The Null Device

Idea of the day: the Happy Recession; the idea that the internet, through driving prices and costs down, will permanently deflate both prices and wages; the post-internet world, it seems, jams econo:

The most pernicious aspect of Internet entertainment is that it’s so easy to measure and so easy to mass-produce. So the moment something on the Internet gets fun enough to be competitive with the real-world analogue, it starts getting relentlessly improved until it’s vastly superior. World of Warcraft soaks up upwards of forty hours per week from serious fans, who pay about $15 per month for their subscriptions. Few other hobbies can consume so much time at such a low cost.

The web makes it easier to access non-traditional employees at much lower salaries. As we argued in our Demand Media analysis, the real story here is that a stay-at-home mom with a Masters in Journalism can write content that is good enough compared to a typical Madison Avenue copywriter, especially when the rate is $15 per article instead of six figures per year. This disaggregation of writing skill means that companies no longer have to hire good writers in order to write 5% good copy and 95% mediocre work; they can outsource the mediocre stuff and relegate the high-end work to a short-term freelancer.

The web offers cheap social status: In the long term, this may have a bigger effect than the web merely making digitizable products cheaper. Social status games drive a huge amount of economic activity: people strive to get into high-paying, high prestige career tracks, to win promotions and attendant raises, to live in the best neighborhoods and send their kids to the best schools. Few status games lack some kind of economic output—people who play sports well below the professional level still get some job opportunities out of it.

¶ economics internet psychology society status 0 Share

Néojaponisme, the blog of Japanese resident W. David Marx, has a five-part piece on how Japan's economic malaise has changed Japanese pop culture (parts 2, 3, 4, 5), in particular, causing the decline of the mainstream and the rise of the fringe to prominence. The gist of this is that the golden age of Cool Japan is over; as Japanese consumers' spending power declined, mainstream consumers cut back, and cultural markets, such as music, publishing and TV have collapsed, resulting in what some commentators refer to as "the generation who don't consume". with the notable exception of fringe genres catering to marginal subcultures for whom consuming cultural products is not a matter of choice but of identity; these include the otaku (whom Marx sums up as "anti-social “nerds” interested in science fiction, comic books, video games, and sexualized little girls (lolicon)"), the yankii—working-class juvenile delinquents with poor economic and lifestyle prospects—and the gyaru, a female analogue of the yankii, only oriented around romantic fiction and elaborate cosmetics.

The end result is that the otaku and yankii have an almost inelastic demand for their favorite goods. They must consume, no matter the economic or personal financial situation. They may move to cheaper goods, but they will always be buying something. Otherwise they lose their identity. While normal consumers curb consumption in the light of falling wages, the marginal otaku and yankii keep buying. And that means the markets built around these subcultures are relatively stable in size.

Most men around the world are not wracked by such deep status insecurity that they want to live in a world where chesty two-dimensional 12 year-old girls grovel at their feet and call them big brother. The average university student in Paris is likely to read Murakami Haruki and may listen to a Japanese DJ but not wear silky long cocktail dresses or fake eyelashes from a brand created by a 23 year-old former divorcee hostess with two kids. Overseas consumers remain affluent, educated, and open to Japanese culture, but Japan’s pop culture complex — by increasingly catering to marginal groups (or ignoring global tastes, which is another problem altogether) — is less likely to create products relevant for them.

¶ culture economics japan otaku 2 Share

50 years after the Bay of Pigs invasion, the Cuban government is preparing to concede defeat in the struggle for socialism, and unveil radical reforms:

Evidence, as Castro himself said in a recent interview, that "the Cuban model doesn't even work for us any more". Which is why on Saturday the Communist party will inaugurate its first congress in 14 years to cement radical changes to the economy and, intentional or not, to Cuban society.

"The narrative is really Thatcherite," said one senior western diplomat in Havana. "It's all about cutting rights and welfare and putting greater emphasis on personal responsibility and hard work."

¶ communism cuba economics history politics 0 Share

Vanity Fair has a long but interesting article about the Irish financial crisis:

reland’s financial disaster shared some things with Iceland’s. It was created by the sort of men who ignore their wives’ suggestions that maybe they should stop and ask for directions, for instance. But while Icelandic males used foreign money to conquer foreign places—trophy companies in Britain, chunks of Scandinavia—the Irish male used foreign money to conquer Ireland. Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was to buy Ireland. From one another. An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, made a back-of-the-envelope calculation that puts the losses of all Irish banks at roughly 106 billion euros. (Think $10 trillion.) At the rate money currently flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for at least the next three years.

