The day Google Nexus One came out, my co-workers were looking at the features and thinking to themselves, “When is this going to come to Singapore?”. While it didn’t take long for people to start complaining about the confusion and frustration created by the weird relationship between Google, the handset-maker HTC and the mobile operators.
Good? Or Goo?
Perhaps the somewhat disturbing problem is that Google have started becoming somewhat ‘evil’; The Economistreported on how they were telling everyone they weren’t intent on having their own phone but eventually came up with this awesome one. Google’s model for developing the phone is typical of course, using an open source mobile phone operating system, contracting the hardware development to an experienced handset manufacturer in an emerging economy with loads of hi-tech industries (in other words, Taiwan).
This contrasts starkly with the Apple model of production, which involves enclosed development. Perhaps this war of phones and wider consumer electronics will demonstrate which model of development would prevail in long run. I tend to think Google’s strategy is more robust but Apple should be able to hold out for quite some time still. Being a Mac user, I’ve confidence in Apple’s ability to churn out products that they would eventually manage to market to the mass market and aid consumers to love them. Google might want to spruce up their ability to do just that.
Trapped on our little island of Singapore, we hardly wonder what our handphones are capable of; here in Singapore we typically use it to text, call, surf, as a phone book to retrieve contact details of people, a personal organizer and even a camera. Singaporeans makes extensive use of their phones and our preferences are varied, a reflection of our melting pot of diversity. And as the briefing in the latest issue of The Economist shows, mobile phones are indeed a great reflection of the culture of the people using them.
The article mentioned a couple of interesting quirks about people using mobile phones around the world:
Japanese use their phones to text and surf intensively because using phones to make or receive calls on board trains and some other public places are thought to be extremely rude.
Spaniards reject voicemail because they think it’s rude not to receive calls from others when they call, even when the receiver is busy with matters.
Chinese will interrupt conversations to receive calls because they are afraid to that they’d miss a business deal; at the same time they use knock-offs handphones that often have extensive functions, even capable of using two SIM cards.
Americans are willing to endure limited cellular coverage; perhaps fearing the hassle involved in changing operators.
Italians, Greeks and Finns would switch operators if they find their coverage limited and yet are fearful of the effects of electro-magnetic radiation, which probably is more ubiquitous than in America.
Indians use mobile phones as torchlights.
Africans usually use ‘beeping’ (ie. give the person a ring) to contact people and signal them to call back when they’re low on pre-paid credits.
Indeed, mobile phones are changing everyone’s lives everywhere; one just needs to know the name given to these devices in different societies and cultures to understand their importance. In fact, Iraqis thought more highly of the proliferation of mobile phones as a result of the American invasion than their supposed liberation.
I read Origins of Wealth about 2 years ago and got introduced to the idea of complexity, which was elaborated for markets (specially that of financial markets) by Benoit Mandelbrot in The (Mis)Behaviour of Markets. Below is a discussion about the wider applicability of the concept of evolution I’ve learnt about from the book and some insights I’d like to share with more academic audiences. These ideas relates to the stuff Kevin Kelly was talking about on TED.com I introduced in a reading package. This long piece was penned during the time I read Origins of Wealth:
Reading Eric D Beinhocker introduced me to the concept of Evolutionary Systems, which I hope to talk about. It’s definitely a great book and I am so glad I bought it (despite the price – my price elasticity of demand for books is very very low). The reason I have decided to pen this short piece on Evolutionary Systems is that I see its application in a wide spectrum of reality and I would like to demonstrate how this idea can help weave ‘Man & Nature’ with ‘Science & Technology’, domains that our General Paper is currently delving into.
