Skip to main content

Home/ New Media Ethics 2009 course/ Group items tagged Pricing

Rss Feed Group items tagged

Filter: All | Bookmarks | Topics Simple Middle
Weiye Loh

Report: Piracy a "global pricing problem" with only one solution - 0 views

arstechnica.com/...lem-with-only-one-solution.ars

Piracy Pricing Capitalism Globalization Income Inequality

shared by Weiye Loh on 14 Mar 11 - No Cached
  • Over the last three years, 35 researchers contributed to the Media Piracy Project, released last week by the Social Science Research Council. Their mission was to examine media piracy in emerging economies, which account for most of the world's population, and to find out just how and why piracy operates in places like Russia, Mexico, and India.
  • Their conclusion is not that citizens of such piratical societies are somehow morally deficient or opposed to paying for content. Instead, they write that “high prices for media goods, low incomes, and cheap digital technologies are the main ingredients of global media piracy. If piracy is ubiquitous in most parts of the world, it is because these conditions are ubiquitous.”
  • When legitimate CDs, DVDs, and computer software are five to ten times higher (relative to local incomes) than they are in the US and Europe, simply ratcheting up copyright enforcement won't do enough to fix the problem. In the view of the report's authors, the only real solution is the creation of local companies that “actively compete on price and services for local customers” as they sell movies, music, and more.
  • ...7 more annotations...
  • Some markets have local firms that compete on price to offer legitimate content (think the US, which has companies like Hulu, Netflix, Apple, and Microsoft that compete to offer legal video content). But the authors conclude that, in most of the world, legitimate copyrighted goods are only distributed by huge multinational corporations whose dominant goals are not to service a large part of local markets but to “protect the pricing structure in the high-income countries that generate most of their profits.”
  • This might increase profits globally, but it has led to disaster in many developing economies, where piracy may run north of 90 percent. Given access to cheap digital tools, but charged terrific amounts of money for legitimate versions of content, users choose piracy.
  • In Russia, for instance, researchers noted that legal versions of the film The Dark Knight went for $15. That price, akin to what a US buyer would pay, might sound reasonable until you realize that Russians make less money in a year than US workers. As a percentage of their wages, that $15 price is actually equivalent to a US consumer dropping $75 on the film. Pirate versions can be had for one-third the price.
  • Simple crackdowns on pirate behavior won't work in the absence of pricing and other reforms, say the report's authors (who also note that even "developed" economies routinely pirate TV shows and movies that are not made legally available to them for days, weeks, or months after they originally appear elsewhere).
  • The "strong moralization of the debate” makes it difficult to discuss issues beyond enforcement, however, and the authors slam the content companies for lacking any credible "endgame" to their constant requests for more civil and police powers in the War on Piracy.
  • piracy is a “signal of unmet consumer demand.
  • Our studies raise concerns that it may be a long time before such accommodations to reality reach the international policy arena. Hardline enforcement positions may be futile at stemming the tide of piracy, but the United States bears few of the costs of such efforts, and US companies reap most of the modest benefits. This is a recipe for continued US pressure on developing countries, very possibly long after media business models in the United States and other high-income countries have changed.
  • Weiye Loh on 14 Mar 11
     
    A major new report from a consortium of academic researchers concludes that media piracy can't be stopped through "three strikes" Internet disconnections, Web censorship, more police powers, higher statutory damages, or tougher criminal penalties. That's because the piracy of movies, music, video games, and software is "better described as a global pricing problem." And the only way to solve it is by changing the price.
Weiye Loh

2010 Petrol Prices: International Comparisons - 0 views

www.byebyeblighty.com/...ices-international-comparisons

Fuel Price Global Warming AGW Countries Capitalism

shared by Weiye Loh on 18 Feb 11 - No Cached
  • Petrol prices in all comparison countries were lower than British prices. The average price in the UK today is around 107-109 pence per litre. Looking abroad, petrol was cheapest in US cities (under 40 pence per litre in Dallas) and most expensive in Italy (114 pence per litre).
  • Standard Unleaded Petrol Prices Australia Price (Pence per Litre) Adelaide 68p Brisbane 69p Melbourne 70p Perth 63p Sydney 69p New Zealand Price (Pence per Litre) New Zealand 81p Canada Price (Pence per Litre) Calgary 51p Toronto 55p Vancouver 61p Montreal 59p United States Price (Pence per Litre) Las Vegas 42p Miami 42p Washington 42p Dallas 39p Los Angeles 46p Seattle 42p Europe Price (Pence per Litre) France 112p Spain 96p Italy 114p Greece 95p
  • Comment by Jason on 11 April 2010: I’m from Michigan, USA. Fuel prices here are about $3.00/gal right now. Although this is really hard to afford, because of the absence of real public transportation and the need to drive your own vehicle to work, it has recently become harder because of the downturn of the economy. If you’re planning to move to the US, be prepared for the high prices, and low wages…
  • ...1 more annotation...
  • Comment by Mike on 4 June 2010: @ Jason, $3.00 per gallon works out at between 50 and 55 UK pence per liter. We pay around about 3 times that amount at the moment. So for us europeans $3.00 dollars a gallon would be a godsend.
Weiye Loh

Skepticblog » Why are textbooks so expensive? - 0 views

www.skepticblog.org/...why-are-textbooks-so-expensive

Books Education Recycling ebooks

shared by Weiye Loh on 02 Jun 12 - No Cached
  • As an author, I’ve seen how the sales histories of textbooks work. Typically they have a big spike of sales for the first 1-2 years after they are introduced, and that’s when most the new copies are sold and most of the publisher’s money is made. But by year 3  (and sometimes sooner), the sales plunge and within another year or two, the sales are miniscule. The publishers have only a few options in a situation like this. One option: they can price the book so that the first two years’ worth of sales will pay their costs back before the used copies wipe out their market, which is the major reason new copies cost so much. Another option (especially with high-volume introductory textbooks) is to revise it within 2-3 years after the previous edition, so the new edition will drive all the used copies off the shelves for another two years or so. This is also a common strategy. For my most popular books, the publisher expected me to be working on a new edition almost as soon as the previous edition came out, and 2-3 years later, the new edition (with a distinctive new cover, and sometimes with significant new content as well) starts the sales curve cycle all over again. One of my books is in its eighth edition, but there are introductory textbooks that are in the 15th or 20th edition.
  • For over 20 years now, I’ve heard all sorts of prophets saying that paper textbooks are dead, and predicting that all textbooks would be electronic within a few years. Year after year, I  hear this prediction—and paper textbooks continue to sell just fine, thank you.  Certainly, electronic editions of mass market best-sellers, novels and mysteries (usually cheaply produced with few illustrations) seem to do fine as Kindle editions or eBooks, and that market is well established. But electronic textbooks have never taken off, at least in science textbooks, despite numerous attempts to make them work. Watching students study, I have a few thoughts as to why this is: Students seem to feel that they haven’t “studied” unless they’ve covered their textbook with yellow highlighter markings. Although there are electronic equivalents of the highlighter marker pen, most of today’s students seem to prefer physically marking on a real paper book. Textbooks (especially science books) are heavy with color photographs and other images that don’t often look good on a tiny screen, don’t print out on ordinary paper well, but raise the price of the book. Even an eBook is going to be a lot more expensive with lots of images compared to a mass-market book with no art whatsoever. I’ve watched my students study, and they like the flexibility of being able to use their book just about anywhere—in bright light outdoors away from a power supply especially. Although eBooks are getting better, most still have screens that are hard to read in bright light, and eventually their battery will run out, whether you’re near a power supply or not. Finally, if  you drop your eBook or get it wet, you have a disaster. A textbook won’t even be dented by hard usage, and unless it’s totally soaked and cannot be dried, it does a lot better when wet than any electronic book.
  • A recent study found that digital textbooks were no panacea after all. Only one-third of the students said they were comfortable reading e-textbooks, and three-fourths preferred a paper textbook to an e-textbook if the costs were equal. And the costs have hidden jokers in the deck: e-textbooks may seem cheaper, but they tend to have built-in expiration dates and cannot be resold, so they may be priced below paper textbooks but end up costing about the same. E-textbooks are not that much cheaper for publishers, either, since the writing, editing, art manuscript, promotion, etc., all cost the publisher the same whether the final book is in paper or electronic. The only cost difference is printing and binding and shipping and storage vs. creating the electronic version.
  • Weiye Loh on 02 Jun 12
     
    But in the 1980s and 1990s, the market changed drastically with the expansion of used book recyclers. They set up shop at the bookstore door near the end of the semester and bought students' new copies for pennies on the dollar. They would show up in my office uninvited and ask if I want to sell any of the free adopter's copies that I get from publishers trying to entice me. If you walk through any campus bookstore, nearly all the new copies have been replaced by used copies, usually very tattered and with broken spines. The students naturally gravitate to the cheaper used books (and some prefer them because they like it if a previous owner has highlighted the important stuff). In many bookstores, there are no new copies at all, or just a few that go unsold. What these bargain hunters don't realize is that every used copy purchased means a new copy unsold. Used copies pay nothing to the publisher (or the author, either), so to recoup their costs, publishers must price their new copies to offset the loss of sales by used copies. And so the vicious circle begins-publisher raises the price on the book again, more students buy used copies, so a new copy keeps climbing in price.
Weiye Loh