Yet when I arrived, in early November 2010, Irish politics had a frozen-in-time quality to it. In Iceland, the business-friendly conservative party had been quickly tossed out of power, and the women booted the alpha males out of the banks and government. (Iceland’s new prime minister is a lesbian.) In Greece the business-friendly conservative party was also given the heave-ho, and the new government is attempting to create a sense of collective purpose, or at any rate persuade the citizens to quit cheating on their taxes. (The new Greek prime minister is not merely upstanding, but barely Greek.) Ireland was the first European country to watch its entire banking system fail, and yet its business-friendly conservative party, Fianna Fáil (pronounced “Feena Foil”), would remain in office into 2011. There’s been no Tea Party movement, no Glenn Beck, no serious protests of any kind. The most obvious change in the country’s politics has been the role played by foreigners. The Irish government and Irish banks are crawling with American investment bankers and Australian management consultants and faceless Euro-officials, referred to inside the Department of Finance simply as “the Germans.” Walk the streets at night and, through restaurant windows, you see important-looking men in suits, dining alone, studying important-looking papers. In some new and strange way Dublin is now an occupied city: Hanoi, circa 1950. “The problem with Ireland is that you’re not allowed to work with Irish people anymore,” I was told by an Irish property developer, who was finding it difficult to escape the hundreds of millions of euros in debt he owed.

A few months after the spell was broken, the short-term parking-lot attendants at Dublin Airport noticed that their daily take had fallen. The lot appeared full; they couldn’t understand it. Then they noticed the cars never changed. They phoned the Dublin police, who in turn traced the cars to Polish construction workers, who had bought them with money borrowed from Irish banks. The migrant workers had ditched the cars and gone home. Rumor has it that a few months later the Bank of Ireland sent three collectors to Poland to see what they could get back, but they had no luck. The Poles were untraceable: but for their cars in the short-term parking lot, they might never have existed.

(via Infrastructurist) ¶ economics ireland wd2 0 Share

If you're thinking of doing a PhD to advance your career, you may want to reconsider: there is a glut of PhDs in the market and not enough jobs for them, other than postdoctoral work at slave-labour wages:

One thing many PhD students have in common is dissatisfaction. Some describe their work as “slave labour”. Seven-day weeks, ten-hour days, low pay and uncertain prospects are widespread. You know you are a graduate student, goes one quip, when your office is better decorated than your home and you have a favourite flavour of instant noodle. “It isn’t graduate school itself that is discouraging,” says one student, who confesses to rather enjoying the hunt for free pizza. “What’s discouraging is realising the end point has been yanked out of reach.”

Whining PhD students are nothing new, but there seem to be genuine problems with the system that produces research doctorates (the practical “professional doctorates” in fields such as law, business and medicine have a more obvious value). There is an oversupply of PhDs. Although a doctorate is designed as training for a job in academia, the number of PhD positions is unrelated to the number of job openings. Meanwhile, business leaders complain about shortages of high-level skills, suggesting PhDs are not teaching the right things. The fiercest critics compare research doctorates to Ponzi or pyramid schemes.

As far as non-academic careers go, the picture isn't much brighter. Having a PhD no longer gets one a salary premium over having a mere Master's. (In some areas, such as engineering and technology, a PhD actually gets you less than a Master's. Meanwhile, the functions of having a PhD (i.e., advanced knowledge potentially applicable to a field) have been taken over by more specialised, market-oriented courses:

Dr Schwartz, the New York physicist, says the skills learned in the course of a PhD can be readily acquired through much shorter courses. Thirty years ago, he says, Wall Street firms realised that some physicists could work out differential equations and recruited them to become “quants”, analysts and traders. Today several short courses offer the advanced maths useful for finance. “A PhD physicist with one course on differential equations is not competitive,” says Dr Schwartz.

¶ economics education society 3 Share

High demand for cocaine in Europe + high prices due to drug prohibition + global trade downturn resulting in glut of cheap cargo jets + Venezuela not cooperating with the War On Drugs = drug cartels buying jumbo jets, packing them with cocaine, flying them to Europe and then torching them, because it makes economic sense:

Fuel and pilots were paid for through wire transfers, suitcases filled with cash and, in one case, a bag containing €260,000 (£220,000) left at a hotel bar. The gang hired a Russian crew to move a newly acquired plane from Moldova to Romania, and then to Guinea.

The gang had access to a private airfield in Guinea, was considering buying its own airport and had sent a team to explore whether it could send direct flights from Bolivia to West Africa, Valencia Arbelaez said in recorded conversations.

¶ cocaine crime economics unintended consequences war on drugs wd2 0 Share

Economist Robin Hanson presents a sustainability-based argument for derivative music:

Each new song sits somewhere in a range of originality, from very original to very derivative. The more new original songs are developed and marketed, the harder it gets to develop and market new songs that will be seen as relatively original. Song writers then become more tempted to develop and market recycled versions of old songs. As the supply of original songs is slowly exhausted, the music industry slowly changes its focus from original to derivative songs. Since original music cannot last forever, we face a “sustainability” question regarding whether we are using up the supply of original music too quickly, too slowly, or just right.

That is assuming that the space of new musical ideas is finite, of course, and that once it is depleted, there will be nowhere left to go; once every possible verse-chorus-verse song in a blues scale has been written, for example, that humanity will be doomed to listen to songs they've all heard before, rather than, for example, changing the rules of what constitutes (popular) music.

(via David Gerard) ¶ culture economics gedankenexperiment ideas music 8 Share

An Italian company has developed a new, ultra-compact airline seat for making economy class even more economical. Called the Skyrider, it takes only 23 inches, and involves the passenger sitting astride a saddle.

