Using UAVs Against Animal Poachers

http://www.freeelephantpictures.com/wallpaper/eliph02-2Elephants-MomNBaby.jpg.html

Large mammals such as elephants and rhinos face the risk of extinction because of demand for their horns. This demand has persisted in spite of international  treaties banning the trade in these and other animal trophies. In a number of blog posts such as this I have made the claim that policy based on the need to conserve species such as the elephant have failed to work because the ivory from elephants and rhino are so valuable that a small number of poachers and networks of crime are able to harvest them and illegally appropriate large financial gains. In parts of east Africa, the poachers have continued to utilize high powered weapons to kills elephants in order to meet the large demand for ivory in south eastern Asia generally and in China in particular.  

The claim of this blogger is that while treaties are useful for an coordinated approach to a problem that transcends borders, it is unlikely to be useful because of the strong financial incentives. To my mind, the solution must involve both a market approach and a technological approach. An article in the Scientific American discussed a high end technological approach that includes use of Unmanned Aerial Vehicles (UAVs) for surveillance of vast parks in order to alert rangers to the existence of poachers. This innovative use of technology is a welcome addition to the quest to detect and deter poachers. It is too early to tell how effective this new approach will be but it cannot be the silver bullet to ending poaching. It is still possible that the assignment of property rights on the endangered animals would ensure that a more comprehensive set of approaches are invented to reduce the high premium that poachers extract from illegal trade. 

Will Information Be Free?

"The information revolution did not make information free. What it did was transfer the money from producers of information to the owners of the technologies that deliver it to their audience." Eduardo Porter, in, The Price of Everything; The True Cost of Living. p. 141. 

Is Africa Really Taking Off?

I am a keen student of economic development and transformation and therefore tries to figure out time and again where the growth of regions and nations will come from. Four years ago, it became clear that the world economy could not run entirely on US and European strength as the economic crisis devastated large firms. This also led to unemployment that has hardly been wound down in the US and a majority of European countries. This episode led analysts to look elsewhere and the rise of the BRICs became even more salient. Apart from that, it is clear that the new economic story is that sub-Saharan African nations have been leading in growth with six nations being among the top 10 fastest growing economies in the world in the last decade.

The business and economics press has understandably been stating that a continent once considered completely hopeless seems to have found its feet with impressive GDP growth rates ranging from 5-10% annually for most of these countries in Africa. Writing in Slate Magazine here, Francis Njubi Nesbitt  reiterates the story of emerging Africa and isolates a select number of countries that have done dine very well over the period being reviewed. It is no doubt that everyone is glad to applaud the progress made and to consider that Africa seems to be confounding the pundits. To my mind, it is at such moments that scholars and analysts should be cautious and circumspect.I state four main reasons below.

First, it is clear that the nations of the continent have benefited substantially from the commodities export boom that coincided with this period. It is clear that this is not the exclusive factor alone that has not driven the growth but it is worth stating that the momentum from higher commodity prices has been helpful. For that reason, there is need to be cautious because commodity booms do not last and increased expansion of prospecting for natural resources or expanded acreage in agriculture will reduce returns over the medium term. Except for the countries with a broad economic base (few in Africa have attained this), this growth momentum is still at risk.

Secondly, looking at the historical record, many African nations have had spurts of growth of this nature before. The main problem is that only Mauritius and Botswana have managed medium growth rates for more than one decade. As the report by the Commission on Growth and Development confirms, attaining high rates of growth on its own is difficult though momentarily possible but keeping high growth rates for a long period is historically rare throughout the world. It is not clear to me that the growth for many of these countries has a sufficiently diverse base to ensure that transformation will continue to occur. Credit to the economic managers of sub-Saharan Africa for getting growth up but I see no fundamental reasons that it will endures for throughout the entire set of individual nations.

The third factor straddles the nature of governments and how these will affect the required reforms in African nations. Bearing in mind that many sub-Saharan countries are not fully developed as democracies, there remains a big risk that their full development will continue. This is a critical factor because Ghana and South Africa are exceptions as structured democracies while most of Africa remains in a that half-way place between democracy and autocratic regimes. tThe nature of government remains a big political risk for most of these nations and the stability of regimes is not a given yet.

Finally, my assessment is that the growth that has taken place in sub-Saharan Africa proves that economic reforms undertaken in the mid-1990s and early part of this century were needed. A second phase of deregulation and economic reform to generate efficiency is required to keep the growth momentum going. tThis means that the benefits generated by reforms of one decade ago will be exhausted and will need to be buttressed by a set of reforms including trade liberalization, reduction of tariffs, competition policy enforcement,  increased transparency and public sector reforms. Given the nature of politicians that rule the continent today and the fact that growth has happened, it probably will take another crisis for the second gear of reforms to be engaged. For a continent led by populist leaders, making these bold and politically risky refroms will cause significant discomfort.

Looking at these four reasons, one urges a more incisive diagnosis of sub-Saharan Africa. It is too early to make the claim that the nations of this continent have emerged as future powers. oOf concern to me is the hubris of the leadership, disdain for different views and the talking up of the whole continent by both international and local press. The continent is not out of the woods yet and is certainly not at the same level as Asia. There's more work for its people to do. pPerhaps the savvy leaders should start with some reading of the Growth Commission's Report.    

Harnessing the Skills of Autistic Persons

A couple of days ago, i was arguing with a colleague whether the rise in the number of recorded cases for almost many non-communicable diseases was caused by better surveillance or a real epidemic at hand. As time went by, we both had to accept that it probably differs by the type of illness and that there is perhaps no single answer. Reading this article in the NYT has reminded me of that argument but on this occasion,  pleasantly so.

In short, the piece goes through the very creative way in which a danish parent deployed the photographic memory and mathematical abilities of an autistic child to establish a niche in business services. Forming a corporation that selects for the skills that autistic individuals have and thereby creating an significant advantage in using them in software and other businesses that develop high-end technology, is just very creative. as the story reveals, this is not only a considerable advantage but one that is sound business strategy. I tip my heart for Mr. Sonne.     

Policeman Helps Homeless Man

I am the first to admit the the internet is among the most interesting creations of the human mind. That notwithstanding, I am less sanguine about the fact that all that it contains is necessarily of value or worthy of review. And yet what that means is that individuals ought to be a lot more discrete about what we appreciate and try to circulate by any means that the internet allows. I am glad to flag and mention the photo that has been spread profusely on the internet because it captured a policeman in New York showing uncharacteristic kindness to an unshod and homeless man. the background to the picture is covered here by David Goodman of the NYT.

I fully understand the cynicism expressed by people who think that this possibly a plan for this young officer to gain personal fame and perhaps set himself up for other opportunities. To my mind, the guy helped beyond the strict call of his duty and in the most effective way for the person in need. So all the cynics should hold their breath and use it to preach some good. The young officer's kindness stands out in my view because it illustrates that there are people who face hard times even in the world's most prosperous county.

Being Patient With Coaches With Poor Record

I have written a few blog posts here about sports franchises but never ventured into trying to understand how teams and franchises determine who to hire as coach or manager. Just recently, Chelsea Football Club dismissed a coach before the end of his contract in a way that did not make sense to many dispassionate observers. It confirmed my hunch that many soccer clubs in Europe engage in a revolving door of appointment and dismissal of coaches with little for what they expect to change. In the case of the soccer club that I mentioned above, it is a sign of the fact that the owner of the club considers it a project for prestige and does not consider the severance pay that he has made in having appointed and parted ways with nine coaches over a similar number of years as perhaps wasteful.

