Friday, December 31, 2010

I trust these predictions are hopelessly off beam…

Valuable predictions are, by definition, the ones you think most unlikely to turn out to be true. On those grounds – and they may be the only grounds for taking any predictions seriously (think about it)… here, from ZDNet are some useful thoughts about 2011 and the tech space…..

“It’s very difficult to predict what an entire demographic of broad level users will do in the upcoming year. It’s like predicting whether or not you’ll get hit by an engine falling from a plane while dressed as Hugh Jackman in drag.

1. Generation Y will continue not to be put off by copyright laws

Copyright laws are weak. Even the newer digital laws are prohibitive and disproportionate. They are busting at the seams with irrelevant content which bears little know how of modern technologies, and are practically unenforceable. No wonder people have been taking advantage since the days of WinMX and the original Napster back in the 1990’s.

Cases which have enveloped the media with disproportionate fines and court battles turns the defendants, arguably the victim in these cases, almost into a martyr for the cause. Surprisingly public sympathy becomes divided, with a feel of modern day ’stealing a loaf of bread’ because they were hungry. I know it sounds odd, but copyright laws at the moment are as effective as the odds to winning the Euro lottery.

2. Rising inflation will impact Generation Y spending

As inflation rises so do the price of consumer goods. For many who are working on national minimum wage at £5-$12 an hour depending on age and country, this is not enough to maintain a technology filled lifestyle.

The technology already bought, ranging from mobile devices to laptops, either by parents or themselves during a time of economic downfall, will be safe. Yet with wages remaining the same, plus the hike in Value Added Tax (VAT) in the UK and similar taxes across the developed world, spending will significantly reduce.

I expect that those with higher incomes with little or no dependencies will have more expendable income. This may include some of the Generation Y, but not the iGeneration demographic as a whole.

3. High speed fibre/WiMAX broadband will be sought by colleges and universities

Even with rising tuition fees and universities and colleges still recovering from their own budget cuts since the recession, the recovery is on. One of the logical options for many will be a increase in bandwidth to their campuses to encourage growth, external research and development, and opportunities for entrepreneurs.

Bandwidth nowadays acts like a currency; the bigger the pipe, the bigger the wallet, and the more you can fit in and the more to spend. New York University could be getting the first taste the fibre pie with Google’s new office conveniently located above a hub of fibre activity.

4. Younger developers may be put off by increasing corporate bureaucracy

Back in the day, there was a good mix of development for enthusiasm but also development for revenue. With a more broad spectrum of devices and platforms to develop for, combined with the bureaucracy of terms and conditions, especially from Apple, this could hamper the efforts for younger developers who create for passion as well as money.

5. Computing students will become more ‘creative’ and less ‘technical’

There always has been a disparity between the creative and the practical industries; like political parties, one occasionally holds the top spot until the other leads the polls.

From what I have seen and heard on my student y-travels, the creative industry for university students has been on a downwards trend, as the recession recovers from ‘non-vital’ infrastructure and technical staffers. The creative industry bridges the technical world with the ordinary consumer, and at long last now that money has hit the economy like a wet fish, more money can be invested into areas which spur on the ordinary consumer.

Wednesday, December 29, 2010

New kid on the Block

I am privileged to have been invited to join Brent on eye2thelongrun. As a graduate, one thing I have most definitely learnt is about the problem New Zealand has because Kiwi’s do not seem to have their eye on the long run. Spending today is much more attractive than spending tomorrow right? Well yes, it seems that way.  It is comforting to read on

Kiwis vow to save more

‘The latest Fly Buys poll, carried out by Colmar Brunton, found the most popular New Year's resolution was increasing savings with 58 percent of New Zealanders choosing to focus on that in 2011.’


Can we increase savings enough to decrease our reliability on foreign debt?


Thursday, December 23, 2010

Difficulties with logic, consistency and history in Australia too…..

We Have to Sell the Farm

By Andrew Leigh

23 December 2010 (Australian Financial Review… HT NZBR)

An iron law of populism is that while Australian businesspeople investing abroad are portrayed as job-creating entrepreneurs, foreign investors are depicted as rapacious robber-barons.

