Tornadoes and Technology

From Patrick Michaels at the Forbes (ht: Don Boudreaux)

Despite 2011, there’s strong evidence that we are saving a tremendous number of lives with modern technology.

After the 1953 disasters, developers of weather radar convinced Congress to support a national network of detectors known as the WSR-57 (for 1957), a very acceptable machine for picking up tornadoes capable of causing significant damage. By the mid-1970s, WSR-57′s pretty much covered the tornado-prone regions of the nation.

An interesting thing happened to tornado frequencies. Before the WSR-57 went online the number of reported tornadoes averaged about 500 per year nationwide. By the time the network was complete, we leveled out around 800. Tornado death frequency–the number of fatalities per million–dropped precipitously. This was an unqualified technological success.

This only demonstrates how capitalism via technological advancement has helped saved many lives.

Technology Uncovers the Secrets of the Pyramid

Like it or not, this is the information-digital age.

Work that used to take years to uncover can be done over a short period time with rapidly developing technologically enhanced instruments. Moreover, long held secrets of nature have greater chances to be discovered.

Below is an example of another important breakthrough: a specially designed robot has unearthed the ancient markings of the pyramid’s secret chamber. And this discovery has gone viral.

From Yahoo (bold emphasis mine)

Are the glory days of the archaeologist over? Has everything cool and ancient already been discovered? Nope. Thanks to ever-improving technology, several new findings have electrified the Web.

A robot explorer recently discovered ancient markings at the Great Pyramid of Giza in Egypt. The robotic device found the markings inside a secret chamber inaccessible to humans--and then proceeded to film the painted hieroglyphics and stone markings, which hadn't been seen by human eyes in 4,500 years, via a small robotic camera that was fit through a tiny hole in a stone wall.

It is too soon to tell what the markings mean, but experts are hoping they may shed some light on why the ancient Egyptians originally built the tunnels. An article from CNN explains that the tunnel is "one of several mysterious passages leading from the larger king's and queen's chambers."

This wasn't the first time a robot explored the passageways--but it was the first time a robot could focus on details on the walls. This breakthrough occurred thanks to a new kind of micro-camera that can be bent side-to-side instead of just focusing straight ahead.

News of the discovery quickly took the Web by storm. Over the past 24 hours, Web searches for "great pyramid of giza" and "egypt pyramids" both spiked into breakout status. Also seeing big bumps in lookups: "hieroglyphic dictionary" and "hieroglyphic meanings."

Meanwhile, other technologically enhanced discovery expeditions have turn up other fascinating new information about the pyramids in recent days. Archaeologists from the United States (with some help from the BBC) used satellite imagery to discover 17 pyramids beneath the sand and silt in Egypt. An article from Canada's CBC explains that 1,000 tombs and around 3,000 other buildings were also discovered thanks to the technology.

Technology and information are proving to be a potent force.

People will have increasing access to information or acquire the capability to secure knowledge from formerly unconventional channels and on real time.

Science will enhance economic progress which should open doors to new industries (lengthening of the production process), organizational and business processes and new markets.

Also by increasing knowledge and with the introduction of specialized tools, productivity will be enhanced. This should mean more prosperity and wealth or a higher living standard for society.

Although despite the good news, there will always be the opposition. They will be personified by people who resist change (luddites), people who feel entitled (welfare beneficiaries) and people who desire control (progressives or liberals, politicians and the bureaucracy) who will use political force to oppose this progress.

Yet despite all the hurdles, breakthroughs like this is a refreshing news.

Has the Magic of Technology Ebbed?

Marketing guru Seth Godin thinks so. He writes, (bold emphasis mine)

Arthur C. Clarke told us, “Any sufficiently advanced technology is indistinguishable from magic.”

Head back to the 1800s with a Taser or a Prius or an iPad and the townsfolk will no doubt either burn you at the stake or worship you.

So many doors have been opened by technology in the last twenty years that the word “sufficiently” is being stretched. If it happens on a screen (Google automatically guessing what I want next, a social network knowing who my friends are before I tell them) we just assume it’s technology at work. Hard to even imagine magic here.

I remember eagerly opening my copy of Wired every month (fifteen years ago). On every page there was something new and sparkly and yes, magical.

No doubt that there will be magic again one day... magic of biotech, say, or quantum string theory, whatever that is. But one reason for our ennui as technology hounds is that we’re missing the feeling that was delivered to us daily for a decade or more. It’s not that there’s no new technology to come (there is, certainly). It’s that many of us can already imagine it.

The current generation, whom have been key beneficiaries of the transformative technological innovations, may seem to be less appreciative of the contributions of technology to our current welfare. That’s because technology has been giving us constantly more for less.

Thus, the diminishing returns on expectations from the impact of technological progress: the perceived loss of magical touch.

But I think it goes more than that.

Perhaps most people may be a lot less familiar with the antecedent of today’s state of technology. Or, people may have forgotten the roots of today’s progress: our ancestors compounded efforts or actions.