One could imagine penny-pinching airlines like Ryanair tearing out all their existing seats and replacing them with these, knowing that their clientele don't mind an hour or two of discomfort in return for getting to Ibiza or wherever for less than the train fare to the airport, though, as pointed out here, an entire jet full of these won't be possible for regulatory reasons. (Even if the total weight of the passengers sardined into it doesn't exceed the maximum carrying weight, the requirement that the aircraft can be evacuated in 90 seconds puts an upper limit on the number of passengers per exit.) The seats, it seems, aren't so much intended for budget carriers as for mixed carriers, allowing them to put in a tier below economy class, moving their lowest fares to this tier and raising the prices of their old cattle-class seats. Consequently, airlines, pressed by fuel prices and fare wars, will become slightly less unprofitable, and the flying experience will become that little bit shittier.

(via MeFi) ¶ air travel business capitalism design economics 0 Share

Over the past few decades, the market value of recorded music has been declining, as music has gotten easier to make and distribute, to the point where there is a flood of music vying for one's attention, and the challenge is not finding it but sorting the worthwhile stuff from the dross and filler. Of course, this sucks if you're a musician trying to be heard, as you're competing for the limited attention of your audience with millions of others.

The latest outcome of this commodification: a British band calling itself The Reclusive Barclay Brothers has paid 100 people £27 to listen to their song, a jaunty little number titled We Could Be Lonely Together.

¶ art economics music the recording industry 3 Share

In Paris, fare evaders on the Métro have organised into outlaw insurance societies. The mutuelles des fraudeurs take a monthly fee of somewhere around 7 euros, and in turn offer to pay the fraudsters' fines, should they get caught. They also compile databases of fare-evading tips and encourage those who would otherwise be too timid.

Back in 2001 or so, he and a group of fellow travelers, in both the literal and metaphorical senses, formed the Network for the Abolition of Paid Transport, "the beginning of our struggle," Gildas calls it. The group's initials in French mimic those of the agency that runs the Metro and buses, and to the agency's logo, which looks like the outline of a face, abolitionists added a raised fist.

(It occurred to me that, were something like the mutuelles des fraudeurs to arise in the English-speaking world, it'd be couched in the language of free-market libertarianism rather than macaronic pseudo-socialism. Rather than attempting to sell a nebulous collective solidarity, it'd speak out to the individual in the language of self-improvement and competition, imploring them to be a winner and not a loser (like the chumps who pay full fare), and would defend itself as the invisible hand of the free market providing a service and/or striking a blow against socialism.)

¶ crime economics france leftwingers paris public transport stupidity 0 Share

As Greece's economic problems raise fears of a possible collapse of the Euro, or even the end of the ambitious single currency, financial commentators are already publishing advice on how to profit from it:

Two: Buy the US dollar. Sure, it has its own problems. The US budget and trade deficits are huge. Wall Street is under attack from populist, crusading politicians. Its share of the global economy is in long-term decline. But with the euro gone, it would be the only serious reserve currency - at least until China decides to take on that role. Without any competition, the dollar would only strengthen.

Seven: Buy airlines. For a few years, the “new drachma” would make the Iraqi dinar look like a haven of stability. It would plunge, and wealthy northern Europeans would be taking three or four holidays a year on Greek islands. That would be great for the companies that fly tourists there. Add in the weakness of the new Portuguese escudo, Spanish peseta and Italian lira, and the guys at Airbus will be working nightshifts to keep up with the demand for new planes to get everyone to the beaches.

¶ economics euro europe 0 Share

An article in The Guardian (which, incidentally, has a paid online dating site) claims that online dating is now socially acceptable, to the point where people who met on dating sites no longer lie about having met in a pub.

Meanwhile, OKCupid's excellent stats blog claims that paid-for online dating is a losing proposition, and puts forward a theory backed with numbers on why it's so. Behold: the Desperation Feedback Loop:

Of course, it's in OKCupid's interests to tell you this because they're an unpaid dating site who compete with the paid dating sites. The implication is that their model works better.

¶ dating despair economics scams sex 0 Share

The decline of physical media continues, as one of Melbourne's larger and more long-lived independent labels abandons the CD format; from now on, Rubber Records (home to Underground Lovers, among other acts) won't actually sell records but only digital downloads.

“Physical retail distribution is dictated by a business model that no longer works for either the customer, the artist or the label,” Rubber MD David Vodicka said in a statement. “It’s also anti-competitive. We can’t sell-in direct to the biggest national retailer JB Hi Fi, we have to go through a third party distributor with an account. Distributors take a minimum cut of 25 percent, and we have to pass that onto the consumer. There’s no point in engaging in this model as it currently stands. We’ll consider it in the future, but only if it works for us."

(via Greg) ¶ economics media music the recording industry 2 Share

During the Cold War, the Soviet Union established a system of secret science cities, or "naukograds" in Russian. These cities were closed off from the rest of the USSR and identified only by numbered names; in them, elite scientists lived in relative luxury and worked on secret projects, while armed guards prevented anyone without authorisation from getting in or out. One could think of the naukograds as a Soviet-era cross between the Google campus and The Village.

