Tag Archives: economics

Blog

Redrawing the globe with the city at its heart

Very sincere thanks to @polgrim for flagging up this excellent article at ForeignPolicy.com. It’s like a heaped plate of geopolitical and socioeconomic Zeitgeist, full of favourite Futurismic riffs like the decline of the nation-state, the weakening of the “first-world” West, the shift toward urban living and the possibilities – good and bad – of rethinking the way we approach these things.

Be sure to read the whole thing (it’ll probably take you maybe twenty minutes max, and it’s worth every second), but here’s a chunk that made my brain chime like a temple bell:

Accelerating this shift toward new regional centers of gravity are port cities and entrepôts such as Dubai, the Venices of the 21st century: “free zones” where products are efficiently re-exported without the hassles of government red tape. Dubai’s recent real-estate overreach notwithstanding, emerging city-states along the Persian Gulf are investing at breakneck speed in efficient downtown business districts, offering fast service and tax incentives to relocate. Look for them to use sovereign wealth funds to acquire the latest technology from the West, buy up tracts of agricultural land in Africa to grow their food, and protect their investments through private armies and intelligence services.

Alliances of these agile cities are already forming, reminiscent of that trading and military powerhouse of the late Middle Ages, the Hanseatic League along the Baltic Sea. Already, Hamburg and Dubai have forged a partnership to boost shipping links and life-sciences research, while Abu Dhabi and Singapore have developed into a new commercial axis. No one is waiting for permission from Washington to make deals. New pairings among global cities follow the markets: Witness the new Doha to Sao Paulo direct flight on Qatar Airways or the Buenos Aires to Johannesburg route on South African Airways. When traffic between New York and Dubai dried up due to the financial crisis, Emirates airlines rerouted its sleek Airbus A380 planes to Toronto, whose banking system survived the economic shake-up in better shape.

And another:

Consider how aggressively Chinese cities have now begun to bypass Beijing as they send delegates en masse to conferences and fairs where they can attract foreign investment. By 2025, China is expected to have 15 supercities with an average population of 25 million (Europe will have none). Many will try to emulate Hong Kong, which though once again a Chinese city rather than a British protectorate, still largely defines itself through its differences with the mainland. What if all China’s supercities start acting that way? Or what if other areas of the country begin to demand the same privileges as Dalian, the northeastern tech center that has become among China’s most liberal enclaves? Will Beijing really run China then? Or will we return to a fuzzier modern version of the “Warring States” period of Chinese history, in which many poles of power competed in ever-shifting alliances?

Centralised governance is done; stick a fork in it. Things fall apart, the centre cannot hold… but “mere anarchy” might not be the horror that Yeats expected it to be. We’re adaptable critters, us humans; we’d do well to remember that.

Blog

Hyperlocal manufacturing: fabrication factory in a shipping container

2 Comments

It’s amazing what you can cram into a shipping container: a solar power generator, an internet cafe, a data centre… or a self-contained tooling workshop and fabrication unit [via GlobalGuerrillas – beware dodgy pop-ups on the linked page]:

The MPH was developed when the army realized that the easiest way to get the many rarely requested, but vital, replacement parts to the troops, was to manufacture the parts in the combat zone. In short order, this led to the construction of a portable parts fabrication system, called MPH, that fit into a standard 8x8x20 foot shipping container. The original version used two containers, but smaller equipment and more powerful computers eventually made it possible to use one container.

As John Robb and others have pointed out, this is a blueprint for hyperlocal manufacturing… though to make it economically practical you’re going to have to shave down the construction costs from the bloated levels of military contracting:

There are four MPH systems in service, two of them in Afghanistan. A fourth is being built, at a cost of $1.5 million.

Ouch. What do you actually need? If you’re going local, you just need a space the same size as a shipping container; should be a stuffed animal that’ll do the job. A fast broadband connection will stand in for the military satellite link (assuming you’re operating in an urban area); speed probably isn’t too crucial with non-military applications, so you might be able to cantenna yourself into a convenient local wireless node for big savings. Then you need CNC machines and raw materials; the former can probably be bought up pretty cheap from bankrupt stock (hell, you might not even need to move the kit if it’s still sat in a disused factory unit – two birds, one stone), and the latter scraped up from salvage and reclamation…

Anyone fancy running the numbers on this?

Blog

The imminent and inevitable downsizing of US foreign policy

2 Comments

Via Richard Gowan of the Global Dashboard gang, here’s one Michael Mandelbaum extolling the theme of his new book, Frugal Superpower. In a nutshell: The US can’t afford to sustain its “democracy-exporting” model of foreign policy unless it wants affairs at home to go from bad to worse. And that’s bad news, even for those of us who aren’t particularly keen on that foreign policy model… because, like it or not, US foreign policy contributes to global stability.

It has to operate within limits that arise from a consensus in the wider public about what is desirable and what is feasible. During the Cold War, for example, America maintained a large and costly military presence in Europe because this was widely agreed to be necessary to protect American interests by deterring a Soviet attack. The limits that govern foreign policy are not formally encoded in a foreign policy charter and are seldom even set out explicitly. They are more like customs in small-scale societies or good manners in larger ones: they are tacitly, but broadly, understood.

Because of the country’s financial constraints, those limits will be narrower than they have been for many decades. The government will still have an allowance to spend on foreign affairs, but because competing costs will rise so sharply that allowance will be smaller than in the past. Moreover, the limits to foreign policy will be drawn less on the basis of what the world needs and more by considering what the United States can–and cannot–afford.

