i.want.world

the growing business of turd

In 2008, along with most other commodities, the market for fertiliser had reached its highest price peak ever. It gave a taste to the people in the business how much money that could be had in feeding the world. Then the market eased and the takeovers begun. Strategic acquisitions by the major players meant that they were securing their positions to await the next price peak. So far this year, the biggest acquisition came from the Finnish company Yara which acquired Terra, an American firm, for $4.1 billion.

The explanation for all this is undoubtedly the open maw and changing dietary habits of the world’s fast-expanding population. It is expected to grow by around a third by 2050 to over 9 billion people, who will all need to be fed. Moreover, as people grow more prosperous they eat more meat, which will require even more crops to provide feed for livestock... The gods, it seems, are smiling on the fertiliser-makers.

what we learned from the financial crisis

The economy is shaping up and looking a lot 'better' comparatively to 2008. It has been said to 'be moving toward escape velocity..' But, I asked myself, what have we ultimately learned from this slow down and reality adjustment? The answer is absolutely nada, zilch, null. For one, we are infatuated at talking about events that already happened and quick to render and dish out ex-post analyses about how the inescapable was just looming to happen.

Uninterestingly, the crisis had nothing new about it that could have caught anyone off guard. Its scale was just larger than most. Yet the same fools are pouring over forecasts that were manufactured by the same individuals who are convinced that they can see the future.

To elaborate, Nicolas Taleb adds:

Over the past twenty-five hundred years of recorded ideas, only fools and Platonists (or, worse, the species called central bankers) have believed in engineered utopias. We see that the idea is not to correct mistakes and eliminate randomness from social and economic life through monetary policy, subsidies, and so on. The idea is simply to let human mistakes and miscalculations remain confined, and to prevent their spreading through the system, as Mother Nature does. Reducing volatility and ordinary randomness increases exposure to Black Swans-it creates an artificial quiet.

Complexity in the markets has indeed risen to a point where it's become ever more difficult to explain to most the daily businesses of a bank. It is this increase in complexity which I can gladly welcome due to the nature of complex systems:

In such systems, there is no way to make things a little bit simpler - the whole edifice becomes a huge, interlocking system not readily amenable to change. Tainter doesn't regard the sudden decoherence of these societies as either a tragedy or a mistake-"[U]nder a situation of declining marginal returns collapse may be the most appropriate response", to use his pitiless phrase. Furthermore, even when moderate adjustments could be made, they tend to be resisted, because any simplification discomfits elites. When the value of complexity turns negative, a society plagued by an inability to react remains as complex as ever, right up to the moment where it becomes suddenly and dramatically simpler, which is to say right up to the moment of collapse. Collapse is simply the last remaining method of simplification.

The business model of pirates

A group of investigators, named the Monitoring Group, that was sent by the Security Council to Somalia has released an encyclopedic, 110 page study of the criminal situation in Somalia. The media, however, has fanatically picked up on the diversion of food sent by the World Food Program from the needy to armed radical Islamist and corrupt contractors. Browsing over the report, however, I came across a short, rather interesting hidden explanation in the annex of the business model of the Somali pirates which is just remarkable:

A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this 'contribution', he receives a 'class A' share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share. At least 12 other volunteers are recruited as militiamen to provide protection on land if a ship is hijacked, In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a 'class B' share - usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought to anchor, the pirates and the militiamen require food, drink, qaad, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

When ransom is received, fixed costs are the first to be paid out. These are typically:
* Reimbursement of supplier(s)
* Financier(s) and/or investor(s): 30% of the ransom
* Local elders: 5 to 10 %of the ransom (anchoring rights)
* Class B shares (approx. $15,000 each): militiamen, interpreters etc.

The remaining sum - the profit - is divided between class-A shareholders.

Driven by an impressive success rate, the high profitability and relative low risks of piracy of the Somali coast has wielded a business model designed for the ages.

Do they teach that at Wharton?

Sin Tax

The results of this experiment might have been well explained through the Hawthorne Effect concept. However, it is undoubltely remarkable and a must to note that in all possible soloutions this might be much more cost effective than just the plain old assumption of "through education the consumer can wise up."

Epstein and colleagues simulated a grocery store, "stocked" with images of everything from bananas and whole wheat bread to Dr. Pepper and nachos. A group of volunteers -- all mothers -- were given laboratory "money" to shop for a week's groceries for the family. Each food item was priced the same as groceries at a real grocery nearby, and each food came with basic nutritional information. The mother-volunteers went shopping several times in the simulated grocery. First they shopped with the regular prices, but afterward the researchers imposed either taxes or subsidies on the foods. That is, they either raised the prices of unhealthy foods by 12.5%, and then by 25%; or they discounted the price of healthy foods comparably. Then they watched what the mothers purchased.