Of course, developing nuclear bombs or putting a live dog into orbit is one thing, and competing in the technological marketplace is another, and Russia hasn't been punching its weight. While America has Apple, Google, Microsoft, Amazon and such and Japan and South Korea supply the world with cameras, LCD screens and memory chips, Russia has a gimmicky LED keyboard and LiveJournal (a US-based, American-built site which is Russian-owned). The post-Soviet economy is worryingly dependent on exports of natural resources such as oil and gas, and, while Russia does produce good scientists and engineers, worryingly many of them end up in the San Francisco Bay Area.

Now, seemingly chagrined by the lack of hype about the latest must-have Russian smartphone in the pages of Engadget, the Russian government has decided to do something about it and build a modern, web-age version of the naukograd, with less secrecy and more bean bags and sushi bars; an attempt to replicate the success of Silicon Valley by fiat, stop the brain drain and boost the Russian technology industry. Of course, there is some dispute over how to actually go about doing this:

In the midst of the oil boom, Russian officials suggested luring back Russian talent by building a gated residential community outside Moscow, designed to look like an American suburb. What is it about life in Palo Alto, they seemed to be asking, that we cannot duplicate in oil-rich Russia?

“In California, the climate is beautiful and they don’t have the ridiculous problems of Russia,” Mr. Shtorkh said. To compete, he said, Russia will form a place apart for scientists. “They should be isolated from our reality,” he added.

HIGH-TECH entrepreneurs who stayed in Russia are more skeptical. Yevgeny Kaspersky, founder of the Kaspersky Lab, an antivirus company, says that he is pulling for the site to succeed but that the government should confine its role to offering tax breaks and infrastructure.

(via /.) ¶ economics politics russia tech 3 Share

Scifi author and blogger Charlie Stross has written a five-part series on how the publishing industry actually works: The structure of the publishing industry, how books are made from manuscripts, a dissection of a book contract (with digressions on the implications of clauses, and why it's in an author's interests to get an agent), the logistics and economics of territories and translations, an exposition of the economic forces responsible for books being the length they are, with speculation on possible future trends, and a piece on who comes up with book titles, blurbs and cover artwork (hint: it's not the author). As with all of Charlie's writing, it's keenly insightful and highly readable.

¶ books charlie stross economics publishing 0 Share

An economist from Santa Fe, New Mexico, is questioning the neoliberal economic assumption that economic inequality is the flipside of efficiency. Professor Samuel Bowles, who became interested in the question of inequality at the time of Martin Luther King, claims that economic inequality causes inefficiency, by locking up productive labour as "guard labour", required to protect the wealth of the haves and keep the have-nots compliant and productive:

In a 2007 paper on the subject, he and co-author Arjun Jayadev, an assistant professor at the University of Massachusetts, make an astonishing claim: Roughly 1 in 4 Americans is employed to keep fellow citizens in line and protect private wealth from would-be Robin Hoods.

The job descriptions of guard labor range from “imposing work discipline”—think of the corporate IT spies who keep desk jockeys from slacking off online—to enforcing laws, like the officers in the Santa Fe Police Department paddy wagon parked outside of Walmart.

The greater the inequalities in a society, the more guard labor it requires, Bowles finds. This holds true among US states, with relatively unequal states like New Mexico employing a greater share of guard labor than relatively egalitarian states like Wisconsin.

(via MeFi) ¶ economics gini coefficient inequality 2 Share

Steven Levitt and Stephen Dubner, the authors of Freakonomics, have a sequel coming out next week; titled, naturally, Superfreakonomics, it looks like the same winning blend of insights, economic detective stories and at times glib reductionism:

Thus in the new book we learn, for example, that more deaths are caused per mile, in America at least, from drunk walking than drunk driving – so when you drive to a party and get plastered, it's not necessarily a wise decision to leave the car and walk home. We discover that female emergency-room doctors are slightly better at keeping their patients alive than male ones, and that Hezbollah suicide bombers, far from being the poorest of the poor, with nothing to lose, tend to be wealthier and better-educated than the average Lebanese person. There's an artful takedown of the fashionable "locavore" movement: transportation, Levitt and Dubner argue, accounts for such a small part of food's carbon footprint that buying all-local can make matters worse, because small farms use energy less efficiently than big ones.

Their mission to explain the world through numbers alone can give Superfreakonomics an oddly detached feel: major social issues are addressed, then instantly reduced to a statistical parlour game. An interesting section on the transactions between pimps and prostitutes, for example, shows that working with a pimp confers great financial advantages: they're much more helpful to prostitutes than estate agents are to house-sellers, for a start. But it neglects to consider the notion that there might, just possibly, be some negative aspects to the pimp-prostitute relationship. (The authors, apparently aware that they have made it look as if selling sex is the business plan to beat all others, add a helpful clarification: "Certainly, prostitution isn't for every woman.")

¶ books contrarianism economics society 0 Share

To figure out the current state and direction of the global economy, economists are turning to somewhat unusual indicators, such as the membership of extramarital infidelity websites and the price of prostitution in Latvia:

The Web site crunched its traffic and membership numbers and found that there was a big increase in both when there was a turning point in the FTSE-100 index, which measures the leading companies listed in London. When the market collapses, people plot affairs. And when the bulls rage, the same thing happens. When it is trading sideways, they stick with their partners.