Evolutionary systems obeys certain characteristics of evolution – a process that can proceed infinitely without an equilibrium (in the traditional sense though you have no problem isolating periods of time and define them as a moment of equilibrium, albeit one that vanishes rather quickly). In Beinhocker’s words, the system is governed by the ‘evolution algorithm‘ that searches for the fit ‘interactors’ in the ‘fitness landscape’. I hope this is not too overwhelming for general interest readers. I’ll deviate briefly from my main focus on ‘Man-Nature & Science-Technology’ Argument (MNST) to explain the terms I have just introduced. ‘Interactors’ are basically agents within the system, like man within nature, technology within society and so on. ‘Evolution Algorithm’ refers to the seemingly systematic formula in which interactors constantly evolve to adapt to changing conditions within the system (whether the changes are results of endogenous or exogenous factors). Finally, the ‘fitness landscape’ refers to how fit the different characteristics the interactors can possibly assume would be given that they really manifest in the system. This is a little complex but just take it that the ‘landscape’ refers to a library of collection of strategies for interactors to survive within the system. How good the strategies are is constantly changing and what evolution does is to pick out the best of all these strategy constantly, occasionally eliminating some lousy ones and so on. This process is essentially what quantifies evolution.
Having established this, I must propose that it is nature that has created this process of evolution, and this mindless but innovating process – it is no different from the laws of physics laid down by the very same nature, as well as the interactors of systems, and even systems itself. I shall not engaged in any quarrels on intelligent design right here and mindlessly assume all my readers to be intelligent followers of the idea of ‘design without designers’. In my MNST argument, I believe that nature lays down the ground rules for things to happen and whatever happens is part of nature, and the natural order. Therefore, Science & Technology is not only part of nature but relies on the laws and forces that nature has laid down in order to work. Man, has essentially leveraged on the evolution algorithm to construct ever increasingly sophisticated stuff.
Okay, now you are saying Man is emulating nature, so isn’t he trying to play God or something? Well, yes and no. Evolution, all these while, have only searched through all the possible lifeforms, object shapes, idealized forms, whatever you can conceive, using a very crude method of trial and error that closely resembles the perturbation that cutting edge physics theorist use to approximate Unified theories. Whatever characteristics that the agents may have that can help him given the existing conditions would be played out and then depending on what characteristics survive the conditions, the evolution process duplicates or eliminates the characteristics according to the fitness assessed. As such, evolution have so far been a slow and extremely painful process of extinction, disasters. The intensification of the use of deduction by man has allowed the evolution to speed up. Logical deduction has allowed quicker elimination of flawed characteristics or strategies for interactors and so they are not even played out in reality. Technologies are products of elimination both by deduction and by the market. The residual stuff that remains are basically what’s left after evolution has stripped it of its unfit cousins. Nature has essentially created man, who in turned, emulated the same innovation (ie. evolution process) that spawned the specie of homo sapiens itself in an attempt to ground its kind in the entire of a new reality – a science-tech reality.
The problem (a sort of disequilibrium occurs) when the changes in fitness landscape triggered by endogenous factors (in this case the emergence and proliferation of products of deductive evolution) has arisen a little too fast for the evolution algorithm of nature itself to catch up. Evolution is on-going because the emergence of a new strategy or at least the manifestation of it can easily alter the fitness landscape and changes the fitness of existing strategies that may have worked well for a long time (and thus harder to fade away).
The appearance of technology – a product of deductive evolution sent out ripples across the fitness landscape that radically altered the fitness of individual characteristics because products of deductive evolution are often able to extract itself from existing manifestations (all the intermediate evolving stages were transversed in the minds of the innovator). This made it hard for the other interactors, with strategies that are rendered useless, to be able to adapt quick enough. Because of that, man has taken a big bold step to dictate the paths of evolution, to alter genes, to tailor species to the new fitness landscape after the rise of technologies that caused the original patterns of existence to undergo an overhaul. I must say, this may have been one of the natural pathways evolution has decided to assume. Mankind have been selected through this mindless innovating algorithm to further its function. Nature overseen the process and will continue to oversee it. Nature cannot cease to be.
Nature, is essentially just a set of laws, forces governing everything. That carbon was chosen to be the main elemental building block of life is perhaps a result of evolutionary process itself. The rest that we classify as nature are mere manifestations of these laws. Man’s being is part of this algorithm, and so is Science & Technology, a subset of man, and thus Nature itself.