The Inequality That Matters - Tyler Cowen - The American Interest Magazine - 0 views

www.the-american-interest.com/article-bd.cfm

Income Inequality Social Divide Economy

shared by Weiye Loh on 16 Dec 10 - No Cached
  • most of the worries about income inequality are bogus, but some are probably better grounded and even more serious than even many of their heralds realize.
  • In terms of immediate political stability, there is less to the income inequality issue than meets the eye. Most analyses of income inequality neglect two major points. First, the inequality of personal well-being is sharply down over the past hundred years and perhaps over the past twenty years as well. Bill Gates is much, much richer than I am, yet it is not obvious that he is much happier if, indeed, he is happier at all. I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does. Like the vast majority of Americans, I have access to some important new pharmaceuticals, such as statins to protect against heart disease. To be sure, Gates receives the very best care from the world’s top doctors, but our health outcomes are in the same ballpark. I don’t have a private jet or take luxury vacations, and—I think it is fair to say—my house is much smaller than his. I can’t meet with the world’s elite on demand. Still, by broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.
  • when average people read about or see income inequality, they don’t feel the moral outrage that radiates from the more passionate egalitarian quarters of society. Instead, they think their lives are pretty good and that they either earned through hard work or lucked into a healthy share of the American dream.
  • ...35 more annotations...
  • This is why, for example, large numbers of Americans oppose the idea of an estate tax even though the current form of the tax, slated to return in 2011, is very unlikely to affect them or their estates. In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor. There’s a great deal of hostility toward various government bailouts, but the idea of “undeserving” recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally. The bailout for General Motors’ labor unions wasn’t so popular either—again, obviously not because of any bias against the wealthy but because a basic sense of fairness was violated. As of November 2010, congressional Democrats are of a mixed mind as to whether the Bush tax cuts should expire for those whose annual income exceeds $250,000; that is in large part because their constituents bear no animus toward rich people, only toward undeservedly rich people.
  • envy is usually local. At least in the United States, most economic resentment is not directed toward billionaires or high-roller financiers—not even corrupt ones. It’s directed at the guy down the hall who got a bigger raise. It’s directed at the husband of your wife’s sister, because the brand of beer he stocks costs $3 a case more than yours, and so on. That’s another reason why a lot of people aren’t so bothered by income or wealth inequality at the macro level. Most of us don’t compare ourselves to billionaires. Gore Vidal put it honestly: “Whenever a friend succeeds, a little something in me dies.”
  • Occasionally the cynic in me wonders why so many relatively well-off intellectuals lead the egalitarian charge against the privileges of the wealthy. One group has the status currency of money and the other has the status currency of intellect, so might they be competing for overall social regard? The high status of the wealthy in America, or for that matter the high status of celebrities, seems to bother our intellectual class most. That class composes a very small group, however, so the upshot is that growing income inequality won’t necessarily have major political implications at the macro level.
  • All that said, income inequality does matter—for both politics and the economy.
  • The numbers are clear: Income inequality has been rising in the United States, especially at the very top. The data show a big difference between two quite separate issues, namely income growth at the very top of the distribution and greater inequality throughout the distribution. The first trend is much more pronounced than the second, although the two are often confused.
  • When it comes to the first trend, the share of pre-tax income earned by the richest 1 percent of earners has increased from about 8 percent in 1974 to more than 18 percent in 2007. Furthermore, the richest 0.01 percent (the 15,000 or so richest families) had a share of less than 1 percent in 1974 but more than 6 percent of national income in 2007. As noted, those figures are from pre-tax income, so don’t look to the George W. Bush tax cuts to explain the pattern. Furthermore, these gains have been sustained and have evolved over many years, rather than coming in one or two small bursts between 1974 and today.1
  • At the same time, wage growth for the median earner has slowed since 1973. But that slower wage growth has afflicted large numbers of Americans, and it is conceptually distinct from the higher relative share of top income earners. For instance, if you take the 1979–2005 period, the average incomes of the bottom fifth of households increased only 6 percent while the incomes of the middle quintile rose by 21 percent. That’s a widening of the spread of incomes, but it’s not so drastic compared to the explosive gains at the very top.
  • The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless. For instance, there is usually greater inequality of income among both older people and the more highly educated, if only because there is more time and more room for fortunes to vary. Since America is becoming both older and more highly educated, our measured income inequality will increase pretty much by demographic fiat. Economist Thomas Lemieux at the University of British Columbia estimates that these demographic effects explain three-quarters of the observed rise in income inequality for men, and even more for women.2
  • Attacking the problem from a different angle, other economists are challenging whether there is much growth in inequality at all below the super-rich. For instance, real incomes are measured using a common price index, yet poorer people are more likely to shop at discount outlets like Wal-Mart, which have seen big price drops over the past twenty years.3 Once we take this behavior into account, it is unclear whether the real income gaps between the poor and middle class have been widening much at all. Robert J. Gordon, an economist from Northwestern University who is hardly known as a right-wing apologist, wrote in a recent paper that “there was no increase of inequality after 1993 in the bottom 99 percent of the population”, and that whatever overall change there was “can be entirely explained by the behavior of income in the top 1 percent.”4
  • And so we come again to the gains of the top earners, clearly the big story told by the data. It’s worth noting that over this same period of time, inequality of work hours increased too. The top earners worked a lot more and most other Americans worked somewhat less. That’s another reason why high earners don’t occasion more resentment: Many people understand how hard they have to work to get there. It also seems that most of the income gains of the top earners were related to performance pay—bonuses, in other words—and not wildly out-of-whack yearly salaries.5
  • It is also the case that any society with a lot of “threshold earners” is likely to experience growing income inequality. A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.
  • The funny thing is this: For years, many cultural critics in and of the United States have been telling us that Americans should behave more like threshold earners. We should be less harried, more interested in nurturing friendships, and more interested in the non-commercial sphere of life. That may well be good advice. Many studies suggest that above a certain level more money brings only marginal increments of happiness. What isn’t so widely advertised is that those same critics have basically been telling us, without realizing it, that we should be acting in such a manner as to increase measured income inequality. Not only is high inequality an inevitable concomitant of human diversity, but growing income inequality may be, too, if lots of us take the kind of advice that will make us happier.
  • Why is the top 1 percent doing so well?
  • Steven N. Kaplan and Joshua Rauh have recently provided a detailed estimation of particular American incomes.6 Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top. For instance, for 2004, nonfinancial executives of publicly traded companies accounted for less than 6 percent of the top 0.01 percent income bracket. In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning more than $100 million a year was nine times higher than the public company executives earning that amount. The authors also relate that they shared their estimates with a former U.S. Secretary of the Treasury, one who also has a Wall Street background. He thought their estimates of earnings in the financial sector were, if anything, understated.
  • Many of the other high earners are also connected to finance. After Wall Street, Kaplan and Rauh identify the legal sector as a contributor to the growing spread in earnings at the top. Yet many high-earning lawyers are doing financial deals, so a lot of the income generated through legal activity is rooted in finance. Other lawyers are defending corporations against lawsuits, filing lawsuits or helping corporations deal with complex regulations. The returns to these activities are an artifact of the growing complexity of the law and government growth rather than a tale of markets per se. Finance aside, there isn’t much of a story of market failure here, even if we don’t find the results aesthetically appealing.
  • When it comes to professional athletes and celebrities, there isn’t much of a mystery as to what has happened. Tiger Woods earns much more, even adjusting for inflation, than Arnold Palmer ever did. J.K. Rowling, the first billionaire author, earns much more than did Charles Dickens. These high incomes come, on balance, from the greater reach of modern communications and marketing. Kids all over the world read about Harry Potter. There is more purchasing power to spend on children’s books and, indeed, on culture and celebrities more generally. For high-earning celebrities, hardly anyone finds these earnings so morally objectionable as to suggest that they be politically actionable. Cultural critics can complain that good schoolteachers earn too little, and they may be right, but that does not make celebrities into political targets. They’re too popular. It’s also pretty clear that most of them work hard to earn their money, by persuading fans to buy or otherwise support their product. Most of these individuals do not come from elite or extremely privileged backgrounds, either. They worked their way to the top, and even if Rowling is not an author for the ages, her books tapped into the spirit of their time in a special way. We may or may not wish to tax the wealthy, including wealthy celebrities, at higher rates, but there is no need to “cure” the structural causes of higher celebrity incomes.
  • to be sure, the high incomes in finance should give us all pause.
  • The first factor driving high returns is sometimes called by practitioners “going short on volatility.” Sometimes it is called “negative skewness.” In plain English, this means that some investors opt for a strategy of betting against big, unexpected moves in market prices. Most of the time investors will do well by this strategy, since big, unexpected moves are outliers by definition. Traders will earn above-average returns in good times. In bad times they won’t suffer fully when catastrophic returns come in, as sooner or later is bound to happen, because the downside of these bets is partly socialized onto the Treasury, the Federal Reserve and, of course, the taxpayers and the unemployed.
  • if you bet against unlikely events, most of the time you will look smart and have the money to validate the appearance. Periodically, however, you will look very bad. Does that kind of pattern sound familiar? It happens in finance, too. Betting against a big decline in home prices is analogous to betting against the Wizards. Every now and then such a bet will blow up in your face, though in most years that trading activity will generate above-average profits and big bonuses for the traders and CEOs.
  • To this mix we can add the fact that many money managers are investing other people’s money. If you plan to stay with an investment bank for ten years or less, most of the people playing this investing strategy will make out very well most of the time. Everyone’s time horizon is a bit limited and you will bring in some nice years of extra returns and reap nice bonuses. And let’s say the whole thing does blow up in your face? What’s the worst that can happen? Your bosses fire you, but you will still have millions in the bank and that MBA from Harvard or Wharton. For the people actually investing the money, there’s barely any downside risk other than having to quit the party early. Furthermore, if everyone else made more or less the same mistake (very surprising major events, such as a busted housing market, affect virtually everybody), you’re hardly disgraced. You might even get rehired at another investment bank, or maybe a hedge fund, within months or even weeks.
  • Moreover, smart shareholders will acquiesce to or even encourage these gambles. They gain on the upside, while the downside, past the point of bankruptcy, is borne by the firm’s creditors. And will the bondholders object? Well, they might have a difficult time monitoring the internal trading operations of financial institutions. Of course, the firm’s trading book cannot be open to competitors, and that means it cannot be open to bondholders (or even most shareholders) either. So what, exactly, will they have in hand to object to?
  • Perhaps more important, government bailouts minimize the damage to creditors on the downside. Neither the Treasury nor the Fed allowed creditors to take any losses from the collapse of the major banks during the financial crisis. The U.S. government guaranteed these loans, either explicitly or implicitly. Guaranteeing the debt also encourages equity holders to take more risk. While current bailouts have not in general maintained equity values, and while share prices have often fallen to near zero following the bust of a major bank, the bailouts still give the bank a lifeline. Instead of the bank being destroyed, sometimes those equity prices do climb back out of the hole. This is true of the major surviving banks in the United States, and even AIG is paying back its bailout. For better or worse, we’re handing out free options on recovery, and that encourages banks to take more risk in the first place.
  • there is an unholy dynamic of short-term trading and investing, backed up by bailouts and risk reduction from the government and the Federal Reserve. This is not good. “Going short on volatility” is a dangerous strategy from a social point of view. For one thing, in so-called normal times, the finance sector attracts a big chunk of the smartest, most hard-working and most talented individuals. That represents a huge human capital opportunity cost to society and the economy at large. But more immediate and more important, it means that banks take far too many risks and go way out on a limb, often in correlated fashion. When their bets turn sour, as they did in 2007–09, everyone else pays the price.
  • And it’s not just the taxpayer cost of the bailout that stings. The financial disruption ends up throwing a lot of people out of work down the economic food chain, often for long periods. Furthermore, the Federal Reserve System has recapitalized major U.S. banks by paying interest on bank reserves and by keeping an unusually high interest rate spread, which allows banks to borrow short from Treasury at near-zero rates and invest in other higher-yielding assets and earn back lots of money rather quickly. In essence, we’re allowing banks to earn their way back by arbitraging interest rate spreads against the U.S. government. This is rarely called a bailout and it doesn’t count as a normal budget item, but it is a bailout nonetheless. This type of implicit bailout brings high social costs by slowing down economic recovery (the interest rate spreads require tight monetary policy) and by redistributing income from the Treasury to the major banks.
  • the “going short on volatility” strategy increases income inequality. In normal years the financial sector is flush with cash and high earnings. In implosion years a lot of the losses are borne by other sectors of society. In other words, financial crisis begets income inequality. Despite being conceptually distinct phenomena, the political economy of income inequality is, in part, the political economy of finance. Simon Johnson tabulates the numbers nicely: From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.7
  • There’s a second reason why the financial sector abets income inequality: the “moving first” issue. Let’s say that some news hits the market and that traders interpret this news at different speeds. One trader figures out what the news means in a second, while the other traders require five seconds. Still other traders require an entire day or maybe even a month to figure things out. The early traders earn the extra money. They buy the proper assets early, at the lower prices, and reap most of the gains when the other, later traders pile on. Similarly, if you buy into a successful tech company in the early stages, you are “moving first” in a very effective manner, and you will capture most of the gains if that company hits it big.
  • The moving-first phenomenon sums to a “winner-take-all” market. Only some relatively small number of traders, sometimes just one trader, can be first. Those who are first will make far more than those who are fourth or fifth. This difference will persist, even if those who are fourth come pretty close to competing with those who are first. In this context, first is first and it doesn’t matter much whether those who come in fourth pile on a month, a minute or a fraction of a second later. Those who bought (or sold, as the case may be) first have captured and locked in most of the available gains. Since gains are concentrated among the early winners, and the closeness of the runner-ups doesn’t so much matter for income distribution, asset-market trading thus encourages the ongoing concentration of wealth. Many investors make lots of mistakes and lose their money, but each year brings a new bunch of projects that can turn the early investors and traders into very wealthy individuals.
  • These two features of the problem—“going short on volatility” and “getting there first”—are related. Let’s say that Goldman Sachs regularly secures a lot of the best and quickest trades, whether because of its quality analysis, inside connections or high-frequency trading apparatus (it has all three). It builds up a treasure chest of profits and continues to hire very sharp traders and to receive valuable information. Those profits allow it to make “short on volatility” bets faster than anyone else, because if it messes up, it still has a large enough buffer to pad losses. This increases the odds that Goldman will repeatedly pull in spectacular profits.
  • Still, every now and then Goldman will go bust, or would go bust if not for government bailouts. But the odds are in any given year that it won’t because of the advantages it and other big banks have. It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw. In any given year, this practice may seem tolerable—didn’t the bank earn the money fair and square by a series of fairly normal looking trades? Yet over time this situation will corrode productivity, because what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it. And it leads to periodic financial explosions. That, in short, is the real problem of income inequality we face today. It’s what causes the inequality at the very top of the earning pyramid that has dangerous implications for the economy as a whole.
  • What about controlling bank risk-taking directly with tight government oversight? That is not practical. There are more ways for banks to take risks than even knowledgeable regulators can possibly control; it just isn’t that easy to oversee a balance sheet with hundreds of billions of dollars on it, especially when short-term positions are wound down before quarterly inspections. It’s also not clear how well regulators can identify risky assets. Some of the worst excesses of the financial crisis were grounded in mortgage-backed assets—a very traditional function of banks—not exotic derivatives trading strategies. Virtually any asset position can be used to bet long odds, one way or another. It is naive to think that underpaid, undertrained regulators can keep up with financial traders, especially when the latter stand to earn billions by circumventing the intent of regulations while remaining within the letter of the law.
  • For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem. The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to control.
  • Another root cause of growing inequality is that the modern world, by so limiting our downside risk, makes extreme risk-taking all too comfortable and easy. More risk-taking will mean more inequality, sooner or later, because winners always emerge from risk-taking. Yet bankers who take bad risks (provided those risks are legal) simply do not end up with bad outcomes in any absolute sense. They still have millions in the bank, lots of human capital and plenty of social status. We’re not going to bring back torture, trial by ordeal or debtors’ prisons, nor should we. Yet the threat of impoverishment and disgrace no longer looms the way it once did, so we no longer can constrain excess financial risk-taking. It’s too soft and cushy a world.
  • Why don’t we simply eliminate the safety net for clueless or unlucky risk-takers so that losses equal gains overall? That’s a good idea in principle, but it is hard to put into practice. Once a financial crisis arrives, politicians will seek to limit the damage, and that means they will bail out major financial institutions. Had we not passed TARP and related policies, the United States probably would have faced unemployment rates of 25 percent of higher, as in the Great Depression. The political consequences would not have been pretty. Bank bailouts may sound quite interventionist, and indeed they are, but in relative terms they probably were the most libertarian policy we had on tap. It meant big one-time expenses, but, for the most part, it kept government out of the real economy (the General Motors bailout aside).
  • We probably don’t have any solution to the hazards created by our financial sector, not because plutocrats are preventing our political system from adopting appropriate remedies, but because we don’t know what those remedies are. Yet neither is another crisis immediately upon us. The underlying dynamic favors excess risk-taking, but banks at the current moment fear the scrutiny of regulators and the public and so are playing it fairly safe. They are sitting on money rather than lending it out. The biggest risk today is how few parties will take risks, and, in part, the caution of banks is driving our current protracted economic slowdown. According to this view, the long run will bring another financial crisis once moods pick up and external scrutiny weakens, but that day of reckoning is still some ways off.
  • Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.
Weiye Loh