“It has to do with people’s confidence levels,” says Rosie Freeman-Jones, a spokeswoman for the site. “When the markets are up, they think they can have an affair because they feel they can get away with anything. When the market hits the bottom, they are looking for a way to relieve the pressure.”

Anyway the problem is that most industries have contractual arrangements which fix prices. Wages are very hard to flex downwards. Rents are fixed over sustained periods and the like. All of this means that people go bust rather than reduce prices – simply because prices are sticky.

Well – most prices. The contractual terms of prostitution are short (an hour, a night) and entry to the industry is unconstrained. That means that the prices are very flexible. Extraordinarily flexible.

(via MeFi) ¶ business economics prostitution psychology sex society wd2 1 Share

The Map Scroll blog has a map of the Gini coefficients of all the US states, and another one of Europe.

According to it, Europe ranges from the mid-.20s to the high .30s, with a few outliers in the low 40s. At the most egalitarian end, unsurprisingly, are the Jante states of Denmark and Sweden, as well as Iceland (perhaps surprisingly, if it's meant to have been an experiment in cut-throat neoliberalism). Things get more inequitous into Norway, Finland, France, Germany and Switzerland (which stays under .28, despite being home to a lot of the global super-rich), and then on to Italy, Spain, Britain and Ireland, and beyond that, Poland and Lithuania. The most unequal country in Europe is Turkey, which has a Gini coefficient of 0.436, somewhere between Guyana and Nigeria, or, if you prefer, Delaware and Hawaii.

The United States is, unsurprisingly, a lot less egalitarian in income than Europe. American states' Gini coefficients range from 0.41 (the solidly Mormon state of Utah, whose state emblem is the beehive, has a Gini coefficient equivalent to Russia's) to a whopping 0.537 in the District of Columbia (comparable to the Honduras). Other states are twinned with parts of the developing world; Alabama and Mississippi are most like Nepal, California has the income distribution of Rwanda, and New York, barely under the .5 mark, is twinned with Costa Rica. According to the article, this is an astonishing state of affairs for a developed country:

According the the CIA World Factbook (table compiled here), the lowest Gini score in the world is Sweden's, at .23, followed by Denmark and Slovenia at .24. The next 20 countries are all in either Western Europe or the former Communist bloc of Eastern Europe. The EU as a whole is at .307. Russia has the highest number in Europe (.41); Portugal is the highest in Western Europe (.38). Japan is at .381; Australia is .352; Canada is .321.

And then there is the United States, sandwiched between Cote d'Ivoire and Uruguay at .450. Not counting Hong Kong (.523), the US is a complete loner among developed countries. In fact, as you can see from the map above, there is no overlap between any single US state and any other developed country; no state is within the normal range of income distribution in the rest of the developed world. Here's a list of the states with their Gini index numbers, and the country where income distribution is most comparable in parentheses:

(via MeFi) ¶ depression economics environment europe gini coefficient inequality maps religion society usa 1 Share

The New York Times has published its annual Year In Ideas for 2008; unsurprisingly, perhaps, there is a lot more rethinking of economics and the foundations of capitalism there ("Guaranteed Retirement Account", "Rising Tide Tax System", and a "Stock Transfer Tax", which months ago would have been seen as unwarranted interference in the majestic free market). Other ideas tackle the energy crisis ("biomechanical energy harvester", "gallons per mile", "smart grids"), environmental issues in general ("carbon penance", "the climate-change defense", and "eat kangaroos to fight global warming"), new findings from psychology (such as "scrupulosity disorder", research into why social exclusion feels cold, or the finding that chauvinistic men earn more than egalitarian men), and random inventions (airbags for the elderly, spray-on condoms) and trends (wine from China, zoning prohibitions on fast-food restaurants).

Meanwhile, LogoLounge has posted its annual roundup of trends in logo design. It seems that organic flourishes and wrapping things around spheres are still big, with bright colours making a comeback, while more corporate clients are going for the instant sincerity of hand-sketched logos.

¶ 2008 design economics environment ideas politics tech 0 Share

Good news for British traditionalists today; the EU has abandoned its effort to make Britain go metric. Britain had been given an exemption from the requirement to standardise on metric measurements in 1995, though this was due to expire this year, with miles and pints to be banished from view. Though, with a fierce display of tutting, the Daily Mail-reading little-Englanders gave Johnny Foreigner what for, and he fled with his tail between his legs, leaving Britain to its ancient systems of measurement in perpetuity.

Those aghast at the surrender of modernity to tradition for its own sake, though, need not despair; the law still requires metric measurements to be displayed alongside the traditional ones, and the traditional measurements are defined in terms of the metric ones (a pint, for example, is legally set at 568ml; cursory inspection of a pint glass at any pub will demonstrate this).

Another British tradition, however, was not so lucky; the EU has voted to abolish Britain's right to opt out of the EU's maximum working-hour limits. The Tories, employer groups and the New Labour nomenklatura are, of course, outraged (though the Labour rank and file are, by all accounts, quite pleased), predicting a collapse of productivity and the surrender of the Calvinist work ethic that made Britain great. However, given that the maximum EU working limits prescribe a 48-hour week, averaged over some nine weeks, this doesn't hold water, unless one is running a Dickensian sweatshop.

