to understand the implications of any position that they take. Whatever the outcomes, I am certain that the players will receive exceptional advice.      

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.