The 3G switch in India
With India’s government set to auction off 3G phone licenses this week, local citizens are hoping the new service will continue to advance opportunities for credit and commerce. In India’s rural areas, people already rely on their mobile phones to send payments and complete financial transactions, but 3G will make the process more seamless and open more opportunities. The BBC reports:
Right now, customers need to send text messages to transact but when we have access to top third generation spectrum- the payment can all happen on the mobile phone screen. Everyone will benefit. The vendor you see on the side of the street can order his supply of colas or crisps directly from the company producing it via his handset. The need for middlemen can be eliminated.
Once 3G is introduced it can exponentially change the way our service operates and it can ease this process of financial inclusion.
India already boasts an the fastest-growing, largest mobile phone market. Hopefully this step will continue to propel the country’s development story.
Creative Commons photo from Flickr in the World Bank Photo Collection
Lots of old people
“Of all the people in human history who ever reached the age of 65, half are alive now.”
There are more age-related facts here.
Must read: Krugman on economics of climate change
Economist Paul Krugman has a lengthy piece in Sunday’s New York Times Magazine looking at the economics of environmental protection and possible approaches to confronting climate change:
The casual reader might have the impression that there are real doubts about whether emissions can be reduced without inflicting severe damage on the economy. In fact, once you filter out the noise generated by special-interest groups, you discover that there is widespread agreement among environmental economists that a market-based program to deal with the threat of climate change — one that limits carbon emissions by putting a price on them — can achieve large results at modest, though not trivial, cost. There is, however, much less agreement on how fast we should move, whether major conservation efforts should start almost immediately or be gradually increased over the course of many decades.
In what follows, I will offer a brief survey of the economics of climate change or, more precisely, the economics of lessening climate change. I’ll try to lay out the areas of broad agreement as well as those that remain in major dispute.
Read the whole thing.
How much could government save with cloud computing?
The US federal government spends almost $76 billion a year on information technology, of which $20 billion is spent on hardware, software and file servers. According to Darrell West at The Brookings Institution, a move by federal agencies to cloud computing could save billions:
To evaluate the possible cost savings a federal agency might expect from migrating to the cloud, in this study I review past studies, undertake case studies of government agencies that have made the move, and discuss the future of cloud computing. I found that the agencies generally saw between 25 and 50 percent savings in moving to the cloud. For the federal government as a whole, this translates into billions in cost savings, depending on the scope of the transition.
Google, which has invested enormously in cloud services, has more to say on its public policy blog.
The customer is always wrong
Entrepreneur and Dallas Mavericks owner Mark Cuban seems to irritate a lot of people. But he often has worthwhile views on a range of issues, whether it’s about professional basketball, the problems with newspapers, or the inconsistencies of various business models. He recently focused on why entrepreneurs should not listen to their customers:
Entrepreneurs always need to be reminded that its not the job of their customers to know what they don’t know. In other words, your customers have a tough enough time doing their jobs. They don’t spend time trying to reinvent their industries or how their jobs are performed. Sure, every now and then you come across an exception. But you can’t bet the company on your finding that person at one of your customers.
Instead, part of every entrepreneurs job is to invent the future. I also call it “kicking your own ass”. Someone is out there looking to put you out of business. Someone is always out there who thinks they have a better idea than you have. A better solution than you have. A better or more efficient product than you have. If there is someone out there who can “kick your ass” by doing it better, its part of your job as the owner of the company to stay ahead of them and “kick your own ass” before someone else does.
Your customers can tell you the things that are broken and how they want to be made happy. Listen to them. Make them happy. But they won’t create the future roadmap for your product or service. That’s your job.
Photo James Duncan Davidson/O’Reilly Media, Inc.
The future of cost control?
With growth languishing in many business lines, consumer packaged goods companies are looking to cut costs in any way possible. In a deal poised to roil the advertising and media buying industries, PepsiCo and Anheuser-Busch have announced that they will create a buying partnership and use their joint scale to secure more favorable pricing on media purchases, including network and cable TV, magazines, and outdoor advertising. Given that the two companies spent a combined $1.15 billion on media last year, the deal is expected to save the companies millions.