While it is known that North American sports franchises tend to be more commercially savvy, this article suggests that a good number of them dismiss coaches just by reviewing the recent performance. together with the academic article that involves statistical analyses, it becomes clear that most of these changes make no sense because most of the replacements do not do much better and that these abrupt and frequent changes represent poor use of scarce resources     

Warren Buffet Reasons Income Tax Policy

To my mind, one of the most difficult matters in economic policy is the decision about setting tax rates for income by individuals and by corporations. It is also one area in which ideology can get intelligent people twisted in their"you know what". As  a libertarian, I start with the sensible view that taxes should be moderate not only to avoid the distortions that it creates in addition to giving people an incentive to work and keep a higher proportion of what is legally earned. Such a view seems sensible until people have to argue about whether a 20% tax on income is sufficient or not.

Warren Buffet pitches into the discussion that animated the US Presidential elections with firmly argued points. His most potent statement in this article is that those who are ideologically committed to lower taxes overstate their case by making the claim that investors are preoccupied with tax rates as a determinant of capital deployment. In the article, he makes a very solid case that both investment rates, growth and income levels in the United States have been substantially higher than they are today and therefore it is improper to state that any upward tax adjustments for wealthy people would harm economic growth. As he argues in , the lower tax burden has contributed to a redistribution of income from the middle class towards the wealthier Americans and thereby exacerbated inequality, while denying the public sector of revenue to meet existing obligations.

Towards the end of the article, he goes out to state that given the federal government's finances today and in the medium term, a minimum tax rate for high income earners should be set. Warren Buffet is correct because he argues that tax rates must respect context and are not n end unto itself. Clearly, every hard working entrepreneur wishes to keep most of his income but the decision for tax rates is about a political discussion. Which brings me back to the fact that I prefer lower tax rates but there is no rule that states that raising taxes is by itself good economic policy.    

Arsenal Football Club's Sponsorship

Arsenal soccer Club is among the leading clubs in England. This entry in the Club's website provides information about a a five year endorsement deal signed with the Emirates, a leading middle eastern airline. As the statement makes clear, the Club has renewed a deal for placing the sponsor's logo on the training and playing shirts for the club. I have no immediate data source to check this out but it is probably true that this deal is quite lucrative and ranks among the leading endorsement contracts in the game.

It is clear that club executives have an idea about concluding such deals but I am still wondering whether they would perform better if the rights were auctioned outright. This is especially interesting because the Arsenal Soccer club play very grans soccer but have not won a trophy in seven years. Noting that companionship status matters to both sponsors and the club, an auction would reveals the relative prices of a single win.    

Post-Elections Analysis 2012

A number of columns and purported analyses have been written already about what determined the outcome of the US presidential elections which president B. Obama handily won. Again, I am not a US Citizens but I had some understanding of the race by following more closely the various contentions between the two candidates. The outcome of the race confirms to me that as stated before, most political, like economic commentators and pundits do not know what they speak about. Not only was the conventional wisdom that the race was a statistical dead heat untrue, but many people opted to go for the pundits on TV with known ideological and party biases, while ignoring both Intrade and Nate Silver's blog which both suggested that Romney had made gains in the last month but was still an underdog late in the game. 

To my own disappointment too, many libertarians and market friendly commentators stuck to a very ignorant mantra that Romney had a momentum after the first debate and would win. Their reasoning was that the endorsement of the Tea Party on one side and the stellar record in corporate reengineering was enough. Sorry, it was not purely because the president was not really as weak as it was thought. And it was only a single comment in the Samizdata blog where there was the caution that the celebrations were unjustified because the information markets still firmly predicted an Obama win. 

Looking now at the result, it is clear that there will be many books and tracts trying to explain the manner of Obama's win. Starting with this piece in the NYT, there is emerging evidence that president  Obama's campaign team worked with a "Dream team" of academics on the cutting edge of research, but also employed sophisticated data analysis that informed both media buying and face to face outreach. Noting also that both campaigns had professionals advising them, it is essential to compare one set against the other in order to determine how one side bested the other.  

Quoting Steven Pinker

"By the late 20th Century, the idea that parents can harm their children by abusing and neglecting them (which is true) grew into the idea that parents can mold their children's intelligence, personalities, social skills, and mental disorders (which is not)."  Steven Pinker, in, The Better Angels of Our Nature: the Decline of Violence in History and Its Causes. p. 443.  

My 100 Page Rule

A couple of weeks ago, I met in person, an individual who is close to attaining one million miles of travel on one the frequent flier programmes of one American Airline. While aware that some people travel too often and that these miles must have been accumulated over a considerable period, one cannot fail to nbe impressed. That incident got me thinking about how arbitrary numbers suddenly find meaning in lives because why would the airline make the decision that reaching that milestone entitles one to lifelong privileged travel on that carrier. No doubt, it involves a marketing gimmick that such as the one I blogged about here a while back.

Being conscious that I have not accumulated a million units of anything of value, I am compelled to mention my one hundred page rule. This arbitrary rule is one that apply to books that I read in printed form. To my mind, whenever I am able to read up to 100 pages of a book in a single day or in one sitting after first starting to read it, then I tend to consider it not only worthy of recommending to others but I conclude often that the subject and writing style is well done. And Yet, I am sure that this is a very rough way to judge the quality of books and the value of the content addressed by the author(s). Equally important is that one hundred pages of a book is arbitrary because the amount that one reads for every one hundred pages depends on the font and layout of the book.

That notwithstanding, the One Hundred Page Rule refers to this, this, this and this book, among a few others. For obvious reasons, i do not apply this rule to digital versions of books.    

Pankaj Ghemawat on Globaloney

I am a member of a book club which nominated Pankaj Ghemawat's book, World 3.0 as the business and Economics book of last year. For the book club, it was a profound demonstration about how misinformation and hype about globalization exceeds the reality. In the blog post here soon after that reading, I stated that popular books have pushed ahead the idea that the world has attained such a high level of globalization that borders cease to matter. Well, the people who claim this only state this because they genuinely believe it but have not placed evidence to support that claim.

The TEd talk embedded to this page is the author's explanation of the lack of evidence for the "No borders effect". It is worthy of viewing again and again as part of alerting people that both those who are opposed to globalization and its cheerleaders are wrong about the facts. This demonstrates again that for all the benefits provided by the accessibility of information, there is still a great deal of conventional wisdom that will not stand scrutiny.





  

Quoting Nate Silver

"In science, one rarely sees all the data point toward one precise conclusion. Real data is noisy-even if the theory is perfect, the strength of the signal will vary". Nate Silver, in, The Signal and The Noise: Why Some Predictions fail- but some don't. Loc. 6920-32

Smart Phone Future

In an earlier blog post here, I argued that Microsoft Corporation had chosen to expand its business into devices. Apple's success with devices gadgets which include the iPod, iPad and iPhone (the 3 IPs) on which it has based its strategy for dominating the technology industry. It is now known that Microsoft is planning to take the competition into the smart phone and tablet businesses.

With the forceful entry of Microsoft into the smart phones markets, I have been wondering how much growth is reasonably expected. The main barrier to entry into the smart phones businesses is the costs because these gadgets command a premium price. Mobile Business Briefing reports that Smart Phones reached the 1 billion milestone in the third quarter of 2012. According to the report, the milestone is reached after a period of 16 years. In addition, it proves that smart phone owners are still a minority and with increasing  competition, prices will fall sufficiently to generate new demand.    