As the great Ludwig von Mises once wrote, (bold highlights mine)

Nobody denies that technological progress is a gradual process, a chain of successive steps performed by long lines of men each of whom adds something to the accomplishments of his predecessors. The history of every technological contrivance, when completely told, leads back to the most primitive inventions made by cave dwellers in the earliest ages of mankind. To choose any later starting point is an arbitrary restriction of the whole tale. One may begin a history of wireless telegraphy with Maxwell and Hertz, but one may as well go back to the first experiments with electricity or to any previous technological feats that had necessarily to precede the construction of a radio network. All this does not in the least affect the truth that each step forward was made by an individual and not by some mythical impersonal agency.

When people forget about history; the contribution of a multitude of individuals in today’s progress through the years, then they became less appreciative of the blessings that has been happening.

Many people today seem to think that the progress from technology is just a given. It is not.

For as long as people are allowed to trade, trade will then function as the main driver of technological progress.

Writers like me will try to keep that magic alive.

Video: Amazing Virtual Choir

Whether you call this Peer2Peer or collaboration, globalization via technology have been linking people from all over the world for different interests. The video below exhibits an amazing global ensemble of a youtube based virtual choir.

I cannot resist quoting Prof Russ Roberts:

We are just beginning to tap the extraordinary potential for human creativity and how we can use the internet to harness that creativity. This is stunning both in concept and execution. Beautiful.

Indeed. Watch it.

Social Inequality: The Anatomy of Plutocracy

One of the most popular misimpressions or smear campaign tactics directed against free markets or laissez faire capitalism is that such a system promotes a political order known as plutocracy-or the rule of the wealthy.

This idea either lacks the comprehensive understanding of capitalism or simply operates on the premises of deliberate equivocation (propaganda).

The Consumer Reigns In A Laissez Faire System

In the laissez faire political economic order, it is the consumer that ALWAYS reigns supreme.

Consumers ultimately determine who to reward (by profits) and who to punish (by losses). Thus, the wealthy are those entrepreneurs who manage to continually satisfy the ever dynamic desires of consumers.

As the great Ludwig von Mises wrote, (bold highlights mine)

In the capitalistic society, men become rich — directly as the producer of consumers' goods, or indirectly as the producer of raw materials and semiproduced factors of production — by serving consumers in large numbers. This means that men who become rich in the capitalistic society are serving the people. The capitalistic market economy is a democracy in which every penny constitutes a vote. The wealth of the successful businessman is the result of a consumer plebiscite. Wealth, once acquired, can be preserved only by those who keep on earning it anew by satisfying the wishes of consumers.

In addition, market dominance is neither guaranteed nor in a state of permanence because consumer desires always changes.

Importantly, the highly competitive nature of markets impels entrepreneurs to attain excellence by exploiting windows of entrepreneurial opportunities.

As Professor Israel M. Kirzner writes, (bold highlights mine, italics Prof Kirzner)

What makes possible the entrepreneurially driven process of equilibration is active market competition. It is only the possibility of unrestricted entrepreneurial entry which permits more alert entrepreneurs to deploy their superior vision of the future in order to correct the misallocations of resources reflected in the false prices which characterize disequilibrium. It is the continual threat of such entry which tends to keep incumbent entrepreneurs alert and on their toes.

A good example of such process can be seen from how Apple, the technology behemoth company, has attained its present dominance.

Apple’s Sphere of Influence From Minyanville.com

Apple’s success wasn’t granted by fiat orders from political leaders but from its numerous attempts to satisfy consumer demands via competition derived innovative consumer friendly technology devices.

The above is an example of one of the many failed Apple products (chart and the rest of the story from Minyanville). In other words, Apple’s recent string of successes came at the cost of her previous failed experiences or experiments.

I have recently noted on how Mattel, makers of the famous Barbie dolls, has closed shop in China for failing to adapt to local tastes and how Philippine conglomerate Jollibee has captured the largest market share in the Philippine fast food industry by toppling US based counterpart McDonald’s by ingenously configuring her products to the palate of Filipino consumers.

The point is—the political economic order of the rule of the wealthy (plutocracy) would NOT sustainably persist or would unlikely occur under a pure laissez faire system.

State And Crony Capitalism Equals Plutocracy

The apologists for statism, who see Plutocracy as the main source for inequality, hardly realize that for the wealthy to politically sustain its dominance means to adapt ANTI-COMPETITIVE measures by co-opting with the political leaders.

Writes Art Carden (bold highlights mine)

Bourgeois riches come from customer service. Aristocratic riches are expropriated. Aristocracy rests on intrinsic value whereas capitalism rests on the exchange of value for value.

Libertarian William Graham Sumner wrote, (bold highlights mine)

[M]ilitarism, expansion and imperialism will all favor plutocracy. In the first place, war and expansion will favor jobbery, both in the dependencies and at home. In the second place, they will take away the attention of the people from what the plutocrats are doing. In the third place, they will cause large expenditures of the people's money, the return for which will not go into the treasury, but into the hands of a few schemers. In the fourth place, they will call for a large public debt and taxes, and these things especially tend to make men unequal, because any social burdens bear more heavily on the weak than on the strong, and so make the weak weaker and the strong stronger. ("Conquest of the United States by Spain.")

