Tag: economics

Davos of the mind

They work very hard, attending sessions from dawn to nearly midnight, but expect the standards of intelligence and analysis to be the best available in the entire world. They are impatient. They have a hard time reconciling long term issues (global warming, AIDS pandemic, resource scarcity) with their daily bottom line foci. They are comfortable working across languages, cultures and gender.
Welcome to Earth: meet the leaders.

such starts an inside account of a WEF participant. the account is rather different from just 3 years ago. much gloomier. we learn that

The global economy is in very very very very bad shape. Last year when WEF met here in New York all I heard was, “Yeah, it’s bad, but recovery is right around the corner”. This year “recovery” was a word never uttered. Fear was palpable — fear of enormous fiscal hysteria. The watchwords were “deflation”, “long term stagnation” and “collapse of the $”. All of this is without war.

on the brighter side

Serious Islamic leaders (e.g. the King of Jordan, the Prime Minister of Malaysia, the Grand Mufti of Bosnia) believe that the Islamic world must recapture the glory days of 12-13th C Islam. That means finding tolerance and building great education institutions and places of learning. The King was passionate on the subject. It also means freedom of movement and speech within and among the Islamic nations. And, most importantly to the WEF, it means flourishing free trade and support for entrepreneurs with minimal state regulation.

time to add some analytical blogs to my daily dose. such as british think tank demos, novelist bruce sterling, and of course, former WEF co-organizer lance knobel.
apologies to lance for the blatant title rip-off.

information far from the median

If information is extremely exclusive, then one can charge a lot for it; if information is extremely broadly available, then there’s power — and ultimately value in economic terms — in that, too. It seems to me that perhaps what’s “less valuable” is the information in the middle zone, where it’s neither exclusive nor extremely broadly read. The Net is a trap for the unwary in this regard. If you keep things close and don’t use the Net for dissemination, you might lose access to some potential readers. If you are aiming for broad circulation and you come up short, then you end up with something of little value.

a very insightful analysis. i was never much a fan of proprietary information (it prolongs the wait for the singularity), and have been working to make it easier to spread information cheaply, reliably and targeted. a page rank of 6 is probably the lower bound for being noticed..
reminds me of the growth trap for companies: midrange companies have lower profits than both small and large companies. don’t be average.

Peer production for information assets

i’m going to defend this paper by yochai benkler in a couple hours as part of my masters. benkler argues that there is a third mode of production besides markets and hierarchies (firms): peer production. per benkler, (and my own experience makes me agree with him) peer production is the most efficient mode of production for information because it reduces the opportunity costs of production that the other 2 models entail. markets are imprecise at valuing human resources because they have limited information, and hierarchies are inefficient at assigning tasks (also due to limited information). in the peer production model, individuals voluntarily flock to the tasks that interest them most, and where they can apply their skills most gainfully. it is asserted that individuals have the best available information about their skill set, and are thus much more efficient at task selection.

the internet enables a unbounded pool of human resources to seek out problems. these economies of scale easily overcome the additional costs of integration and coordination in a highly distributed environment. with proper attribution and meritocratic structures, problems of burn-out and free riding can be overcome.

it should be an interesting discussion, especially considering that the relevant institute has been conducting research into the open source phenomenon recently.

Switzerland is going down the toilet

prediction: within 5 years, switzerland will be in dire straits, and will resemble the japan of today. economic growth will screech to a halt, and may even hit a deflation. within 10 years, switzerland will have a significantly lower standard of living in relation to other countries.

there are several reasons for this:

  • a failure to attract low wage immigrants by closing the borders
  • a failure to provide funding for new companies
  • misguided gov spending that emphasizes obsolete industries (military, agriculture)
  • a reluctance to push painful reform through
  • a belief that “swiss quality” will always reign supreme while failing to innovate
  • failing to train the next generation of an excellent workforce

Innovation is crucial

Far from being simply some missing factor in the growth equation, innovation is now recognized as the single most important ingredient in any modern economy – accounting for more than half of economic growth in America and Britain. In short, it is innovation more than the application of capital or labor – that makes the world go round.

finally a credible source that spells out what many naysayers fail to understand. schumpeterian destruction is very necessary for an economy to prosper. the commodization of protocols and applications ushered by open source is very much in line.

H1B fun

Joe Q. Random handed me a flyer for No more H1B yesterday in SOMA. What a bunch of crack heads. Blame me for I am a foreigner, and yes I would love to work in the United States. I come from a rich country, and our citizens are scared of foreigners too. Building protectionist walls will do no good though. We live in an international market, and jobs and contracts will follow the rules of the market, no matter what regulations there are. Outlawing H1B will do exactly nothing. Some people seem to have forgotten what the US is all about: Welcoming people from all around the world, and letting them compete on even ground.

I witnessed how outsourcing is done when I worked in Thailand last year. Over time, salary levels WILL reach US levels, as asian companies figure out they can charge more. And they do. In one example, a swiss bank actually shipped furniture to India for their IT staff there, probably eliminating all savings in the process.

Bottom line: Protectionism will save no one. Get over it.

Virtual economies

Quite a few people are losing interest in the real world, and settle for virtual ones like Everquest. A new study calculated the theoretical GNP, and it’s at 77th place. So far, dealing with real cash has been discouraged. If Project Entropia has their way, this will change.

the ultimate goal of the project is a worldwide network monopoly in virtual reality 3D commerce, replacing all existing internet browsers and web interfaces with a single virtual world of millions of users.

moving bits, not atoms

there is a discussion whether the USPS (US postal services) should be disbanded (300k jobs). of course it should. all the sectors of the industry that resist efficiency improvements by going digital are dragging the economy into recession. most mail these days is advertising and bills. an all-electronic bill payment system has been waiting in the wings for years, ready to be deployed. industries need to improve efficiency, or die.

lameness at the top

this week, i participated in an 1-day economic forum at the un conference center in bangkok. pm thaksin’s performance was less than stellar, barely able to read from the script. while it provided few new clues about the economic outlook, i was very impressed with the performance of Kenneth Curtis from Goldman Sachs. having just arrived by learjet from frankfurt, he gave his 2 cents on the world economy in flawless, logically coherent statements (which he had not prepared, as the Q & A showed)

The crisis will accelerate the shift in technology, by placing a premium on cost-cutting, efficiency and earnings. Anyone who thinks these forces will slow is wrong.