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Copenhagen, Hopenhagen, Nopenhagen

It saddens me to read in The Straits Times that at the end of the whole Copenhagen COP15 summit, the only statement issued was just a whimper, a short simple declaration that does not commit anything very much promising. The US$30b fund is an improvement that I found encouraging, but otherwise all the wrangling and politicking was disgusting and disappointing.

As an environmentalist, I guess I always had greater expectations about COP15 and what governments should be doing. But even as my expectations were lowered by the day as I tracked the summit through the newspapers, I am still disappointed that there will not be real leadership and guts to tackle climate change. Reading The Economist, in particular, seems to increase that pessimism. Local politics ultimately rules the day, and sadly local politics are heavily influenced by lobby groups like the oil industry, as well as naysayers who do not believe in the concept of climate change.

It does not help matters that recently there were <a href="leaked emails of data collected on climate science being ‘massaged’. It only proves the skeptics and naysayers that climate change is an agenda usurped by those against capitalism and the Western world, against development and industrialisation. It was already difficult to convince people, or to convince even ourselves, that the economy would not be affected by measures to fight climate change. This ‘Climategate’ might only sour perceptions about environmentalists, environmental scientists and those who support the climate change notion as rogues who are trying to stop the world from getting wealthier.

Very hard to feel very optimistic. I visited the Hopenhagen website, and on its index page it asks for input from visitors to its website for what hopes the visitors have for the environment / climate and what is it that keeps them optimistic. I could not think of anything positive to write about, knowing that the legal, political and economic hurdles were so huge. I closed the website window without typing anything.

So tell me, what keeps you optimistic about resolving climate change?

Weekend Reads

We begin this week’s reads with an interview with Paul Samuelson by John Cassidy from The New Yorker. John Cassidy recently published a new book, How Markets Fail, which I’ll read some time soon. It won’t be that soon though – I’m still reading Thinking Strategically and moving on to Art of Strategy after that.

Eric Morris shared something about the cab industry in New York, which eventually concluded with urging for less regulation (ie. raising the supply of cab licenses or “medallions” as they’re called). One of the comments revealed a really humourous story of how the cabbie’s industry in Ireland got deregulated overnight; I shall reproduce it here:

A similar sitution existed in Ireland up to a few years ago. Change was brought about when the government went to issue more wheel chair accessable taxi licenses. The Taxi driver / owners group foolishly sued the government. They claimed that the government didn’t have the right to issue new licenses. They won but the court ruled that the government didn’t have the power to issue any licenses. The taxi ma[r]ket was deregulated overnight.

The current complaint from taxi drivers is that there are too many taxis etc etc. There were clear winners, the consumer and those new taxi drivers who are now free to ply their trade in a vastly increased taxi market.

The fact that GPS navigation on-board cars/cabs are widely available means that the tacit barrier to entry for the cab business have been significantly lowered. Anyone who can drive and have a car with on-board GPS navigation (and perhaps a meter) can technically offer good taxi services. Knowledge of the city and the different landmarks have become less of an advantage or requirement.

As for talks that you might want to listen to, Magnus Larsson speaks about structuring sand in deserts to prevent further desertification. His proposal won the Holcim Awards.

Tech Highlights

Tech Quarterly is here again and here are some highlights.

There’s an interesting study about the contagious effects of loneliness. It sounds kind of paradoxical since the fact that it can be spread at all shows that the victims are already interacting with people and thus not ‘lonely’ technically speaking. In the area of medical research, there’s a glue designed for aiding bones to heal.

As for gadgets and machines, readers might be interested in an article on E-readers and potential future developments that these devices will move towards – especially having coloured displays. The discussion on ways of typing different language text on mobile phones helps you understand more about non-latin languages.

Finally, there’s something on mechanization of agriculture; the article reveals surprising labour shortage in this field of work. I thought the solution might be to move the unemployed people from the urban areas to these agricultural regions but well, they designed all sorts of machine to do the job so that means the unemployed will have to find something more complex to earn a living.

Design & Business

A while back, I was writing about LVMH because they were featured in a briefing on The Economist. One of the strategies that were highlighted in the article was Louis Vuitton’s effort in researching customer flows in malls:

In 2005, when Maurizio Borletti, owner of several prominent department stores in Italy and France, was preparing for the opening of a refurbished La Rinascente department store in Milan, he recalls, the Vuitton people built a scale model of the building in their offices to understand customer flows and get the best positioning. “In this they’re the most professional in the industry,” he says.