Is Microsoft Copying Apple?

Conventional wisdom held it as a given that Microsoft's hold in the realm of technology and especially software was almost unassailable. In the last decade, it has become very clear that this assumption was not neither well informed nor justifiable. In the last decade, both Google and Apple have gained substantial recognition through innovation and emerged not only as Microsoft's primary competitors but also the leaders in the industry. Part of the evidence for this is seen in reports such as this in the Irish Times, which showed that Google surpassed Microsoft in the equity markets. Certainly, stock market valuations alone do not mean  that one corporation is more innovative than another but valuation is a sensible barometer by stock buyers about the expected revenues of one corporation.

Notably, the leading corporation has been Apple, whose valuation has been rising and is the recognized leader in the technology industry. Microsoft's CEO, announced in this article in the Irish times that it is changing strategy and will commence reorient itself to go into production of gadgets in addition to software. As argued, this will involve the integration of software and gadgets in order to compatibility in products with high margins and huge demand. Any person who follows the industry understands that that path is one that Apple has taken with spectacular results. This state of affairs is empirical demonstration of the fact that competition is  a major driver of innovation.

To my mind, this entry of a large firm with a great background in innovation into the integrated gadget and software business forebodes further innovation and efficiency. That means that the consumer surplus will only expand. Competition makes capitalism and capitalism thrives on competition.        

Recommended Reading for Some African Leaders

A number of nations on the African continent have been independent for half a century now. In that time, very few of these nations have had an unbroken series of hand over of political authority. Also instructive is that a good number of the individuals with economic clout have an existing or past connection with the governments. Daron Acemoglu and James Robinson have a book that explains by trawling through history how and why societies have generated economic prosperity and political stability. In their view, societies are either extractive or inclusive. Extractive societies are those in which political institutions channel power and wealth from the majority towards the minority while inclusive institutions exist where there is pluralism that allows for participation in public affairs and reduces monopoly in both markets or political power.

"However, in most cases of sub-Saharan Africa and many in Asia, the post-independence governments simply took a page out of Robert Michel's book and repeated and intensified the abuses of their predecessors, often severely narrowing the distribution of political power, dismantling constraints, and undermining the already meager incentives that economic institutions provided for investment and economic progress."  In, Why Nations Fail, Pages 112-113.

  

How the Rolls Royce Competes

In using Us presidential campaign parlance, I care for the 47% but also admire the 1% for their justly earned income. Seth Stevenson puts out a very detailed article in Slate Magazine in which he describes the super-luxury vehicle with the name Rolls Royce. In that piece, he describes the features of the vehicle but more impressive is the workmanship that distinguishes it from other equally good vehicles that cost nearly 15% of its price.

Among the amazing features is that while the average car is produced in 30 hours tops, the Rolls Royce is produced in the range of 400-450 hours. One sees why this is so because the machine is largely assembled by hand unlike other vehicles that are made with very hi-tech robots. A good indicator is that the Rolls Royce reverses the 90-10 rule and has humans undertake an overwhelming portion of the work that is required to put it into the show room.

Understandably, the vehicle that is mostly made from high quality craftsmanship is expensive because the labor component is high but I also think that the luxury signal contributes substantially to the price of this vehicle. Nobody who purchases a Rolls Royce for upwards of US$ 300,000 cares much that its fuel efficiency is at 14 miles per gallon and would embarrass an environmental conservation advocate. Its a delightful thing that the manufacturers are able to produce a limited number of a fine machine and keep the firm profitable. That's as it should be.      

Out With Oddball Interview Questions

Occasionally, I meet acquaintances who are scheduled for an interview in order to take a new job with a firm and have thought that most people think that the interview is a situation for a battle of wits between the panel and the outnumbered interviewee.For that reason, I have asked myself whether the human resource consultants and the interview panels really consider whether these situations enable them to get the best responses from those that they seek to recruit.

One must trust Lucy Kellaway to bust the myth and expose the emptiness of the fads that come with everyone trying to prepare for interviews in either the Microsoft or the Google way. In this very deep article in the Irish Times, she exposes why firms are mistaken in asking odd questions in the guise of getting the best out of the interviewees.As she states, if the founders of Google are the best in their class, it is unlikely that many people know much more about any subjects that they do. For that reason, to ask an interview to teach them is either a sign of arrogance or a misunderstanding about what person they are searching for. To be honest, I am not surprised that Larry Page gets bored during interviewing for most of them are frankly unable to tell him much that would impress him. That he gets frustrated by this is what surprises me instead.

It is also possible that the interviewees are not impressive because they are over-prepared to answer questions that they have read from guide books purporting to educate them to state smart answers. And so my free advise is to loosen up and ask these interviewees to reduce their knowledge to about 500 words or less. This may tell one more about a person because people who care to write clearly and coherently are bound to be very keen workers and excel in new tasks too. This may not be a perfect system for hiring new workers for a corporation with billions of US dollars in revenue but it is far better than asking questions that allow people to regurgitate what the "How To" books say.     

When Entrepreneurship Results in No Jobs

There are few countries that can claim to have a real answer to the creation of employment and this question continues to animate the world's largest economy today. And yet a number of popular approaches and policy stances to the need to expand employment are often based on belief and strong sentiment than on empirical evidence. The common claims are that the provision of loans on preferential terms are sufficient to create new business through new enterprises. A related claim that is quite common is that self-employment is one sure way out of the unemployment problem in both low and high income countries.

Employment is rightly considered one of the major issues in the ongoing presidential campaigns in the United States. Catherine Rampell of the NYT, writes about the difficult employment problem generally but more particularly about the fragmented and small nature of most start-ups in the United States. The nature of the new corporations is that they are creating a smaller number of employees on average and therefore essentially unable to drive strong employment growth. As the piece states, this phenomenon has startling policy implications for those who believe that small firms will be the creators of jobs as they have been.

Whether this change in the structure of the labour markets is permanent or not is subject to confirmation in the future. What is mot certain is that the quest to expand employment cannot be found in the purported silver bullet of entrepreneurship.economies are complex and this works in a way that precludes the ability to push buttons on one end and generate jobs on another.      

A Journalist Compares US and European Incomes

Reading this article by Remi Adekoya of the Guardian newspaper reminds me of two things that many people take for granted about comparing income across countries. The author is right that notwithstanding the focus on its problems and the unyielding crisis, the European continent still provides the highest standards to living that can be found on the planet today. To be clear, I am less convinced that this is proof that the welfare state as understood in the continent is the only reason for this. Instead, it is more defensible for me to state that this high standard of life for its citizens is underpinned by the fact that by a correspondingly large number of businesses and productive workers. Indeed, the allusion to competitiveness shows that European countries provide opportunity for enterprises to grow and their ranking in the various leagues confirms that.   

In comparing the income of Europeans to that of the United States, it is clear that the United States has chosen a different way of organizing economic activity and its government is less directly involved in large welfare programmes comparable to those in Europe. Comparing incomes by alluding to the average is troublesome but it is not right to therefore dismiss higher incomes in the United States by alluding to the fact that extremely wealthy people such as Warren Buffet raise the average substantially. This article shows the difficulty of comparing incomes across nations with different economic and political structures but does not erase the fact that on the whole, total income is a very potent measure of human well being. In that respect, the United States is still a special nation.