Is this just the first deal, signaling a trend toward collaboration between historical rivals using their collective bargaining power to squeeze suppliers? Maybe not. The Wall Street Journal speculated that an ingredient purchasing collaboration between Campbell Soup and Heinz could help each company reduce its cost of goods sold to help restore bottom-line growth. Looking to a different, but also struggling, industry, automakers Daimler, Renault and Nissan are developing an alliance through which they would share certain research and development costs, in an effort to become more competitive.
One can imagine many opportunities for cost cutting across industries, if companies are willing to work with their competitors to create mutually beneficial partnerships. The success of initial partnerships may determine whether it will be a lasting trend or a blip on the map, but it’s an interesting idea, nevertheless.
CEOs emerge from their foxholes
As the economy shows signs of recovery and CEOs’ fears of pending disaster dissipate, it appears that their concern is shifting to a new question: how to hold onto talent as job opportunities pick up. The Wall Street Journal reports one strategy that is picking up momentum:
Chiefs who spent last year battling the recession are coming out of their foxholes to talk more with staffers. It’s an effort to boost morale, solicit ideas and better understand employee concerns. Some hope to stave off defections ahead of a job-market recovery.
Good communication is certainly key to employee satisfaction and performance. But whether or not this strategy will be successful in preventing attrition will likely depend on whether or not CEOs also used effective communication at the height of the recession to manage concerns about layoffs and job security. If team meetings and lunches suddenly appear after the worst is over, employees are smart enough to see through the smokescreen to the motive. If, on the other hand, this reflects a consistent management style, then these CEOs deserve credit for a smart strategy.
Why financial reform is so hard
Tyler Cowen reckons that financial regulation will always come down to the quality of the regulators, almost irrespective of how legislation is drafted:
There isn’t any “once and for all” solution to banking regulation and the harder we try to find one probably the more we will end up relying on regulator discretion and judgment.
Bank regulation is a tough slog, it depends on the quality of the bureaucracy and the periodic attention of a somewhat responsible legislature, “toughness” can be counterproductive, the historic periodic of regulatory “easiness” relied on cartelization and near-automatic profits, and it is like a chess game whereby the private sector eventually finds a way around most of the binding regulations.
What happened to those Copenhagen pledges?
What happened to the Copenhagen Accord, so tortuously reached last December?
According to Kevin Drum, the early indications are mixed:
There have been a flurry of reports recently about [pledges on greenhouse gas reductions], but no firm conclusion. First up is Kevin Parker of Deutsche Bank, who released a report last week saying that the Copenhagen conference, far from being a failure, had produced “the highest number of new government initiatives ever recorded [...] in a four-month period.”
Fine. But how does that translate into GHG reductions? Trevor Houser of the Peterson Institute takes a crack at an answer. After adding up the various pledges made so far, and then assuming some additional mitigation from “international finance,” he figures that Copenhagen has produced pledges totalling something between 4.17 and 7.29 gigatons of CO2e by 2020. That’s a reduction of 7-13% compared to business-as-usual (BAU).
Fine again. But how much of that representsnew pledges? Andrew Light and Sean Pool of CAP provide the guesstimate shown on the right. Prior to Copenhagen they figure the world had already agreed to reductions in the range of 3.6-9.0 gigatons. After Copenhagen that went up to 5.0-9.2 gigatons. If you optimistically assume that the real number will be halfway between the low and high estimates, it means that pledged reductions went from 6.3 gigatons to 7.1 gigatons. That’s 0.8 gigatons better, or about 1.5% of total estimated GHG emissions in 2020.
“If you can’t open it, you don’t own it”
In all of the millions of words that have tumbled out on the iPad in the last week, Cory Doctorow is one of the few who has something original to say:
It really feels like the second coming of the CD-ROM “revolution” in which “content” people proclaimed that they were going to remake media by producing expensive (to make and to buy) products. I was a CD-ROM programmer at the start of my tech career, and I felt that excitement, too, and lived through it to see how wrong I was, how open platforms and experimental amateurs would eventually beat out the spendy, slick pros.
