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]]> A Rationale http://www.brentwheeler.com/index.php?itemid=223 Sun, 25 Jul 2010 19:30:00 +1200 http://www.brentwheeler.com/index.php?itemid=842 Who exactly benefits from CSR
]]> General http://www.brentwheeler.com/index.php?itemid=842 Sun, 25 Jul 2010 19:29:50 +1200 http://www.brentwheeler.com/index.php?itemid=838
Bad legislation, maintained by self-seeking interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur Olson published a book, "The Rise and Decline of Nations," predicting just that trend. Over time, Olson argued, interest groups would form to press for policies that would almost invariably prove protectionist, redistributive or antitechnological. Policies, in a word, that would inhibit economic growth. Yet since the benefits of such policies would accrue directly to interest groups while the costs would be spread across the entire population, very little opposition to such self-seeking would ever develop. Interest groups—and bad policies—would proliferate, and the nation would stagnate.

Olson may have sketched his portrait during the 1980s, but doesn't it display a remarkable likeness to the United States today? Mr. Becker thinks for a moment, swiveling toward the window. Then he swivels back. "Not necessarily," he replies.

"The idea that interest groups can derive specific, concentrated benefits from the political system—yes, that's a very important insight," he says. "But you can have competing interest groups. Look at the automobile industry. The domestic manufacturers in Detroit want protectionist policies. But the auto importers want free trade. So they fight it out. Now sometimes in these fights the dark forces prevail, and sometimes the forces of light prevail. But if you have competing interest groups you don't end up with a systematic bias toward bad policy."

Mr. Becker places his hands behind his head. Once again, he reflects, then smiles wryly. "Of course that doesn't mean there isn't any systematic bias toward bad policy," he says. "There's one bias that we're up against all the time: Markets are hard to appreciate."

Capitalism has produced the highest standard of living in history, and yet markets are hard to appreciate? Mr. Becker explains: "People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."
]]> Policy http://www.brentwheeler.com/index.php?itemid=838 Sat, 19 Jun 2010 12:38:10 +1200 http://www.brentwheeler.com/index.php?itemid=837
From ZNET....

Leading up to the launch of the iPhone 4 (Techmeme, live coverage, gallery, all Apple posts), run by the iOS since it powers the iPhone, iPod touch and iPad, there were whispers everywhere about the Android’s turbo-charged innovation cycle, the end of iPhone envy and how other smartphones from the likes of HTC were closing the gap.

Now it wasn’t like the iPhone was becoming a commodity device, but you could see some parity on the horizon. Even Sam Diaz got over his iPhone envy. Enter Apple CEO Steve Jobs who was having none of that talk. Jobs talked about the mix between technology and liberal arts. The emphasis is on technology as an art form.

Throughout Jobs’ talk there were information nuggets that spoke to reclaiming the high-end phone market. Now Jobs did point out that Apple had heft and scale. Jobs wooed developers on many fronts. Jobs mentioned the company had twice the mobile browser share of Android; that developers had access to 150 million accounts hooked up to App Store, iTunes and iBookstore waiting to buy developer apps; and how he loved to return 70 percent of revenue to them. Jobs relished telling developers Apple has forked over $1 billion in payments to them.

But the overall performance was more nuanced. Jobs had many subtle references that indicated that the iPhone was a Mercedes or BMW and the other rivals had more common sedans.

To wit:

Referring to the iPhone 4, Jobs noted how it was thin, but also positioned the device as art. Jobs said the iPhone 4 is “the most precise thing” with “glass on the front and back, and steel around the sides.” And then the kicker: Jobs said the iPhone 4 was like a “beautiful old Leica camera.” Don’t lose the Leica reference since it’s unlikely you’ll hear something like that from all of the rivals gunning to be an iPhone killer.
Jobs also talked about the iPhone 4’s Retina Display, which Apple hopes will set a display standard. “Once you use a retina display you can’t go back,” said Jobs.