Finally, the pound's value has recently plummeted, to the point where a pound is rapidly approaching one euro. Which has caused some commentators to suggest that maybe Britain joining the euro is not such a bad idea. Which may be the case; certainly, the traditionalist argument for retaining the pound doesn't hold much water, given that the modern decimal pound is a dollar/euro-style decimal currency which replaced the ancient pound in 1971; the difference between it and, say, the Australian dollar (another currency hewn from pounds, shillings and pence at about the same time) is that Britain decided to name its new currency after the old one. Britain joining the euro would make things easier for those travelling to/from or trading with continental Europe (or, indeed, Ireland). The question which has most bearing on the pros and cons of the euro is whether Britain's monetary policy being fixed to the Eurozone would help or harm the British economy; this is a question I'm not qualified to answer.

¶ anglocapitalism currency economics eu euro europe metric uk work 0 Share

Via Bruce Sterling, some background on the rise of Somali maritime piracy, which is threatening to strangle trade through the Suez Canal (and is reaching out to the route around the Cape of Good Hope):

Some analysts write fearful tracts that the pirates have links with terrorists and extremists, that the chaos is a direct result of international neglect of Somalia, and try to link pirates to the islamist insurgency that control much of the south or the recent terrorist bombings in Somaliland. This is nonsense. The origins of Somali piracy are not found in the southern half of the country, where a “transitional government” is dueling the Union of Islamic Courts with the half-hearted assistance of the Ethiopian military. Somali piracy originates in Puntland, a self-declared autonomous region of Somalia at the horn, hailed for years by policymakers as a model of a stable Somali state.

Piracy has its origins in the organized communities of the Puntland coast. In the 1990s, a group of fisherman in settlements there banded together to prevent illegal fishing and the dumping of toxic waste off their shores. This harmless community action inspired many analysts to designate Puntland a model for Somali civil society. When some ships illegally fishing were boarded in attempts to police the region, the reward offered for the boats return was enormous—amounts that were many times the monthly income of entire villages. Piracy took off as an attempt to gain income from this type of civic policing, and slowly grew to what Kaplan called the “innocence” of piracy. It wasn’t long before the pirates became more ambitious, using the fishing boats they captured to hunt larger prey. And with the money that came in, small fishing towns were transformed into pirate havens. As responsible organizers, pirates have invested some of their profits back into the franchise, replacing barely seaworthy rafts with speedboats, AK-47s with modern arms, and GPS tracking systems to boot.

Analysts were right about Puntland’s organization, but they were wrong that Abdullahi Yusuf Ahmed, president of the transitional government and the former leader of Puntland, could spread the discipline of goverment and organization to elsewhere in Somalia. Instead, it’s become the parent of a business model that could be copied in other lawless regions of the world.

¶ crime economics geopolitics piracy somalia trade 2 Share

The Mind Hacks blog has a summary of a paper looking at the content of another adulterated street drug, in this case, heroin. Not surprisingly, your average wrap of street smack contains a lot of adulterants; the analysis lists random medications and pharmaceutical substances, anaesthetics, dietary supplements and chelating agents for metals, as well as other street drugs including cocaine and amphetamines.

The article also looks at the economics and business practices behind the adulteration of heroin. Obviously, taking advantage of the lack of quality control and getting more money out of less actual expensive heroin is a major consideration for the dealers, but it isn't the only one:

Interestingly, the paper also notes that professional heroin cutters are expensive, charging up to $20,000 for a kilo of heroin. This is likely due to the skill and knowledge needed to select ingredients that will have certain effects, which can be different for 'smokers', 'snorters' and 'injectors'.

Additionally, some ingredients are added purely for their psychoactive effect to give a different experience and 'brand' the dope.

(via Mind Hacks) ¶ crime drugs economics heroin marketing society 0 Share

The most serious casualty of the economic crisis has been Iceland. Only five months ago it was hailed as a success story, with its balance of a strong economy, mass affluence and a Scandinavian work-life balance and, apparently, the happiest people on earth. Now the good times are over; Iceland's economy has been devastated by the credit crunch/subprime crisis/opening phases of World Depression 2, banks have collapsed (some of them taking vast amounts of British savings with them), and the nation teeters on the verge of "national bankruptcy".

Some people are calling for Iceland to swallow its pride and join the EU, adopting the Euro. Also, the Icelandic government is reportedly negotiating with Russia for a huge multi-billion-Euro loan to stave off economic collapse. If this takes place, it will be interesting to see what place an Iceland massively indebted to Russia takes on the world stage. For one, will the US air base at Keflavík airport (which has been there since World War 2, generally lukewarmly tolerated) be given its marching orders? (If the Russians are willing to spend big to move it out, I suspect the US would have more pressing concerns on its mind at the moment.) Also, Russia is one of the nations competing for sovereignty over vast (and possibly mineral-rich) stretches of the Arctic; having allies near the Arctic Circle could prove useful to them.