Roger Pielke Jr.'s Blog: Julia Gillard Goes All In - 0 views

rogerpielkejr.blogspot.com/...julia-gillard-goes-all-in.html

Carbon Tax Carbon Trade Policy Economy Political Economy

shared by Weiye Loh on 16 Mar 11 - No Cached
  • It is here where I think that Gillard has made a bad bet. Carbon pricing is supposed to create jobs by making fossil fuels appreciably more expensive, thereby creating a market signal that disfavors carbon-intensive industry and stimulates less carbon-intensive economic activity. The economic parts of theory seem sound enough.
  • However, it is the political realities that the theory does not account for.  Australia's economy is very carbon intensive (PDF). Thus, if carbon pricing were to work exactly as the Prime Minister describes, it will necessary lead to a great deal of economic dislocation and change -- Consider that to meet the 5% emissions reduction target (from 2000 levels), without relying on offsets or other tricks, implies that Australia's economy would need to become as carbon efficient as Japan's by the end of this decade. How such a profoundly disruptive transitional period would be managed is the one issue that advocates of a high carbon price have never really dealt with -- the market's invisible hand will take care of it I guess.
  • How does one become "reskilled"?  Without an explanation, many people will translate "reskilled" to mean "unemployed".  The oft-stated idea that the proceeds of a carbon tax will be used to compensate those who fact higher costs does not address the issue of dislocation in the economy. There is a element of "magical thinking" in the idea that transforming a national economy starts with a simple decision: . . . clean energy will open up opportunities we are only just beginning to imagine. Those opportunities begin with that simple but momentous decision: Putting a price on carbon. Friends, a price on carbon is the cheapest way to drive investment and jobs.
  • ...2 more annotations...
  • There are only two realistic outcomes here. One is that the carbon tax proposal is scrapped. With this speech it seems highly unlikely that Gillard will be the one doing any scrapping.  So it would probably be via an election or a change in leadership, such as if Kevin Rudd becomes captain of the Brisbane Broncos. The second possible outcome is that the carbon pricing is watered down so far that its enactment allows Labor to claim success while limiting any actual impact from the tax on the economy.  Of course, that would undercut its stated purpose -- to transform the economy.
  • A better strategy is the one proposed in The Climate Fix -- start with a very low carbon tax, one that is politically acceptable, and use the proceeds to invest in innovation. The carbon price would rise over time as the fruits of innovation make it politically acceptable to raise that price.  I expect that Australia will soon provide (yet aonpther) lesson in how not to try to put a price on carbon.
  • Weiye Loh on 16 Mar 11
     
    In the face of opinion polls showing a lack of support for her proposed carbon tax, Julia Gillard today has delivered a speech that indicates that she is willing to wager her future on this issue (The speech is here in PDF). 
Weiye Loh