Then Apple talked about FaceTime, its video calling system for between the iPhone 4. FaceTime will run on Wi-Fi for now, but Jobs noted that FaceTime “is one of the moments that reminds us of why we do what we do.”
Sure, there are plenty of tech specs to ponder, but Apple is selling a different vibe and a higher calling. Now you can debate forever whether you buy into the Apple zeitgeist, but Jobs accomplished what he had to. Apple is about threading that liberal arts and technology needle and the company just put a little more distance between the big pack trying to hunt down the iPhone.

Will it work?

Piper Jaffray analyst Gene Munster seems to think so. In a research note, Munster said:

While the announced features of the iPhone 4 were as expected, the reality is this phone is significantly more advanced than the next best alternative. We expect another strong product launch for Apple, resulting in Street iPhone estimates for the June quarter (around 8.7 million) moving slightly higher…The bottom line is the iPhone is taking unit and dollar share from other device categories…We believe that the innovation announced is sufficient to maintain Apple’s lead in mobile for the next year.
]]> General http://www.brentwheeler.com/index.php?itemid=837 Wed, 9 Jun 2010 08:51:00 +1200 http://www.brentwheeler.com/index.php?itemid=836
By Peter Boone and Simon Johnson

The big news is France. With sentiment worsening across Europe, France has lost its relative safe haven status – credit default swap spreads on French government debt were up sharply today.

The trigger – oddly enough – was Hungary’s announcement that its budget is worse than expected (blaming the previous government; this is starting to become the European pattern) and in the current fragile environment discussed yesterday, this relatively small piece of news spooked investors. But these developments only reinforced a trend that was already in place.

It did not help that the Irish Minister of Finance announced Ireland has 74.2bn euros of guaranteed bank loans, bonds, and systemic support falling due between now and Oct 1. This is around 55% of GNP. It sounds like everyone backed by the Irish government had the “clever” idea to roll over their debts to just before the guarantees expire.

The big losers are Portugal-Ireland-Italy-Greece-and-Spain as always, but Belgium is now in the line of fire, and France is clearly under pressure. The spread between French and German credit default swaps (measuring the relative probability of default) is up – yesterday this was 40 basis points, today it stands at 44 (up from just 5 basis points at the end of 2009; most of the increase is since mid-March, with a sharp acceleration recently). French bonds have become illiquid, with wide bid-ask spreads; not what is supposed to happen in a safe haven. This is going to make the French angry – watch for more market slanders from top French politicians over the weekend; you know they would just love to ban trading in something.

Earlier today the French Prime Minister came out with a quote for the ages:

“I only see good news in parity between euro and dollar”.

Be careful what you wish for – such statements will drive the Germans crazy as they see further evidence that inflation lovers are clearly winning influence and might just gain control at the European Central Bank (ECB). ]]> General http://www.brentwheeler.com/index.php?itemid=836 Sun, 6 Jun 2010 23:27:39 +1200 http://www.brentwheeler.com/index.php?itemid=834
Even better news is the declining frequency of major oil spills. Some evidence of this healthy trend is the fact that the average time that elapsed between each of history’s top ten accidental oil spills prior to BP Deepwater was 26 months. But the amount of time between the most recent of these top-ten spills (which occurred in September 1994) and the BP Deepwater spill is 187 months. How many Americans today hear of this happy trend?"

From Don Boudreaux.... Cafe Hayek.]]> Environmental http://www.brentwheeler.com/index.php?itemid=834 Sun, 30 May 2010 05:43:00 +1200 http://www.brentwheeler.com/index.php?itemid=833
What it takes to meet consumer demand
This statement says a great deal about:

- one of the most common mistakes made by non economists
- just how attractive rhetoric rather than analysis is for politicians

And it's so simple.....

Ultimately the tragedy in the Gulf is the "fault" - and the term is a nonsensical one - of consumers of oil and all consumers of lifestyle benefits which derive from oil.

If there was no consumer appetite for oil BP would not exist - period. No one can set up an oil company if there is no consumer demand for oil. No one - not even BP - would explore for oil if there was no demand for oil and no demand for oil at the lowest price possible, in stable quantities and at a given quality.

What BP shareholders are responsible for is bearing the risk that meeting consumer demand involves. For a profit, those shareholders are prepared to take the risk of operating an oil company and exploring for oil.