I remember the early days of the web — and the last days of CD ROM — when there was this mainstream consensus that the web and PCs were too durned geeky and difficult and unpredictable for “my mom” (it’s amazing how many tech people have an incredibly low opinion of their mothers). If I had a share of AOL for every time someone told me that the web would die because AOL was so easy and the web was full of garbage, I’d have a lot of AOL shares.
And they wouldn’t be worth much.
Feel free to disagree with Doctorow (as many people do), but before you make up your mind, read his post and digest the arguments. They are important.
The next crisis: municipal bonds?
Rick Bookstaber, senior policy adviser at the SEC, wonders where the next crisis is going to come from. His answer?
Well, guess where we have a market that is (1) leveraged and opaque, that is (2) very big and tied to the credit markets; and is (3) viewed by investors as being diversifiable by holding a geographically broad-based portfolio; with (4) huge portfolios where assets and liabilities are apparently matched; and with (5) questionable analysis by rating agencies; and where (6) there are many entities, entities that may not approach default with business-like dispatch, and that have already mortgaged sources of revenue that are thought to support their liabilities?
Answer: The municipal market.
Complexity is not your friend
Clay Shirky, one of the most perceptive thinkers about the Internet and society, has posted a thought-provoking essay on the inherent dangers of complex business models. He wrote it in response to a question about how media companies can make money with online video. He provide that answer, but his analysis applies to far more than media executives.
Read the whole thing, but here’s a taster:
When ecosystems change and inflexible institutions collapse, their members disperse, abandoning old beliefs, trying new things, making their living in different ways than they used to. It’s easy to see the ways in which collapse to simplicity wrecks the glories of old. But there is one compensating advantage for the people who escape the old system: when the ecosystem stops rewarding complexity, it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.
Creative Commons photo from Flickr by Nerovivo
What allows a nation to thrive?
Richard Florida, who did pioneering work in his Rise of the Creative Class, has been doing some interesting analysis on why nations struggle or thrive.
He cautions that the results are preliminary, but does reach some broad conclusions:
We can say that while income and the level of economic development play an important role in the happiness of nations, well-being is also related to the type and nature of economic development and the values it engenders. There is something in the nature of post-industrial economies and in their values that appears to affect the happiness of their people over and above the effects of income. Perhaps it is that people with higher levels of education have more flexibility or choice in pursuing their dreams, building families and social relationships that are more fulfilling, or simply in their ability to adjust to misfortune or bad times. Perhaps it is that knowledge-based jobs are more challenging and fulfilling. It’s also clear that the most troubled societies – those with the highest reported levels of suffering – also, generally speaking, face the highest levels of intolerance. While income and the level of economic development certainly need to be top of mind considerations when we think about or attempt to act on the happiness of nations, one simply cannot neglect the effects of economic and social structure and of values in social well-being.
Some economic light
Influential econoblogger James Hamilton sees what he calls “convincing signs of economic recovery” in some US statistics. Friday’s jobs numbers from the Bureau for Labor Statistics were particularly encouraging for Hamilton:
I acknowledge that 162,000 isn’t enough to bring the unemployment rate down, which remained stuck at 9.7% for March. Even so, this is enough better than what we’ve been seeing and than we could have seen that I personally am quite relieved. For a mix of the range of other optimistic and pessimistic takes on the employment numbers, see Phil Izzo’s usual nice summary.
Preparing The New York Forum
With a little more than two months to go until the inaugural New York Forum, we’re working furiously to prepare a content-rich, engaging program for business leaders. We’ll use this blog to post news about the Forum as it develops, and to pick out items that strike us as pertinent to the main themes of the meeting, valuable analyses that will help participants, and quotes that resonate with the issues that matter.
Creative Commons photo from Flickr by Photochiel