Rwanda's Fund of Dignity

A couple of weeks ago, an experts group of the United Nations published a very detailed indictment of Rwanda's government with uncharacteristically blunt allegations that this government supported M-23 rebels who have committed unbelievable atrocities in the Democratic Republic of Congo. Predictably, the Rwanda's government issued a rebuttal covered here, that questioned the objectivity and standards of proof required to sustain those allegations. The United States and the British Government subsequently communicated that some financial support could be withdrawn due to the gravity of those allegations.

This episode revealed the fact that a country that relies on foreign assistance for a substantial portion of its expenditure runs the risk of pressure for political purposes. Apart from the predictable denials and assertion of sovereignty favoured by many countries on that continent, Rwanda's government went further. At a public meeting, President Kagame inaugurated the establishment of a Development Fund intended to cover the country against the risk of financial assistance being turned into a political tool. New of Rwanda reports here that the the Agaciro Fund was formally established and is a call for ensuring independence from foreign assistance.

To my mind, African countries almost always exhibit this degree of nationalism as a response to a challenge from other areas. I am therefore not impressed by this move and consider it a diversionary technique that fails to respond to the issue at hand. It need not have taken the threats of suspension of financial assistance for a country to respond to that risk. This is mere symbolism which is another matter in which African governments excel. My free advise is that governments that spend substantially more than they can collect in revenues should either expand revenues or cut down expenditure. A development fund as an manifestation of national pride is acceptable to me but does not respond to the need to clarify the allegations that are made. Whereas public sectors officials are falling over one another to make pledges and contributions in public, I am not convinced that these contributions do any more than divert money that would have been saved.
  

What Next for Elephant Conservation?

Illegal trade in ivory has been a main driver of the high mortality of elephants in the African continent for several decades now. For most of that time, the approach has involved using legal instruments at the international level to reduce trade in ivory either by getting rid of existing ivory stocks or by banning trade altogether. The result has been that in most of east, west and central Africa, the elephant populations have continued to fall because the price of ivory has kept rising with increased incomes from China and other Asian nations.

In a very poignant story from the NYT here, Jeffery Gettleman ties the rise in elephant poaching to organized crime and civil wars in parts of the continent of Africa. The most plausible part of his argument is that large and poorly governed territories of Africa leave some opportunities for fighting units to fund their war operations through killing of elephants and trade in ivory. In addition, he states that the rising demand for ivory has made turned armies of the Democratic Republic of Congo and its neighboring countries into organized poaching units who use sophisticated aerial surveillance and choppers to find herds of elephants.

That the populations of the African elephant in the central and eastern African regions are in danger is indubitable. Still, I find that the story is written as if the poaching mechanisms are so sophisticated that the elephant populations throughout the continent are doomed. The connection between state weakness and inability to enforce law is well made but it is clear that not all elephant populations are doomed and neither is every conservation effort failing. What I am less convinced of is the nebulous story tying US government funding to elephant deaths. It is perhaps an attempt to awaken US citizens to pressure their government to give this matter more support in reviewing existing conservation policy.    

Systems Design and Remote Probability

More than a decade ago, most technology users were faced with what was called the 2K problem which referred to the early programming of computers and related equipment which did not anticipate the change into the the new millennium. A lot of media frenzy and doomsday scenarios were developed about the mass crashing of computer systems together with the possibility that a level of problems may occur. To my mind, this state of affairs reflects a degree on inertia because in designing systems, we discount the future and are not always capable of covering all scenarios.

Reading this article reminded me of the 2K problem for the reason that the national health insurance service in Kenya has computer and software systems that were programmed with assumptions that are now causing an inconvenience. As stated in this story from the Daily Nation in Kenya, a man whose identification documents suggests that he is 128 years old could not be registered by the National Hospital Insurance Fund for the reason that its system software can only go as far back as 1890. Thus several attempts have been made to ensure his registration, without success.  

To my mind, this incident is interesting for a couple of reasons. The first is that given that the life expectancy of most Kenyan males is about 60 years, the system was designed with the view that the probability of an individual being 128 years old in Kenya was far too low to consider. Secondly, the failure to resolve this issue shows the degree to which people and institutions are captive to systems and are unable to adjust easily. In this case, it would still be okay for an authorized person to simply use the earliest data possible in ensuring the registration of this individual. Instead, I see the fixation with getting the right date and trying a variety of tricks to ensure that registration.     

Nobel Prizes: Being Right and Wrong

"Nobel prizes are sometimes awarded to scholars who are wrong for the right reasons, but almost never to those who are right for the wrong reasons". Robert H. Frank in The Return of the Economic Naturalist. p. 90

Vietnamese Demand for Cycles

Among the most salient phenomena that a person visiting parts of Asia notices, is the variety of options for transportation. In my view, Asia remains the continent of bicycles and rickshaws by a huge margin. From India to China and Vietnam, one gets the distinct impression that bicycles or rickshaws are an important way for people to move around and to transport goods as well. Rarely does one see transportation by cycles adopted to that degree in the African and Latin American world. 

In this interesting article, Esmer Golluoglu of the Guardian covers a story of the place of cycles of different kinds in Vietnam. Indeed, it is not just a story of mobility and furious economic growth but also an unimaginable anthropological study about ownership, status and utility of cycles of various kinds. Significant is the view that ownership is hierarchical starting with the conventional cycle, to the e-bike, motorbike and the automobile as marking the apex of status. To my mind therefore, it is possible to accurately deduce a person's status by the kind of cycle that she owns in Vietnam. It is certain that some marketers have noted it but this is quite an important issue for study about markets and the segments within them.  

Doctors Calls for Testing in Medicine

It takes several years of training and practice for any individual to begin to dispense medicine and care for patients. With this in mind, many patients who receive advise from a physician or a surgeon are bound to believe that that professional makes decisions and chooses the most effective methods for treatment that are available to the doctor. H. Gilbert Welch is far more modest by stating that the practice of medicine today is so complex that sometimes medical professionals choose options but are not certain that they are the most cost effective or even the most useful for patients.

Writing this article in the NYT, H. Gilbert Welch goes through a number of treatment options that doctors have dispensed in good faith but whose overall efficacy was not tested as rigorously as required. he now recommends that the ability to step back and conduct evaluation of one treatment option against another in order to determine relative effectiveness is necessary. One method of going through this is to integrate randomized evaluations as a critical part of decision-making by the profession. This call for more research is interesting because it is not intended to find out new methods and drugs but rather to focus on what works in the repertoire of treatments offered today.

This doctor highlights an important but hardly emphasized factor in innovation and knowledge today. Human welfare could be improved substantially by exploring the utility of existing treatments and knowledge but this is often surrendered to the quest for the new. And if that is applicable in a cutting-edge profession like medicine, one wonders how much so in other areas.               

Economics Signals End of Dandy Comic Book

I have been reviewing the extent to which the rise of digital media has affected the economics of the printing business generally and the print media in particular. I have been surprised by Mark Sweeney's finding in this article stating that one of the UK's most established comic book, The Dandy is facing closure for the reason that its circulation figures have been reduced to 8000 weekly copies. As stated, it is not that the decision to bring that 75-year old publication to a close has been made lightly. It seems that the publishers are alive to the fact that the population to which was originally intended have alternatives forms of entertainment in addition to different means for spending their money.