I’m not so sure about Mandelbaum’s grim assertions that the dogs of discord will be unleashed as a result of budgetary belt-tightening; the dogs of discord are already gleefully chewing through the leash, despite the immense (and sometimes predominantly unaccounted for) recent expenditure on US interventionism overseas. And this is exactly the sort of thing the United Nations was put together to deal with, after all… maybe we could go back to, y’know, letting it do its job? I’m guessing those notorious council veto options may hamper that particular idea for a while, but still…

Tough disruptive times are on the cards for the whole planet, this much is certain; whether they’d be any less tough with the US still throwing its weight around is, in my humble opinion, still open to debate.

Blog

Neuroeconomics

4 Comments

What do you do with a discipline or field of endeavour that’s getting a bit stale and dated? Slapping the prefix neuro- onto it seems to be popular, and here’s the latest example: no one trusts economics any more (well, almost no one), so maybe that trust can be restored by looking at how trust itself – and the neurochemical basis for such – acts as a fundamental human component of the system that old economic models don’t account for [via BigThink]. Confused? Yeah, me too.

Zak and his collaborators at Claremont Graduate University have found that oxytocin, a hormone produced in the brain that promotes human bonding, plays a powerful role in shaping how generous people are. He calls it “the moral molecule.” “It’s a whole different model,” Zak says. “It tells us why global commerce works — because there is a motivation to reciprocate.”

People release oxytocin (pronounced ok-si-toh-sun) in settings that promote feelings of trust and safety, Zak has found, and their behavior becomes more trusting and generous in return. He envisions workplaces structured to reinforce this cycle.

[…]

Although Zak preaches the power of markets, he strongly agrees that rational-actor models fall short. “Economists get a bad rap for doing what I call ‘imaginary economics,’” he says. “You sit in your office, imagine some situation and scribble down a model. You get excited about it, ship it to your friends and publish it in a journal. It has nothing to do with any problem in the world.

“What neuroeconomics does is put human beings back in the center of economics. I can go inside the brain and measure what’s happening.”

[…]

Vernon Smith showed that people are naturally more generous than decision theory would predict. But what would happen if the players’ moods were enhanced by oxytocin? Zak had some of his game subjects inhale oxytocin before playing the Trust Game. Remarkably, more than twice as many people on oxytocin sent all of their money to a stranger (versus control subjects who were administered a placebo).

This is compelling evidence that oxytocin helps us to decide whom to trust and when to reciprocate, Zak says. “Civilization is dependent on oxytocin,” he says. “You can’t live around people you don’t know intimately unless you have something that says, ‘Him I can trust, and this one I can’t trust.’”

Obviously we can’t just start dosing people up with neurochemicals in an attempt to make the world a better place (or could we?), but the theory is that we can build a social and economic environment where people are more likely to have their oxytocin levels raised, leading to a sort of virtuous reciprocal circle of generosity. But if you’re thinking it sounds like something of a utopian technofix, don’t worry – this Zak character is looking at the bigger picture:

“How can we make the world more trusting, more cooperative, more generous? It’s not all oxytocin. It’s a much bigger brain circuit. It’s the people interacting with you, it’s the environment within which you interact — all those things matter. We have to peel away the layers of the onion to figure out how all those things fit together.”

All well and good… provided the current system doesn’t break irreparably before we’ve peeled our metaphor. Er, onion.

Blog

DRM may suck, but avoiding it is no panacea to piracy

4 Comments

As a fellow-traveller of the copyleftists, this is the sort of story I’d rather not be reading. But it’s an important one, because it underlines the problem that all the optimistic rhetoric in the world can’t sweep under the carpet: the point-and-click adventure game Machinarium was released without DRM, and despite (or perhaps because of) great reviews, suffered from an estimated 90% piracy rate. The developers are now having a “pirate amnesty” where they invite people with pirated copies to cough up $5 – a quarter of the original asking price – to legitimise their installation.

So much for the myth (albeit rarely stated directly) that DRM-free games are less likely to be pirated because they give the players their oft-demanded flexibilities of installation and migration; disappointing, perhaps, but hardly surprising.

However, it’s worth bearing in mind that the piracy rate would probably have been similar even if DRM had been baked in to Machinarium. So what’s the way out of this bind? My guess (and it is a guess) would be a lower price point – maybe if the asking price had been $5 from the outset, more people would have coughed up in the first place. The counterargument to that usually goes along the lines of “but that won’t cover the overheads of making the game!”; the counter-counter-response is “well, charging $20 obviously hasn’t achieved that either”. Quod erat demonstrandum.

Then there’s the MMO/metaverse model: charge very little or nothing for software and access, and make your rake-off through in-game items. We know this one works, because if it didn’t there’d be no goldfarming outfits in developing nations… but how to adapt it to single-player gaming experiences? Or maybe you have to look at sponsorships, in-game advertising and product placements… none of which sound particularly appealing, but would probably become accepted by players pretty quickly once there were no other options…

… and given the way things are going, that might not be too distant a day. What this story makes clear is that DRM is a blind alleyway: whether you include it or not, you’ll still have your work pirated. The web burgeons with suggested alternative business models for computer games, but to my knowledge no one has yet made one of them really stick.