Food crisis is a chance to reform global agriculture - FT.com

Summary:
Martin Wolf on why the price of food has risen and what can be done. Weak growth of supply and strong increases in demand has caused stocks of cereals to drop to lowest levels since 80s. Price hikes not due to speculation. Supply is biggest problem. Prices will remain high until energy prices tumble. Poor most affected. Humanitarian intervention needed. Farming overly regulated. Needs to be market oriented. Move towards genetically modified food in developing countries is inevitable in order to increase productivity.(Published: 29/04/08)

Notes:

• Of the two crises disturbing the world economy - financial disarray and soaring food prices - the latter is the more disturbing
• high food prices threaten unrest at best and mass starvation at worst
• jumps in food prices are part of a wider range of commodity price rises
  
• forces that link prices of energy, industrial raw materials and foodstuffs
• rapid economic growth in the emerging world
• strains on world energy supplies
• the weakness of the US dollar
• global inflationary pressures
• but: food now hotter issue that normal
• questions: why have prices of food risen so strongly? Will these higher prices last? What action should be taken in response?
• demand side:
  
• demand for food raised due to strong rises in incomes per head in China, India and other emerging countries
• notably meat and the related animal feeds
• shifts in land use reduce the supply of cereals available for human consumption
• rising production of subsidised biofuels
• stimulated by soaring oil prices
• boosts demand for maize, rapeseed oil and the other grains and edible oils that are an alternative to food crops
• IMF: "although biofuels still account for only 11/2 per cent of the global liquid fuels supply, they accounted for almost half of the increase in consumption of major food crops in 2006-07, mostly because of corn-based ethanol produced in the US"
• supply side:
• aggregate production of maize, rice and soyabeans stagnated in 2006 and 2007
• partly the result of drought
• partly due to higher prices of oil, since modern farming is so energy-intensive
• cereal stocks have fallen to their lowest levels since the early 1980s
• due to weak growth of supply and strong increases in demand
• undermines belief that speculation has driven the rising prices
• if if prices were above market-clearing levels due to speculation, stocks would be rising, not falling
• biggest problem is is weak medium-term growth of supply
• rapid increases in yields of the 1970s and 1980s (the "green revolution") have slowed
• given the stresses on water supplies, longer-term supply prospects would look poor even if diversion of land for production of biofuels were not adding to the pressure
• Are prices going to remain high?
  
• Two opposing forces are at work
• First force is the market
• will tend to bring prices back down as supplies expand and demand shrinks
• latter is also what we want to avoid, at least in the case of the poor, since reducing their consumption is not so much a solution as a failure
• Second force is the current intense pressure on the world's food system
• true of both demand and costs of supply
• Prices are likely to remain relatively elevated, by historical standards, unless (or until) energy prices tumble
• what is to be done? answers fall into three broad categories:
  
• humanitarian
• important point: higher food prices have powerful distributional effects: they hurt the poorest the most
• Increases in aid to the vulnerable, either as food or as cash, are vital
• Equally important, however, is ensuring that the additional supplies reach those in greatest difficulty.
  
• trade and other policy interventions
  
• Protection, subsidies and other such follies distort agriculture more than any other sector
• rich countries are encouraging, or even forcing, their farmers to grow fuel instead of food
• present crisis is a golden opportunity to eliminate this plethora of damaging interventions
• focus should be on shifting the farm sector towards the market, while cushioning the impact of high prices on the poor
  
• longer-term productivity and production
• far greater resources need to be devoted to expanding long-run supply
• increased spending on research, especially into farming in dry-land conditions
• the move towards genetically modified food in developing countries is as inevitable as that of the high-income countries towards nuclear power
• more efficient use of water, via pricing and additional investment.
  
• "People will oppose some of these policies. But mass starvation is not a tolerable option."

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America needs a new case for trade - FT.com

Summary:
Larry Summers on rise of anti-free trade sentiment in US. Despite economic benefits, free trade does appear to be hurting American workers. Vigorous effort needed to help those left behind. Global prosperity at expense of workers and middle classes in rich countries. This may lead to loss of support for internationalist economic policy. In order to prevent this, better alignment is needed between the interests of this group and the success of the global economy, to be discussed in part 2. (Published 28/04/2008)

Notes:

• America's commitment to internationalist economic policy in doubt
• significant rise in unemployment likely in months ahead due to financial crisis
• presidential candidates attacking NAFTA
• increasing attacks on foreign investment in US
• growing support for restrictive immigration policies
• typical 4-part response by conventional wisdom:
1. trade benefits not just producers but also consumers, and economy in general
2. free trade also represents good mercantilism: US already has low trade barriers, don't need to be reduced as much as those of trading partner; note: US in competition with other major economic powers, and will therefor be at a disadvantage if developing country has free trade agreement with them and not with us
3. most of the increase in observed income inequality due to new technology rather than increase trade; moreover most of the increase in trade not attributable to trade agreements
4. acknowledged that although trade is good for the economy overall, not everybody wins
• needs complementing with ambitious effort to reduce insecurity and income inequality; eg universal healthcare?
• All correct economic arguments
• compelling case that US is better of than without free trade agreements, that world will be a richer and safer place with more economic integration
• if combined with vigorous efforts to help those left behind, support for economic internationalism may be maintained
• But policy debate will need to confront suspicion held by many that growing prosperity of global economy may not be in their interest
• Paul Samuelson, years ago: the valid proposition that trade barriers hurt an economy does not imply the corollary that it necessarily benefits from the economic success of its trading partners
• When other countries develop American producers benefit from larger export market but are faced with more competition; which effect dominates?
• reasonable to think that economic success abroad hurts American workers; 3 reasons:
1. increased export by developing countries of goods that the US slso produces such as computers and software puts pressure on wages; at the same time, global prosperity increases rewards for the already highly paid producers of intellectual property goods such as films and music
2. increased global competition for energy and natural resources raising prices for Americans
3. most fundamental: growth of global economy encourages development of 'stateless elites'; allegiance to global economic success and own interest rather than nation where headquartered
• even as globalization increases inequality and insecurity, it is usually invoked as argument against progressive taxation, support for labour unions, strong regulation, and substantial production of public goods that mitigate its adverse impact
• Focus must shift from supporting internationalism as traditionally defined, to designing an internationalism that more succesfully aligns the interests working people and the middle class in rich countries with the success of the global economy
  

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Quote of the Day

"The power of accurate observation is commonly called cynicism by those who have not got it." - G.B. Shaw

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OLEDs could soon wave lifetime woes goodbye - R&D Magazine

Summary:
Sealing of OLEDs using ion-assisted deposited passivation layer (SiON) as opposed to glue has been found to greatly increase the longevity of the displays. SiON has a lower water permeability than conventional glues, the main cause of reduced life-times of OLEDs. Note: these OLEDs are compared against unencapsulated OLEDs, not commercial benchmarks, and the results are far less impressive when this is borne in mind. Overhyped IMAO. (published: 23/04/2008)

Notes:

• OLEDs promising for next generation of displays and solid state lighting
  
• use less power
  
• can be more efficiently manufactured
• better color
• capability of larger displays
• lacking is an inexpensive encapsulation method to mass produce organic electronics that doesn't let moisture in
• currently displays sealed in inert atmosphere or in vacuum
• glass lid glued on top of display substrate
• moisture absorbing powder inside
• expensive and labor-intensive to assemble
• Georgia Tech Research Institute (GTRI)
• Wusheng Tong, senior research scientist
  
• Hisham Menkara, senior research scientist
• Brent Wagner, principle research scientist
  
• thin film barrier, pinhole free SiON (silicon oxynitride)
  
• ion assisted deposition
• relatively inexpensive
• performed at room temperature, thus keep organics material intact
• 50-200nm
• thinner increases risk of pinholes
• no sign of degradation after 7 months using SiON barrier
• as opposed to 2 weeks unencapsulated, same conditions
• note: this is to be expected without encapsulation
  
• accelerated degradation tests at 50°C and 50% relative humidity
• little degradation after 2 weeks
• note: 2 weeks at 50°C and 50% RH not very impressive
  
• unencapsulated OLEDs degraded immediately
• note: again, this is to be expected without encapsulation
• Note: these devices should be compared against an industry standard (e.g. a Kodak OLED) rather unencapsulated displays
  

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Tracing China's Ascent - The Globalist

Summary:
Giovanni Arrighi argues that China's economic boom is not the result of direct investment by the West or Japan, but by direct investment by Chinese overseas, mainly in Hong Kong and Taiwan. Western and Japanese corporations faced burdened with regulations, not faced by Chinese ex-pats. This dictation by the Chinese government of the terms of access to Chinese labor etc., was an essential ingredient of the success of Chinese economic reforms.(Published: 23/04/2008)

Notes:

• China's attraction for foreign capital: not quantity of low-priced labour, but quality of it
• health, education and capacity for self-management
• foreign capital intervened late in process of development of China
• mainly facilitated by Chinese diaspora capital
• matchmaker between foreign capital and Chinese labour, entrepreneurs and government officials
• China under Deng sought assistance of the overseas Chinese in opening China to foreign trade and investment
• more fruitful alliance for Chinese government than open-door policy towards Western coroporations
• kept their investments to bare minimum needed to keep foothold in China
• bothered by regulations that restricted their freedom to hire and fire labour, buy and sell commodities, remit profits out of China
• overseas Chinese could bypass most regulations
• familiarity with local customs, habits and language; manipulation of kinship and community ties; preferential treatment received from CCP officials
• investment by overseas Chinese (mainly Hong Kong and Taiwan) far exceeded that of Western and Japanese corporations
• 1990: Hong Kong/Taiwan: 75% of all foreign investment; Japan: 5%
• investment by Japan grew rapidly after that (24% in 1993), but this followed rather than led the boom of foreign investment in China
• as Chinese ascent gained momentum under its own steam in 1990s, Japanese, US and European capital flocked ever more massively to China
• total foreign direct investment:
• 1990: $20b
• 2000: $200b
• 2003: $450b
• "But if foreigners were investing, it was only because the Chinese were investing more"
• foreign capital jumped on the bandwagon of an economic expansion which it neither started nor led
• foreign capital needed/needs China far more than China needs foreign capital
• US companies face simple imperative: invest in China to take advantage of country's cheap labour and its fast-growing economy, or lose out to rivals
• before: China just manufacturing center; now: China place to develop and sell high-tech goods
• capacity of Chinese government to dictate to (rather than being dictated by) foreign capital the terms of access to Chinese labour, entrepreneurship and markets has been essential ingredient of success of Chinese economic reforms
  

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Quote of the Day

"When there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'" King Abdullah of Saudi Arabia (21/04/08)

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Quote of the Day

"Careful. We don't want to learn from this." - Bill Watterson (Calvin & Hobbes)

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Nano switch hints at future chips - BBC NEWS

Summary:

Molecule sized transistors made using graphene. Graphene geat conductor, works at room temperature. Challenge is to make large wafers. Other applications: displays and solar panels. (17/04/2008)

Notes:

• graphene
• single layer of graphite, thickness of one atom
• stable and robust
• transparent
• Dr Kostya Novoselov and Professor Andre Geim from The School of Physics and Astronomy at The University of Manchester
• first to separate sheet of graphene from graphite, 2004
• leading research into potential applications of graphene in electronics
• Manchester team shown that graphene can be carved into electronic circuits with individual transistors
• transistors not much larger than one molecule
• graphene can conduct electricity better than silicon
• great conductor
• graphene transistors will work at room temperature
• current silicon roadmap expected to end in 2020
• race to find alternative materials
• biggest challenge: producing graphene sheets big enough to be used as wafers for chip production
• biggest wafer produced so far: 100um
• yield of working devices: ~50%
• same process used as in making silicon transistors
• use in display technology?
• because it is transparent
• transparent conductor
• using small interconnecting graphene sheets together
• other applications: solar panels, transparent window coatings, sensing technologies

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I and My Brother Against My Cousin - The Weekly Standard

Summary:

Stanley Kurtz reviewing Philip Carl Salzman's "Culture and Conflict in the Middle East". Dominant theme of cultural life in Arab Middle East is the template of tribal life: collective responsibility, feuding, balanced power and honor shaping every action and thought; Islam and state merely superficial layers. Controlled anarchy. Tribal societies egalitarian and democratic. Islam: uniting all Arab tribes in ultimate feud against infidel outsiders. Western strategy for change should focus on tribal aspect not Islam; Islam sacred, tribal aspects not so and open for criticsim (14/04/2008)

 

Notes:

• Middle Eastern tribes: think of themselves as giant lineages, traced through the male line, from some eponymous ancestor
• each giant lineage divides into tribal segments, subdivide into clans, divide into sub-clans, etc down to families
• traditionally Middle Eastern tribes have existed outside of the police powers of the state
• keep order through a complex balance of power between these fusing and segmenting ancestral groups
• central institution of segmentary tribes is the feud
• security depends on willingness of every adult male in given tribal segment to take up arms in its defence; universal male militarization
• attack on lineage-mate must be avenged by entire group; vice versa, any lineage member is liable to be attacked in revenge for offense committed by relative
• results in system of collective responsibility: action of any one person directly affect reputation and safety of entire group; collective guilt
• Muslim tribal society is both fundamentally collectivist and profoundly individualist
• no man of the tribe can, by right, command another
• all males equal, free to dispose of their persons and property and to speak in councils that determine fate of the group
• fundamentally democratic
• Arab saying: "I against my brother; I and my brother against my cousin; I and my brother and my cousin against the world"
• liberal Westerners: why risk battle without first making a reasonable effort to talk problem out?
• sort of question liable to be posed by someone living where a state monopolizes the legitimate use of force and police and courts can be relied upon to keep the peace
• in non-state setting, where anarchy is kept under control only by the threat or use of force, it makes sense to send a war party first and ask questions later
• conveying impression of weakness
• preventing future abuse in lawless desert environment by publicly making capacity known to swiftly unify to preserve interests
• Arab tribesmen preoccupied with maintaining deterrence and are prepared to use force preemptively
• much like neocons: hawkish conservatives ("rightly") believe global anarchy underlies reality of international system; much like de facto stateless anarchy in which Bedouin Arabs live
• swift and seemingly disproportionate resort to retaliatory force against apparently trivial offenses is an effective technique for surpressing future challenges
• eg careful use of targeted force against Western critics of Islamism; overtly religious action actually shaped by a hidden tribal template
• eg fatwa against Salman Rushdie, rage against Muhammed cartoons, killing of Theo van Gogh, ...
• all examples of pro-active deterrence
• doves: use of force serves to unite foe; creating impression of an infidel war against Muslims, thus recruiting every Muslim lineage into bin Laden's civilisational war party
• true, but on the other hand, failure to strike back creates impression of weakness that invites further attacks
• Islamists view cooing of the doves as sign that their feud against the West has successfully weakened and split our own coalition
• disturbing lesson: in the absence of fundamental cultural change, the feud between the Muslim world and the West is unlikely ever to come to an end
• tribal feuds simmer on and off for generations, with negotiated settlements effecting only temporary respites
• Western liberal template takes an experience of peace under the lawful authority of a state as the normal human condition
• in this view, when peaceful equilibrium is disturbed, reasonable men reason together to restore normalcy
• in tribal template, low-level endemic feuding in conditions of controlled anarchy is the norm
• liberal "come let us reason together" model has little currency in Arab tribal culture
• Salzman: Tribal template is dominant pattern of Arab culture, not religion
• religion is overlay in partial tension with, and deeply stamped by, the dynamics of tribal life
• To think of Middle East as consisting of a number of states is mistake.
• Rather, collection of tribes.
• Governing party essentially tribe or tribal coalition with most power (e.g. Saddam Hussein)
• Statelessness increases as one moves towards periphery of nation.
• Statelessness seen by tribes as essential condition of dignity, equality, and freedom.
• State = predation under official guise
• Importance of avoiding dishonourable submission; avoiding life of peasant humiliation and exploitation
• Salzman: tribal template dominant pattern of Arab culture
• not details of tribal kinship matter, but underlying principles of "balanced opposition," in which collective responsibility, honor and feuding shape every action and thought;
• quick shifts in loyalty often called for
• unite with erstwhile enemies in opposition to a more distant foe
• all members of an enemy group are potential targets
• demand honourable behaviour from members of own group
• maintain own and group's honour by a clear willingness to sacrifice for the collective good
• Islam's founding triumph was to raise stakes of balanced opposition by uniting all the Arab tribes in an ultimate feud against infidel outsiders
• Muslim's treating tribal era of Muhammed and his early successors as golden age of Islam
• cultural influence of tribal template thus remains pervasive
• Gaza's feuding clans: revelation of bedrock of Middle Eastern social organisation
• ever-present and ever-influential beneath superficial layers of Islam and state
• political paradox posed by Salzman's tribal interpretation of Arab culture
• on one hand, pervasive tribal principles of balanced opposition are "precluding democracy" in Middle East
• to democratise Middle East, the particularist loyalties at the core of balanced opposition (kin, tribe, sect) need to be replaced by greater "individualisation"
• only then could an authentic liberal democracy based on constitionalism and the rule of law take root in the Arab world
• on other hand, tribal culture is largely egalitarian, individualist and democratic in character
• balanced opposition is democratic because decision making is collective and everyone has a say
• absence of government authority, combined with system of shifting coalitions of willing individuals, means that freedom, equality and personal responsibility - along with bellicosity and courage - are fundamental tribal values
• confusion about meaning of words "freedom," "equality," and "democracy"
• in liberal state, freedom is rights-based and universal
• in tribal society, freedom is freedom of freestanding warrior and his tribe to dominate and deprive others of their liberty
• equality refers to equal combat, as opposed to submission
• democracy is closer to a conclave of family heads in the Godfather, never far from potential violence, than to debate in a modern representative assembly
• not equality before the law, but equality outside of the law
• democracy requires something more fundamental than open consultation between descriptively free and equal parties
• Arabs know all about freely expressing their opinions in open council, yet have fundamental reservations about entering into the sort of social contract required to create a modern liberal state
• largely justified: state offers only thin alternative to "the war against all"
• most Middle Eastern states are just reincarnations of the predatory winner-take-all tribal coalitions of old
• why exchange protection of your family, tribe or sect for submission to a weak or predatory state?
• "tribal society contains just enough order to make a bit of violent anarchy bearable, and just enough grasping anarchy to make a liberal social contract unreliable"
• won't be easy to weaken cycle of particularism, ie the self-reinforcing loyalties of extended family, tribe and sect that dominate Arab countries at both state and local levels
• West needs to learn to understand and critique the Islamic Near East through a tribal lens
• Islam is only half the cultural battle
• tribal practices, however, are less swathed in sacredness than explicitly Koranic symbols and commandments
• therefore more susceptible to criticism and debate
• new and smarter strategy for change