What the President can do is reduce his appetite for oil or be prepared to pay higher prices as exploration efforts reduce or some combination of both.

What he can't do with any semblance of rigour, is simply "blame" BP.... Getting annoyed with business while ignoring the consumer demand which promotes its existence is both futile and an indication that one is more interested in politics than solutions.]]> General http://www.brentwheeler.com/index.php?itemid=833 Tue, 4 May 2010 12:42:19 +1200 http://www.brentwheeler.com/index.php?itemid=832
"For example, before 1996, certain initial public offerings of stocks were subject to merit review in certain states, where the state decided if a security is a "bad" investment and thus not appropriate to be offered to its citizens. In fact, this is exactly what happened to Apple Computer when it first went public in 1980. Massachusetts prohibited the offering of Apple shares because they were "too risky," and Apple did not even bother to offer its shares in Illinois due to strict state laws on new issues. What if federal bureaucrats had had the power to impose their judgment on a "risky" financial product (such as an IPO) on a nationwide scale, or every state followed Massachusetts' lead?"
From Marginal Revolution]]> Regulation http://www.brentwheeler.com/index.php?itemid=832 Sun, 2 May 2010 17:41:51 +1200 http://www.brentwheeler.com/index.php?itemid=831
Schoolchildren around the world learn that European history starts with Athens and Rome. In future times, they will also be taught that the end of modern Europe began in the same places.

The European welfare state model hit the buffers in Greece’s fiscal crisis. Universal cradle-to-grave care for everyone as practised by consecutive Greek governments will never return. Not because European politicians would not want to provide it but because such promises can no longer be paid for. Greece’s current budgetary near-death experience only foreshadows what most of Europe will suffer in the coming years.

There is, however, another problem looming on the European horizon that may trigger an even more severe crisis than increasing sovereign debt. A demographic earthquake is going to shake the very foundations of European society. To feel its first tremors, there is no better place to visit than Italy.

Italy is a country of delicious pasta, magnificent churches, and beautiful countryside. Rounding off the image of il bel paese is the idea of the Italian family dominated by a resolute mamma and her many bambini. You can still find pasta, churches and countryside in contemporary Italy, but the typical Italian family is just a piece of nostalgic folklore.

Europe as a whole has embarked on a process of population ageing and shrinking, but Italy is well ahead of its neighbours in both respects. In 2005, Europe was already the world’s oldest continent with an average age of 38.9 years. By comparison, the average age was 36.3 years in America and Canada, 27.6 years in Asia, and only 19.0 years in Africa. Italy’s average age, however, was in a league of its own at 42.3 years. The nation of bambini has turned grey.

On the positive side of this development is the fact that Italians live longer than most other nationalities, except Japan. Italian men may expect to live to 78 years on average; Italian women even reach 84 years. Whether it is the result of the Mediterranean diet or due to something else, the Italian lifestyle is conducive to high life expectancy.

Perhaps it’s because Italians don’t worry too much about the future even if they have every reason to be gloomy. Italy’s remarkable longevity is in fact not the most important factor behind its rapidly ageing society. The key driver is the decline in fertility.

Italy indeed used to be a country of many children. In 1964, an Italian woman gave birth to an average of 2.7 children. Since the 1970s, the fertility rate has dropped sharply to an all-time low of 1.19 in 1995. It has somewhat recovered to 1.35 it is still well below the replacement level of 2.1 which demographers deem necessary to keep the population stable.

Why fertility in Italy collapsed as much as it did is a matter for debate. Cultural pessimists like Theodore Dalrymple argue that modern European society values its material standard of living more highly than anything else. Seen from this point of view, children would only be "obstructions to the enjoyment of life, a drain on resources, an obstacle to next year’s holiday in Bali or wherever it might be", he writes in his just released book The New Vichy Syndrome.

There may be some truth to this assertion, but not quite in the way Dalrymple imagines. It is correct that the decline in fertility has something to do with the material conditions of the younger generation. However, it would be unfair to blame their growing childlessness on selfish greed.