And so it is with the latest tabloid campaign against foreign investment. Under headlines such as 'Chinese buying up our farms', 'It's time to stop selling off the farm', and 'It’s time to save our farms from foreign investors', News Ltd tabloids have recently embarked upon a fear campaign against foreign investment in Australian agriculture. With anecdotes taking the place of statistics, foreign investment has been labelled 'a dramatic global land grab', fed by 'a looming global food shortage'.

For a country whose agricultural sector has benefited substantially from foreign investment, this is odd stuff indeed. In 1855, British investors helped kick start our local sugar production industry when they established CSR (originally Colonial Sugar Refinery). In 1877, American firm Schweppes opened its first Australian factory - as did Kraft and Kellogg in the 1920s. Japanese investment in Australia's beef cattle sector has been important since the 1970s. Today, the largest foreign investors in Australia are still Britain and the United States.


Wednesday, December 15, 2010

Twin Peaks–of Folly

There has been a some unfortunate hand wringing recently in our local paper regarding “peak oil”. The new Mayor ought to read this letter from economics Prof Don Boudreaux of George Mason University in response to some New York Times hand wringing on behalf of China……..

Here’s a letter to the New York Times (HT Chris Meisenzahl):

You report that China risks encountering “peak coal,” thus making that country’s continued economic growth “unsustainable”  (“Does China Face a ‘Peak Coal’ Threat?” Dec. 14).

Your report reminds me of William Stanley Jevons‘s book The Coal Question.  In the Preface to the second edition, Jevons warned his fellow Brits that “The question here treated regards the length of time that we may go on rising, and the height of prosperity and wealth to which we may attain.  Few will doubt, I think, after examining the subject, that we cannot long rise as we are now doing.”

Jevons’s dire warning was written in 1866.  It was the product of an accomplished scholar steeped in the science of his day.  Nevertheless, was Jevons correct to predict that Great Britain’s economy would soon stop growing because coal supplies were destined to shrink to dangerously low levels – low levels that drove the price of industrial power to heights that stymied economic growth?  No.  (British economic growth did slow for quite some time during the 20th century, but that was due to a surplus of socialism rather than to a shortage of coal.)

As your report today demonstrates, predictions of resource depletion and a resulting serious slowing of economic growth are in abundant supply.  But there’s a severe shortage of evidence to support these fears.

Donald J. Boudreaux


Another pair of eyes to the long run

I am pleased to announce that Econ and Commerce grad Stefan Fairbrother, new analyst with Brent Wheeler Group is joining me in blogging.

Stefan has broad interests in economics and finance and has scored heavily in the fixed interest area lately


Thursday, December 9, 2010

Have politicians noticed? The climate change scare is dying

By Christopher Booker – Daily Telegraph 7:26PM GMT 13 Nov 2010 (Pointer NZBR)

Nothing more poignantly reflects the collapse of the great global warming scare than the decision of the Chicago Carbon Exchange, the largest in the world, to stop trading in "carbon" – buying and selling the right of businesses to continue emitting CO2.

A few years back, when the climate scare was still at its height, and it seemed the world might agree the Copenhagen Treaty and the US Congress might pass a "cap and trade" bill, it was claimed that the Chicago Exchange would be at the centre of a global market worth $10 trillion a year, and that "carbon" would be among the most valuable commodities on earth, worth more per ton than most metals. Today, after the collapse of Copenhagen and the cap and trade bill, the carbon price, at five cents a ton, is as low as it can get without being worthless.

Here in Britain, as the first snows fall, heralding what may be our fourth cold winter in a row, it is time we addressed one of the most glaring political "disconnects" in our sadly misgoverned country.

Next Friday is the first anniversary of the leaking of the "Climategate" emails – the correspondence of a small group of scientists at the heart of the UN's Intergovernmental Panel on Climate Change (IPPC). By exposing their manipulation of data and suppression of dissent, these called their reputation as disinterested scientists seriously into question. But that was only the first in a series of events that, in the past year, saw the climate scare going off the rails.