How We Know by Freeman Dyson | The New York Review of Books - 0 views

www.nybooks.com/...how-we-know

Information Language Data History Science

shared by Weiye Loh on 27 Feb 11 - No Cached
  • Another example illustrating the central dogma is the French optical telegraph.
  • The telegraph was an optical communication system with stations consisting of large movable pointers mounted on the tops of sixty-foot towers. Each station was manned by an operator who could read a message transmitted by a neighboring station and transmit the same message to the next station in the transmission line.
  • The distance between neighbors was about seven miles. Along the transmission lines, optical messages in France could travel faster than drum messages in Africa. When Napoleon took charge of the French Republic in 1799, he ordered the completion of the optical telegraph system to link all the major cities of France from Calais and Paris to Toulon and onward to Milan. The telegraph became, as Claude Chappe had intended, an important instrument of national power. Napoleon made sure that it was not available to private users.
  • ...27 more annotations...
  • Unlike the drum language, which was based on spoken language, the optical telegraph was based on written French. Chappe invented an elaborate coding system to translate written messages into optical signals. Chappe had the opposite problem from the drummers. The drummers had a fast transmission system with ambiguous messages. They needed to slow down the transmission to make the messages unambiguous. Chappe had a painfully slow transmission system with redundant messages. The French language, like most alphabetic languages, is highly redundant, using many more letters than are needed to convey the meaning of a message. Chappe’s coding system allowed messages to be transmitted faster. Many common phrases and proper names were encoded by only two optical symbols, with a substantial gain in speed of transmission. The composer and the reader of the message had code books listing the message codes for eight thousand phrases and names. For Napoleon it was an advantage to have a code that was effectively cryptographic, keeping the content of the messages secret from citizens along the route.
  • After these two historical examples of rapid communication in Africa and France, the rest of Gleick’s book is about the modern development of information technolog
  • The modern history is dominated by two Americans, Samuel Morse and Claude Shannon. Samuel Morse was the inventor of Morse Code. He was also one of the pioneers who built a telegraph system using electricity conducted through wires instead of optical pointers deployed on towers. Morse launched his electric telegraph in 1838 and perfected the code in 1844. His code used short and long pulses of electric current to represent letters of the alphabet.
  • Morse was ideologically at the opposite pole from Chappe. He was not interested in secrecy or in creating an instrument of government power. The Morse system was designed to be a profit-making enterprise, fast and cheap and available to everybody. At the beginning the price of a message was a quarter of a cent per letter. The most important users of the system were newspaper correspondents spreading news of local events to readers all over the world. Morse Code was simple enough that anyone could learn it. The system provided no secrecy to the users. If users wanted secrecy, they could invent their own secret codes and encipher their messages themselves. The price of a message in cipher was higher than the price of a message in plain text, because the telegraph operators could transcribe plain text faster. It was much easier to correct errors in plain text than in cipher.
  • Claude Shannon was the founding father of information theory. For a hundred years after the electric telegraph, other communication systems such as the telephone, radio, and television were invented and developed by engineers without any need for higher mathematics. Then Shannon supplied the theory to understand all of these systems together, defining information as an abstract quantity inherent in a telephone message or a television picture. Shannon brought higher mathematics into the game.
  • When Shannon was a boy growing up on a farm in Michigan, he built a homemade telegraph system using Morse Code. Messages were transmitted to friends on neighboring farms, using the barbed wire of their fences to conduct electric signals. When World War II began, Shannon became one of the pioneers of scientific cryptography, working on the high-level cryptographic telephone system that allowed Roosevelt and Churchill to talk to each other over a secure channel. Shannon’s friend Alan Turing was also working as a cryptographer at the same time, in the famous British Enigma project that successfully deciphered German military codes. The two pioneers met frequently when Turing visited New York in 1943, but they belonged to separate secret worlds and could not exchange ideas about cryptography.
  • In 1945 Shannon wrote a paper, “A Mathematical Theory of Cryptography,” which was stamped SECRET and never saw the light of day. He published in 1948 an expurgated version of the 1945 paper with the title “A Mathematical Theory of Communication.” The 1948 version appeared in the Bell System Technical Journal, the house journal of the Bell Telephone Laboratories, and became an instant classic. It is the founding document for the modern science of information. After Shannon, the technology of information raced ahead, with electronic computers, digital cameras, the Internet, and the World Wide Web.
  • According to Gleick, the impact of information on human affairs came in three installments: first the history, the thousands of years during which people created and exchanged information without the concept of measuring it; second the theory, first formulated by Shannon; third the flood, in which we now live
  • The event that made the flood plainly visible occurred in 1965, when Gordon Moore stated Moore’s Law. Moore was an electrical engineer, founder of the Intel Corporation, a company that manufactured components for computers and other electronic gadgets. His law said that the price of electronic components would decrease and their numbers would increase by a factor of two every eighteen months. This implied that the price would decrease and the numbers would increase by a factor of a hundred every decade. Moore’s prediction of continued growth has turned out to be astonishingly accurate during the forty-five years since he announced it. In these four and a half decades, the price has decreased and the numbers have increased by a factor of a billion, nine powers of ten. Nine powers of ten are enough to turn a trickle into a flood.
  • Gordon Moore was in the hardware business, making hardware components for electronic machines, and he stated his law as a law of growth for hardware. But the law applies also to the information that the hardware is designed to embody. The purpose of the hardware is to store and process information. The storage of information is called memory, and the processing of information is called computing. The consequence of Moore’s Law for information is that the price of memory and computing decreases and the available amount of memory and computing increases by a factor of a hundred every decade. The flood of hardware becomes a flood of information.
  • In 1949, one year after Shannon published the rules of information theory, he drew up a table of the various stores of memory that then existed. The biggest memory in his table was the US Library of Congress, which he estimated to contain one hundred trillion bits of information. That was at the time a fair guess at the sum total of recorded human knowledge. Today a memory disc drive storing that amount of information weighs a few pounds and can be bought for about a thousand dollars. Information, otherwise known as data, pours into memories of that size or larger, in government and business offices and scientific laboratories all over the world. Gleick quotes the computer scientist Jaron Lanier describing the effect of the flood: “It’s as if you kneel to plant the seed of a tree and it grows so fast that it swallows your whole town before you can even rise to your feet.”
  • On December 8, 2010, Gleick published on the The New York Review’s blog an illuminating essay, “The Information Palace.” It was written too late to be included in his book. It describes the historical changes of meaning of the word “information,” as recorded in the latest quarterly online revision of the Oxford English Dictionary. The word first appears in 1386 a parliamentary report with the meaning “denunciation.” The history ends with the modern usage, “information fatigue,” defined as “apathy, indifference or mental exhaustion arising from exposure to too much information.”
  • The consequences of the information flood are not all bad. One of the creative enterprises made possible by the flood is Wikipedia, started ten years ago by Jimmy Wales. Among my friends and acquaintances, everybody distrusts Wikipedia and everybody uses it. Distrust and productive use are not incompatible. Wikipedia is the ultimate open source repository of information. Everyone is free to read it and everyone is free to write it. It contains articles in 262 languages written by several million authors. The information that it contains is totally unreliable and surprisingly accurate. It is often unreliable because many of the authors are ignorant or careless. It is often accurate because the articles are edited and corrected by readers who are better informed than the authors
  • Jimmy Wales hoped when he started Wikipedia that the combination of enthusiastic volunteer writers with open source information technology would cause a revolution in human access to knowledge. The rate of growth of Wikipedia exceeded his wildest dreams. Within ten years it has become the biggest storehouse of information on the planet and the noisiest battleground of conflicting opinions. It illustrates Shannon’s law of reliable communication. Shannon’s law says that accurate transmission of information is possible in a communication system with a high level of noise. Even in the noisiest system, errors can be reliably corrected and accurate information transmitted, provided that the transmission is sufficiently redundant. That is, in a nutshell, how Wikipedia works.
  • The information flood has also brought enormous benefits to science. The public has a distorted view of science, because children are taught in school that science is a collection of firmly established truths. In fact, science is not a collection of truths. It is a continuing exploration of mysteries. Wherever we go exploring in the world around us, we find mysteries. Our planet is covered by continents and oceans whose origin we cannot explain. Our atmosphere is constantly stirred by poorly understood disturbances that we call weather and climate. The visible matter in the universe is outweighed by a much larger quantity of dark invisible matter that we do not understand at all. The origin of life is a total mystery, and so is the existence of human consciousness. We have no clear idea how the electrical discharges occurring in nerve cells in our brains are connected with our feelings and desires and actions.
  • Even physics, the most exact and most firmly established branch of science, is still full of mysteries. We do not know how much of Shannon’s theory of information will remain valid when quantum devices replace classical electric circuits as the carriers of information. Quantum devices may be made of single atoms or microscopic magnetic circuits. All that we know for sure is that they can theoretically do certain jobs that are beyond the reach of classical devices. Quantum computing is still an unexplored mystery on the frontier of information theory. Science is the sum total of a great multitude of mysteries. It is an unending argument between a great multitude of voices. It resembles Wikipedia much more than it resembles the Encyclopaedia Britannica.
  • The rapid growth of the flood of information in the last ten years made Wikipedia possible, and the same flood made twenty-first-century science possible. Twenty-first-century science is dominated by huge stores of information that we call databases. The information flood has made it easy and cheap to build databases. One example of a twenty-first-century database is the collection of genome sequences of living creatures belonging to various species from microbes to humans. Each genome contains the complete genetic information that shaped the creature to which it belongs. The genome data-base is rapidly growing and is available for scientists all over the world to explore. Its origin can be traced to the year 1939, when Shannon wrote his Ph.D. thesis with the title “An Algebra for Theoretical Genetics.
  • Shannon was then a graduate student in the mathematics department at MIT. He was only dimly aware of the possible physical embodiment of genetic information. The true physical embodiment of the genome is the double helix structure of DNA molecules, discovered by Francis Crick and James Watson fourteen years later. In 1939 Shannon understood that the basis of genetics must be information, and that the information must be coded in some abstract algebra independent of its physical embodiment. Without any knowledge of the double helix, he could not hope to guess the detailed structure of the genetic code. He could only imagine that in some distant future the genetic information would be decoded and collected in a giant database that would define the total diversity of living creatures. It took only sixty years for his dream to come true.
  • In the twentieth century, genomes of humans and other species were laboriously decoded and translated into sequences of letters in computer memories. The decoding and translation became cheaper and faster as time went on, the price decreasing and the speed increasing according to Moore’s Law. The first human genome took fifteen years to decode and cost about a billion dollars. Now a human genome can be decoded in a few weeks and costs a few thousand dollars. Around the year 2000, a turning point was reached, when it became cheaper to produce genetic information than to understand it. Now we can pass a piece of human DNA through a machine and rapidly read out the genetic information, but we cannot read out the meaning of the information. We shall not fully understand the information until we understand in detail the processes of embryonic development that the DNA orchestrated to make us what we are.
  • The explosive growth of information in our human society is a part of the slower growth of ordered structures in the evolution of life as a whole. Life has for billions of years been evolving with organisms and ecosystems embodying increasing amounts of information. The evolution of life is a part of the evolution of the universe, which also evolves with increasing amounts of information embodied in ordered structures, galaxies and stars and planetary systems. In the living and in the nonliving world, we see a growth of order, starting from the featureless and uniform gas of the early universe and producing the magnificent diversity of weird objects that we see in the sky and in the rain forest. Everywhere around us, wherever we look, we see evidence of increasing order and increasing information. The technology arising from Shannon’s discoveries is only a local acceleration of the natural growth of information.
  • . Lord Kelvin, one of the leading physicists of that time, promoted the heat death dogma, predicting that the flow of heat from warmer to cooler objects will result in a decrease of temperature differences everywhere, until all temperatures ultimately become equal. Life needs temperature differences, to avoid being stifled by its waste heat. So life will disappear
  • Thanks to the discoveries of astronomers in the twentieth century, we now know that the heat death is a myth. The heat death can never happen, and there is no paradox. The best popular account of the disappearance of the paradox is a chapter, “How Order Was Born of Chaos,” in the book Creation of the Universe, by Fang Lizhi and his wife Li Shuxian.2 Fang Lizhi is doubly famous as a leading Chinese astronomer and a leading political dissident. He is now pursuing his double career at the University of Arizona.
  • The belief in a heat death was based on an idea that I call the cooking rule. The cooking rule says that a piece of steak gets warmer when we put it on a hot grill. More generally, the rule says that any object gets warmer when it gains energy, and gets cooler when it loses energy. Humans have been cooking steaks for thousands of years, and nobody ever saw a steak get colder while cooking on a fire. The cooking rule is true for objects small enough for us to handle. If the cooking rule is always true, then Lord Kelvin’s argument for the heat death is correct.
  • the cooking rule is not true for objects of astronomical size, for which gravitation is the dominant form of energy. The sun is a familiar example. As the sun loses energy by radiation, it becomes hotter and not cooler. Since the sun is made of compressible gas squeezed by its own gravitation, loss of energy causes it to become smaller and denser, and the compression causes it to become hotter. For almost all astronomical objects, gravitation dominates, and they have the same unexpected behavior. Gravitation reverses the usual relation between energy and temperature. In the domain of astronomy, when heat flows from hotter to cooler objects, the hot objects get hotter and the cool objects get cooler. As a result, temperature differences in the astronomical universe tend to increase rather than decrease as time goes on. There is no final state of uniform temperature, and there is no heat death. Gravitation gives us a universe hospitable to life. Information and order can continue to grow for billions of years in the future, as they have evidently grown in the past.
  • The vision of the future as an infinite playground, with an unending sequence of mysteries to be understood by an unending sequence of players exploring an unending supply of information, is a glorious vision for scientists. Scientists find the vision attractive, since it gives them a purpose for their existence and an unending supply of jobs. The vision is less attractive to artists and writers and ordinary people. Ordinary people are more interested in friends and family than in science. Ordinary people may not welcome a future spent swimming in an unending flood of information.
  • A darker view of the information-dominated universe was described in a famous story, “The Library of Babel,” by Jorge Luis Borges in 1941.3 Borges imagined his library, with an infinite array of books and shelves and mirrors, as a metaphor for the universe.
  • Gleick’s book has an epilogue entitled “The Return of Meaning,” expressing the concerns of people who feel alienated from the prevailing scientific culture. The enormous success of information theory came from Shannon’s decision to separate information from meaning. His central dogma, “Meaning is irrelevant,” declared that information could be handled with greater freedom if it was treated as a mathematical abstraction independent of meaning. The consequence of this freedom is the flood of information in which we are drowning. The immense size of modern databases gives us a feeling of meaninglessness. Information in such quantities reminds us of Borges’s library extending infinitely in all directions. It is our task as humans to bring meaning back into this wasteland. As finite creatures who think and feel, we can create islands of meaning in the sea of information. Gleick ends his book with Borges’s image of the human condition:We walk the corridors, searching the shelves and rearranging them, looking for lines of meaning amid leagues of cacophony and incoherence, reading the history of the past and of the future, collecting our thoughts and collecting the thoughts of others, and every so often glimpsing mirrors, in which we may recognize creatures of the information.
Weiye Loh