As a person with libertarian leanings, I find myself conflicted about the decision that seems to be prudent because it is based on the hard facts. On the other hand, I am wondering whether it is possible to reconfigure these comic books and deliver them through other digital means such as applications. And yet I am aware that the producers of these brand comic books that I once read must have considered a number of ways of maintaining the demand for their products and are probably at their wits end. Noting also that as Mark Sweeney mentions, about 3 decades ago, the same publication sold about 2 million copies weekly makes me wonder whether today's youngsters are totally different from their parents. This is because the comics books were really funny and suitable across a range of ages. It surprises me that with incomes having grown, the comic books should not have retained a level of demand to ensure its survival.

This suggests to me that there may be problems that can be analyzed through the instruments of economic theory but to which solutions may not exist. I would be content if the archive of all these comics were maintained in digital form for one never knows whether a new business model may emerge to make them profitable alone.

I apologize that I just could not find a free image of one of the characters to spice up the page. 

What Has 3D Printing Wrought?

An article in the Huffington Post by Dominique Mosbergen reports about an very clever man who managed to manufacture gun arts from 3D printing and assembled them into a usable weapon. for a country alert to recent disasters by people who handled guns maliciously and harmed fellow citizens, this development introduces a new challenge for public policy on firearms ownership and use. At the same time, there is the realization that 3D printing technology may lead to production of goods whose ownership and use remain in contention.

It may not be illegal to get blue prints and manufacture a weapon as the subject of the story did but a regulatory issue arises whether the product of that process requires registration. My hunch is that a bureaucrat will probably find good reason why it should be registered if not altogether outlawed. The fears of a criminal using a similar process to manufacture and sell large volumes of similar weapons, is perhaps overstated because the production of that weapon presupposes a high degree of knowledge and technical capability that many people save for dedicated students would have. Additionally, most of these goods are already manufactured by corporations whose processes use cutting-edge technology and who would probably wipe out a lone working competitor on cost and quality. What this state of affairs brings to the fore is that many technologies are marginally neutral in their effects and can also be applied for other purposes that portions of a society may not approve.  

Mitt Mixes His Facts and Numbers

There have been predictable reactions to Mitt Romney's claim that the difference between Israel and its neighbors is because the former has a better culture. Jared Diamond, who wrote the book Guns, Germs and Steel, dissects the claim in this NYT piece. That piece aside, many people asked about whether it was appropriate to make that claim given the different circumstances in which the two nations live. Still, this matter is worthy of consideration because there are differences between Israel and Egypt, Syria or other closer countries that do not live under the same political constraints of Palestine.

My view is that Mitt Romney may really believe in the argument that culture is a determinant of economic success. More surprising to me is that he and his team make quotes and attribute certain findings to Jared Diamond and other authors when these are not correct. Its clear that as the article by Jared Diamond states, this candidate for the presidency has most probably not read the book that he quotes liberally from and seems to be less concerned with differences between these countries. In spite of his support for "superior cultures", one would expect him to note that an income per capita of US$ 10,000 that he attributes to Palestine would still make it a mid-income country. An undeniably good business head should not show such ignorance about the economy. Its a plain fail for the campaign research team.   

Ye Shiwen Blasts the Field

Late last evening, I read the ever-informative article written by Nate Silver in which he explains why a couple of disciplines in the Olympics 2012 are more likely to produce record-breaking performances than others. In that piece here, he mentions that swimming has advantages in the sense that the records have improved at every edition of the games. In his view, swimming is one of the sports disciplines in which the intense application of technology and discoveries of science could still generate performances   that lead to regular records. he states that other disciplines such as the sprints and field events are very close to the barriers of human physiology and capability and this explains the longevity of the records there.

What surprised me about the analysis is that Nate Silver completely did not mention the fact that while his model states that there is still scope for record performances in swimming, it is also one discipline that raises eyebrows about use of performance enhancing substances.

Consistent with Nate's expectation, China' Ye Shiwen shattered in the record in the 400 metres individual medley in world record time. As Andy Bull reports here, the impressive performance was so off the charts that it raised eyebrows about the swimmers integrity. A number of coaches have dissected the performance and note that it looks suspicious because of the unduly strong finish which beats the male swimmers winner in the same event in addition to the huge performance gains that the winner attained in the last few months.

One must be circumspect in assessment of this single performance but I still think that the performance is an outlier. This young athlete is truly gifted and has worked hard and deserves her reward. that notwithstanding, I would like to see a more objective analysis of her finish which could have blown away the competitors in the equivalent male race. I echo the emerging consensus that this performance was unbelievable and that its not the last time it will be analyzed.   

Making Mathematics Necessary

In this very insightful and erudite opinion piece in the NYT, Andrew Hacker asks questions about the oft-repeated view that learning mathematics is indispensable for high school and college students. he cites very interesting facts that for the US, the  difficulty in mastering the mathematics curriculum is a leading cause of failure to matriculate. He therefore makes the sensible view that for all its unquestioned utility for students, the mathematics curriculum is too dense and acts as a barrier to educational attainment for students. 

The author's sensibly questions the design of the curriculum and the abstract concepts conveyed in trigonometry, calculus and algebra. While it may be impolitic to mention, he demonstrates that for most students, most of the abstract concepts are unlikely to be used after graduating from school. For most colleges, mathematical ability is called upon even for courses in which it has no direct relevance such as history and art merely to screen out a large number of applicants. He wonders instead why the curriculum has not been designed to demonstrate clearly the applications of these subjects in a way make them more understandable and readily usable for students. In particular, he suggests that subjects such as "machine tool mathematics" are not only likely to hold the interest of students but are more effective in sharpening the cognitive capability of students to apply them. 

The most potent part of his argument is that by insisting in mass education of students in a dense and dry curriculum, the schools, colleges and nations are misapplying scarce skills. This piece leaves it to designers of education curriculum in mathematics to design them in ways that catch the interest of students without generating massive failures. To my mind, mathematics is too important for education managers to give up on most of society. the graphic that accompanies the story shows that young scholars do not want to drown in numbers. 

Steven Pinker on Prediction

Image from amazon.com

"Social scientists should never predict the future: its hard enough to predict the past". Steven Pinker, in The Better Angels of Our Nature. P. 278.  

Whither the Spectators at the Olympics 2012?

As a student of economics, I have keenly observed the progress of the London Olympics 2012 and was greatly impressed by the originality of the opening ceremony. Like every edition of the games, it has been spectacular and a showcase of the economic power of the host nation. But the reason that the games are held is to ensure that the competition begins and this has had less than spectacular results over the last three days. viewers on television were inevitably struck by the low attendance to the events  yesterday. Understandably, the press called public attention to this fact since a number of people were unable to get tickets to attend events that were now being played in empty arenas. If nothing else, the empty stadiums led to the declaration that a number of tickets were issued to "accredited Olympics family members", in reference to individuals affiliated to Olympics movement who failed to attend sessions for which they had taken up tickets. A host of solutions are being floated out as covered by the Daily telegraph here.

This state of affairs reveals to me that the Olympics movement is particularly impervious to economics reason for two reasons. First, it chose a very poor mechanism for distributing tickets and thereby denied genuine spectators the opportunity to watch events that they valued. The lottery system used in assigning seats was purported to ensure that coverage would go out as widely as is possible but it instead ensured that individuals with connections "the family" got tickets that they obviously did not value at all. Secondly, the Olympics movement persists in using sub-optimal mechanisms because it is a monopoly and prices its events without competition.