I didn’t think too highly of it then but recently I was forced to think about this issue when I wonder why a crowd in the mall refuse to go to the cafe I was at.

The design of Iluma is definitely pretty interesting; with all the glittery looking stuff on the building surface, some kind of balcony on the middle floors and fancy looking glass doors that looks as though they weigh a ton but opens automatically (at least some of them). The outside main entrance area, there are 2 escalators; one leading from and another leading to the second level of the building. The interior of the building is big, and the ground floor is capable of holding lots of people in the middle, perfect for events and normally used for cart-stalls giving it a bazaar feel.

There’s another pair of escalators there, leading to the fourth floor directly. Wait a minute, fourth floor? Yes, it leads you directly to the fourth floor, by-passing the second and the third, which totally explains why it’s hard to get crowds within the building to go to the shops on the second floor. The pair of escalators inside the building that leads to the second floor is absolutely hidden from the crowd standing in the middle of the interior of the building. Some pictures of the interior will help you see why. Even when it takes about 40 seconds or so to reach the end of that long escalator, it’s fun enough to attract people to hit that level where a bunch of other cafes awaits.

The Coffee Bean will largely have to rely on people entering from the escalators at the front main entrance for business (come on, who takes the lifts these days?). On 13 December when 8-Days Magazine was having their 1001 issue exhibition, people who are naturally drawn to the ground floor interior of the building will probably not take that escalator and so the crowd they anticipate at their cafe will probably not manifest. The only people who might patronize them are those who came over to Iluma via the newly built link bridge from Parcos Bugis Junction and unable to find the escalator that will lead them down to the center of activity at the ground floor…

The customer flows in malls are pretty important in this sense, the location of the escalators, the entrance/exits, the link bridges and the placements of your signboard. That will all be before your staff’s attitude. Studying these flows before you rent out a space in a mall is going to make a whole load of difference to the destiny of that shop/unit.

Popping Up?

With the Subprime Financial Crisis, the global economy tumbled, trade flows scaled down rapidly as economies started contracting. Initially, during the boom, trade was growing faster than global income, implying that the global growth, mainly concentrated in the already developed parts of the world economy was gained from increasing specialization and division of labour through trade and exchange. And for a slight contraction in the global economy, a lot of these supply chain will face problems in-between and go bust, resulting in a huge contraction in trade since the businesses relied on each other heavily for business. Daniel Gross discusses the decline of trade, and the implied slowdown/reverse of globalization on Slate.com. The situation is probably not as serious as Gross makes it sound.

The crisis is leading to a re-organization of globalization, towards greater degrees of cooperation and perhaps with less imbalances. With economists finding a better means of carry trade, and more reasons for Asia to get together, the world won’t be drifting apart that soon. In the latter article from Banyan column, The Economist highlights the strengths of a more integrated Asian economy and the challenges facing Asia.

The world seem to have accepted the global multilateral trade isn’t exactly going to be possible with all that decline in trade and rise of calls for protectionism and so regional multilateral trade and economic integration is the second best thing. Forming trade blocs or even common markets would do a great deal to help further globalization and put it on a path with more supranational bodies’ control. The idea is that having authorities in the process of globalization might help make it a better force in this world.

Cafe Ironies

In an entry with the same title on my blog, I detailed my experience at The Coffee Bean recently that didn’t quite start nicely but ended off pretty intellectually. I’m quoting the gist here:

I approached the counter with a maths worksheet in my hand (I was planning to work out some problems there while I sipped on the tea since I had some spare time on my hand and needed to exercise my mind) and made my order. The young man serving me immediately asked if I intended to sit around to study.

I commented that I’ll probably be around for half an hour and asked if it’ll be a problem. He replied that there’s an event downstairs and they anticipate a crowd so they discourage people from studying at the cafe. I kept quiet and took my receipt. I thought that the Large Chai Latte should at least buy me 30 minutes of time at the cafe.