Roger Pielke Jr.'s Blog: Wanted: Less Spin, More Informed Debate - 0 views

rogerpielkejr.blogspot.com/...spin-more-informed-debate.html

Carbon Trade Climate Change Pragmatism Public Relations

shared by Weiye Loh on 04 Aug 11 - No Cached
  • , the rejection of proposals that suggest starting with a low carbon price is thus a pretty good guarantee against any carbon pricing at all.  It is rather remarkable to see advocates for climate action arguing against a policy that recommends implementing a carbon price, simply because it does not start high enough for their tastes.  For some, idealism trumps pragmatism, even if it means no action at all.
  • Ward writes: . . . climate change is the result of a number of market failures, the largest of which arises from the fact that the prices of products and services involving emissions of greenhouse gases do not reflect the true costs of the damage caused through impacts on the climate. . . All serious economic analyses of how to tackle climate change identify the need to correct this market failure through a carbon price, which can be implemented, for instance, through cap and trade schemes or carbon taxes. . . A carbon price can be usefully supplemented by improvements in innovation policies, but it needs to be at the core of action on climate change, as this paper by Carolyn Fischer and Richard Newell points out.
  • First, the criticism is off target. A low and rising carbon price is in fact a central element to the policy recommendations advanced by the Hartwell Group in Climate Pragmatism, the Hartwell Paper, and as well, in my book The Climate Fix.  In Climate Pragmatism, we approvingly cite Japan's low-but-rising fossil fuels tax and discuss a range of possible fees or taxes on fossil fuels, implemented, not to penalize energy use or price fossil fuels out of the market, but rather to ensure that as we benefit from today’s energy resources we are setting aside the funds necessary to accelerate energy innovation and secure the nation’s energy future.
  • ...3 more annotations...
  • Here is another debating lesson -- before engaging in public not only should one read the materials that they are critiquing, they should also read the materials that they cite in support of their own arguments. This is not the first time that Bob Ward has put out misleading information related to my work.  Ever since we debated in public at the Royal Institution, Bob has adopted guerrilla tactics, lobbing nonsense into the public arena and then hiding when challenged to support or defend his views.  As readers here know, I am all for open and respectful debate over these important topics.  Why is that instead, all we get is poorly informed misdirection and spin? Despite the attempts at spin, I'd welcome Bob's informed engagement on this topic. Perhaps he might start by explaining which of the 10 statements that I put up on the mathematics and logic underlying climate pragmatism is incorrect.
  • In comments to another blog, I've identified Bob as a PR flack. I see no reason to change that assessment. In fact, his actions only confirm it. Where does he fit into a scientific debate?
  • Thanks for the comment, but I'll take the other side ;-)First, this is a policy debate that involves various scientific, economic, political analyses coupled with various values commitments including monied interests -- and as such, PR guys are as welcome as anyone else.That said, the problem here is not that Ward is a PR guy, but that he is trying to make his case via spin and misrepresentation. That gets noticed pretty quickly by anyone paying attention and is easily shot down.
Weiye Loh

Roger Pielke Jr.'s Blog: Tall Tales in the New York Times - 0 views

rogerpielkejr.blogspot.com/...l-tales-in-new-york-times.html

Data News media bias Nature Disaster Insurance

shared by Weiye Loh on 14 Feb 11 - No Cached
  • , it is still amazing to see the newspaper of record publish a statement like the following about Munich Re, one of the world's largest reinsurance companies: Munich Re is already tailoring its offerings to a world of more extreme weather. It is a matter of financial survival: In 2008, heavy snows in China resulted in the collapse of 223,000 homes, according to Chinese government statistics, including $1 billion in insured lossesMunich Re's financial survival? Here Rosenthal makes a leap well beyond the perhaps understandable following along with the delusions of crowds. There are always risks to bringing data to bear on an enjoyable tale tall, but let's look anyway at what is actually going on in Munich Re's business over the past several years.
  • Here is what Muinch Re reported on its 2008 company performance, the year in which China suffered the heavy snows: Notwithstanding the most severe financial crisis for generations, Munich Re recorded a clear profit for the financial year 2008, in line with previous announcements. According to preliminary calculations, the consolidated profit amounted to €1.5bn.How about 2009 then? Nikolaus von Bomhard, Chairman of the Board of Management: “We have brought the financial year 2009 to a successful close: with a profit of over €2.5bn, we were even able to surpass expectations and achieve our long-term return target despite the difficult environment.” Sure, 2010 must have see some evidence of a threat to the company's financial survival?  Guess again: On the basis of preliminary estimates, Munich Re achieved a consolidated result of €2.43bn for 2010 (previous year: €2.56bn), despite substantial major losses. The profit for the fourth quarter totalled €0.48bn (0.78bn). Shareholders are to participate in last year's success through another increase in the dividend: subject to approval by the Supervisory Board and the Annual General Meeting, the dividend will rise by 50 cents to €6.25 (5.75) per share. In addition, Munich Re has announced a further share buy-back programme: shares with a volume of up to €500m are to be repurchased before the Annual General Meeting in 2012
  • The NYT may be unaware of the fact that not only is Munich Re in the catastrophe reinsurance business, meaning that it pays out variable and large claims for disasters, but that its business actually depends upon those disasters
  • ...3 more annotations...
  • Munich Re explains in the context of recent disasters (emphasis added): Overall, pressure on prices in most lines of business and regions is persisting. Munich Re therefore consistently withdrew from under-rated business. It nevertheless proved possible to expand accounts with individual major clients, so that the business volume grew slightly on balance, despite the difficult environment. Munich Re owes this profitable growth especially to its ability to swiftly offer complex, tailor-made reinsurance solutions to its clients. Besides this, the many large losses resulting from natural hazards and also from man-made events, had a stabilising influence on the lines of business and regions affected. Thus, prices increased markedly for natural catastrophe covers in Australia/New Zealand (Oceania) and in offshore energy business. There were no major changes in conditions in this renewal season. The overall outcome of the reinsurance treaty renewals at 1 January 2011 was again very satisfactory for Munich Re.
  • There is downward pressure on prices in the reinsurance industry because there have not been enough disasters to keep up demand and thus premium prices. The following observation was made just three months ago: Insurance and reinsurance prices have been falling across most business lines for two years, reflecting intense competition between well-capitalised insurers and a comparative dearth of major catastrophe-induced losses.
  • as Munch Re explains, they have been able to overcome the dearth of disasters because recent extreme events have allowed them to increase prices on coverage in a manner that not only counteracts recent losses to some degree, but even allows for "profitable growth."  As with most tall tales, the one about the financial plight of reinsurers dealing with a changed climate isn't going away any time soon. It is just another bit of  popular unreality that effective decision making will have to overcome.
Weiye Loh