To my mind, because the commercial rights to the games are aggressively marketed and defended, it is pretentious to cite the need to ensure proper spread of tickets by resorting to the ballot system. Its far better to auction tickets and use the funds to support broadcast and other ways for public to view the games and make it clear that this is the most efficient mechanism. There would be less angst if people failed to get tickets due to their unwillingness to pay auction prices because the people who win those tickets would not stay out of the events after having bought the tickets. So I award a grade "A" for the opening but a plain "D" for the game around tickets that leaves the stadiums empty.   

Mistaken Diagnosis of Music Piracy

A considerable number of blog posts here have been muses about the futility of trying to completely extinguish all illegal sharing of music in the form of digital files. In my view, the main labels in the music production industry are so obsessed with cutting out and impeding networks that allow for exchange of files that they are completely ignoring the people who purchase music or other digital entertainment content. Bill Oremus states in this blog post on Slate Magazine that a leaked document suggest that an organization representing the music industry has found out that most music piracy happens offline. The implication is therefore that even if all illegal downloads were taken out, it would hardly make as much difference.

To my mind, this suggestion is difficult to confirm but irrespective of its veracity, it still supports my strong hunch that the industry is concentrating on the wrong thing. Music sales are not going down because of piracy as much as is claimed. The enormous effort being applied to stopping sites and suing site owners is legitimate but is not connected to ensuring that sales will recover. As a supporter of entrepreneurs, I am at a loss that the industry is more interested in symbolic shows of strong law enforcement without asking whether this is the correct answer to the business problem that they face. Clearly, the music industry is barking up the wrong tree.

Let Plumbers Take Pay in Cash

Faucet 2 clipart
from Clker.com

I consider it sensible economic policy for every government to levy taxes on goods, services or income only where it can collect a majority of those taxes. Therefore, while I am not of the view that payment of taxes is equivalent to slavery, I think that a government ought not to announce a tax rate and then further burden the citizen with the duty to ensure that that tax is collected as conveniently and promptly as is possible. With those views in mind, I am not as sympathetic to the near demand by the Secretary of the Exchequer of the UK government in his preposterous claim here that citizens who pay plumbers in cash are engaged in immoral acts because it makes it easier for the latter to evade or avoid tax payments. 

More recently, governments have been correctly concerned with the operations of tax havens which may support practices that are illegal in terms of tax evasion. That aside, most tax evasion occurs simply because of unduly complex characterization of what is taxable and what is exempt in addition to trying to capture transactions for which the existing tax collection model is a poor fit. despite my real sympathy with the need to collect taxes to cover deficits and close up the debt position, I am reluctant to accept this ranting by public sector officials that all citizens should bear the burden of ensuring that the revenue service catch every penny.

To my mind, citizens should not be forced to write cheques and avoid the convenience of legitimate cash transactions in order to ensure traceability for the revenue services. Perhaps its just time to ask that governments should discuss plainly whether levying a tax that is this difficult to collect is good use of the legislative authority. The remedy comes back to creating moderate tax rates and simplifying the tax system and ensuring that government is run from the resulting revenues. Its not too clever to levy taxes and ask citizens to help with the thinking about ensuring absolute compliance. Just simplify the tax code.

  

Belated Tribute to Elinor Ostrom

Source: http://www.nobelprize.org/nobel_prizes/economics/laureates/2009/ostrom-photo.html

I was speaking to an undergraduate student of economics who was surprised at my mentioning that Elinor Ostrom was the first female Nobel laureate on in Economic sciences. The purpose of this blog post is not to express my surprise that this student was unaware of this important first in economics, but that this fact has not been sufficiently covered in popular press.

As a professional with a a distinguished career and who is classified as a political scientist, Elinor Ostrom was deservedly awarded the prize in 2009 in conjunction with Oliver Williamson.

To my embarrassment, I realized that I had not announced the award on this blog in 2009 as I have often done for other Nobel prize winners in that category. This left me with the delicate issue of blowing Elinor's trumpet rather late especially since she sadly passed away about a month ago. In short, she received the prize, " ..for her analysis of economic governance, especially the commons". Here is the link to her Nobel Prize Lecture delivered on December 8, 2009. In short, her work responds to the economic aphorism, "tTragedy of the Commons", and shows presents real examples in parts of the world where societies adopted sophisticated systems to ensure coordinated utilization of such resources. Here's social scientist who tests theories through empirical means and provided a serious counterfactual to one of the most common responses to handling common resources. 


Addition: Here's the article from the NYT announcing her passing on. 

France Introduces Overtime Tax

France recently had an election that brought in a new and seemingly less haughty leader by the Name of Francois Hollande. It would lead one to consider that this taciturn gentleman would be more aware of the complexity of economic policy but that is evidently not so. Seeking to implement a campaign promise, the new leader has sought to fortify the already bad policy of the 35-hour week by reversing the tax advantage for working beyond this limit. Kim Wilsher's article in the Guardian reports on the unbelievable policy change that raises taxes for working longer.

This tax constraint on individuals that seek to work beyond the prescribed 35-hour week makes no sense since this policy has not led to the creation of more employment. In my understanding, the 35-hour week was instituted to ensure that employment is available for many more people than would be the case in the event that a portion of the work force chose to work for longer periods. That argument is based on the fallacious assumption that every economy has a fixed amount of work available which should be distributed to reduce employment levels. Students of economics recognize this as the "Lump of Labour Fallacy". One would wonder why even after this restriction, a political party would choose to restrict those who may want to work beyond that limit from making extra income. Discouraging work has never created more employment so perhaps the government should justify this as an attempt to collect more money. Good luck with that.   

Are Hollywood Studios Aware of Epagogix?

In this recent edition of the NYT's Magazine, Adam Davidson wonders how the movie industry makes it it's money. The interesting article goes through the organization of Hollywood and uses movies that largely show that the industry spends a lot of money in production and marketing but seems not to have a definite idea about what distinguishes commercially successful movie projects from the rest. For all the glamour, the article confirms my suspicion that commercial success for most movies is really rare, judging by the overall return on investment that is barely at 1%. Only Disney and Pixar, which both make animated movies seem to have strong brand recognition, to the extent that it matters.

What comes to my mind is whether the directors and owners is whether any of them have read my blog post here but more importantly whether they have heard from Epagogix. This firm has been known to have a quantitative prediction tool for assessing the likelihood of commercial success for movies based on the script. Among the findings of this tool is that it does not recommend the hiring of high-profile movie stars who are also expensive because they do not guarantee success for those movies. While I am unaware of published tests on this tool by Epagogix,  I am surprised that few people in Hollywood are using it keenly. So is it ignorance or have they tried it and found it unsuitable for their purposes?

Is the Goal Line Technology Cost Effective?

FIFA finally made the decision to allow for technology to be deployed during soccer matches to be able to tell whether the ball has crossed the line even if it does not get to touch the net. There has been wide demand for the deployment of some mechanism to assist umpires to make the correct decision but this organization has been reluctant to accept any change. At a meeting of FIFA's International Football Association Board last week, the organization made three decisions with the most profound being that on Goal Line Technology (GLT).  The effect of this unanimous decision is that the rulebook will be amended to include two approaches to support referees in making decisions about goals. Interestingly, the statement issued clarifies that the Hawk-Eye and GoalRef technologies will only be used on the goal line and nowhere else on the pitches.

One must applaud the fact that this decision was made after appropriate testing of the technology in order to determine their fitness for the game and thereby reflect evidence based decision making. As a person who watches a moderate number of soccer matches at club and international level, I am wondering whether these technologies are cost effective. I am not privy to any data but understand that soccer is a low-scoring game hence the number of instances in which the technology will be required is less than 10% of all competitive soccer matches. Does this justify the deployment of these machines during on all professional soccer matches? My hunch is that it is not cost effective since only a small number of matches present a scenario that requires a decision that will be improved by GLT .      