The original entry I wrote on my personal blog can be accessed here.
Saul Griffith is an inventor, not many people would have this as their main identification occupation/tag today; but when you read up his profile, he really fits the title of an inventor, basically a scientist who problem-solve through inventions. In one of his talk on TED.com, he talks about programming self-assembling systems, very much like creating life itself.
There’s is already what we call biohacking taking place in homes of people, much like the geeks of the 1970s who were assembling computers in their garage. Already, The Economist points out how this parallels the beginnings of the computer age where the geeks had their kits consisting of basic chips for computers.
Going back to mechanical stuff, objects can be ‘programmed’ to build themselves based on sequencing their materials in a certain way like what is shown in the presentation by Saul Griffith. A 3-dimensional object, in this sense, can be defined by a sequence of bits (in a digital sense). Seeing the universe – reality – as a compiler, changes the way we think about our world; it helps us see how everything contains information and how properties of objects are able to convey additional information about things they are interacting with.
Griffith also co-writes Howtoons, cartoons that teaches people how to build/make stuff.
I was looking for George Arkelof and Robert Shiller’s Animal Spirits in the library but it was on loan so I decided to look for something else in the Call Number 330 (which some library-goers might note is the ‘Economics’ section) area. I stumbled on ‘Free Market Madness‘ by Peter Ubel.
Ubel’s book is a pretty simple and short one, I took only one and a half day of on-and-off reading to finish it, one of my fastest timing for a non-fiction. Admittedly, the text and paragraph spacings are pretty wide and the book is thin for a hard-cover one. It is largely about behavioural economics, a topic which I hardly have a hard time understanding so the speed by which I finished the book didn’t really surprise me. Nevertheless, I hardly consider Ubel’s Free Market Madness to be that good a book.
For a start, I understand that Ubel is trying to make a case for government intervention in the economy for markets where consumers are ill-placed to make wise choices and where market imperfections like the inadequacy of useful information and the apparent misalignment of producer’s interests and consumer’s interests are significant. He focuses on the case of junk food causing obesity though he touched on other cases such as insufficient retirement funding and overspending on branded drugs. Unfortunately, while he makes a good case for the fact that humans are not entirely rational (something we all know at least implicitly), based mainly on the study of other behavioural scientists and economists, he didn’t give very outstanding or original proposals on how to get around this problems. Even then, he fails to make a good connection with how the conflict between the short-term-self and long-term-self can be resolved by the governments; the question of what sort of happiness/well-being (long term or short term) the ‘Big Brother’ he is advocating should maximize it left to speculation by the reader.
The little technical issues in the examples he cited in his book is by and large criticized by David Gordon, senior fellow of the Mises Institute. Austrian School economists probably think that no one can be innocently obese; it takes two hands to clap and producers and consumers must agree on the transaction for it to take place. In other words, people are obese through a process of attempting to maximize utility within their own accounting. On the other hand, Ubel thinks that the faculty accounting on the part of the consumers need to be rectified – in other words, internalities need to be addressed. The problem is we cannot exactly agree on which accounting is correct; after all, if one’s belief in the goodness of a product can provide additional positive experience in consuming it, the faculty accounting can have such a self-fulfilling effect. I believe I have the tendency to agree with the ordinary economists that humans would have a fair degree of foresight and self-control and in an event where they lack such discipline and ability, the market punishes them very much in the way evolution eliminates those who lack the fitness.
His proposals are rather unoriginal, citing stuff like fat taxes once mentioned in The Economist, default options, persuasion campaigns (largely moral suasion) and possibly outright ban. He did discuss implications on liberty and such but doesn’t dwell much on it – often it seems to me like he’s saying ‘I just want everything to be good and right, I don’t care how’.