To define healthy and unhealthy foods, the scientists used a calorie-for-nutrition value, or CFN, which is the number of calories one must eat to get the same nutritional payoff. For example, nonfat cottage cheese has a very low CFN, because it is high on nutrition but not on calories; chocolate chip cookies have a much higher CFN. The researchers also measured the energy density- essentially calories- in
every food.

The results, just published in Psychological Science, a journal of the Association for Psychological Science, show that taxes were more effective in reducing calories purchased over subsides. Specifically, taxing unhealthy foods reduced overall calories purchased, while cutting the proportion of fat and carbohydrates and upping the proportion of protein in a typical week's groceries.

By contrast, subsidizing the prices of healthy food actually increased overall calories purchased without changing the nutritional value at all. It appears that mothers took the money they saved on subsidized fruits and vegetables and treated the family to less healthy alternatives, such as chips and soda pop. Taxes had basically the opposite effect, shifting spending from less healthy to healthier choices.

be unimaginably curious

(via nickibinds)

Es geht um mehr als nur um Google

Die speziell in Deutschland geführte Attacke der Verlagshäuser auf Google ist mehr als nur das übliche Beißverhalten konkurrierender Konzerne. Es ist auch eine Schlacht um Meinungsmacht und Meinungsfreiheit, um das Oligopol der Verleger und meinungsführenden Redaktionen, das durch das Internet in seinen Grundfesten erschüttert ist.

Das kommerzielle Radio war das letzte Medium in Deutschland, das die Verleger, mit tatkräftiger Hilfe der Politik, weitgehend unter ihre Kontrolle bringen konnten. Deshalb ist es auch so schlecht. Es ist, bar jeden publizistischen Anspruchs, als Gelddruckmaschine für satte, träge und an zweistellige Umsatzrenditen gewöhnte Verlagshäuser ausgelegt.

Das kommerzielle Fernsehen war das erste Medium, das den Verlegern aus den Fingern glitt. Das als Verlegerfernsehen gestartete Sat1 ging erst an den Filmhändler Leo Kirch und fiel später Finanzinvestoren in die Hände. Bertelsmann konnte nur in einem herkulischen Kraftakt die RTL-Gruppe unter seine Kontrolle bringen. Fast hätte die Familie Mohn deshalb an die Börse gehen müssen.

Das Internet nahmen die Verleger in den neunziger Jahren vor allem als weitere Abspielstation für ihre ohnehin vorhandenen Inhalte wahr. Das Ziel war, das Internet wie zuvor das Radio unter verlegerische Kontrolle zu bringen. Früh schon wies die IVW, die Informationsgemeinschaft zur Feststellung der Verbreitung von Werbeträgern, auch die Reichweiten der verlegerischen Onlinemedien aus.

Doch den damit verbundenen Anspruch, den gesamten Markt abzubilden und zu definieren, konnten sie nie vollends einlösen, denn die wirklich großen Spieler wie T-Online, früher AOL und später Google spielten das IVW-Spiel nicht mit. Die AGOF, die Arbeitsgemeinschaft Online-Forschung, krankt bis heute an den damals eingeführten, untauglichen Messgrößen wie Pageimpressions (total absurd) und Visits (nicht viel besser). Für Onlinereichweiten relevanter sind Unique Visitors und vor allem die Nutzungszeit.

Den unsäglichen Bildstreckenklickschindejournalismus im Netz haben sich die Verlage selbst eingebrockt, indem sie untaugliche Messinstrumente in den Markt gedrückt und damit den Zwang zur Pageimpressioninflation geschaffen haben. Und wie das bei Inflationen so ist: Das Überangebot an Inventar hat die Preise ins Bodenlose fallen lassen - und damit die Möglichkeiten, Onlinejournalismus aus Onlinewerbung zu finanzieren, nicht eben vergrößert.

Schwerer noch wiegt indes die Tatsache, dass das Netz kein Oligopol ist, dass es kein Verlagsmonopol auf Onlinejournalismus gibt, sondern dass im Netz, anders als in den meisten angestammten Printmärkten, echter Wettbewerb herrscht. Zweistellige Umsatzrenditen sind in diesem Umfeld nur schwer zu erzielen.