What Happened to Intrade on Obamacare?

The idea behind the design of information markets such as Intrade and a few others is that they aggregate information from a diverse crowd of people and thereby, attain accuracy by errors on either side of a question canceling out. David Leonhardt therefore writes about the most important policy decision of the last few weeks where Intrade in particular was wrong by a large margin. As the article states, the US Supreme Court made a majority decision that affirmed the constitutional fitness of the health care mandate.

Being one of the largest decisions this year and one on which the incumbent president had lots of skin in the game, it is essential to consider the fact that Intrade in particular was so far off. David Leonhardt mentions that information markets are not perfect and may have been affected in this instance by the thinness of the market and may have reflected a very narrow set of views to the exclusion of the alternative views. It appears that on the part of the Obamacare, the participants reflected too much of those who information suggested that the mandate would be declared unconstitutional.

And yet in spite of the confirmed error in this instance, I think that the chatter about this miss is still uninformed. To my mind, confidence in information markets is based on the fact that the collection of view that generates its information is bound to be more accurate that individuals who hold court as "the experts". Thus information markets are bound to have a better predictive record than these experts but that is not to state that they are infallible. So the total failure in calling out the outcome of the case is still embarrassing to me, but I think that few experts had it as clearly too.  Intrade only appears to have made it look like it was not even close because with a 65%-70% threshold, Intrade in particular performs very well.

The lesson of this event is that the experts claiming that information markets are imperfect are not saying anything new. On the other hand, the cheerleaders of information markets must always state clearly that they tend to be far more accurate than experts and that usually is good enough but does not mean they are infallible. 

Is Another Oil Boom Coming ?

The price of petroleum has in the last five years been higher than it has been higher than the average in the earlier years. As usual, this gave the ammunition to people who maintain the idea that the world is consuming too much of the world's resources another opportunity to argue that the world had reached the Peak Oil. This is the imagined state where the demand for oil overtakes supply capability, with the result that oil prices rise to unprecedented levels. On its face, this theory appears as a sensible position simply because every natural resource that is not renewable is liable to depletion at some time.  Thus the dependence of the world on petroleum energy would be in peril if demand was to permanently outstrip supply.

And yet those who make this argument most forcefully fail to account for a couple of factors specific to the petroleum market and to other markets generally. Writing in the Guardian here, George Monbiot has come to the conclusion that most of the predictions on peak oil status have been proved wrong thus far. The more profound point that he makes is that the rise in the prices of crude petroleum led to the increased exploration and drilling and opened up new fields for exploitation. At the same time, rising prices provided ample incentives for the major crude oil producers to expand production and thereby ensure that supplies come to market.

Unlike the author, I am less saddened by the fact that supplies are available principally because the ability to utilize these resources for growth ensure that countries will be able to achieve income levels that demand cleaner energy and more efficient use of petroleum. Monbiot should perhaps recall that prices do not only work to regulate the supply of crude petroleum but that the same mechanism may be used for environmental protection. My hunch though is that the promoters of the peak oil theory will suspend it for another decade and dust it up again when prices go up momentarily. 

Learning Through Digital Technology

In the last decade, many industries have been changed fundamentally by innovative applications of digital technology tools. This state of affairs has led to the erroneous assumption that these pace of change will maintain and also that no specific industry will remain the same. Many people view the growth of Google, Apple, Amazon and mobile telephony and assume that digital technology must therefore transform every industry from energy, education, publishing and so forth. As already stated, the Internet and these new applications of digital technologies have had profound effects on industries by creating new value and made entrepreneurs very wealthy.

However, it is clear that there are industries in which the amazing effect of digital technologies seems to be overstated. Konstantin Kokaes makes a strong argument in this article in Slate Magazine that in education generally and mathematics in particular, the fact that technology is superior is more an article of faith than a demonstrated result. Among the more profound points that he makes are that the rush to introduce digital tools into education is an expensive experiment without evidence that it is either useful or cost effective. This argument is real because it is not based on a preference for what is familiar and known but is based on the fact these new tools are being pushed by interested marketers. 

I am not surprised that these new tools are not proven to be better but are incorporated into education policy by the fact that the education departments are buying them as symbols of modern ways of teaching science and mathematics. The point that I made in a blog post here remains valid.     

The Problem with Passports

One of the most baffling things to me is the way in which very educated people fall for notions with little meaning such as nationalism. The result of this dedication to amorphous ideas as nationalism is that it sometimes makes smart politics but leads to very bad outcomes for the economy. A perfect illustration of this is the immigration policy headache that the United States, among other countries, faces. Many educated people take the view that if immigration must be allowed, then it should be confined to a highly skilled cadre who will contribute to the creation of scientific enterprise and innovation. The obverse of this sensible argument is that any less educated immigrant is not worth allowing to reside in the recipient country.

While commenting in Slate about President Obama's recent decision to suspend any deportation of a selected generation of illegal immigrants, Martin Yglesias demolishes the idea that only highly-skilled immigrants are good for the US economy. In a argument that would be familiar to any keen student of economics, it is clear that immigrants who come in for low wage jobs contribute to economic prosperity because of the linkage that industries and workers create. By providing care work, the enable more households to deploy both parents in the work force and thereby raise overall welfare. One other idea that is less empirically proven but plausible is that allowing for emigration from poor countries would lead to gains that would surpass all economic assistance that comes through foreign assistance between countries. An added advantage of such a programme would be that it would also ensure that corrupt governments have less money to steal because the flow of resources takes place through households. 

With that background, it is obvious that a liberal immigration policy makes economic sense but is not always easy to sell to a patriotic crowd. Another illustration that patriotism can lead to bad economics.

A Survey of Rio+20

The Rio+20 Conference ended over the last weekend and many reports suggest that this meeting achieved nothing partly because the expectations were too high, views so far apart and the real expectations not clearly spelt out. In this piece, Jagdish Bhagwati states that he is unsurprised because of many reasons starting with the emptiness of the phrase "sustainable development". Not only has this term of reference become cliche' but it also illustrates why those who insist on it as a precondition for development are oblivious of the real tradeoffs that poor people need. In the short essay, he also states how matters unconnected to the environment are allowed onto the agenda and become part of the declarations in a way that shows the inability to focus on small and smart solutions.

Unlike Jagdish, I have no problem with any self-appointed group of activists trying to hoist their pet policy solutions on the rest of us. I would rather that they understood much better that multilateral institutions that take on every agenda are the best candidates for failure on all of them. And as a person who attends smaller conferences on select trade and regulatory matters, I think that a conference dedicated to global growth would be far more useful than Rio+40. The environment is certainly important but all who come for the conference must recall that this was about the environment and that the train can only pull in so much. The framing of global problems is one of the skills that today's society lacks.  

Younger Workers and Property Ownership

Every person with even a little knowledge about economics would have been cautious about the resumption of growth after the financial crisis and subsequent recession. Among the lessons of the crisis and its effects is that there is no such thing as an asset that cannot lose value. Home ownership may be desirable but this crisis emphatically revealed that homes are not necessarily assets of a different category and when the prices rise beyond reason, then they will come down and leave many owners with huge and unserviceable mortgages. 