There have been some unexpected upsides to the crisis, though; Iceland's tourist industry is booming, as the formerly unaffordable krona has plummeted. This has also reduced Iceland's notoriously high alcohol prices, making Reykjavík a destination for stag parties and the sort of chavvish tourism the old cities of Eastern Europe have been complaining about. The Icelanders are, as one might expect, also going out, getting drunk and partying like there's no tomorrow. Or like tomorrow will be a lot less fun.

nyway, next week, the Airwaves Festival in Reykjavík kicks off, and here are some MP3s from artists performing there.

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The credit crunch has produced a new boom industry: spray-painting the dying lawns of empty, reposessed houses green, to increase the chances of selling them.

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The tragedy of the commons occurs when there is insufficient ownership of common assets, which, as a result, become overused. But now, in the age of monetisation, copyright expansionism and corporate legislative power grabs, we are seeing the opposite: the tragedy of the anticommons, where there are too many rightsholders needed to negotiate with and pay off (each doing their duty to their shareholders by being as greedy as they can be), and many endeavours are no longer viable:

The commons leads to overuse and destruction; the anticommons leads to underuse and waste. In the cultural sphere, ever tighter restrictions on copyright and fair use limit artists’ abilities to sample and build on older works of art. In biotechnology, the explosion of patenting over the past twenty-five years—particularly efforts to patent things like gene fragments—may be retarding drug development, by making it hard to create a new drug without licensing myriad previous patents. Even divided land ownership can have unforeseen consequences. Wind power, for instance, could reliably supply up to twenty per cent of America’s energy needs—but only if new transmission lines were built, allowing the efficient movement of power from the places where it’s generated to the places where it’s consumed. Don’t count on that happening anytime soon. Most of the land that the grid would pass through is owned by individuals, and nobody wants power lines running through his back yard.

Recent experimental work by the psychologist Sven Vanneste and the legal scholar Ben Depoorter helps explain why. When something you own is necessary to the success of a venture, even if its contribution is small, you’ll tend to ask for an amount close to the full value of the venture. And since everyone in your position also thinks he deserves a huge sum, the venture quickly becomes unviable. So the next time we start handing out new ownership rights—whether via patents or copyright or privatization schemes—we’d better try to weigh all the good things that won’t happen as a result. Otherwise, we won’t know what we’ve been missing.

(via Boing Boing, /.) ¶ behavioural economics copyfight copyright economics galambosianism intellectual property 0 Share

With the continuing rise in oil prices, some are saying that the age of cheap flights is over, as airlines raise their prices and/or collapse. Think about the implications of that for a moment: historic Eastern European town centres empty of drunken Britons, speculators unable to flog second homes on the Bulgarian Riviera to Ryanair junkies from Gillingham, people actually packing onto trains to go from, say, London to Manchester (and Britain's chronically underfunded railway infrastructure creaking under the weight of the extra patronage). As for bargain shopping in New York, forget it: if you want to see New York, your best bet may be to buy an Xbox 360 and Grand Theft Auto IV. Perhaps the end of the age of cheap travel will finally usher in the Stay-At-Home Century, when tomorrow's people will range as far from their homes as their mediæval peasant ancestors, instead communicating through broadband links.

Meanwhile, General Motors is shutting down four plants that make its Hummer SUV, which for a long time embodied the ugly side of the American Dream. This is after gasoline (that's petrol to the Europeans/Australians reading this) reached $4 a gallon (incidentally, breaking the mechanical pumps at some older gas stations, whose designers never envisioned a gallon of gasoline costing more than $3.99), and dealerships are having trouble moving the hulking behemoths. Perhaps soon we will hear an old joke about Eastern Bloc cars being repurposed?

And still in America, CNN is now running articles about whether the age of the railroads has returned. (Mostly in reference to Europe and Asia as the paragons of modernity.)

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Good news: Britain is arguably entering the new age of the train, with more journeys having been made on the railways last year than in any year since 1946. Not so good news: Britain's railways are still barely adequate; John Major's ideologically-driven privatisation of British Railways has led to a situation where more taxpayers' money is being pumped into the railways than even in the bad old days of that Inefficient Socialist Monopoly, though fewer pounds actually making it through to improving the service (but rather going to the profits of various private enterprises at various levels and/or falling through the cracks of the various inefficiencies of the present arrangement, which in some ways looks to be cobbled together with duct tape and string). Meanwhile, passengers are paying more for their tickets than anywhere in continental Europe, whilst putting up with slower trains and often a lack of seats. Not surprisingly, most of the record-breaking rail journeys were fairly short ones, with people choosing to fly between cities (like, say, London and Manchester), in a way that they just don't do in France or Germany:

The problem is that Britain's railways are a public utility run as a profit-making enterprise, and thus a rather inefficient conduit for channelling taxpayers' funds into the coffers of private industry. It seems that there are two possible ways out of the current mess:

1. Continue regarding the railways as a public utility and undo a lot of privatisation. Either nationalise rail operators or have them provide a service to a non-profit rail company, under carefully controlled terms. All state subsidies (for keeping socially- and economically-useful though unprofitable services running) will go to the non-profit (let's call it British Rail 2.0), or:
2. Run the railways consistently as a profit-making enterprise, and restructure them to run at a profit. That would mean a new round of Beeching-style cuts, with most smaller lines being scrapped, and the service ultimately being cut down to something like American-style commuter rail, consisting largely of profitable shuttles between dormitory areas and economic centres, running mostly at commuting hours. This is the approach The Economist recommended last year.