And it has not been different here in Southeast Asia, Joe Studwell writes, (as I earlier quoted here)

Centralized governments that under-regulate competition (in the sense of failing to ensure its presence) and over-regulate market access (through restrictive licensing and non-competitive tendering) guarantee that merchant capitalists-or asset trader, to use a more pejorative term-will rise to the top by arbitraging economic inefficiencies created by politicians. The trend is reinforced in South-east Asia by the widespread presence of what could be called as ‘manipulated democracy’, either in the guise of predetermined winner democracy (Singapore, Malaysia, Suharto’s Indonesia) or else in the scenario where business interest gain so close a control of the political system that they are unaffected by the changes of government that do occur (as in Thailand and the Philippines). In both instances politicians spend huge sums to maintain a grip on power that has some semblance of legitimacy. This can only be financed by through direct political ownership of big business or more usually, contributions from nominally independent big business that is beholden to politicians. Whichever, the mechanism creates a not entirely unhappy dependence of elites between politicians and tycoons.”

If Confucius once said that ‘give the man a fish you feed him for the day, teach him to fish and you feed him the rest of his life’.

From a political standpoint, libertarians and classical liberals advocates on the method that teaches the man how to fish, so as to make him productive to the society.

Whereas for statists, who along with politicians, will naively insist on feeding the man for the day (moment), by picking on someone else's pocket, supported by a legalized coercive framework that are enabled or facilitated by a politically constructed paper money system, which from the account of the entire history of man’s attempt to produce political nirvana has always failed.

Yet such accounts for exactly the Anatomy of Plutocracy.

Any political economic order which depends on political privileges or distribution of resources—endowments, protectionism, subsidies, bailouts, behest loans, economic concessions et. al. represents NOT a laissez faire system but a political system known as STATE CAPITALISM or CORPORATISM or CRONY CAPITALISM. The important difference is that consumers in a laissez faire system represents as real power, whereas politicians signify as the most powerful agents in the state capitalist order.

In today’s setting, the cooptation of the banking cartel-military industrial complex-green industrial-government labor union-welfare state-central banking system (in the US or elsewhere) are representative of PLUTOCRACY IN ACTION!

As the great Milton Friedman said in this lecture,

A society that aims for equality before liberty will end up with neither equality nor liberty. And a society that aims first for liberty, will not end up with equality but will end up with a closer approach to equality.

Bottom line: Statism or government interventionism, which enables or sustains a political economic order of plutocracy, is what engenders social inequality. The more societies politically organize herself towards attaining social equality, the more inequality gets amplified.

Here, noble intentions and economic reality are separated.

Video: Hans Rosling On How The Washing Machine Enhances Our Lives

Fascinating talk by Hans Rosling. (hat tip: Steve Horwitz)

Maria Lourdes Aragon: Another Celebrity Sensation From Globalization?

Just like Charice Pempengco and Journey’s Arnold Pineda before her, Canadian based 10 year old Filipina Maria Lourdes Aragon looks likely the next celebrity sensation as a result of the web enhanced globalization evolution.

This from OMG.yahoo

Lady Gaga was overcome with emotion after a video of a 10-year-old fan performing a flawless rendition of "Born This Way" hit the internet and Access caught up with Maria Lourdes Aragon to bring you all the details on this budding web sensation! …

Thanks to the wonders of modern technology, the Grammy Award-winning singer saw Maria's video tribute less than 24 hours after the young fan had posted it. Gaga then re-Tweeted the video to her followers early Thursday, writing, "Can't stop crying watching this. This is why I make music. She is the future."

The reason I have been pressing on this is to demonstrate how the web has virtually cut the geographical distance and directly connected people or increased social interactions without the traditional layers that would have limited discovery and access to required information.

And this isn’t just in seen in celebrities. Goods and services and most importantly ideas have likewise fluxed in such a horizontal manner where knowledge, which used to be localized, has now been globalized. In terms of knowledge, the world is now everyone’s oyster.

And this is why, in contrast to the obstinate views of top-down analysts and the ideological neo-luddites, the unprecedented spread of the People Power phenomenon in the Middle East and Africa, have caught almost everyone by surprise.

The internet, like the printing press, has and will serve as the most critical instrument for the spread of the Hayekian knowledge revolution or Alvin Toffler’s Third wave, as epitomized by the newly discovered celebrities bypassing traditional talent recruitment channels or as seen in the People Power near synchronous phenomenon in MENA.

These are structural changes occurring at the fringes which people hardly notices (yes they see the changes but they hardly understand its mechanics and implications).

Like it or not, these changes will inevitably shape our future (commerce, lifestyle, culture and politics).

Will Humans Achieve Immortality By 2045?

