Sunday, February 25, 2007

The Real China

2 in 3 Chinese graduates that have studied abroad never return.

That simple statistic tells you a lot about China.

How interesting it would be to collate and compare the same statistic across democratic and non-democratic countries (adjusting for GDP).

Lent

I am not eating meat for Lent.

Almost one week down, and five to go (no one told me that Lent lasts for 6 whole weeks, next year I'll do Ramadan instead, reckon it's shorter!).

Saturday, February 17, 2007

Crippled Capital and Crocodile Tears

Bob Geldof once said that extreme poverty in a world so affluent is an intellectual absurdity. He is completely correct. But why does extreme poverty exist?

I read recently that the 3 wealthiest people in the world are wealthier than the 48 poorest nations with combined populations of 600m.

Shocking, eh?

Another shocking example is Uncle Scrooge McDuck (Disney Duck Tales) a millionaire with *obscene* wealth -- his vault is a huge swimming pool of gold coins if I remember rightly.

Now, ask yourself what those 3 wealthiest people do with /their/ fortunes?

Most probably they invest 99% of their wealth in companies far and wide. Even if they save part of their fortune, a large proportion of their savings (as with all savings) will be recycled and invested into ventures by their savings bank.

So on the face of it these three /are/ obscenely rich, but they don't jealously hoard their wealth like Scrooge McDuck, it's put it to work and it in turn helps employ, educate and put meals on the table for tens of thousands (maybe a magnitude or so higher!) of people.

Obviously not much of this investment capital ever reaches those 48 poorest countries on earth. Why?

Contrary to common consensus, economics is an optimistic science. One of economics' main tenets is that the ratio of investment capital to labour should tend to even out across the globe over time. This is due to simple supply and demand.

Let's assume two broad production input categories. The first is investment capital, i.e. cash. The second is labour. Both are needed in varying quantities to produce output. The output is sold and the owners of capital and labour receive compensation for their efforts.

The returns to capital should be lower in areas with an abundance of capital, due to investors having to compete harder for investment opportunities. The same is true for labour, increasing labour supply drives wages lower, as there is less capital spread among more workers.

This gives investors an incentive to go to countries with an abundance of labour and workers to go where there are high levels of capital investment. This is precisely what we see in practice, for example, corporations look to invest in China which has a very low capital per person ratio, and Chinese citizens look to emigrate to Western countries with a high ratio.

The problem is that these flows of capital and people are being suppressed, resulting in boils and lesions of inequality and poverty.

Developed countries are mainly democracies, and the electorate want to stay affluent. To that end, they don't want too many immigrants competing with them for jobs, and they definitely don't want foreigners flooding their social welfare systems. On the other side they want to avoid capital going abroad, therefore they ensure that capital stays in their country by erecting barriers to trade -- i.e. a company can't expect to produce elsewhere and sell back in the home country without punitive tariffs.

Developing countries are beset with corrupt bureaucracies and dictators. In many cases this corruption is a form of legalised thievery due to corrupt legal systems. The risk is that high proportions of investment in corrupt countries are arbitrarily stolen from the investor. Moreover, capitalists within the developing country (who often have considerable influence and ties to government) may prefer not to have an influx of foreign capital in their country and look to create barriers to investment. These countries often subtly restrict emigration, or in extreme cases not so subtly, e.g. North Korea and Maoist China.

Most economists argue that freedom of trade will bring about a more affluent, more equal world. Freeing capital flows is only one part of the story however. I believe that the importance of the other half, that of freedom of movement has been woefully underestimated.

The kernel of the problem is that the "enlightened" plebs in developed democracies and the capitalist oligarchs of the developing world have forged an air tight cartel of wealth and power, which will lock out most of today's poor from peaceful, respectable lives for the foreseeable future.

Poverty /is/ intellectually absurd, but /our/ selfishness locks us and the poor into this status quo. The challenge is to find the courage and vision which can knock us out of this horrific equilibrium.

Labour Monopsony

[A "monopoly" of supply is called a monopsony.]

This article argues that labour market deregulation is bad for workers. Many unions (the world over) also make similar points.

When listening to these arguments one point should be kept in mind. There is a dichotomy between a nation's workers and its total workforce. In Indonesia just over half the workforce is unemployed or underemployed.

A more deregulated, properly working labour market would give a majority of the Indonesian workforce the opportunity to work hard and earn a decent living for their families.

One of the salient obstacles is that labour unions (who represent those in steady jobs) are better organised and have louder voices than the less fortunate majority.

The labour union's stance is perfectly understandable as their members are the ones with steady jobs, however their points are often disingenuous and one should keep in mind the broader picture.

Tuesday, February 06, 2007

Monopoly of Violence

All nation states are founded upon one core idea: the monopoly of violence.