The messy business of cleaning up carbon policy (and how to sell it to the electorate) ... - 0 views

www.abc.net.au/...45810.html

Carbon Tax Global Warming Politics

shared by Weiye Loh on 04 Apr 11 - No Cached
  • 1. Putting a price on carbon is not only about the climate.Yes, humans are affecting the climate and reducing carbon dioxide emissions is a key commitment of this government, and indeed the stated views of the opposition. But there are other reasons to price carbon, primarily to put Australia at the forefront of a global energy technology revolution that is already underway.In future years and decades the world is going to need vastly more energy that is secure, reliable, clean and affordable. Achieving these outcomes will require an energy technology revolution. The purpose of pricing carbon is to raise the revenues needed to invest in this future, just as we invest in health, agriculture and defence.
  • 2. A price on carbon raises revenues to invest in stimulating that energy technology revolution.Australia emits almost 400 million tonnes of carbon dioxide into the atmosphere every year. In round numbers, every dollar carbon tax per tonne on those emissions would raise about A$100 million. A significant portion of the proceeds from a carbon tax should be used to invest in energy technology innovation, using today’s energy economy to build a bridge to tomorrow’s economy. This is exactly the strategy that India has adopted with a small levy on coal and Germany has adopted with a tax on nuclear fuel rods, with proceeds in both instances invested into energy innovation.
  • 3. The purpose of a carbon tax is not to make energy, food, petrol or consumer goods appreciably more expensive.Just as scientists are in broad agreement that humans are affecting the global climate, economists and other experts are in broad agreement that we cannot revolutionise our energy economy through pricing mechanisms alone. Thus, we propose starting with a low carbon tax - one that has broad political support - and then committing to increasing it in a predictable manner over time.The Coalition has proposed a “direct action plan” on carbon policy that would cost A$30 billion over the next 8 years, which is the equivalent of about a $2.50 per tonne carbon tax. The question to be put to the Coalition is not whether we should be investing in a carbon policy, as we agree on that point, but how much and how it should be paid for. The Coalition’s plans leave unanswered how they would pay for their plan.A carbon tax offers a responsible and effective manner to raise funds without harming the economy or jobs. In fact, to the extent that investments in energy innovation bear fruit, new markets will be opened and new jobs will be created. The Coalition’s plan is not focused on energy technology innovation.The question for the Coalition should thus be, at what level would you set a carbon tax (or what other taxes would you raise?), and how would you invest the proceeds in a manner that accelerates energy technology innovation?
  • ...1 more annotation...
  • 4. Even a low carbon tax will make some goods cost a bit more, so it is important to help those who are most affected.Our carbon tax proposal is revenue neutral in the sense that we will lower other taxes in direct proportion to the impact, however modest, of a low carbon tax. We will do this with particular attention to those who may be most directly affected by a price on carbon.In addition, some portion of the revenue raised by a carbon tax will be returned to the public. But not all. It is important to invest in tomorrow’s energy technologies today and a carbon tax provides the mechanism for doing so.
Weiye Loh

Land Destroyer: Alternative Economics - 0 views

landdestroyer.blogspot.com/...alternative-economics.html

New Media Economics

shared by Weiye Loh on 20 Mar 11 - No Cached
  • Peer to peer file sharing (P2P) has made media distribution free and has become the bane of media monopolies. P2P file sharing means digital files can be copied and distributed at no cost. CD's, DVD's, and other older forms of holding media are no longer necessary, nor is the cost involved in making them or distributing them along a traditional logistical supply chain. Disc burners, however, allow users the ability to create their own physical copies at a fraction of the cost of buying the media from the stores. Supply and demand is turned on its head as the more popular a certain file becomes via demand, the more of it that is available for sharing, and the easier it is to obtain. Supply and demand increase in tandem towards a lower "price" of obtaining the said file.Consumers demand more as price decreases. Producersnaturally want to produce more of something as priceincreases. Somewhere in between consumers and producers meet at the market price or "marketequilibrium."P2P technology eliminates material scarcity, thus the more afile is in demand, the more people end up downloading it, andthe easier it is for others to find it and download it. Considerthe implications this would have if technology made physicalobjects as easy to "share" as information is now.
  • In the end, it is not government regulations, legal contrivances, or licenses that govern information, but rather the free market mechanism commonly referred to as Adam Smith's self regulating "Invisible Hand of the Market." In other words, people selfishly seeking accurate information for their own benefit encourage producers to provide the best possible information to meet their demand. While this is not possible in a monopoly, particularly the corporate media monopoly of the "left/right paradigm" of false choice, it is inevitable in the field of real competition that now exists online due to information technology.
  • Compounding the establishment's troubles are cheaper cameras and cheaper, more capable software for 3D graphics, editing, mixing, and other post production tasks, allowing for the creation of an alternative publishing, audio and video industry. "Underground" counter-corporate music and film has been around for a long time but through the combination of technology and the zealous corporate lawyers disenfranchising a whole new generation that now seeks an alternative, it is truly coming of age.
  • ...3 more annotations...
  • With a growing community of people determined to become collaborative producers rather than fit into the producer/consumer paradigm, and 3D files for physical objects already being shared like movies and music, the implications are profound. Products, and the manufacturing technology used to make them will continue to drop in price, become easier to make for individuals rather than large corporations, just as media is now shifting into the hands of the common people. And like the shift of information, industry will move from the elite and their agenda of preserving their power, to the end of empowering the people.
  • In a future alternative economy where everyone is a collaborative designer, producer, and manufacturer instead of passive consumers and when problems like "global climate change," "overpopulation," and "fuel crises" cross our path, we will counter them with technical solutions, not political indulgences like carbon taxes, and not draconian decrees like "one-child policies."
  • We will become the literal architects of our own future in this "personal manufacturing" revolution. While these technologies may still appear primitive, or somewhat "useless" or "impractical" we must remember where our personal computers stood on the eve of the dawning of the information age and how quickly they changed our lives. And while many of us may be unaware of this unfolding revolution, you can bet the globalists, power brokers, and all those that stand to lose from it not only see it but are already actively fighting against it.Understandably it takes some technical know-how to jump into the personal manufacturing revolution. In part 2 of "Alternative Economics" we will explore real world "low-tech" solutions to becoming self-sufficient, local, and rediscover the empowerment granted by doing so.
Weiye Loh

Johann Hari denies accusations of plagiarism | Media | guardian.co.uk - 0 views

www.guardian.co.uk/...johann-hari-twitter-plagiarism

Journalism Churnalism Plagiarism Objectivity

shared by Weiye Loh on 29 Jun 11 - No Cached
  • "It's clearly not plagiarism or churnalism – but was it an error in another way? Yes. I now see it was wrong, and I wouldn't do it again. I'm grateful to the people who pointed out this error of judgment."
  • when contacted by the Guardian, Levy said he was not unhappy: "I stand behind everything that was published in the interview, which was an accurate representation of my thoughts and words."
  • Hari's interview read: "With a shake of the head, he says: 'We had now two wars, the flotilla – it doesn't seem that Israel has learned any lesson, and it doesn't seem that Israel is paying any price. The Israelis don't pay any price for the injustice of the occupation, so the occupation will never end. It will not end a moment before Israelis understand the connection between the occupation and the price they will be forced to pay. They will never shake it off on their own initiative.'"In July 2007, Levy wrote something very similar in a column for Haaretz: "The Israelis don't pay any price for the injustice of the occupation, so the occupation will never end. It will not end a moment before the Israelis understand the connection between the occupation and the price they will be forced to pay. They will never shake it off on their own initiative, and why should they?"
Weiye Loh

Letter from China: China and the Unofficial Truth : The New Yorker - 0 views

www.newyorker.com/...-and-the-unofficial-truth.html

China Social Media Politics

shared by Weiye Loh on 14 Mar 12 - No Cached
  • Chinese citizens are busy dissecting and taunting the meeting on social media. While Premier Wen Jiabao was pledging that the government would “quickly” reverse the widening gap between rich and poor—last year he said it would do so “gradually”—Chinese Web users were scrutinizing photos of delegates arriving for the meeting, and posting photos of their nine-hundred dollar Hermès belts and Birkin and Celine and Louis Vuitton purses that retail for car prices. As Danwei points out, an image that has been making the rounds with particular relish shows the C.E.O. of China Power International Development Ltd, Li Xiaolin, in a salmon-colored suit from Emilio Pucci’s spring-summer 2012 collection—price: nearly two thousand dollars. Web user Cairangduoji paired her photo with the image of dirt-covered barefoot kids in the countryside and the comment: “That amount could help two hundred children wear warm clothes, and avoid the chilly attacks of winter.” And it appended a quote from Li, of the salmon suit, who purportedly once said, “I think we should open a morality file on all citizens to control everyone and give them a ‘sense of shame.’” (This is no ordinary delegate: Li Xiaolin happens to be the daughter of former Premier Li Peng, who oversaw the crackdown at Tiananmen Square.)
  • Another message making the rounds uses an official high-res photo of the gathering to zoom in on delegates who were captured fast asleep or typing on their smart phones.
Weiye Loh