So says Ray Kurzweil, chief proponent of Singularity is Near –“an era in which our intelligence will become increasingly nonbiological and trillions of times more powerful than it is today—the dawning of a new civilization that will enable us to transcend our biological limitations and amplify our creativity.”

From Time’s Lev Grossman

Here's what the exponential curves told him. We will successfully reverse-engineer the human brain by the mid-2020s. By the end of that decade, computers will be capable of human-level intelligence. Kurzweil puts the date of the Singularity — never say he's not conservative — at 2045.

Read the rest here

Ray Kurzweil’s betting on the exponential growth of human ingenuity which converts technology into our life preserver.

The Next Green Revolution?

Is the next green revolution upon us?

The non profit organization Philippine based International Rice Research Institute (IRRI) together with a China based institution has come up with a new variety of rice that is said to be “more robust, high yielding, and disease-resistant, yet thrive with less water, fertilizer, and pesticide”

Picture From IRRI

From Yale Global,

The world appears to be on the threshold of another green revolution in rice production as a result of an intensive, 12-year partnership between the Chinese Academy of Agricultural Sciences in Beijing and the International Rice Research Institute in the Philippines.

Called "Green Super Rice," it is the result of a project begun in 1998, involving the painstaking crossbreeding of more than 250 different potential varieties and rice hybrids, according to Dr Jauhar Ali, a senior scientist and regional project coordinator for the Development of Green Super Rice at IRRI in Los Banos, south of Manila.

The development of the process, Dr Ali said, is considered so significant that Microsoft founder Bill Gates met personally with Zhi-Kang Li who holds a dual position both with IRRI as Senior Molecular Geneticist and as Chief Scientist with the Institute of Crop Sciences at the Chinese Academy of Agricultural Sciences in Beijing and, through the Bill and Melinda Gates Foundation, presented the program with a US$18 million, three-year grant to expand the benefits to Asia and Africa.

The two institutions are seeking additional donors to be able to push the rice to undeveloped corners of Africa and other continents to help stave off the growing need for food across the planet.

The process was developed by Zhi-Kang Li, It involves the efforts of hundreds of researchers in dozens of countries across the world, seeking to isolate the desirable traits from indigenous strains and then backcross breed them to produce hardier varieties. (emphasis added)

By the above account, I am reminded of the brilliant economist Julian L. Simon who once said

The essence of wealth is the capacity to control the forces of nature, and the extent of wealth depends upon the level of technology and the ability to create new knowledge.

If markets are only allowed to do their job, we’d see less worries over scarcities of natural resources.

Will Jurassic Park (The Movie) Become Reality?

I’ve always been fascinated, and thus repeatedly watched via cable TV, the highly successful sci-fi thriller trilogy film of the Michael Crichton (novel) and Steven Spielberg (director), the Jurassic Park. The movie has been about the unforeseen consequences of turning a menagerie of cloned dinosaurs into an amusement park.

Well what seemed as merely a science fiction in the past may perhaps become a reality soon. I’m not referring to the amusement park of dinosaurs, but of the technology that would enable one.

According to the Telegraph (which includes the diagram above)

The woolly mammoth, extinct for thousands of years, could be brought back to life in as little as four years thanks to a breakthrough in cloning technology.

Previous efforts in the 1990s to recover nuclei in cells from the skin and muscle tissue from mammoths found in the Siberian permafrost failed because they had been too badly damaged by the extreme cold.

But a technique pioneered in 2008 by Dr. Teruhiko Wakayama, of the Riken Centre for Developmental Biology, was successful in cloning a mouse from the cells of another mouse that had been frozen for 16 years.

Now that hurdle has been overcome, Akira Iritani, a professor at Kyoto University, is reactivating his campaign to resurrect the species that died out 5,000 years ago.

If these scientists will be spot on with their predictions, then the implications would be REVOLUTIONARY. You may call it a black swan- a rare high impact event.

Since one thing may lead to another, then it won’t likely be just about Jurassic Park and about possibly saving endangered or the restoring of extinct species, but likewise the possibility of resurrecting our ancestors!

While it would be a pleasure to see Hayek, Mises, Rothbard, Menger debate Keynes live, it would be a nightmare to see Stalin, Mao, Hitler, Pol Pot or Marcos back, yikes!

We’d also probably see our world co-exist with clones ala the movie The Island, starred by Scarlett Johannson. Of course, am guilty here of the projecting current trends into the future as a way of mental stimulation.

Nevertheless, the rapid progression of technological innovations never cease to amaze me.

How Videogames Flourish Under Free Markets

Former hedge fund Kessler argues that Videogames will inspire many of the most important innovations in the coming years which would overshadow government’s influence.

Mr. Kessler writes, (bold highlights mine)

But without gaming, this technology would be expensive, one-off stuff that never sees much use. Much as keyboards and mice and fast graphics have driven corporate productivity for 40 years—killing carbon paper and Correcto Type—the next decades will be driven by tools that can harness voices and gestures.

All it takes is one application. High-margin industries like finance usually deploy these things first: The early adopters could be traders in commodity pits signaling like crazy folk. The rest will follow.