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When the prices of metals rose, one started to hear of thieves electrocuting themselves on powerlines, train services being disrupted because someone nicked all the signal cables and public artworks disappearing in the middle of the night, undoubtedly destined for the scrap market. Now, in the US, the subprime crisis has caused a wave of foreclosures and evictions, and a glut of empty, mostly new houses, some of which are now worth less than their pipes and wiring. So, not surprisingly, these houses often end up being torn apart by scavengers:

"We're seeing houses sold for $100 that are distressed houses that should not be recycled," he said. Some boarded-up homes in his Slavic Village community have "No copper, only PVC" painted on the boards to stop would-be thieves.

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Faced with the choice of a mobile phone plan to buy, Charlie Stross did the math and determined that the more "expensive" ones are often, in terms of total cost of ownership, cheaper:

The first obvious conclusion I reached is that if you look at the total cost of ownership (TCO) of a phone, including both the phone cost and the monthly tariff cost multiplied by the term of the contract, there's surprisingly little elasticity in the bottom line until you get into the eye-wateringly high usage tariffs. The TCO for a sample phone on 18 month contract varied by only £102 between the Talk 75 and Talk 500 tariffs (75 included minutes and 100 included texts per month, versus 500 minutes and 1000 texts per month). The same pattern held on 12 month contracts, with a £60 spread. Which is, frankly, ridiculous, because you get so few minutes and texts on Talk 75 that the actual cost per minute is nine times higher, and the cost per text is eight time higher than on Talk 500.

What I had discovered looked weirdly like a classic bathtub curve — only plotting price against contract time, rather than the more familiar failure rate against time. It's a familiar curve: airline seat price allocations often follow the same distribution. At one end of the curve, you've got the chancers who want a flashy phone but no commitment to use it. Typically they'll sign up for a short, cheap contract with an expensive phone. Fashion victims, in other words. The cellcos are set up to recognize and fleece them, however. At the other side of the curve you've got the gabby heavy users, and they're going to throw money at you whatever you do, so you might as well take it. In between, you've got a highly price sensitive market, which you want to encourage to use their phones more (and graduate into being heavy users), so you dangle some promising discounts in front of them, weighted towards the heavier tariffs.

(Airline seats for long-haul flights: if someone books a flight six months ahead of departure, it is a Big Deal to them, so they value it, so you can price it high. If they book at two day's notice to go to Aunt Irma's Funeral in New Zealand, it's a coercion purchase, so you can price it high. In-between, there's a trough where people have time to pick and choose which carrier to use ... so seat prices are at their lowest in the period 8-12 weeks before departure. It's the same bathtub-shaped curve.)

Though is the bathtub curve the whole story for air fares? As flying a jumbo jet from one airport to another has a rather large fixed cost, it would make sense for the airlines to make an effort to fill as many seats as they can, whilst taking as much per ticket as the market will bear. I imagine they may have worked out a way of, at the last minute, selling off the remaining empty seats to whoever will pay for them without disincentivising other passengers from, in future, paying as much as they would otherwise be willing to, perhaps by making last-minute discounts inconvenient or cumbersome to obtain.

Anyway, while we're on the subject of mobile phones: here is a piece on how unwanted mobile phones are recycled. (Some are sold to people further down the new-shiny-toy chain; ancient, obsolete bricks often end up in countries where their network technology is still in use; some are refurbished or used for parts in countries with lower labour costs (and lower gadget-buying power), and those at the end of their useful life can end up melted down for their precious metals (of which there is a lot). If they're lucky; if not, they may end up leaching toxins into the water table somewhere in Africa.

It’s hard to track ReCellular’s or Collective Good’s phones. But Jack Qiu, a professor at the Chinese University of Hong Kong who has studied the movement of used computers and phones in China, describes one route phones take. In Kowloon, in Hong Kong, Pakistanis and other immigrants (often asylum seekers) import phones from Europe by the shipping container. These are fixed or cannibalized for parts in stalls at a local market. In the past, Nigerians and other African exporters swept in to buy tens of thousands of phones at a time, particularly so-called “14-day phones” — those that have been returned under warranty and used little. But recently, Qiu says, the markets for these phones have become saturated in African cities. So the Nigerians, needing to take their business to poorer African villages, have been leaving Hong Kong for Chinese cities like Guangzhou, where they can purchase cheaper, more heavily used phones from the larger refurbishing companies there. Many Nigerians have learned Mandarin in order to do business in Guangzhou, Qiu says, and the city now has an African-style coffee shop.

cellphones are not easily abandoned — and, when they are, someone somewhere is still likely to see some value in them. Jim Puckett, the coordinator of the Basel Action Network, a nongovernmental watchdog group that focuses on e-waste, visited Nigeria in 2005. He describes, at one Lagos electronics bazaar, repairmen sitting on dirt floors under shelves of scavenged parts, jury-rigging phones back together, over and over again, until the things are absolutely dead.

(via Boing Boing Gadgets) ¶ charlie stross economics environment mobile phones recycling tech 0 Share