The Price of Fuel | How Countries Compare - 0 views

www.thepriceoffuel.com/howcountriescompare

Global Warming Fuel Price AGW Countries Capitalism

shared by Weiye Loh on 18 Feb 11 - No Cached
  • In 2008, crude oil topped $111 a barrel for the first time. During that time, the U.S. average retail price for regular unleaded gasoline reached $3.28 a gallon. Despite the increase, people in the United States still pay significantly less for gasoline than people in many other countries.
  • This chart depicts the elements of production, transportation, refining and distribution required to transform crude oil into finished petroleum products like gasoline.
  • In the United States, the average tax on gasoline is 47 cents per gallon. The tax is usually a combination of federal, state and local fees, underground storage tank fees and other environmental fees. Many European countries attach much higher fees as an incentive to reduce greenhouse gas emissions and raise revenue, increasing the overall price of gasoline.
Weiye Loh

Singapore has priced honesty correctly - 0 views

www.straitstimes.com/...STIStory_649403.html

Capitalism Honesty Pricing

shared by Weiye Loh on 26 Mar 11 - No Cached
  • Second, the turnover of ministers in comparable countries is relatively much faster compared to Singapore, where a minister can be in the Cabinet for decades with no fixed term limit.
  • Third, the candidates who enter politics, as is often seen in countries like the United States, may have already made their fortune, as in the case of former US treasury secretary Hank Paulson, who was chief executive officer of premier investment house Goldman Sachs before he joined the White House Cabinet. Such holders of high office can afford to serve their country out of conviction alone.
  • Singapore does not offer such luxuries because we are a small country with a small pool of talent that can be considered for key government positions.
Weiye Loh

The Black Swan of Cairo | Foreign Affairs - 0 views

www.foreignaffairs.com/...the-black-swan-of-cairo

Complex System Black Swan Falsifiability Politics Economics

shared by Weiye Loh on 01 May 11 - No Cached
  • It is both misguided and dangerous to push unobserved risks further into the statistical tails of the probability distribution of outcomes and allow these high-impact, low-probability "tail risks" to disappear from policymakers' fields of observation.
  • Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems.
  • Seeking to restrict variability seems to be good policy (who does not prefer stability to chaos?), so it is with very good intentions that policymakers unwittingly increase the risk of major blowups. And it is the same misperception of the properties of natural systems that led to both the economic crisis of 2007-8 and the current turmoil in the Arab world. The policy implications are identical: to make systems robust, all risks must be visible and out in the open -- fluctuat nec mergitur (it fluctuates but does not sink) goes the Latin saying.
  • ...21 more annotations...
  • Just as a robust economic system is one that encourages early failures (the concepts of "fail small" and "fail fast"), the U.S. government should stop supporting dictatorial regimes for the sake of pseudostability and instead allow political noise to rise to the surface. Making an economy robust in the face of business swings requires allowing risk to be visible; the same is true in politics.
  • Both the recent financial crisis and the current political crisis in the Middle East are grounded in the rise of complexity, interdependence, and unpredictability. Policymakers in the United Kingdom and the United States have long promoted policies aimed at eliminating fluctuation -- no more booms and busts in the economy, no more "Iranian surprises" in foreign policy. These policies have almost always produced undesirable outcomes. For example, the U.S. banking system became very fragile following a succession of progressively larger bailouts and government interventions, particularly after the 1983 rescue of major banks (ironically, by the same Reagan administration that trumpeted free markets). In the United States, promoting these bad policies has been a bipartisan effort throughout. Republicans have been good at fragilizing large corporations through bailouts, and Democrats have been good at fragilizing the government. At the same time, the financial system as a whole exhibited little volatility; it kept getting weaker while providing policymakers with the illusion of stability, illustrated most notably when Ben Bernanke, who was then a member of the Board of Governors of the U.S. Federal Reserve, declared the era of "the great moderation" in 2004.
  • Washington stabilized the market with bailouts and by allowing certain companies to grow "too big to fail." Because policymakers believed it was better to do something than to do nothing, they felt obligated to heal the economy rather than wait and see if it healed on its own.
  • The foreign policy equivalent is to support the incumbent no matter what. And just as banks took wild risks thanks to Greenspan's implicit insurance policy, client governments such as Hosni Mubarak's in Egypt for years engaged in overt plunder thanks to similarly reliable U.S. support.
  • Those who seek to prevent volatility on the grounds that any and all bumps in the road must be avoided paradoxically increase the probability that a tail risk will cause a major explosion.
  • In the realm of economics, price controls are designed to constrain volatility on the grounds that stable prices are a good thing. But although these controls might work in some rare situations, the long-term effect of any such system is an eventual and extremely costly blowup whose cleanup costs can far exceed the benefits accrued. The risks of a dictatorship, no matter how seemingly stable, are no different, in the long run, from those of an artificially controlled price.
  • Such attempts to institutionally engineer the world come in two types: those that conform to the world as it is and those that attempt to reform the world. The nature of humans, quite reasonably, is to intervene in an effort to alter their world and the outcomes it produces. But government interventions are laden with unintended -- and unforeseen -- consequences, particularly in complex systems, so humans must work with nature by tolerating systems that absorb human imperfections rather than seek to change them.
  • What is needed is a system that can prevent the harm done to citizens by the dishonesty of business elites; the limited competence of forecasters, economists, and statisticians; and the imperfections of regulation, not one that aims to eliminate these flaws. Humans must try to resist the illusion of control: just as foreign policy should be intelligence-proof (it should minimize its reliance on the competence of information-gathering organizations and the predictions of "experts" in what are inherently unpredictable domains), the economy should be regulator-proof, given that some regulations simply make the system itself more fragile. Due to the complexity of markets, intricate regulations simply serve to generate fees for lawyers and profits for sophisticated derivatives traders who can build complicated financial products that skirt those regulations.
  • The life of a turkey before Thanksgiving is illustrative: the turkey is fed for 1,000 days and every day seems to confirm that the farmer cares for it -- until the last day, when confidence is maximal. The "turkey problem" occurs when a naive analysis of stability is derived from the absence of past variations. Likewise, confidence in stability was maximal at the onset of the financial crisis in 2007.
  • The turkey problem for humans is the result of mistaking one environment for another. Humans simultaneously inhabit two systems: the linear and the complex. The linear domain is characterized by its predictability and the low degree of interaction among its components, which allows the use of mathematical methods that make forecasts reliable. In complex systems, there is an absence of visible causal links between the elements, masking a high degree of interdependence and extremely low predictability. Nonlinear elements are also present, such as those commonly known, and generally misunderstood, as "tipping points." Imagine someone who keeps adding sand to a sand pile without any visible consequence, until suddenly the entire pile crumbles. It would be foolish to blame the collapse on the last grain of sand rather than the structure of the pile, but that is what people do consistently, and that is the policy error.
  • Engineering, architecture, astronomy, most of physics, and much of common science are linear domains. The complex domain is the realm of the social world, epidemics, and economics. Crucially, the linear domain delivers mild variations without large shocks, whereas the complex domain delivers massive jumps and gaps. Complex systems are misunderstood, mostly because humans' sophistication, obtained over the history of human knowledge in the linear domain, does not transfer properly to the complex domain. Humans can predict a solar eclipse and the trajectory of a space vessel, but not the stock market or Egyptian political events. All man-made complex systems have commonalities and even universalities. Sadly, deceptive calm (followed by Black Swan surprises) seems to be one of those properties.
  • The system is responsible, not the components. But after the financial crisis of 2007-8, many people thought that predicting the subprime meltdown would have helped. It would not have, since it was a symptom of the crisis, not its underlying cause. Likewise, Obama's blaming "bad intelligence" for his administration's failure to predict the crisis in Egypt is symptomatic of both the misunderstanding of complex systems and the bad policies involved.
  • Obama's mistake illustrates the illusion of local causal chains -- that is, confusing catalysts for causes and assuming that one can know which catalyst will produce which effect. The final episode of the upheaval in Egypt was unpredictable for all observers, especially those involved. As such, blaming the CIA is as foolish as funding it to forecast such events. Governments are wasting billions of dollars on attempting to predict events that are produced by interdependent systems and are therefore not statistically understandable at the individual level.
  • Political and economic "tail events" are unpredictable, and their probabilities are not scientifically measurable. No matter how many dollars are spent on research, predicting revolutions is not the same as counting cards; humans will never be able to turn politics into the tractable randomness of blackjack.
  • Most explanations being offered for the current turmoil in the Middle East follow the "catalysts as causes" confusion. The riots in Tunisia and Egypt were initially attributed to rising commodity prices, not to stifling and unpopular dictatorships. But Bahrain and Libya are countries with high gdps that can afford to import grain and other commodities. Again, the focus is wrong even if the logic is comforting. It is the system and its fragility, not events, that must be studied -- what physicists call "percolation theory," in which the properties of the terrain are studied rather than those of a single element of the terrain.
  • When dealing with a system that is inherently unpredictable, what should be done? Differentiating between two types of countries is useful. In the first, changes in government do not lead to meaningful differences in political outcomes (since political tensions are out in the open). In the second type, changes in government lead to both drastic and deeply unpredictable changes.
  • Humans fear randomness -- a healthy ancestral trait inherited from a different environment. Whereas in the past, which was a more linear world, this trait enhanced fitness and increased chances of survival, it can have the reverse effect in today's complex world, making volatility take the shape of nasty Black Swans hiding behind deceptive periods of "great moderation." This is not to say that any and all volatility should be embraced. Insurance should not be banned, for example.
  • But alongside the "catalysts as causes" confusion sit two mental biases: the illusion of control and the action bias (the illusion that doing something is always better than doing nothing). This leads to the desire to impose man-made solutions
  • Variation is information. When there is no variation, there is no information. This explains the CIA's failure to predict the Egyptian revolution and, a generation before, the Iranian Revolution -- in both cases, the revolutionaries themselves did not have a clear idea of their relative strength with respect to the regime they were hoping to topple. So rather than subsidize and praise as a "force for stability" every tin-pot potentate on the planet, the U.S. government should encourage countries to let information flow upward through the transparency that comes with political agitation. It should not fear fluctuations per se, since allowing them to be in the open, as Italy and Lebanon both show in different ways, creates the stability of small jumps.
  • As Seneca wrote in De clementia, "Repeated punishment, while it crushes the hatred of a few, stirs the hatred of all . . . just as trees that have been trimmed throw out again countless branches." The imposition of peace through repeated punishment lies at the heart of many seemingly intractable conflicts, including the Israeli-Palestinian stalemate. Furthermore, dealing with seemingly reliable high-level officials rather than the people themselves prevents any peace treaty signed from being robust. The Romans were wise enough to know that only a free man under Roman law could be trusted to engage in a contract; by extension, only a free people can be trusted to abide by a treaty. Treaties that are negotiated with the consent of a broad swath of the populations on both sides of a conflict tend to survive. Just as no central bank is powerful enough to dictate stability, no superpower can be powerful enough to guarantee solid peace alone.
  • As Jean-Jacques Rousseau put it, "A little bit of agitation gives motivation to the soul, and what really makes the species prosper is not peace so much as freedom." With freedom comes some unpredictable fluctuation. This is one of life's packages: there is no freedom without noise -- and no stability without volatility.∂
Weiye Loh