Videogames will influence how next-gen workers interact with each other. Call of Duty, a military simulation game, has a mode that allows players to cooperate from remote locations. In World of Warcraft, players form guilds to collaborate, using real-time texting and talking, to navigate worlds presented in high-resolution graphics. Sure, they have funky weapons and are killing Orcs and Trolls and Dwarves, but you don't have to be a gamer to see how this technology is going to find its way into corporate America. Within the next few years, this is how traders or marketers or DNA hunters will work together. No more meetings!

Even the entertainment and media businesses will be transformed. In 1985, Neil Postman of New York University wrote a book, "Amusing Ourselves to Death," disparaging the media for ruining discourse. Postman died in 2003, but I wonder what he'd think today: Online ad sales are now more lucrative than newspaper advertising, as marketers follow their customers. Netflix video streaming will change the cable TV business. The videogames Rock Band and Guitar Hero have taught the media how to package something that's at least 30 years old, in this case music you play along with, and sell it as if it were new.

The mass expansion of videogames only reflects on how specialization via technology has swiftly been diffusing into the highly competitive marketplace. The videogames industry today is estimated at $21 billion, according to Venturebeat.com and is expected to balloon to $68 billion, according to arstechnica.com. (includes the graph below)

And part of this growth will come from social network gaming.

According to Red Herring,

Farmville and other social games won't be needing Farm Aide support for 2011. According to a recently released eMarketer report, social gaming will reach a billion dollar business this year.

Not that the techsphere is reeling from the news. Considering the massive growth of Facebook and Zynga platforms for social gaming lately, this impressive statistic is hardly surprising, though it's nice to have the numbers to back it up.

According to the report, nearly 62 million Internet users, making up 27 percent of the online audience, will engage at least one game on a social platform monthly this year, a sizable increase from the 53 million who did so in 2010. US consumers will spend $653 million on social gaming for 2011, a hearty boost from the $510 million they spent last year.

Count me as one of the free riding game players (presently active in Knights of Camelot and Napoleonic wars but am rethinking if I should continue)

I think the idea that video games will serve as one of the most important source of innovation is spot on. That’s because video games seems emblematic of free market forces at work where competition drives innovation through the technology platform, where game developers tap the specialty market segments through various genre of games, which has been rapidly growing along with explosive growth of web usage.

While Mr. Kessler rightly attributes the origins of some of the past technological innovations to the government, it is important to point out that the market, and not the government, has fuelled the widespread use.

As rightly Peter Klein explains, (bold highlights mine)

But technological value is not the same as economic value. That can only be determined by the free choice of consumers to buy or not to buy. The ARPANET may well have been technologically superior to any commercial networks that existed at the time, just as Betamax may have been technologically superior to VHS, the MacOS to MS-DOS, and Dvorak to QWERTY. (Actually Dvorak wasn't.) But the products and features valued by engineers are not always the same as those valued by consumers. Markets select for economic superiority, not technological superiority (even in the presence of nefarious "network effects," as shown convincingly by Liebowitz and Margolis).

In short, those cited figures—billions in dollars—account for as the economic value of these videogames. It’s not just the game, but how people spend for it which sustains and grows the industry and at same time satisfying millions of users.

From the investment perspective, surging video and online social network games seem as one great area to explore.

Celebrities of Globalization: Charice Pempengco and Journey’s Arnel Pineda

2 fantastic Filipino international music superstars Charice Pempengco and Arnel Pineda, the lead singer of a pop rock band of the 80s Journey, represent as shining examples one of the miracles of globalization.

Charice Pemepengco (left) and Arnel Pineda (right)

[sorry I am not aware of the billing order for the two celebrities thus made use of family name alphabetical order. Nevertheless portraits from Wikipedia.org]

The stepping stone to newfound stardom for these Filipino artists:

Charice Pempengco, according to Wikipedia.org (bold emphasis mine)

Pempengco made minor appearances on local television shows and commercials, but essentially had fallen off the radar after her stint at Little Big Star. It was not until 2007 that she gained worldwide recognition after an avid supporter started posting a series of her performance videos on YouTube under the username FalseVoice. These videos received over 13 million hits which, according to Reyma Buan-Deveza, makes Pempengco a "YouTube singing sensation"

Arnel Pineda, lead singer of popular 80s rock band Journey, based on the accounts of the mainstay members on this interview:

______________

Arnel Pineda’s biography according to Wikipedia.org here

My observations:

-The recent career success of both Filipino artists has been founded on the crucible of technology, social mobility, and importantly in response to a global audience.

-Both artists have defied the traditional-conventional vertical (organizational) process of discovering talent for the music industry.

In the case of Ms. Pempengco, her seeming unsuccessful debut in the local TV contest (one of the orthodox way of talent scouting) had been representative of the failure of the select judges to appreciate her talents in lieu of the market.

But that didn’t deter her. The viral (word of mouth) ramifications diffused over the web apparently neutralized the rigid and discriminatory screening process that eventually launched her newfound fame.