I do agree with Ubel, that humans in our age needs more self-control and the public’s awareness of the ills of the markets, the ills of different products that are so ubiquitous in our world today needs to be improved. This self-improvement in discipline and improvement of public knowledge can come from bottom-up rather than top-down. After all, given the circumstances today, it is likely that the group with better knowledge of the markets, those making wiser market decisions and the ones who have better self-control is going to thrive. Parents will have to recognize that and respond accordingly (not too much to hope for given the limited rationality of humans I hope) when educating their children and developing them. And I must have to say that in markets like healthcare and pharmaceutical products, doctors like Ubel himself will have to take the responsibility of protecting their patients from the ills of the market/industry. The imperfect information is really too serious in this market and Ubel is right to say that doctors are practically making decisions for patients – doctors’ recommendations are almost equals to patients’ choice (doctors can’t possibly give their diagnosis to patients and get them to choose medicine for themselves). The government can only do so much to protect the doctors from manipulation by the industry and thus defend the interests of the patients. Physicians themselves will have to take the big step to be responsible doctors.
On the whole, Free Market Madness gives us good idea of how behavioural economics came into being and how traditional economic analysis of indifference is difficult to apply in today’s complex world. As a result, rationality of human beings becomes undermined today. Beyond that, it makes a good alert on the problems humans might have with markets that makes us poor economic agents – in long run we will get exploited somehow. We will need to exploit back by becoming producers of certain exploitive products ourselves or try to defend ourselves through self-restraint and aggressive self-education. Otherwise, if the book is hoping to inspire any sort of action, it might need to be much more.
In today’s The Straits Times, occasional columnist Tom Plate writes about ‘an optimist’s wish list for 2010‘. Tom Plate is a relatively regular columnist for The Straits Times and writes for many other newspapers in the Asia-Pacific as well. His articles also often make for interesting reading because he writes in a rather cheerful and casual (yet still professional) style, a style not exactly like Paul Krugman’s whose writings I recently referred to in my last entry for erpz.net but I enjoy his writings as much as Krugman’s.
In this article, he tries to infuse some optimism into his hopes for the coming year. Some of the wishes are really wishful thinking, but still no harm keeping your fingers crossed.
His wishes: 1. World pays more attention to South Korea, less to North Korea
Well, actually this tactic might work. North Korea is sometimes like an attention-seeking kid throwing a temper-tantrum and sometimes you need to ignore the kid for a while so that he calms down. But then again, does your kid have nuclear weapons that he can throw at his ‘friends’?
2. These bad big shots will resign: Britain’s PM Gordon Brown, Burma’s junta leader Than Shwe & North Korea’s leader Kim Jong Il
I agree on the latter two but Gordon Brown… he’s not doing a good job at all in Britain, but he’ll probably be kicked out through the elections this year. Why is Iran’s President Mahmoud Ahmadinejad not on this list? He’s a greater danger to the world than Gordon Brown is.
3. India’s Odd Couple named Time’s Man and Woman of the Year: PM Manmohan Singh & Congress party leader Sonia Gandhi
Like Plate says, US needs to pay more attention to India. It will make not ‘just a good strategic partner’ as US President Obama claims, but a staunch ally and friend not just in the War on Terror but in terms of the global economy and climate change for instance. US needs to soothe the frayed nerves of their Indian counterparts.
4. China’s President Hu opens up, gets down with Western media
This is not that hard to do on a personal perspective, but if you think about the Chinese leadership and how they go about doing things… this is pretty much like expecting Wish Number 2 to magically be granted.
5. Japan finds a successful premier: NOT Yukio Hatoyama
In all honesty, is anything so wrong with current PM Yukio Hatoyama? I think he is hamstrung by his 2 parties allied to his Democratic Party of Japan (DPJ) that are imposing many demands on him and not toeing the official alliance line. And then there’s DPJ Chairman Ichiro Ozawa who pulls strings behind the scenes… which makes the current PM’s life so difficult. Give him a chance to learn the ropes. We are so willing to give President Obama chances to make mistakes as a newly-minted leader without much experience, so why not PM Hatoyama?