A survey among women aged 25 to 39 in European Union member states showed that there is no other country with as many childless women as Italy. Nevertheless, the share of Italian women who categorically do not want children is much lower than in most other European countries. There is a paradox, then, why many Italian women want to be a mamma and yet very few actually give birth.

The paradox can be explained by looking at the circumstances of Italy’s young generation. They may be living in one of the most prosperous – and beautiful – countries on the planet, yet living la dolce vita has become an unaffordable dream for them.

Rents in Italy’s cities and a lack of good job opportunities are the most pressing problems for young Italians, and so it is not surprising that a whole generation of youngsters have become mammoni (mother’s darlings). They stay at home well into their 20s and sometimes 30s. A staggering 92 percent of 18 to 24-year-olds and 62 percent of Italy’s 25 to 29-year-olds reside at 'Hotel Mamma'. They have little choice as two-thirds of them earn monthly incomes below the €1,000 mark ($1,450). Such young adults are very unlikely to start a family. They are busy enough making ends meet.

The problem with demography is its inertia. As leading demographer Herwig Birg put it, once a development has been going in the wrong direction for 25 years, it takes 75 years to correct it. There is no quick fix for demographic faults; the skid marks of demographic change are too deep and long.

Even if Italy somehow managed to improve the situation of its young generation and boost fertility rates to more sustainable levels, it could not hold off the process of ageing and shrinking for decades. The potential mothers Italy needs were not born a generation ago.

Immigration is unlikely to improve Italy’s demographic situation, either. The country would need an annual influx of more than 700,000 migrants to maintain its current workforce-to-retiree ratio, according to strategic consultancy STRATFOR. Such an unprecedented increase of Italy’s migrant population from about four to five million people today is not politically viable, though. Mass immigration is already one of the most contentious issues in Italian politics.

Given these prospects, there will be fewer and older Italians for generations. Until 2030, Italy’s population will fall by about two million people. This would be bad enough, but by this stage Italy’s median age will be well over 50 years. It does not require much imagination to understand the burden this will pose on the Italian government as the main provider of health services and pensions. Also bear in mind that Italy today is already one of the most heavily indebted countries in Europe. If nothing else kills the euro currency beforehand, Italy’s demographic time bomb will do the job.

In Europe, the Italians are furthest advanced on the trajectory of demographic change. Other nations like Germany, France or Spain are not far behind, though.

For a long time of post-War history, Europeans (at least in Western Europe) believed they had created a comfortable, secure and prosperous continent. As the Greek example shows, this was partly fuelled by ongoing budget deficits, which cannot be sustained forever. The common European phenomenon of ageing and shrinking populations, well underway in Italy, will inevitably turn this public finance crisis into a debt catastrophe.

Modern Europe began to fall apart in Greece and Italy. If Italian schoolchildren won’t be taught this history lesson in the future, it’s only because there will hardly be any bambini left to teach.

Dr Oliver Marc Hartwich is a Research Fellow at the Centre for Independent Studies.]]> General http://www.brentwheeler.com/index.php?itemid=831 Thu, 22 Apr 2010 08:56:02 +1200 http://www.brentwheeler.com/index.php?itemid=830

Why assume that greenhouse-gas emissions are an externality that ought to be internalized?

PERC’s Terry Anderson and I were talking recently and Terry pointed out that the concept of ‘externality’ implies a prior property right. For example, if I have a right to sleep soundly at night in my home, then noise created by my neighbor that penetrates into my nighttime bedroom is indeed a negative externality on me.

But if I choose to try to sleep on a bench inside of a jazz club, the jazz-club’s music will keep me awake but it is no externality imposed on me. The reason, of course, is that the jazz club has a right to stage musical performances within its premises – a right that supercedes my right to sleep in that club.

So who’s to say that each Chinese person’s right to the fruits of economic growth are superceded by each non-Chinese person’s (or even each Chinese person’s) right to be free of whatever increased health risks might result from continued economic growth in China?]]> Law and Economics http://www.brentwheeler.com/index.php?itemid=830 Mon, 12 Apr 2010 15:19:28 +1200