In short, 13 million hits demolished the subjective opinions of a handpicked few who presupposed ascendancy over the market’s opinion or appreciation over her talents.

Although one might interpret that Ms. Pempengco’s genre of music appear to cater to international audience more than the local ones, which may be partly true, I would suspect more of the rigid screening ‘syndicate’ based process as responsible for missing out in identifying her talent.

After her international success, local outfit have been quick to embrace her.

Of course, her perseverance and creativity had also been instrumental to the advancement of her aspirations.

In the case of Mr. Pineda, while years of exposure may seem to have augmented his recent career glory, the orthodoxy in the artist talent scouting system surely didn’t—as Mr. Pineda’s career didn’t make any significant headway.

Of course, this was not until Journey’s direct discovery through the internet (via Journey’s guitarist Mr. Neal Schon), which serves as a testament to the technology-aided short-circuiting of the archaic agent based process.

While it may be true that Mr. Pineda or Ms. Pempengco’s case could be, for the moment considered as unique, nevertheless, such trends appear on the way to radically alter the conduct of business as manifested in the music industry.

-Lastly, the Pempengco and Pineda ‘rags to riches’ success story appear to be representative of the internationalization or the global integration of the marketplace. In particular, the expanded access to a global pool in the matching of ‘specialized’ talent-to-‘niche’ audiences.

Think of it, if one of the three variables (technology, social mobility, and a global audience) had been encumbered, then the many would not have appreciated the magnificent repertoires provided by these newly discovered highly talented Filipino artists.

In short, the democratization of information (via technology platform) and increasing social mobility appears to have played a crucial behind-the-scenes role in the success story for these Filipino celebrities of globalization.

And count me in as a fan of the market elected talents.

More Competition Via Deregulation For The US Electricity Industry?

The electricity market in the US appears to be opening up, that’s according to Energy biz editor Ken Silverstein, (bold emphasis added)

“While retail deregulation has fallen short of its promises, wholesale markets where industrials buy directly from generators are opening up. And the subsequent efficiencies are benefitting smaller consumers, who are also expected to see added improvements once their providers implement smart grid technologies that maximize efficiencies.”

And a genuine “deregulation” should translate to more competition. Adds Mr. Silverstein, (bold emphasis mine)

“Despite strong sentiments on both sides of the restructuring debate, it is too late to reverse directions in the wholesale market. That's because of the existing investments in unregulated generation and the sales efforts built to support that. The goal then is to create a fair market that enforces equal access to the grid and allows at least big buyers a choice in the matter. Any efficiency gains would then be passed down to smaller users.

“Deregulation has not been the panacea that supporters had hoped. But it is impractical to reverse course, particularly since customers are still switching.

“Under regulation, ratepayers may bear the risk of mistakes resulting from where and how investments are made. In competitive markets, however, the penalties for such mistakes fall on management and shareholders. Such accountability leads to better results, say proponents of deregulation, adding that the transition period from the traditional regulatory model to robust competitive markets takes time.”

Some comments:

The industry appears to be responding to the dictates of consumers more than the political supporters of a closed industry.

Perhaps this has been due to the ratchet effect or the “tendency of people to be influenced by the previous highest (or best) level of a factor (variable)” from the previous attempt to deregulate.

Next, this is exactly the difference between free markets and socialism: the profit and loss incentive versus collective risk taking.

Another, technology appears to be a critical factor in helping push consumers to demand for more competition.

Mr. Silverstein anew,

``The most significant catalyst for more efficient retail and wholesale energy markets will be less about new rules and regulations and more about technologies centered on the smart grid that can provide enhanced services and cleaner options. Utilities that incorporate those tools will, indeed, enjoy more competitive positions.”

If the trend towards more competition via deregulation is true, then this area should be a bright spot in an otherwise bleak- “socialization” of the US.

Technology Curve: Terrific Advances In Supercomputers

The technology curve has indeed been accelerating as the capacity of supercomputers continually soar.

This update from the Economist,

``AMERICA's dominance in the field of supercomputing has slipped over the past decade, according to the latest TOP500 chart, a biannual list of the world's fastest number-crunching machines. Having accounted for 56% of the top 50 machines a decade ago, America now accounts for 40%. Japan has lost ground too, while Britain and Germany have held steady. The greatest gains have been made by France, due in part to the use of supercomputers in the energy industry, and China, which had no supercomputers in the top 50 a decade ago, but now has four, including the world's second-fastest machine, at the National Supercomputing Centre in Shenzhen. Other countries have also moved up the rankings, which indicates that supercomputers are more widely distributed around the world than they used to be: the top 50 machines include computers in South Korea, Saudi Arabia, Switzerland and India."

The loss of the dominance of the US in this field does not exhibit a zero sum based competition, where one's gains translates to the loss of the others, which appear to be the undertone of the article.

What's truly happening is that the progress in technological innovation in supercomputers have been more diffused globally where more nations have been participating in the growing pie.