Next month sees the anniversary of the Copenhagen conference – the largest ever held, with upwards of 100,000 people present – which collapsed in an acrimonious shambles, without the treaty that would have landed the world with the biggest bill in history. This was followed by all those scandals surrounding the IPCC itself, hitherto regarded as the supreme authority on global warming. It emerged that the most recent IPCC report was riddled with errors, and that many of its more alarming predictions were based, not on proper science, but on claims dreamed up by environmental activists.

Since then, despite a series of unconvincing attempts to clear the Climategate scientists, it has become clear that the 20-year-old climate scare is dying on its feet. The money draining away from the Chicago exchange speaks louder than all those inquiries – and the same point will be made obvious in a fortnight's time in Cancun, Mexico, as the UN attempts to salvage something from the wreckage at a conference that will draw scarcely a tenth of the numbers that met in Copenhagen.

But to all this deflation of the bubble our political class in Britain remains quite impervious. Our governments in London and Brussels charge on with completely unreal and damaging policies which increasingly look as much of a shambles as the warming scare which inspired them. Scarcely a single politician dares question the Climate Change Act, by far the most expensive law in history, which commits Britain, uniquely in the world, to reducing its CO2 emissions by 80 per cent in 40 years. By the Government's own estimates, this will cost up to £18 billion a year. Any hope that we could begin to meet such a target without closing down most of our economy is as fanciful as the idea that we can meet our EU commitment to generate 30 per cent of our electricity by 2020 from "renewable" sources, such as wind and solar.

It was recently reported that farmers are rushing to cash in on the ludicrous subsidies which could earn them £50,000 a year for covering 35 acres of their fields with solar panels bought from China. These yield, on average, only 8 per cent of their capacity. Last year, all the solar panels in Britain generated an average 2.3 megawatts, barely 1/500th of the output of a single medium-sized coal-fired power station. Yet our Government wants us to pour billions of pounds into this scheme, just when Spain, Germany and Australia have drastically reduced their own solar subsidies, because the billions they lavished on them turned out to be a total waste of money for virtually no return.

Our Government also wants us to pay £100 billion through our electricity bills for thousands more wind turbines over the next 10 years, with another £40 billion to hook them up to the grid. Yet it's predicted that by 2013, thanks to soaring costs and technical problems, orders for turbines will have fallen by 93 per cent.

The EU continues to set targets to power our transport with an increasing percentage of biofuels, when a new report from some of its own advisers finds that meeting its 2020 target will mean taking an area of farmland as large as Ireland out of food production, and that producing biofuels requires up to 167 per cent more energy from fossil fuels than they theoretically save.

None of this, of course, will do anything to save Britain from the looming crisis when the ageing nuclear and coal-fired power stations which supply 40 per cent of our current electricity needs are forced to close. The other night when it was very cold I checked to see how much of our electricity was, at that moment, coming from wind. The answer was 0.1 per cent, or a thousandth of all the power we were actually using to keep our homes lit and warm.

It appears that Chris Huhne, our Energy and Climate Change Secretary, is so obsessed with the half of his job relating to climate change that he can happily ignore the other half, to do with keeping the lights on. But Mr Huhne is far from alone. Not a single MP of any party has yet found the courage to mount a properly briefed challenge to all this lunacy. So what do we pay them for?

Tuesday, December 7, 2010

A Late Thanksgiving Story

The Pilgrims’ Real Thanksgiving Lesson
November 25, 2004
Benjamin Powell
Charlotte Observer, The San Diego Union-Tribune (Courtesy NZBR)

Feast and football. That’s what many of us think about at Thanksgiving. Most people identify the origin of the holiday with the Pilgrims’ first bountiful harvest. But few understand how the Pilgrims actually solved their chronic food shortages.

Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.

In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on “equality” and “need” as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. Governor William Bradford, in his 1647 history, Of Plymouth Plantation, wrote that this system “was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.” The problem was that “young men, that were most able and fit for labour, did repine that they should spend their time and strength to work for other men’s wives and children without any recompense.” Because of the poor incentives, little food was produced.

Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. While not a complete private property system, the move away from communal ownership had dramatic results.