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Quote of the Day

"I know that most men, including those at ease with problems of the greatest complexity, can seldom accept the simplest and most obvious truth if it be such as would oblige them to admit the falsity of conclusions which they have proudly taught to others, and which they have woven, thread by thread, into the fabrics of their life". - Tolstoy

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The financial system: What went wrong - Economist.com

Summary:

Economist special briefing looking at Wall Street near-collapse and future changes in financial system; financial services industry racing ahead when economy slowed down; causes and consequences; incentives and regulation (19/03/2008)

Facts and Figures

• American financial services industry
• share of total corporate profits
  
• 1980: 10% ; 2007: 40%
• share of stockmarket value
  
• 1980: 6%; 2007: 19%
• accounts for 15% of America's gross value added
• accounts for 5% of private-sector jobs
• value of outstanding credit default swaps: $45tr (2008)
  
• financial sector debt vs. non-financial debt
• 1980: 1:10; 2008: 1:2
• Leverage of banks
  
• Goldman Sachs: $1.1tr assets on $40bn equity
  
• Merrill Lynch: $1tr assets on $30bn equity
  

Notes:

• American financial services industry from early 1980s to 2007
• share of total corporate profits from 10% to 40%
• share of stockmarket value from 6% to 19%
• account for only 15% of America's gross value added
• account for only 5% of private-sector jobs
• 1982 to 2000, unparalleled bull market for shares and bonds
• something changed in 2001, after bursting of dotcom bubble
• America's GDP growth since then been weaker than in any cycle since 1950s
• growth in consumer spending, total investments and export been correspondingly feeble
• but financial services industry did not slow down; raced ahead of real economy ("as ground beneath it fell away")
• industry been able to boost income and profits by using debt, securitisation and proprietary trading
• investors (hungry for yield) went along
• industry has further combined computing power and leverage to create burst of innovation
• value of outstanding credit default swaps at $45tr
• financial sector debt vs. non-financial debt
• 1980: 1:10; 2008: 1:2
• investment banks trading heavily on own debt accounts
• Goldman Sachs: $40bn equity as foundation for $1.1tr assets
• Merrill Lynch: $30bn equity for $1tr assets
• "In rising markets, gearing like that creates stellar returns on equity. When markets are in peril, a small fall in asset values can wipe shareholders out."
• Banks' course made possible by cheap money, in turn facilitated by low consumer-price inflation
• central banks have conspired with banks' urge to earn fees and use leverage
• previously, credit controls or gold standard restricted creation of credit
• as result of liquidity and "financial firms' thirst for yield," boom in American subprime mortgates
• tendency for financial services to go over cliff is accentuated by financial assets' habit of growing during booms
• by lodging their extra assets as collateral, intermediaries can put them to work and borrow more
• since 1970s, debts have grown faster than assets during booms
• banks using borrowed money to buy more of the securities they lodged as collateral; raises prices of the those securities; enables banks to raise more debt and buy more securities
• "pro-cyclical leverage" feeding on itself
• banks get punished by shareholders if they sit out next round
• "bank trapped in a dance it cannot quit; but sooner or later music stops"
• mechanisms that create abundant credit will eventually also destroy it
• "most things attract buyers when price falls, but not necessarily securities"
• financial intermediaries need to limit their leverage in falling market; sell assets; lowers price of securities; puts further strain on balance sheets leading to further sales; continues until those without leverage will buy
• cycles not necessarily result of poor monitoring or huge incentives; human nature; competing with star trader next door
• but pay and lack of regulation probably made this crisis worse; proper incentives needed
• prediction that in future senior executives will face prospect of some of their bonuses being contingent on bank's performance over several years
• but is already the case: many senior bankers paid in shares they cannot immediately sell
• e.g. Bear Stearns' employees owned third of company; already looking to longer term
• more regulation?
• regulation does not just offer protection, but also clever ways to make money by getting around it
• capital reserve requirements set up incentive to create structures free of capital burden (e.g. 364 days credit, "not permanent")
• hundreds of billions of dollars in SIVs and conduits to get round the rules
• reformed capital adequacy rules needed, monitor this shadow banking rigorously
• gaming on boundary between AAA and other bonds, passing off poor credit as AAA, making a lot of money, for a while
• financial industry likely to stagnate or shrink in next few years
• partly because last phase of its growth was founded on unsustainable leverage
• partly because value of underlying equities and bonds unlikely to grow as in 1980s and 1990s
• foolish regulation may make it worse