The general advances in the capability of supercomputing from Top500.org illustrates of the dynamics of the growing pie. The progress has been breath-taking.

In my view it's merely the motions of Moore's law at work, and possibly Ray Kurzweil's technological singularity.

And this has been fuelled by competition, globalization and collaboration.

And it would be a mistake to gloss over the implications of such remarkable progress in technology innovation to the real economy.

Read more interactive graph of supercomputers from BBC here

How Free Markets In The Telecom Industry Aids Economic Development

The global telecom industry best exemplifies how competition spurs economic development.

The growth in mobile use has been phenomenal; some 5 billion people are expected to be subscribers by the end of 2010- that's about 75% of the world population!

And mobile broadband (internet) takeup is also expected to exceed a billion users from 600 million as of 2009!

What makes this astounding is that the gist of the growth has been in the developing or poor economies. In short the poor is benefiting from free trade!

The following charts are from the World Bank's Development Indicators....
And that's because competition has prompted for a sharp decline of prices or fees for mobile services.

In short, the wonders of competition and technology based DEFLATION! (Darn the mainstream for painting deflation as evil)


And lower prices has attracted widespread demand which has led to this astounding growth!


These are emblematic of basic economic laws at work.

Competition drives prices lower, lower prices prompts for more demand, and finally widespread use indicates enhancement to people's lifestyle via enhanced connectivity, greater access to information, the lowering of transaction costs, more efficient markets, greater market breadth, influences on how politics are being shaped, introduces new services and importantly, more prosperity.

So in contrast to protectionists, who are so naively averse to competition and blame everything else to globalization, when domestic policies (bubble policies, regulatory quirks and bias, protectionism, cronyism and statism) have been the culprit for their woes, competition is and will be a MAJOR plus.

Proof?

This magnificent article from Jenny C. Aker and Isaac M. Mbiti of the Boston Review (hat tip: Mark Perry)

[bold emphasis mine]

``There are some good reasons to believe that mobile phones could be the gateway to better lives and livelihoods for poor people. While some of the most fundamental ideas in economics about the virtues of markets assume that information is costless and equally available to all, low-income countries in sub-Saharan Africa are very far from that idealization. Prior to the introduction of mobile phones, farmers, traders, and consumers had to travel long distances to markets, often over very poor roads, simply to obtain price (and other) information. Such travel imposed significant costs in time and money.

``Mobile phones, by contrast, reduce the cost of information. When mobile phones were introduced in Niger, search costs fell by half. Farmers, consumers, and firms can now obtain more and in many cases “better” information—in other words, information that meets their needs. People can then use this information to take advantage of arbitrage opportunities by selling in different markets at different times of year, migrating to new areas, or offering new products. This should, in theory, lead to more efficient markets and improve welfare.

``An emerging body of research suggests that perhaps theory is meeting reality. In many cases, these economic gains from information have occurred without donor investments or interventions from non-governmental organizations. Rather, they are the result of a positive externality from the information technology (IT) sector.

``In Niger, millet, a household staple, is sold via traditional markets scattered throughout the country. Some markets are more than a thousand kilometers away from others with which they trade. The rollout of mobile phone coverage reduced grain price differences across markets by 15 percent between 2001 and 2007, with a greater impact on markets isolated by distance and poor-quality roads. Mobile phones allowed traders to better respond to surpluses and shortages, thereby allocating grains more efficiently across markets and dampening price differences. Mobile phone coverage also increased traders’ profits and decreased the volatility of prices over the course of the year.

``The benefits of mobile phones are not limited to grain markets or to Africa. Robert Jensen, a UCLA economist, found that in the Indian coastal state of Kerala, mobile phones reduced price differences across fish markets by almost 60 percent between 1997 and 2001, providing an almost-perfect example of the “Law of One Price”: when markets work efficiently, identical goods have the same price. Even more impressive, mobile phones almost completely eliminated fisherman’s waste—the catch left unsold at the end of the day—by allowing fishermen to call around to different markets while at sea, choose the market with the best price, and sell accordingly. Mobile phones resulted in welfare improvements for both fishermen and consumers: fishermen’s profits increased by 8 percent, and consumer prices declined by 4 percent."

The article further deals with how the free market in telecoms has influenced improvements to education, health services, financial transaction (mobile banking) and governance (vigil on corruption).

Read the rest here.

Applied to the Philippines, mobile subscribers are estimated today at 72.8 million, according to the Streetinsider.com, or about 80% of the entire population!

Yet popular mobile usage is helping facilitate the introduction of new services as financial intermediation or mobile banking.


Where a big segment remains unbanked, mobile banking is helping to close this gap.