This change, Bradford wrote, “had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been.” Giving people economic incentives changed their behavior. Once the new system of property rights was in place, “the women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.”

Once the Pilgrims in the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years. It was only after allowing greater property rights that they could feast without worrying that famine was just around the corner.

We are direct beneficiaries of the economics lesson the pilgrims learned in 1623. Today we have a much better developed and well-defined set of property rights. Our economic system offers incentives for us—in the form of prices and profits—to coordinate our individual behavior for the mutual benefit of all; even those we may not personally know.

It is customary in many families to “give thanks to the hands that prepared this feast” during the Thanksgiving dinner blessing. Perhaps we should also be thankful for the millions of other hands that helped get the dinner to the table: the grocer who sold us the turkey, the truck driver who delivered it to the store, and the farmer who raised it all contributed to our Thanksgiving dinner because our economic system rewards them. That’s the real lesson of Thanksgiving. The economic incentives provided by private competitive markets where people are left free to make their own choices make bountiful feasts possible.

altBenjamin Powell
Send email
Benjamin Powell
is Research Fellow at The Independent Institute ,assistant professor of economics at Suffolk University and a Senior Economist with the Beacon Hill Institute. Dr. Powell received his Ph.D. in economics from George Mason University. He has been assistant professor of economics at San Jose State University, a fellow with the Mercatus Center's Global Prosperity Initiative, and a visiting research fellow with the American Institute for Economic Research. Benjamin is also the editor of Housing America: Building out of Crisis.
Full Biography and Recent Publications

Sunday, December 5, 2010

This idea has plenty going for it….

Close the Washington Monument

Alex Tabarrok (Marginal Revolution)

The National Park Service wants to add airport-level security to the Washington Monument.  Bruce Schneier says we should close it:

...Let it stand, empty and inaccessible, as a monument to our fears.

An empty Washington Monument would serve as a constant reminder to those on Capitol Hill that they are afraid of the terrorists and what they could do. They're afraid that by speaking honestly about the impossibility of attaining absolute security or the inevitability of terrorism -- or that some American ideals are worth maintaining even in the face of adversity -- they will be branded as "soft on terror." And they're afraid that Americans would vote them out of office if another attack occurred. Perhaps they're right, but what has happened to leaders who aren't afraid? What has happened to "the only thing we have to fear is fear itself"?

An empty Washington Monument would symbolize our lawmakers' inability to take that kind of stand -- and their inability to truly lead.

...The empty monument would symbolize our war on the unexpected, -- our overreaction to anything different or unusual -- our harassment of photographers, and our probing of airline passengers. It would symbolize our "show me your papers" society, rife with ID checks and security cameras. As long as we're willing to sacrifice essential liberties for a little temporary safety, we should keep the Washington Monument empty.

Terrorism isn't a crime against people or property. It's a crime against our minds, using the death of innocents and destruction of property to make us fearful. Terrorists use the media to magnify their actions and further spread fear. And when we react out of fear, when we change our policy to make our country less open, the terrorists succeed -- even if their attacks fail. But when we refuse to be terrorized, when we're indomitable in the face of terror, the terrorists fail -- even if their attacks succeed.

...We can reopen the Washington Monument when we've defeated our fears, when we've come to accept that placing safety above all other virtues cedes too much power to government and that liberty is worth the risks, and that the price of freedom is accepting the possibility of crime.

I would proudly climb to the top of a monument to those ideals.

I agree.

Friday, December 3, 2010

I really can’t do anything for you I’m sorry

In The NZ Herald this morning Securities Commission Chair Jane Diplock is quoted as saying that even when there is full disclosure regarding an investment there is nothing at all the Commission can do to make sure intentions disclosed are fulfilled.

Honesty at last – and all credit to her – no amount of disclosure and no regulator can “save” investors through disclosure. So there is absolutely no point:

1. Pretending that disclosure will protect investors in more than a minimal fashion, or,

2. Spending any great time and money on it. Certainly costly laws and regulatory activity cannot be justified.

In our hearts we knew this all along – why are are we so weak then?