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Quote of the Day

"Eagles may soar, but weasels don't get sucked into jet engines." - John Benfield

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China 'now top carbon polluter' - BBC NEWS

Summary:

Report in Journal of Environment Economics and Management suggest China overtook the US in 2006-2007 as top greenhouse gas emitter. Warns that unchecked future growth will dwarf any emission cuts made by rich countries under Kyoto. (14/04/2008)

Notes:

• Univ of California researchers reporting in Journal of Environment Economics and Management
• China surpassed US greenhouse gas emissions in 2006-2007
• report warns that "unless China radically changes its energy policies, its increases in greenhouse gases will be several times larger than the cuts in emissions being made by rich nations under the Kyoto protocol"
• current computer models substantially underestimate future emissions growth in China
• "all those concerned about climate change agree that China's emissions are a problem - including China itself"
• China and UN insist that rich countries with higher per capita levels of pollution must cut emissions first and help poorer countries to invest in clean technology
• America's per capita emissions five to six times higher than China's
• Auffhammer: "There is no sense pointing a finger at the Chinese. They are trying to pull people out of poverty and they clearly need help. The only solution is a massive transfer of technology and wealth from the West."
• "an eventuality which is unlikely"

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Horrors of a 'Crisis' - Washington Post

Summary:

George Will calling talks of "crisis" exaggerated and typical for presidential elections (need dragons to slay). Early retirement should not be considered a given; Q1 2008 drop of 9.9% in S&P500 not alarming; drop in house prices allows first-time buyers onto ladder (13/04/2008)

Facts and Figures:

• S&P500 contractions:
  • 2008 Q1 : 9.9%
  • 1998 Q3: 10.3%
  • 1990 Q3: 14.5%
  • 1987 Q4: 23.2%
  • 1932 Q2: 39.4%

Notes:

• percentage people working aged 55 to 64 rose 1.5% from April 2007
• Wall Street Journal: "prospect of millions of grandparents toiling away in their golden years doesn't square with the American dream."
• Will: "idea that protracted golden years of idleness are a universal right is a delusion of recent vintage."
• Congress, 1935, enacted Social Security; retirement age set at 65, then life expectancy of average male
  • compare life expectancy today: 75 years
• standard definition of recession: two consecutive quarters of contraction
  • 9.9% first quarter decline of S&P 500 not remarkable
  • Q3 1998: 10.3%, Q3 1990: 14.5%, Q4 1987: 23.2%; all without long-term trauma

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Quote of the Day

"Even if you're on the right track, you'll get run over if you just sit there." - Will Rogers

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China raises GDP growth to 11.9 percent - Boston Globe

Summary:
National Statistic Bureau report; China's GDP ($3.61tr) and growth (11.9%) in 2007; price inflation at 8.7% (10/04/2008)


Facts and Figures:

• China
  
• GDP in 2007: 24.95tr yuan, $3.61tr
• GDP growth
  
• 2007: 11.9%
• 2006: 11.6%
• 2008: 9% (forecast)
• Price inflation Feb 2008: 8.7%
• Highest in 12 years
• Germany's
  
• GDP (2007): $3.8tr
• GDP growth (2007): 2.5%

Notes:

• China's GDP growth in 2007 revised upwards to 11.9% (11.6% in 2006)
• China (GDP $3.61tr) close to overtaking Germany (GDP $3.8tr) as world's third largest economy
• China remains much poorer per person
• China's growth been greater than 10% for last 5 years
• 2008 forecast: 9% due to global slowdown and falling export growth
• Beijing concerned with slowing down growth
• Central bank raising interest rates to cool price pressure (February inflation 8.7%, highest level in 12y)