Writes the McKinsey Quarterly,

[bold emphasis mine]

``In the Philippines, for example, mobile-subscriber penetration is almost 80 percent, but banking penetration is only around 35 percent, leaving 21 million mobile subscribers with no bank account. If operators in the Philippines could bring mobile-money penetration rates among the unbanked into line with those achieved by best-practice operators elsewhere, they could acquire four million to five million new customers and add two to three percentage points of growth to their revenues. And these numbers don’t include earnings on loans and deposits, which we conservatively estimate could be a further $60 million to $80 million. Introductory mobile-money services also set the stage for additional cross-selling and up-selling in the future. In addition, eight million unbanked people in the Philippines don’t have mobile phones, and mobile money could make phone subscriptions more attractive to this segment."

From the development aspect, it is worthwhile to repeat that competition impacts the world in general positively.

In terms of investment, in the Philippines, industries that revolve around the growth of mobile banking should be a worthwhile field to consider.

The Final word from Friedrich August von Hayek,

``Competition is essentially a process of the formation of opinion: by spreading information, it creates that unity and coherence of the economic system which we presuppose when we think of it as one market. It creates the views people have about what is best and cheapest, and it is because of it that people know at least as much about possibilities and opportunities as they in fact do. It is thus a process which involves a continuous change in the data and whose significance must therefore be completely missed by any theory which treats these data as constant."

Yes, the telecom industry is essentially validating Hayek.

Natural Gas: Alternative Energy Of The Future

The Economist has this nice article about natural gas.

The article goes to show that the world isn't running out of energy. It's just a matter of markets aided by technology, adapting to the current conditions.

Here's an excerpt, (all bold highlights mine)

``The source of America’s transformation lies in the Barnett Shale, an underground geological structure near Fort Worth, Texas. It was there that a small firm of wildcat drillers, Mitchell Energy, pioneered the application of two oilfield techniques, hydraulic fracturing (“fracing”, pronounced “fracking”) and horizontal drilling, to release natural gas trapped in hardy shale-rock formations. Fracing involves blasting a cocktail of chemicals and other materials into the rock to shatter it into thousands of pieces, creating cracks that allow the gas to seep to the well for extraction. A “proppant”, such as sand, stops the gas from escaping. Horizontal drilling allows the drill bit to penetrate the earth vertically before moving sideways for hundreds or thousands of metres.

``These techniques have unlocked vast tracts of gas-bearing shale in America. Geologists had always known of it, and Mitchell had been working on exploiting it since the early 1990s. But only as prices surged in recent years did such drilling become commercially viable. Since then, economies of scale and improvements in techniques have halved the production costs of shale gas, making it cheaper even than some conventional sources.
More from the Economist,

``The Barnett Shale alone accounts for 7% of American gas supplies. Shale and other reservoirs once considered unexploitable (coal-bed methane and “tight gas”) now meet half the country’s demand. New shale prospects are sprinkled across North America, from Texas to British Columbia. One authority says supplies will last 100 years; many think that is conservative. In 2008 Russia was the world’s biggest gas producer; last year, with output of more than 600 billion cubic metres, America probably overhauled it. North American gas prices have slumped from more than $13 per million British thermal units in mid-2008 to less than $5. The “unconventional”—tricky and expensive, in the language of the oil industry—has become conventional.

``The availability of abundant reserves in North America contrasts with the narrowing of Western firms’ oil opportunities elsewhere in recent years. Politics was largely to blame, as surging commodity prices emboldened resource-rich countries such as Russia and Venezuela to restrict foreign access to their hydrocarbons. “Everyone would like to find more oil,” says Richard Herbert, an executive at Talisman Energy, a Canadian firm using a conventional North Sea oil business to finance heavy investment in North American shale. “The problem is, where do you go? It’s either in deep water or in countries that aren’t accessible.” This is forcing big oil companies to get gassier."

Read the rest here

My comments:

As we have repeatedly said, politics has been the fundamental reason for the elevated prices in oil, caused mainly by geological restrictions or limited access (mentioned by the article) combined with artificial demand from inflationism and or policies, such as subsidies (not mentioned in the article).

Nevertheless, because people adjust to the circumstances they are faced with, such as the pain of higher prices and political constrains, the perpetual desire to satisfy human needs makes possible for ingenuity to pave way for innovative technology which would allow for more access to supplies or substitution.

In the case of natural gas, since there is a recognition, out of the existing technologies, of the abundance of reserves, higher oil prices will likely compel producers to compete to convert erstwhile uneconomical resources into utilizable reserves, ergo "forcing big oil companies to get gassier" as the article mentioned.

And if successful, which I am optimistic of, this will have a spillover effect to the midstream (processing, storage, marketing and transportation) and the downstream (retail outlets, derivative products, etc...). In other words, part of the transformation would likely see global transportation evolve to natural gas as default fuel.

So in the future, we should expect natural gas to also play a big role in the transition to diversify energy sources.

The following chart caught my eye. If the technology to access shale oil becomes universally commercial, guess where the bulk of reserves are?

In Asia Pacific!

A Gallery of Obsolete Occupations

A wonderful showcase of jobs lost due to technological evolution from NPR.com.

A sample with a description shown below (click on the image to redirect to NPR.)[thanks to Cafe Hayek]



This serves as a reminder of how advances in technology induces material changes in the economy. It's an inevitable trend.