Und der Wettbewerb erstreckt sich auch auf den Markt der Meinungen. Die Redaktionen haben ihre Gatekeeperfunktion verloren. Sie bestimmen nicht mehr alleine, wer und wessen Meinung Zugang zur Öffentlichkeit erhält. Das Internet hat den Zugang zur Öffentlichkeit prinzipiell für jedermann geöffnet. Die meinungsführenden Redaktionen führen nicht mehr alleine.

Google steht in dieser Schlacht paradigmatisch für zwei Dinge: für unerwartete und unerwünschte Konkurrenz auf dem Werbemarkt und für die Öffnung des Meinungsmarktes. Google hat geschafft, was keinem Verlag gelungen ist: einen Milliardenumsatz im deutschen Werbemarkt zu erwirtschaften. Google steht für ein offenes Internet und einen freien Markt der Meinungen, wird dafür in China attackiert, in Italien verurteilt und in Deutschland dämonisiert.

Es geht in dieser Schlacht nicht um Google, sondern um das offene Internet, das Recht auf freie Meinungsäußerung und den Zugang für Jedermann. Es ist die letzte Schlacht der Verleger, und sie versuchen alles, um die Politik auf ihre Seite zu ziehen, wie seinerzeit beim Radio erfolgreich durchexerziert. Vielleicht ist es Zeit, sich an John Perry Barlow zu erinnern, der 1996 den digitalen Raum für unabhängig erklärte.

A Declaration of the Independence of Cyberspace

by John Perry Barlow

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.

We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear.

Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think that you can build it, as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions.

You have not engaged in our great and gathering conversation, nor did you create the wealth of our marketplaces. You do not know our culture, our ethics, or the unwritten codes that already provide our society more order than could be obtained by any of your impositions.

You claim there are problems among us that you need to solve. You use this claim as an excuse to invade our precincts. Many of these problems don't exist. Where there are real conflicts, where there are wrongs, we will identify them and address them by our means. We are forming our own Social Contract . This governance will arise according to the conditions of our world, not yours. Our world is different.

Cyberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live.

We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.

We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.

Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.

Our identities have no bodies, so, unlike you, we cannot obtain order by physical coercion. We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge . Our identities may be distributed across many of your jurisdictions. The only law that all our constituent cultures would generally recognize is the Golden Rule. We hope we will be able to build our particular solutions on that basis. But we cannot accept the solutions you are attempting to impose.

In the United States, you have today created a law, the Telecommunications Reform Act, which repudiates your own Constitution and insults the dreams of Jefferson, Washington, Mill, Madison, DeToqueville, and Brandeis. These dreams must now be born anew in us.

You are terrified of your own children, since they are natives in a world where you will always be immigrants. Because you fear them, you entrust your bureaucracies with the parental responsibilities you are too cowardly to confront yourselves. In our world, all the sentiments and expressions of humanity, from the debasing to the angelic, are parts of a seamless whole, the global conversation of bits. We cannot separate the air that chokes from the air upon which wings beat.

In China, Germany, France, Russia, Singapore, Italy and the United States, you are trying to ward off the virus of liberty by erecting guard posts at the frontiers of Cyberspace. These may keep out the contagion for a small time, but they will not work in a world that will soon be blanketed in bit-bearing media.

Your increasingly obsolete information industries would perpetuate themselves by proposing laws, in America and elsewhere, that claim to own speech itself throughout the world. These laws would declare ideas to be another industrial product, no more noble than pig iron. In our world, whatever the human mind may create can be reproduced and distributed infinitely at no cost. The global conveyance of thought no longer requires your factories to accomplish.

These increasingly hostile and colonial measures place us in the same position as those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers. We must declare our virtual selves immune to your sovereignty, even as we continue to consent to your rule over our bodies. We will spread ourselves across the Planet so that no one can arrest our thoughts.

We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.

Davos, Switzerland

February 8, 1996

the impending collapse of the united states

Niall Ferguson writes:

One day, a seemingly random piece of bad news -- perhaps a negative report by a rating agency -- will make the headlines during an otherwise quiet news cycle. Suddenly, it will be not just a few policy wonks who worry about the sustainability of U.S. fiscal policy but the public at large, not to mention investors abroad. It is this shift that is crucial: A complex adaptive system is in big trouble when its component parts lose faith in its viability.