Singapore M.D.: You CAN put a price on everything... - 0 views

singaporemd.blogspot.com/...n-put-price-on-everything.html

Crime Cost Benefits Governmentality Data Measurement

shared by Weiye Loh on 28 Jun 11 - No Cached
  • The study aims to calculate the costs incurred as a consequence of crime, which includes "monetary loss in traditional terms" and "monetising the loss of life and trauma suffered by victims".Costs of crime prevention and enforcement will also be tallied. The study seeks to find out costs borne by private entities - such as security expenditure and insurance - as well as costs borne by public bodies such as proactive police patrols in anticipation of crime.The police also intend to calculate the costs incurred in response to crime - investigating cases, apprehending suspects as well as the costs expended by the State in prosecuting, convicting and incarcerating suspects.
  • While costs of crime prevention - such as installing alarm systems - and the State's response to crime could be measured, sociologist Paulin Straughan felt it might be "impossible" to measure the social costs of a spate of violence on a community. Social isolation and mistrust from these crimes would impact social capital on a community which would be difficult to estimate, she argued.However, the former Nominated Member of Parliament felt calculating the cost of crime would serve as "a reality check" for any society.
  • "We live in a world that is driven by economics," Associate Professor Straughan said. "We can't understand or appreciate unless it is documented in dollars and cents. So, this is one way of documenting it (crime) in dollars and cents to show you that every burglary cost you this (amount) … and highlight the importance of crime prevention."
  • Weiye Loh on 28 Jun 11
     
    As with healthcare and other valuable services, police work costs money; but as the cost is not borne by the user, the true cost is hidden and abuse occurs. Does this study by the SPF signal a desire on the part of the government to shift the cost of security from the public to the direct consumers? I certainly hope so. Now there will be people who will tell you that you cannot put a price on security (and health) - the truth is, you can: they just don't want to pay for it.
Weiye Loh

Technology and Inequality - Kenneth Rogoff - Project Syndicate - 0 views

www.project-syndicate.org/...English

Technology Inequality Digital Divide

shared by Weiye Loh on 06 Jul 11 - No Cached
  • it is easy to forget that market forces, if allowed to play out, might eventually exert a stabilizing role. Simply put, the greater the premium for highly skilled workers, the greater the incentive to find ways to economize on employing their talents.
  • one of the main ways to uncover cheating is by using a computer program to detect whether a player’s moves consistently resemble the favored choices of various top computer programs.
  • many other examples of activities that were once thought exclusively the domain of intuitive humans, but that computers have come to dominate. Many teachers and schools now use computer programs to scan essays for plagiarism
  • ...4 more annotations...
  • computer-grading of essays is a surging science, with some studies showing that computer evaluations are fairer, more consistent, and more informative than those of an average teacher, if not necessarily of an outstanding one.
  • the relative prices of grains, metals, and many other basic goods tended to revert to a central mean tendency over sufficiently long periods. We conjectured that even though random discoveries, weather events, and technologies might dramatically shift relative values for certain periods, the resulting price differentials would create incentives for innovators to concentrate more attention on goods whose prices had risen dramatically.
  • people are not goods, but the same principles apply. As skilled labor becomes increasingly expensive relative to unskilled labor, firms and businesses have a greater incentive to find ways to “cheat” by using substitutes for high-price inputs. The shift might take many decades, but it also might come much faster as artificial intelligence fuels the next wave of innovation.
  • Many commentators seem to believe that the growing gap between rich and poor is an inevitable byproduct of increasing globalization and technology. In their view, governments will need to intervene radically in markets to restore social balance. I disagree. Yes, we need genuinely progressive tax systems, respect for workers’ rights, and generous aid policies on the part of rich countries. But the past is not necessarily prologue: given the remarkable flexibility of market forces, it would be foolish, if not dangerous, to infer rising inequality in relative incomes in the coming decades by extrapolating from recent trends.
  • Weiye Loh on 06 Jul 11
     
    Until now, the relentless march of technology and globalization has played out hugely in favor of high-skilled labor, helping to fuel record-high levels of income and wealth inequality around the world. Will the endgame be renewed class warfare, with populist governments coming to power, stretching the limits of income redistribution, and asserting greater state control over economic life?
Weiye Loh

Your Brain on Computers - Attached to Technology and Paying a Price - NYTimes.com - 0 views

www.nytimes.com/...07brain.html

Technology Computer Brain

shared by Weiye Loh on 15 Jun 10 - Cached
  • The message had slipped by him amid an electronic flood: two computer screens alive with e-mail, instant messages, online chats, a Web browser and the computer code he was writing. (View an interactive panorama of Mr. Campbell's workstation.)
  • Even after he unplugs, he craves the stimulation he gets from his electronic gadgets. He forgets things like dinner plans, and he has trouble focusing on his family.
  • “It seems like he can no longer be fully in the moment.”
  • ...4 more annotations...
  • juggling e-mail, phone calls and other incoming information can change how people think and behave. They say our ability to focus is being undermined by bursts of information.
  • These play to a primitive impulse to respond to immediate opportunities and threats. The stimulation provokes excitement — a dopamine squirt — that researchers say can be addictive.
  • While many people say multitasking makes them more productive, research shows otherwise. Heavy multitaskers actually have more trouble focusing and shutting out irrelevant information, scientists say, and they experience more stress.
  • even after the multitasking ends, fractured thinking and lack of focus persist. In other words, this is also your brain off computers.
  • Weiye Loh on 15 Jun 10
     
    YOUR BRAIN ON COMPUTERS Hooked on Gadgets, and Paying a Mental Price
Weiye Loh

Philosophy Talk: The Blog: The Irrationality of Human Decision Making - 0 views

theblog.philosophytalk.org/...-of-human-decision-making.html

Rationality

shared by Weiye Loh on 29 Jul 10 - Cached
  • most people  (and probably most philosophers too)  are pretty irrational in their decision-making.
  • if  the mug is already yours (and you have to set a sell price)  you’ll think it’s worth a lot more than a similar mug that isn’t yet yours  (on which you have to place a “willing to purchase it” price.)  One way to think of this is as an instance of loss aversion.  You’ve got your precious mug in hand and you don’t want to lose it.  It means a lot to you.   And so you set a very high price on it.  That is,  people tend to value things they already have and might lose, much more highly than things they don’t have, but could get.
  • Weiye Loh on 29 Jul 10
     
    JULY 23, 2010 The Irrationality of Human Decision Making
Weiye Loh

Congress told that Internet data caps will discourage piracy - 0 views

arstechnica.com/...caps-can-discourage-piracy.ars

Data Cap Capitalism Pricing Internet

shared by Weiye Loh on 16 Mar 11 - No Cached
  • While usage-based billing and data caps are often talked about in terms of their ability to curb congestion, it's rarely suggested that making Internet access more expensive is a positive move for the content industries. But Castro has a whole host of such suggestions, drawn largely verbatim from his 2009 report (PDF) on the subject.
  • Should the US government actually fund antipiracy research? Sure. Should the US government “enlist” Internet providers to block entire websites? Sure. Should copyright holders suggest to the government which sites should go on the blocklist? Sure. Should ad networks and payment processors be forced to cut ties to such sites, even if those sites are legal in the countries where they operate? Sure.
  • Castro's original 2009 paper goes further, suggesting that deep packet inspection (DPI) be routinely deployed by ISPs in order to scan subscriber traffic for potential copyright infringements. Sound like wiretapping? Yes, though Castro has a solution if courts do crack down on the practice: "the law should be changed." After all, "piracy mitigation with DPI deals with a set of issues virtually identical to the largely noncontroversial question of virus detection and mitigation."
  • ...1 more annotation...
  • If you think that some of these approaches to antipiracy enforcement have problems, Castro knows why; he told Congress yesterday that critics of such ideas "assume that piracy is the bedrock of the Internet economy" and don't want to disrupt it, a statement patently absurd on its face.
  • Weiye Loh on 16 Mar 11
     
    Internet data caps aren't just good at stopping congestion; they can also be useful tools for curtailing piracy. That was one of the points made by Daniel Castro, an analyst at the Information Technology and Innovation Foundation (ITIF) think tank in Washington DC. Castro testified (PDF) yesterday before the House Judiciary Committee about the problem of "parasite" websites, saying that usage-based billing and monthly data caps were both good ways to discourage piracy, and that the government shouldn't do anything to stand in their way. The government should allow "pricing structures and usage caps that discourage online piracy," he wrote, which comes pretty close to suggesting that heavy data use implies piracy and should be limited.
1 - 20 of 70 Next › Last »
Showing 20▼ items per page