With that view in mind, I get a little surprised that articles that fail to caution against the impression that ownership of homes is imperative for all and that rental is an inferior form of consumption of housing services. This piece in the Telegraph is one of many in the British press that has provided summaries of a study undertaken by the Joseph Rowntree Foundation in which it found that the effects of slow growth and lower wages for younger workers will be seen in their inability to acquire homes and may have to resort to renting houses. To be fair, the study brings up the sound economic argument that it is useful to try and improve the efficiency in the house rental markets to ensure that it works better. 

Having just read through the publication by the Institute of Economic Affairs on housing in the United Kingdom, it is clear to me that there should be an broad understanding that rental of residential property is not necessarily inferior to outright ownership especially where individual incomes cannot match prevailing prices. That report goes into comparisons of basic benchmarks for assessing property markets and isolates regulatory gaps and missteps that frames the housing policy in UK in far better light. Its not a bad thing at all that younger people will not own homes because the gap between their incomes and the houses shows that houses are far too expensive to own and even for those with that income, it may be useful to carefully gauge whether renting is better.     

From Absurd Belief to Atrocities

"Those who can make you believe absurdities can make you commit atrocities." Voltaire 

Speed Reading Test

I encountered this page on an application that allows one to test the ability to read quickly and provides a benchmark in a spectrum from high school students to college professors. My score was much slower than I am sure that I am but still impressed me. I embed it for blog readers to try.

Source: Staples eReader Department

India: The Bungling Democracy

I have argued on this blog here and other posts that India and China represent a natural experiment that will help to answer the question about the place of democracy and authoritarianism in longer term development. In short, my claim has been that in spite of a slower rate of growth and a smaller economy, India is bound to catch up soon and will over time become a large economy owing to its more open political system. In sum, the argument is that democracy is not necessarily a hindrance to India's long term growth and that China will of necessity have to go through bumps that may derail it substantially.

In spite of my being bullish about India, reading stories such as this in the NYT makes me really frustrated at India's political leadership. Granted that the Congress party has to navigate in order to keep its coalition in place, I cannot avoid the argument that India's growth is slowing and that it does not show any signs of catching up with China at all. Indeed, in spite of China's own domestic political and economic difficulties, India's leaders still have an inferior record of economic management. In many respects, the benefits that India gained from the bold economic reforms initiated under Manmohan Singh two decades ago are exhausted now and he lacks either the courage or the ability to make another long-overdue round of reforms to open up the economy. 

Given the state of affairs, it is just possible that India's catch up period will be unduly extended because of the delays in cutting back red tape and substantial regulatory and tax reforms. On the political side, India's bungling, in spite of the fact that it has an indubitably bright man as prime minister will embolden those who consider democracy as a liability for fast growth. Please get up and sprint!

 

Should Zoos Be Conservation Parks?

If asked, I would answer that the primary purpose for the existence of a zoo is to assemble a number of animals that would meet the curiosity of people who would visit and pay some money to cover costs. By this definition, the functions of a zoo are largely for the entertainment of visitors. Reading Leslie Kaufmann's article in the NYT tells me that there is substantial pressure on successful zoos to incorporate the conservation of threatened species into their business model. It is immediately clear that an accreditation body is trying to use the conservation of species as a new criteria for certifying zoos in the United States.

It is altogether understandable that it would be a big advantage to be able to display a wide range of animals as part of building the experience for visitors. However, I think that the management of zoos should not be compelled to change the business model to incorporate conservation because that change will imply different costs and requirements in terms of staff and operations. To start with, some of the fauna that are arguably in danger of extinction may be unknown to the visitors to zoos and therefore the diversion of resources towards saving them may not be a cost effective policy. As stated, tensions will inevitably arise because of the required trade offs where the more popular species as elephants may not be in as much danger. In the eyes of many school children, to visit a zoo to see a toad or unique species of frog in place of the elephant and the Zebra may not be acceptable.

Clearly therefore, the approach should be to allow individual zoos to choose the species in which they would specialize and let the conservation efforts be handled by others that are resourced for it. It will become clear in good time whether these models could co-exist or be run separately. Ensuring the restoration of numbers of some of the species with low numbers may in the end be even beyond some zoos. they should therefore be allowed to provide entertainment only.  Conservation requires concentrating resources on a few species and this limits the variety within zoos.    

Promise of National ID Sytems

Soon after reading the book Imagining India by Nandan Nilekani, one of the founders of Infosys, I learned that the author's proposal for a form of identification mechanism for individual citizens had been accepted by the government. In the book, he mentions that the absence of an identification document for most Indian citizens leads to a lot of fraud in government assistance for social programmes. It is understandable that a technology solution to this would reduce cost and ensure cost effective delivery of the services to deserving people. While reading that book, it immediately came to my mind that the retention of all sets of data on individuals has implications for their rights and their relationship to governments.

The Republic of South Africa has also commenced a citizen registration system mentioned here by its Minister for Home Affairs. In that piece, it is argued that there is the need to consolidate all registration and identification documents in the form of a smart card that would enable citizens to be registered for voting, driving and other interactions with the state. Needless to mention, my libertarian instincts tell me that this endeavor is not only bad for liberty but also technically unsound. To start with, the consolidation of all forms of identification under a single smart card may seem smart but simply shows that an individual is more vulnerable because a large amount of data is available in one place. Secondly, I see the tendency for well-meaning state officials to overstate the power of technology in the statement that this card is absolutely secure and cannot be breached. To my mind, that is such a preposterous statement that can only have been made up or used by the firm that is marketing this system to governments that would not care to audit that system.  

So to add my conclusion, I am certain that the quest to make identification of individuals may have some social value. What I am less certain of is whether it needs to be in form of governments collecting and maintaining a lot of data for individuals in one place. Now, the technology savvy thief knows which database to breach and find out more than they should about some citizens.    

Changing The Penalty Shootout Rule

Several days ago, Chelsea Football Club won the UEFA championship in a penalty shootout against the FC Bayern Munich. In the eyes of many purists and soccer pundits, the winning team was less deserving based on an assessment of the tactics adopted and the distribution of skills displayed on that day.  Simply put, the Chelsea FC are an inferior footballing side to the Bayern Munich team irrespective of the outcome. Most of the pundits were concerned that the triumph of an inferior side could spark a widespread imitation that could reduce the entertainment value of this high profile tournament. As if the condemnation was not enough, the president of FIFA spoke about the manner of that triumph and suggested that the sports discipline of soccer should consider the development of an alternative to penalty shootouts.  

In my view, that response is too drastic and perhaps denigrates the hard work that one team put in to ensure that it won. My view, is that notwithstanding the justifiable disappointment that many purists and fans of the game may feel, this reaction is too drastic and altogether unjustified. For a start, it assumes that winning a penalty shootout is manifestation of no preparation when that portion of the game is itself very technical and skill-driven. Secondly, it feels as if the revision of laws is driven by animus towards one team's tactics in spite of the fact that they represent a legitimate approach to the game. It may be ugly soccer but is within the rules. Finally, I think that the officials of FIFA and administrators of the game must be careful because there may be unintended consequences of the anticipated changes too. 

It is worthy to recall that Formula 1 has had so many technical changes to the sport with the ostensible reason of making it more interesting and simply changed the dominant sides from one team to another. My advise would be to let teams learn to cope by creating new approaches to ensure that they triumph against the more defensive minded sides. It is my understanding that fans tend to reward the teams that play more entertaining soccer. If some clubs make the trade off in order to win tournaments, then that should be acceptable to all.