Over the last three years, the complex system of the global economy flipped from boom to bust -- all because a bunch of Americans started to default on their subprime mortgages, thereby blowing huge holes in the business models of thousands of highly leveraged financial institutions. The next phase of the current crisis may begin when the public begins to reassess the credibility of the radical monetary and fiscal steps that were taken in response.

Neither interest rates at zero nor fiscal stimulus can achieve a sustainable recovery if people in the United States and abroad collectively decide, overnight, that such measures will ultimately lead to much higher inflation rates or outright default. Bond yields can shoot up if expectations change about future government solvency, intensifying an already bad fiscal crisis by driving up the cost of interest payments on new debt. Just ask Greece.

Ask Russia too. Fighting a losing battle in the mountains of the Hindu Kush has long been a harbinger of imperial fall. What happened 20 years ago is a reminder that empires do not in fact appear, rise, reign, decline and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.

Washington, you have been warned.

elasticity of deaths due to natural disasters vs. income

Going back to hammer in the topic of economic freedom, Matt Kahn has a paper on the topic of the elasticity of deaths due to natural disasters vs. income which states this in the Abstract:

Though richer nations do not experience fewer natural disasters than poorer nations, richer nations do suffer less death from disaster. Economic development provides implicit insurance against nature's shocks. Democracies and nations with higher-quality institutions suffer less death from natural disaster. Because climate change is expected to increase the frequency of natural disasters such as floods, these results have implications for the incidence of global warming.

 

The paper concludes:

Death counts differ sharply by continent. African nations experience fewer natural disasters and all else equal, suffer less death from natural disasters. Unlike other Institutions play a role in shielding the population from natural disaster death. Future research should pinpoint the mechanisms.

This paper has shown using several empirical models, that controlling for national income, less democratic nations and nations with more income inequality suffer more death. Controlling for a nation's population size and geography, I showed using OLS and instrumental variable estimates that a host of institutional quality proxies lower national death counts from disasters.

One important hypothesis that merits future research is the role of government corruption in exacerbating death counts from natural disaster. Existing corruption indices are highly negatively correlated with national per-capita income. It is quite plausible that government corruption raises death counts through the lack of enforcement of building codes, infrastructure quality, and zoning enforcement.

Austria's Economic Freedom

No major surprise: government spending and high taxes has Austria ranked 22nd in this year's Index of Economic Freedom - right above Germany. In part due to recent unprecedented large stimulus plans, the world experienced for the second time in the history of the Index's publishing an overall decreased of economic freedom.

Terry Miller's presentation of the Index at the Hayek Institute pointed out that despite large government spending to promote growth, early evidence has shown that increase in spending has undoubtedly the negative effect -

yet another attestation of delusionary Keynesian economics propaganda.

Click here to download:

Index2010_ExecutiveHighlights.pdf (926 KB)

entertain physics, don't ponder upon it

The sciences of astronomy and physics, specifically quantum physics, has always fascinated me. I've tried often to keep abreast of the sciences with any free time that I may gather. Consequent of the many hours spent on the MIT Open Course Ware site, my understanding has certainly come a long way further from my physics class in 10th grade. Recently, I came across a paper written by a physicist named Jia Liu entitled Dark Matter as a Possible New Energy Source for Future Rocket Technology and later this article. An excerpt:

Crane first started thinking about artificial black holes 12 years ago when physicist Lee Smolin, now at Canada's Perimeter Institute for Theoretical Physics in Waterloo, Ontario, asked Crane to read the manuscript of his book The Life of the Cosmos.

Nobody knows what happens at the singularity of a black hole, the point where space and time become so warped that the laws of relativity break down. In his book, Smolin suggested that a new universe could be created and bud off. So universes in which black holes are likely to arise will give birth to more and more such universes.

This means that our universe could be a baby universe, and is more likely to have come from one that is good at making black holes than one that isn't. Crane then wondered what would happen if intelligent civilizations could make black holes. This would mean that life in these universes played a key role in the proliferation of baby universes. Smolin felt the idea was too outlandish and left it out of his book. But Crane has been thinking about it on and off for the last decade.

He believes we are seeing Darwinian selection operating on the largest possible scale: only universes that contain life can make black holes and then go on to give birth to other universes, while the lifeless universes are an evolutionary dead end. His latest calculations made him realize how uncanny it was that there could be a black hole at just the right size for powering a starship.

"Why is there such a sweet spot?" he asks. The only reason for an intelligent civilization to make a black hole, he sees, is so it can travel the universe. "If this hypothesis is right," he says, "we live in a universe that is optimized for building starships!"

Yes I know. Just don't think about it too much.