This post is a discussion seeks to answer the question: “If a cafe wants to maximize their profits from a crowd and yet is limited by their available seats, how do they discourage people from studying there besides using attitude (which I assume is something I experienced)?” So before answering that question, we list out the factors that would encourage one to study at the cafe and see if there’s anything we can do to manipulate them:

Things that encourage one to study at a cafe

Good lighting; makes reading comfortable

Extremely hot or cold drink; takes you longer to drink and the taste of the drink don’t change that rapidly over time which means more excuse to stay at the cafe longer

Quality drinks; makes for nice beverage while you study and you probably won’t mind ordering one more and staying longer

Comfortable seats; allows you to study comfortably and sit at the cafe for longer time without feeling discomfort physically.

Technically speaking, removing any of these would help to reduce the time people stay around the cafe and also discourage studying. On the other hand, attitude (on part of the service staff) won’t help to reduce the determination of people studying at the cafe. In fact, it turns off people who genuinely just want to chill at the cafe for a while without discouraging the studying students. When one plans to stay at the cafe for a long time to study and sip on drinks, service at the counter makes up only a small part of the experience, whereas for customers who are interested to get a good drink and sit for a while, the service at the counter makes up half of the experience. In other words, giving people attitude is the worst possible solution compared to removing any of the above.

I strongly recommend the dimming of lighting, which doesn’t harm people out to relax but makes studying tedious and difficult. But this is not always possible since The Coffee Bean that I went to utilizes the in-building lighting that they probably have no control over. It’s not wise to compromise the quality of the drinks since it sends out the wrong messages and is disastrously difficult to control. That leaves us with modifying the seats.

I got this idea when I was at Saizeriya Restaurant at Liang Court; they feature a drinks bar where you pay about $6 bucks or so and get to drink lots of different drinks and it’s free flow – literally a drinks buffet. At first, I wondered why the seats there were so narrow and small; the cushion were thin and not exactly comfortable with prolonged sitting. Later I rationalized it as a means to get people out of the restaurant as soon as they’re done with the food. Of course it’s not going to put off people determined to try all the drinks, but at least they’ll finish with their affair and get out fast.

So here’s some prescription for cafes who hopes to attract people there for a drink and to sit around for a while (after all, if the cafe was empty you might think the drinks suck) but discourage students from spending their entire day studying there, the best move would be to adjust lighting according to your needs to adjust demand. Where this is not possible, modify the seats to make prolonged sitting uncomfortable.

Age of Turbulence

I read the review of Alan Greenspan’s book 2 years back in The Economist, but didn’t buy it until late last year when I went on a book-shopping spree. The book gone on to stay on my book table (yes, I seriously need a bookshelf) for another year or so before I dusted it two weeks ago and began reading it. In any case, I bought an updated version, which features an epilogue detailing Alan Greenspan’s take on the Subprime Financial Crisis and his prescriptions.

I was immediately surprised by Alan Greenspan’s clear writing and simple style so contrary to his famous inscrutable public announcements about the Fed. It is this that earned The Economist’s rare praise:

Sub-heading of the book review: “Not many surprises in this memoir-cum-essay except that it is an unexpectedly enjoyable read.”

Book Review Quote: “[D]espite everything, the book turns out to be first-rate. It engages on different levels: it is intelligent in a way that few popular books on economics manage or even try to be; and, wonder of wonders, it is a good read.”

The book begins as a memoir, detailing Greenspan’s childhood, interest in music, schooling, economic/technical inclinations and his long career in the Federal Reserve Bank where he was Mr Chairman. His memoir ends somewhat abruptly in retrospect at the eleventh chapter, The Nation Challenged. Beginning with the chapter, The Universals of Economic Growth, he went on with his economy essays and analysis of various economies, industries and trends. Like what The Economist says, Age of Turbulence is a good read, his memoir was very neutral and he was very humble about his work at the Fed. His accounts of the workings of the Fed provides non-American readers a good starting point to learn about their system. Greenspan’s essays on the world economy and economics stays faithful to his belief in the power of free markets and respect for the freedoms and rights that the American Founding Fathers have sought and preserved.

He defends his views that no one can possibly identify a bubble and actively sought to burst it before it gets too big and cause a crisis in its subsequent burst. As a matter of fact, this is the case because anyone who can confidently identify the bubble can profit from it by going against the flow and thus end up defusing it before it builds up. At times, when the so-called ‘irrational exuberance’ exerts too powerful a market force then regulators wouldn’t actually be able to defuse it anyways. He seem to sigh at the voter’s expectations that the government is almighty and is disappointed by typical politicians who doesn’t seem to understand the meaning of ‘trade-offs’. These are typical economist’s perennial concerns about the world in democracies that never seem they’ll ever go away.