He did not tackle climate change in his article as I hoped he might have, but let’s just stick to politics and economy for now. Or he probably feels pessimistic about climate change as well? We dont really know what he doesnt write, but from what he has written in his above list, if any of the wishes came true it’d make global affairs less complex and less troublesome for America at least.
ERPZ have always been rather social science oriented, doing analysis mostly on social/economic/political matters and lots of writing in just plain language (ie. no greek symbols or mathematical operators). Nevertheless, economics is fundamentally somewhat about logic and it attempts to connect the maths and science of our society with reality. Sean Gourley, a physicist is doing the same sort of analysis in his research on the mathematics of war, which he presented on TED.com.
Gourley's Equation
The most interesting idea presented in the talk is that even within the chaos of conflict, there are universal principles and relationships between the myriad of different variables in the field (in this case, fatality and frequency of attacks). More importantly, the use of alpha as a measure of fragmentation of insurgency is an interesting result and hopefully can be exploited as a means to achieve peace more quickly during a conflict.
This research paper that eventually resulted from his collaboration with the various experts of different fields was recently published on Nature magazine. TED Blogs features a Q&A with Gourley about the research. It’s great that scientists and mathematicians are using their tools to learn more about complex reality and uncover patterns previously hidden from us; the applications of these mathematics, however, remains to be discovered. As science is often the neutral party, it is important to note also that the same tools can be used by the opposing parties. Strategic thinking, remains an important means of conducting these affairs.
I’ve previously read Shock Doctrine and written a review on my personal blog; it was a time before ERPZ started and became active. Here’s a reproduction of the original review:
After 2 months of reading I finally finished Naomi Klein’s powerful book, Shock Doctrine. It was a long ride deep into the dark old mines of history on the different ‘economic revolutions’ all around the world: Argentina, Chile, China, Russia, Bolivia and Poland. It was a book that was written with intentions to put down Milton Friedman, clearly anti-corporatist and in some sense, anti-globalization. From this book I understand finally how the term ‘anti-globalization’ have been mis-interpreted by so many people, even myself. I once thought that it means being against the integration of cultures, economies and companies but then I realised it gets way deeper than that.
The idea of anti-globalization is usually used to mean being against the way the phenomena is taking place in our world, that inequality is rising and corporates are like taking over the world while people in poor countries work in sweatshops, suffer in silence and endure the hardship only to realise generations later that nothing changes. It is the discovery of a certain helplessness in the bottom layer of the world. Shock Doctrine is clearly about that, and more.
In a clear but otherwise way too long writing, Naomi presented a very complete picture of how pure ideology-driven economist are used by corporates and government to advance their self-interest. And of course, in a capitalistic perspective, self-interest is just profit and money. She didn’t over turn free market theories on how a perfectly free market is able to dilute power and increase freedom but she did show that the approach that allows for extreme free market is not exactly compatible with democracy and worst of all, economist have been naive about how a free market can be brought to exist. Case after case cited in the book, firms are privatize just be selling it out to the private sector without proper valuation of the assets and this hasty act would not only delay the attainment of a market equilibrium that would be at least more socially optimal but also create new forces that increases the inertia of the market. In other words, it makes the market less free.
In the area of corporate America and politics, Naomi is suggesting that the corporate people have penetrated politics too deeply with CEOs becoming civil servants in top positions of the government and politicians being lobbied by powerful companies with CEOs receiving incomes more than 400 times the average person on the street. And because of that, government becomes ran like corporations, public sector jobs being slashed and direct public spending is reduced while outsourcing (locally, giving contracts to companies) all the functions that can be done by the private sector. Worst, it is infected by a touch of cronyism; and this probably explains why contracts are rarely distributed by bidding and that the contracts concentrate in the hands of the few big firms that are always ‘aiding the government’ with ‘planning’.