The state strives to monoplise the use of violence within its jurisdiction.

Problems arise when a state loses that monopoly.

Examples of oligopolies of violence:

Iraq
Aceh
Bosnia
.
.
.

Sunday, February 04, 2007

Honesty is Stupidity

Rarely do you hear the positive sides of corruption, you only hear the negative.

Corruption is merely a market for power. Some have power, for example traffic police have the power to punish speeding drivers (supply). Some need power, i.e. one can purchase a traffic cop's discretion when caught (demand) in effect he has purchased some of the cop's power. The bribe is the price of power.

Of course when you purchase or sell something, you should keep in mind the net profit of the transaction. The purveyor of power could factor in the cost of the sale, e.g. will he be punished by superiors? Could he lose his job? The buyer also has to think about laws on bribery and perhaps his own job would be on the line if his bribe was made public.

So as with any market, corruption only occurs when the transaction gives a net benefit to both parties.

If I get caught speeding in Mumbai I would be a fool /not/ to pay a reasonable amount to the traffic cop.

If I get caught in an embrace with an illicit lover in a Sharia jurisdiction, I and my lover would be idiots /not/ to buy our way out of some sort of corporal punishment.

If I get caught by police on Bali with a funky weed, I would be on a par with any Catholic or Muslim martyr if my principles didn't allow me to stump up some cash to the arresting cop.

In these situations being honest is clearly irrational. Honesty only becomes rational when trying to bribe an official will land you in deeper waters - otherwise be corrupt and be proud.

There are more subtle forms of everyday corruption. For example:

If I see pirated PlayStation2 games in Jakarta being sold at 100th the price they are sold in Ireland I would be completely bonkers to /not/ buy them.

If my sister sees a cute fake (but great quality) designer watch in some shopping mall in Jakarta, she'd be mad /not/ to snap it up.

If someone offers me some cheap cocaine in a club or a pimp offers me the chance to sleep with some hookers, and I (uncharacteristically) think I might give it a try -- why on earth shouldn't I? -- no one's ever going to know the better anyway! -- the chances of getting caught are minimal!!

Again, all these products and services are supplied and demanded. These markets are supplied by huge organised (criminal) industries, which drive corruption (and selected other vices). The industries in these supply chains are not any more moral or immoral than those who demand their produce, they are /completely/ rational in the societies we all belong to.

Complete honesty is irrational or just plain stupid. Moreover, in societies which are largely corrupt, even being a little more honest than average is irrational. E.g. being a bit more honest than your corrupt bosses will ensure you won't be promoted too often.

The rational response to corruption in corrupt societies is more corruption. What is needed above of all in those societies is bloody-minded irrationality.

Saturday, February 03, 2007

Windows Vista Crapfest Part II

If you remember in part one an MS software dev details how MS made a complete mess of useability in Vista (at great cost of frustration, time and money) -- even though they had Macs on hand, so that they could clearly see how useability is done right.

Now in an email from MS's number 2, Steve Allchin, says that he'd prefer to use a Mac over Windows.

(The email is 3 years old, but tellingly, Allchin has recently jumped ship...)

Thursday, February 01, 2007

It's A Man's World

Ever wonder why "it's a man's world"? (as the song goes)

Because historically (and currently in many places) a man could win an argument by beating the pulp out of his female interlocuter.

Tuesday, January 30, 2007

Use Your Delusion

I have been thinking about delusion recently.

What does delusion mean? I assume it to be a state of misleading oneself.

I believe that delusion (now and again) is perfectly normal state for us humans.

I.e. sometimes we have beliefs about reality which we choose to ignore or on the other hand we have some beliefs about reality that (if in a more rational state) we would discount out of hand.

An example:

People living through traumatic episodes. I doubt any victim that lived through a holocaust could be completely rational, when dying would be the more rational choice.

...

I wonder why we replace the rational beliefs with delusional beliefs? Such a replacement would seem irrational, as having a less good picture of reality should be disadvantageous for decision making.

Note here that when people usualy mention irrationality they mean bounded rationality.

We humans for example are boundedly rational - we have limited decision making capabilites - we are sometimes wrong. Stock market bubbles are a product of bounded rationality not irrationality - traders draw upon (limited) experiences and understandings and create false overly optimistic beliefs. These false beliefs are grounded on the trader's experience of reality however, and are therefore boundedly rational. For example, traders that lost everything after the dot com bust, weren't bonkers they just didn't have the years of experience and trading acumen to avoid those losses.

Husbands and wives are also boundedly rational (most are human afterall). Their decision to marry may be overly optimistic and end up a bad decision. I suspect though, that the first rush of love may well be ver close to irrational.