As a pragmatist, Greenspan shows great appreciation for the rule of law that has maintained the workings of the market and fostered a culture of trust so essential to capitalism. And reflecting on that, Greenspan gives suggestions on how the emerging economies need to improve their governance and legal systems to catch up with their prosperity and march towards developed status. These are valuable insights gained from Greenspan’s 19 years of being the Chairman of the Federal Reserve Bank. Indeed, Greenspan confesses that he knows little about international economics until he took on this role since his work at Townsend-Greenspan & Company (which closed following his nomination to that post) deals little with the economies of other nations.

Overall, Age of Turbulence provides wonderful insights into workings of the capitalist system of America and great ideas about emerging economies, the direction the world economy is heading to – knowledge significant to any economics students and economist-wannabe.

Another sort of Criticism

After penning the entry on Yuan’s appreciation, I come to observe another sort of criticism that is used on China that does contribute to the global imbalance and probably needs more attention than the currency but is an issue the Chinese government have way less control. That is the lack of spending by the Chinese, which is something repeated time and again. The Economist’s Banyan column recently compared India to China:

Levels of capital and infrastructure investment [of India] compare favourably with China’s. And, much more than in China, the hot story in India is domestic demand. India is no mercantilist adding to global imbalances. It imports more than it exports, creating much needed global demand.

Although the article goes on to discuss the flaws of the Indian economy, especially its lack of participation in the supply chains that link up much of the emerging economies of Asia as a result of their focus on exporting services rather than industrial goods. Industrial production in India remains largely in the hands of a huge number of medium-sized enterprises.

Anyways, back to the fact that China is under-consuming; James Surowiecki explains on The New Yorker why the Chinese don’t spend. He briefly ponders over culture, but goes on to focus on the nature of their economy, and the structures that are reducing access to credit and thus raising the need to save, which means perenially low consumption.

In a sense, the culture revolves around the idea of investment for the future, saving first so that one would be able to spend them. The long history of struggles and uncertainty means the Chinese are probably more risk adverse than their Western counterparts and reluctant to take on debts. In a period of growing wealth, the Chinese naturally hopes to put aside money for the future (be it studies, starting a business, a family or just for rainy days).

As the economy develops, it’ll mature and eventually shift towards higher credit and lower savings. The large investment that the government is pumping into the economy will have to induce greater efficiency in use of capital to help speed up the maturity. Till then, Americans will still get the chance to complain about Chinese inability to spend in the consumer sense.

Deflation!

The recent entries seem pretty obsessed with money markets and the more talked-about economies. I’m keeping up with my readings of The Economist and that probably explains. Following the article I previously mentioned about Japan’s looming deflation. They probed further and devoted a recent article in the leader section to the issue.

The Economist followed up with an article highlighting the problems associated with the return of deflation. Japan is encouraged to loosen their monetary policy, worry less about inflation and more about deflation. Interestingly, they even tried to draw parallels between Japan and some other developed economies’ experience today.

Decaying Plastics, Melting Ice

We are dependent on oil not only for energy but something almost as ubiquitous in modern day products. Shaking off other aspects of our dependence on oil is thus as important as diversifying sources of energy. And some Koreans just found out how to make an alternative kind of plastic way faster.

Meanwhile, Brian Palmer wrote a piece on Slate.com about how we might be able to overcome bacteria resistance to anti-biotics, a problem we have faced since the invention of anti-biotics. Fighting evolution is not the ultimate solution, as Palmer argued; he believes we need to adapt the rules of evolution and manipulate the bacteria with other strategies to overcome the problem.

Johann Hari writes on moreIntelligentLife about how Arctic is changing as experienced by the Inuits living there. Many of us may know about climate change and perhaps some of the sciences behind it but our lives goes on pretty much the same except for periodic violent weather we might intuitively attribute to climate change. To climate scientist, arctic is at the front line of this phenomenon and Hari writes convincingly about the reality of climate change in the arctic and how the lives of the Inuits are affected. The writing reflects a deep respect for those who lives in the arctic; something lacking in most other appeals for attention to global climate change. Ultimately though, it reflects how people are all looking at the problem with different lenses and focusing on different consequences. If anything is to be done at all, we’ll have to connect the different groups together.

On other green matters, Nina Shen Rastogi asks on Slate.com, Should You Flush Your Drugs Down the Toilet?