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The political threats to globalisation - FT.com

Summary:
Gideon Rachman on risks to globalisation; globalisation was made possible by political changes at first; now political changes are threatening globalisation; modern timeline of globalisation, 1978-1991. (07/04/2008)


Notes:

• Most people, globalisation ~ economics, technology and business
• Globalisation was made possible by political changes first; underpinned by political consensus; now political changes are threatening globalisation
• political elites struggling to convince citizens that globalisation doesn't just benefit the rich; losing this argument in any of the major world economies may jeopardise political consensus
• political consensus recent creation; took place in very short period of time: 1978 to 1991, i.e. less than 15 years
• 1978: Deng Xiaoping's reforms; China turns from Maoism to market; most important development
• 1979: Thatcher takes power; abolition of foreign exchange controls; London's rise as global financial centre
• 1980: Reagan takes power; deregulation and tax cuts; huge boost to market ideology around the world
• mid 1980s: creation of single market in EU
• 1980s: discrediting of protectionist populists in Latin America
• 1989: collapse of Berlin wall; Eastern Europe and Russia join globalisation game
• 1991: India moves away from regulation and protectionism
• As a result, now feels as natural doing business in Beijing, Moscow and Delhi as in London and New York
• Could this period of globalisation end, like it did in 1914 and 1930s?
• Most obvious threat: crisis in most important political and economic relationship in the world, between US and China
• Risk in Chinese-American relations is of miscalculation, clash that escalates into something that does real damage; combination of looming recession in US, presidential election and Beijing Olympics are formula for potential trouble
• Other threats (long-term): terrorism and climate change; globalisation depends on ease of travel!
• Biggest risk: politicians losing argument for globalisation; 10 years ago, narrow majority in US in favour of globalisation, now majority against; politicians reacting to this shifts, eg. Democrats taking sceptical line on free trade, Republicans against illegal immigration, Sarkozy arguing for protectionism on EU level
• Indian government lost general election largely because poor, rural voters felt left out by boom; in China, authorities anxious about rural unemployment, environmental protests and wealth gap between rich coasts and poorer inland regions
• rising world food prices, sense that poor have lost out as a result of globalisation

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Glued together by their lies - Literary Review

Summary:
Gillian Tindall's review of "A dangerous liaison" by Carole Seymour-Jones. Describes Sartre and Beauvoir's union as fake. Sartre sexually exploiting young women that Beauvoir provided so as to keep up the appearance of a union. One of these women later committed suicide, two became drug addicts and another permanently traumatised. Beauvoir had affair herself. Labile sexuality. Sartre and Beauvoir are also alleged to have exaggerated their role in the resistance during WWII. (04/2008)

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An American in Beijing - The Globalist

Summary:
Lauren Konopacz on the benefits of studying abroad and in China in particular. (04/04/2008)


Notes:

• "Self" is simply "set of beliefs and assumptions about life that are the products of such as social group, economic class, family background and national culture. Foreign experience allows students to recognize these assumptions in both their host culture and their own." Re-examining assumptions of own lives and assumptions of society belonging to.
• "Globalization has rendered today's world absolutely in need of people with cultural experience other than their own."
• "Just as an art history student must forgo their textbook to go to the museum in order to best experience a work of art, a student of culture or language must forgo their text book to go abroad in order to best experience that culture or language."

Facts and Figures:

• US Senate Resolution 308, 11 Nov 2005: lists several reasons why international experience is important for both the students and the US as a whole;
• eg. "federal agencies, educational institutions and corporations in the United States are suffering from a shortage of professionals with international knowledge and foreign skills";
• eg. study abroad programs "empower students to better understand themselves and others through a comparison of cultural values and ways of life."
• China receiving 5.3% of US exports; 21% of its exports go to US, equal to 15.9% of total US imports; US is China's top export partner
• China's average yearly GDP growth: relatively steady 10-11%

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Why Every Employee Needs a Global Mindset - The Globalist

Summary:
Second excerpt from "The Quest for Global Dominance," by Anil Gupta, Vijay Govindarajan and Haiyan Wang. Companies that want to be market leaders need to cultivate global mindset in all its employees. Importance of selection, demographic makeup, promotion decisions. (03/04/2008)


Notes:

• Global mindset obviously needed for employees managing activties that span borders (e.g. global product manager, employees facing foreign customers/suppliers/colleagues) Greatest value added by/highest return from global mindset at senior levels.
• However, even employees with purely local responsibilities need global mindset. Even assembly workers should develop own "global learning communities"
• Global mindset in every employee needed for creation of global learning organization. Does not need to equally strong across entire spectrum of employees.
• If company's goal is to capture and sustain global market leadership in its industry, necessary to regard development of global mindset as a goal encompassing all units and all employees.
• Global mindset needs to be cultivated, ceaseless journey. Cultivating curiosity and openness about the world.
• Company's greatest degree of freedom lies at the point of selection, managing its demographic makeup and promotion decisions.
• "Promotion decisions to senior executive levels that place high value on global experience and global mindsets also have a corollary effect in terms of sending strong signals regarding the increasing criticality of openness to and curiosity about diverse cultures and markets."
• Market opportunities, critical resources, cutting-edge ideas and competitors not just lurking around corner in home market, but increasingly in distant and often little-understood regions of the world. Cultivating global mindset essential for company to exploit these opportunities and tackle accompanying challenges.

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Cultivating a Global Mindset - The Globalist

Summary:
Excerpt from "The Quest for Global Dominance," by Anil Gupta, Vijay Govindarajan and Haiyan Wang. Not sure what the global dominance is about, but discusses some interesting concepts. Cultivating a global mindset (vs. parochial and diffuse mindsets). Update: global dominance refers to companies wanting to become global market leaders (02/04/2008)


Facts and figures:

• Mobile subscribers in China (2007): ~500m
• Internet users in China (2007): >200m

Notes:

• Global mindset: "combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity.
• Global manager: open-minded; respect how different countries do thing and understand why they do them that way; however, don't passively accept it, push the limits of culture; finding opportunities to innovate through "the debris of cultural excuses"
• Diffuse mindset: some people in firm may have global mindset, but is not philosophy of the whole firm; behaves parochial.
• Microsoft in Chinese market: example of global mindset
• China promises huge market but is accompanied by perils (e.g. software piracy, unpredictable public policy, local enterprises favoured)
• Sophistication level Chinese market in many respects lagging behind, but leading in some (e.g. 2007: mobile subscribers, 500m, and internet users, 200m)
• Global mindset enables company to outpace rivals in assessing market opportunities, establishing market presence necessary to pursue worthwhile opportunities, converting presence across multiple markets into global competitive advantage
• central value of global mindset: enabling the company to combine speed with accurate response; having an insight into the needs of the local market + being able to build cognitive bridges across these needs and between these needs and the company's own global experience and capabilities
• prisoner of diversity: intimidated by enormous differences across markets and staying back
• companies that stay local (eg. nursing homes, hospitals, radio stations, cleaning services, ...) may benefit from global mindset, too: 1) benchmarking and learning from product and process innovations outside domestic borders; 2) alertness to entry of foreign competitors in local market (eg. a global consolidator acquiring a local competitor and changing the rules of the game)
  

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Quote of the Day

"Most men are within a finger's breadth of being mad." - Diogenes the Cynic

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Carbon Dioxide Removed From Smockstacks Could Be Useful In DVD And CD-ROM Manufacture - ScienceDaily

Summary:
Carbon dioxide removed from smokestack emissions in order to slow global warming in the future could become a valuable raw material for the production of DVDs, beverage bottles and other products made from polycarbonate plastics. Two presentations at the ACS 2008 meeting were dedicated to the topic. Polycarbonates have great potential for use in removing carbon dioxide from the environment. Estimates are that it's a matter of a few years before CO₂-derived polymers are available to the public. (Published: 09/04/08)

Notes:

• ACS meeting, April 8, 2008
• two presentations on trapping CO₂ into carbonates and urethanes to avoid release of many million tons into the environment
  
• Thomas Mueller, RWTH Aachen:
  
• "Carbon dioxide is so readily available, especially from the smokestack of industries that burn coal and other fossil fuels. And it's a very cheap starting material. If we can replace more expensive starting materials with CO₂, then you'll have an economic driving force."
• "Millions of tons of polycarbonates already are sold each year with the volume rising. Perhaps no other consumer product has such a great potential for use in removing carbon dioxide from the environment."
• are the mainstay for producing eyeglass lenses, automotive headlamp lenses, DVDs and CDs, beverage bottles, and a spectrum of other consumer products
• "Using CO₂ to create polycarbonates might not solve the total carbon dioxide problem, but it could be a significant contribution."
• "I would say it's a matter of a few years before CO₂-derived polymers are available to the public."
• Toshiyasu Sakakura, Institute of Advanced Industrial Science and Technology in Tsukuba, Japan

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