Drug users may also be irrational. Seeing as love and cocaine stimulate the same areas of the brain (apparently), perhaps we can better view irrationality as a /temporally/ altered rationality, rationality based on a different reality.

Humans (and other animals) have evolved to be in states of delusion. It is sometimes advantageous (and sometimes disadvantageous) for us to temporally alter our realities away from the usual grounded, boundedly rational view of reality.

I wonder would it be possible to model and simulate games (game theoretical ones) where delusion (or irrationality) is advantageous? - as far as I am aware, there are no games where a player can gain strategic advantage from manipulating her own beliefs.

- Perhaps genetic irrational anger could in some situations be a "natural" credible threat...

Hmmmhmmmmmmmmmmmmmmmmmmmmmmmmmm.............

Sunday, January 28, 2007

Japanese Baby Machines (Fertility, Part I)

This will be an ongoing series of posts about fertility and immigration.

I will expose the stupidity (and the latent racism) of those policy makers who actively incentivise their citizens to produce babies and increase their nation's fertility - when there are more than enough people from developing countries willing to be constructive, exemplary citizens.

No, Japanese scientists haven't come up with a new ingenious way of producing babies, the Japanese health minister called Japanese women "Baby Machines", I'd love to know what reaction it has caused over there.

[Here is part 0 of this fertility series]

Saturday, January 27, 2007

Virgin Murder

Why are honour and pride so important?

Read more here and here (my new favourite blogger).

I hear one brutal account of oppression after another.

I hope sooner or later Arabic women can revolt.

Monday, January 22, 2007

Death

6 billion people (give or take) will die in the next 120 years.


(Not in /any/ way suicidal dudes................. ;))

Sunday, January 21, 2007

The Last King of Scotland

"The Last King of Scotland" is the best movie I've seen for months.

Basically about an expat living the high life in a tropical developing country.

It reminds me of "The Year of Living Dangerously", but imo has a more biting, bitter punchline.

Wednesday, January 17, 2007

The Problem with Economics

"Science is prediction, not explanation" - Fred Hoyle


All to often, economics explains, but doesn't predict.

Yes, it's extremely difficult, and yes economics bods can be quite intelligent - but mostly economic research degenerates to ex post explanations.

A Measure of Failure

I've previously posted that Indonesia on many measures is failing, at the very least it is failing a large portion of its people.

Actually, I reckon only one measure counts, that is net migration, or perhaps better: willingness to migrate.

Ireland haemorrhaged migrants for about 150 years (my highschool economics teacher used to say "Ireland is the only 3rd world country with snow") until about 10 years ago. Emmigration is often the last resort of desperate people, in effect it shows that the state has utterly failed them. Interestingly over the last decade Ireland has never been in a healthier state, and now has large inflows of foreign workers, students and whole families.

On the whole I am not "proud" of Ireland (not unproud either); but I am proud that Ireland is giving foreign people a chance to thrive in our society, when they couldn't make a go of things at home.

Now turn back to Indonesia. The govt. is failing the 20% of the population (40 million people) that live below the poverty line (ie. earn under a dollar a day!). It's also failing the most talented who go abroad to study or work. It fails the wealthy who generally don't trust the government education system and go abroad to seek health care. Of course Indonesia has been a success to a lucky few - the Suharto family, the Sukarno family (to a lesser extent), the expats who lunch in the Shangri La for $20 a go, the tourists looking for good value sex, those lucky enough to be supreme court judges...

However, let's just focus on one of that hard core 20% of the utterly destitute. I visited a slum in Jakarta, and met a Chinese woman in her early 30s (we were there as part of a program giving out school wares for poor kids) the thing that struck me was: this woman had near zero chance of escaping the hole she was in, but she seemed very bright and intelligent. In fact she reminded me most of all of may pal Yuk Ki, a HKer who can speak 4 languages and is a /very/ capable person.

Needless to say I was shocked. I've always lived in societies where I believed that as long as you were on somewhat of an even keel you could survive well.

In my opinion Indonesia is failing /at the very least/ 20% of its population. Perhaps 20%, 30% or even 40% of Indonesians would exchange their citizenships for another (however sorrowfully) if that meant they could live and work in a society which gave them and their families a chance to live more fulfilling lives (that /would/ be an interesting survey).

Saying that Indonesia over the last 60+ years has been anything /but/ a failure to a major portion of its people, is ignoring the elephant in the room. In fact anything and everything from the Chinese, to the Communists, to the Meneer and not forgetting George Soros have been made scapegoats to avert attention away from fundamental problems within.

The first Indonesian president to face up squarely to how Indonesia has failed its people over the past 60 years, will be the first to put Indonesia on the path of real progress -- unfortunately I don't see that happening any time soon.