It has been a good read anyways and while Naomi Klein has a rather extreme stance, my reading of Joseph Stiglitz (Globlization & its Discontents as well as Making Globalization Work) have helped me appreciate the gravity of the matters she was talking about and I could understand her thinking. As always, the writer do give us a gleamer of hope about what the future may turn out to be when the ‘Shock Wears Off’ and how we can prevent similar stuff from happening again. I would recommend this book for people who have no fear of heavy non-fiction reading, a thorough interest in learning how and why corporate America is seen in bad light.
Paul Krugman’s article, published in The Straits Times, regarding the 2000s, gives quite a bit for thought. Paul Krugman is a famed American economist from Princeton who was awarded the Nobel Memorial Prize in Economics in 2008 for his theories on trade and economic geography. I have always loved to read his articles in The Straits Times because they have always been very insightful and succintly written, and always hit the nail on the head. This article that I introduce here is no different, but it’s slightly different in tone from what he writes.
Usually, he adopts a rather neutral or slightly positive tone in his writings, even if they are regarding the economic crisis today (he studies economic crises, hence his expertise in commenting on them). But in this article he takes a rather pessimistic, negative view towards the decade that just passed us: the Noughties (2000s). He proposes calling it ‘The Big Zero’ because ‘nothing good happened’ and ‘none of the optimistic things we were supposed to believe turned out to be true’.
And then he justifies with some general statistics based on America: almost zero job creation, private-sector employment decline, fall in median household income after adjustment for inflation, zero gains for houseowners, zero gains for stocks. Read the article for moredetails, but we all have seemed to come back to square 1, in 1999, or gotten worse off. So what’s with all that optimism about the economy?
By right things were supposed to go well. There was confidence in the financial system, expressed by Lawrence Summers in 1999. Summers is, by the way, the current administration’s top economist and in 1999 then deputy Treasury secretary. He believed then that America had ‘honest corporate accounting’, but this seemed to just vapourise if we look at this century. Even before the current financial meltdown, much earlier on there was Enron and WorldCom, two large and supposedly reliable firms that were exposed for dishonesty.
And then American politics does not seem to have a solution to the problem. The Democrats try to seek compromise in what they seek and their ideas are vehemently opposed by many as being too socialist, while the Republicans seem to believe that the solution to the problems caused by ‘tax cuts and deregulation’ is more ‘tax cuts and deregulation’.
Certainly not a very inspiring decade. But this restricts itself to America of course. I must say that for most other countries it was probably not this bad. If we take the example of China, to call this decade The Big Zero would be to forget its ascent onto the global arena as a superpower. So… the Americans have it bleak but the Asians are having it better.
Our views towards climate change are often tinted with a veil of emotions – fearful of our children’s safety, the prospects of more disasters and such. As a result, we proceed as cautiously as possible when studying it and would rather we err on the side of exaggerating the effects of climate change than to downplay it. Robert P. Murphy, an economist specialized in climate change economics, gave the whole story a more objective treatment in his article, The Benefits of Procrastination: The Economics of Geo-engineering
The article mentions some interesting geo-engineering schemes that are currently explored, but the main issue of the article is not the technologies involved but the cost-benefit analysis for the choice between waiting for more options to fight climate change and fighting it now through emission reductions. He argues for wait-and-see approach towards climate change and encourage geo-engineers to get on with their innovations and research.
Murphy believes that procrastination might give us a better assessment of the effects and extent of climate change our economic activity is resulting in and thus allow us to respond with more effective initiatives without compromising our economic growth at present and paying too high a cost from preventive measures such as reducing emissions.
Interestingly, discount rates isn’t even the issue. The significant idea Murphy is after is that we could buy time to refine our assessment of climate change and also the means to tackle them. And that it’s worth it. I’m not sure if the potential life loss from the risk is accounted for but his suggestions would sound insane to those who are suffering at the frontline of climate change, like the Inuits in Arctic region.
Even as an economist-to-be, I know that these issues is not always about economics and when we are thinking about global issues and aggregating cost, we almost definitely will leave out the non-monetary cost borne by the fringe groups. Perhaps Murphy could re-do his calculations and analysis after he reviews the cost of the effects of climate change even using more conservative estimates of the effects.
