At their core, most political partisans believe that the theories, ideologies and values they embrace contain wisdom that will lead to sustained economic growth and better living standards for all.
Barry Ritholtz, one of the financial world's most widely followed investment sages wrote this essay for the Washington Post in which he states HIS belief that politics and investing dont mix well at all:
"Washington, I’m here to tell you, politics and investing don’t mix.
Yep, I thought I’d begin our conversation about investing by rocking your most cherished beliefs. Many of you are active in party politics, work for government or are involved in related fields. Well, I have some bad news: Your politics are killing you in the markets.
In my work, I use behavioral psychology, statistics, cognitive biases, history, data analysis, mathematics, brain physiology, even evolution to make better investing decisions. Indeed, these are all key to learning precisely what not to do. While making good decisions can help your portfolio, avoiding bad ones is even more important.
We humans make all the same mistakes, over and over again. It’s how we are wired, the net result of evolution. That flight-or-fight response might have helped your ancestors deal with hungry saber-toothed tigers and territorial Cro Magnons, but it drives investors to make costly emotional decisions.
And it’s no surprise.
It’s akin to brain damage.
To neurophysiologists, who research cognitive functions, the emotionally driven appear to suffer from cognitive deficits that mimic certain types of brain injuries. Not just partisan political junkies, but ardent sports fans, the devout, even hobbyists. Anyone with an intense emotional interest in a subject loses the ability to observe it objectively: You selectively perceive events. You ignore data and facts that disagree with your main philosophy. Even your memory works to fool you, as you selectively retain what you believe in, and subtly mask any memories that might conflict.
Studies have shown that we are actually biased in our visual perception – literally, how we see the world – because of our belief systems.
This cognitive bias is not an occasional problem – it is a systematic source of errors. It’s not you, it’s just how you are built. And it is the reason most people are terrible investors.
How does this play out in the world of investing? Let me share two examples. I don’t pick favorites: Both Democrats and Republicans are implicated.
Back in 2003, the dot-com crash had about run its course. From the peak of the market in March 2000 to the March 2003 trough, the Nasdaq had gotten crushed, losing 78 percent of its value.
As Federal Reserve chief Alan Greenspan took rates down to 1 percent, the Bush administration passed $1 trillion in tax cuts. As someone else once said about the stock market, “Give me a trillion dollars, and I’ll throw you one hell of a party.”
Yet many of my Democrat friends on Wall Street – fund managers, traders and analysts – were highly critical of the tax cuts. At the time, I heard all the reasons why they were so bad: They were deficit-busters, unlikely to create jobs, giveaways to the wealthy.
While those critiques may have been true, they were also irrelevant to equities. As armchair policy wonks obsessed over these issues, they missed the bigger picture: Liquidity is a major factor in how the economy and stock markets perform. Trillions of dollars in fresh cash was very likely to goose equities higher. (Sound familiar?) Indeed, the impact of the tax cuts did just that. Combined with Greenspan’s ultra-low rates, you had the makings of a cyclical bull market rally. From 2003 to 2007, the Standard & Poor’s 500-stock index – the usual benchmark for equities – gained 100 percent.
And my politically active friends on the left missed most of it.
Fast-forward six years to the recent credit crisis. The S&P 500 had fallen 57.69 percent. By March 2009, op-eds in the Wall Street Journal blamed the crash on President Obama.
But conditions were forming that would hasten the end of the sell-off. Markets were deeply oversold. Once again, the Fed chair was cutting rates – this time, it was Ben Bernanke, and he took rates down to zero. In a panic, Congress forced the accounting rule-making body to be more accommodative to the banking sector. FASB 157, as it is known, ended mark-to-market accounting – essentially allowing banks to hide their bad loans.
All these factors suggested that a substantial rally from the market lows was coming. Historically, average gains in post-crash bouncebacks were 70 percent. The easy money to the downside had been made, and it was time to stop betting that the markets were heading south. If history held true, we were looking at the mother of all bear market rallies.
By that March, I was explaining this to clients, the news media and co-workers. But the greatest pushback this time around came from across the political spectrum. My GOP pals were lamenting the occupant of the White House. I heard things like “Obama is a Kenyan, a Muslim, a Socialist. He is going to kill business.”
What followed was the single most intense two-year rally in Wall Street history. As of Friday, the S&P 500 has gained 93.8 percent.
And my politically active friends on the right missed most of it.
Remember, the cycle of booms and busts are surprisingly regular occurrences. What some people all a “100-year flood” actually happens far more frequently – since 1929, there have been 18 crashes.
It’s just as important that an investor participate in the cyclical bull markets, capturing the rally as well. All things considered, missing the downside and catching the upside makes for a pretty decent investment strategy.
You need not be a mathematical wizard to learn this lesson. When you are in the polling booth, vote however you like; But when you are reviewing your investing options, it is best to do so with a cold, dispassionate eye.
Understanding how your own biases impact your investing process is a key step. If you want to avoid making certain errors, you must at least be aware of them.
And now you are.
Feb 12, 2011
How Many Friends Can Your Brain Hold?
An interesting question; despite the thousands of 'friends' people acquire on facebook and other social media sites, is there, in fact, a natural limit to the number of more-than-casual human interactions that one person can manage. Ancient warrior societies based their military organizations on what experience taught them was a natural span of control and latter-day businesses have recognized some of the same principles by limiting the number of 'direct reports.'
Matt Ridley has some information in the Wall Street Journal's "Mind Over Matter" column:
"As far as scientific accolades go, a Nobel Prize is rare, a law named after you is rarer, your own unit of measurement is more elusive still, but the most select club of all is those who have their own number, or constant. Two hundred years ago this year, the Italian physicist Amedeo Avogadro put forward the hypothesis that eventually resulted in the naming of Avogadro's number—the number of molecules in a mole, 6.022 times 10 to the 23.
Avogadro dines in this exclusive club with Max Planck and Ludwig Boltzmann (and perhaps, to make a foursome, the science-fiction writer Douglas Adams, for his "Hitchhiker's Guide to the Galaxy," where the number 42 is a supercomputer's mysterious answer for the meaning of it all). In recent years, however, the evolutionary anthropologist Robin Dunbar has acquired future rights to membership in this posthumous Pantheon. Mr. Dunbar's eponymous number is 147.8, plus or minus a lot, and it is the size of the average human being's social network of friends, as predicted by the size of the average human brain.
Mr. Dunbar's "social brain hypothesis" rests on another idea—the theory of mind—which argues that we use our brains to imagine what others are thinking.
Many years ago Mr. Dunbar famously noticed that there is a tight correlation between the size of a primate's brain and the size of the social group its species generally forms. On this basis human beings should live in groups of around 150. The neat thing about this prediction was the way it seemed to fit the number of good friends most people have, as measured by the length of address books, the size of hunter-gatherer bands, the population of neolithic villages and the strength of army units. In recent years, Facebook has also seemed to confirm the hunch, with rosters of friends often settling around the Dunbar number.
Now Mr. Dunbar, who teaches at Oxford, has taken the argument a step further in work yet to be published, by correlating the size of a specific part of an individual's brain with the size of that individual's social network. He and his colleagues asked volunteers to list the initials of every person they had had social contact or communication with over the previous week, before stepping into a magnetic resonance scanner to measure the volume of their "orbitomedial prefrontal cortex." Sure enough, the size of this lobe of the brain correlates well with the size of a person's circle of friends. (It remains to be seen, of course, which causes which.)
The prefrontal cortex is the most peculiarly enlarged part of the brain in human beings, but whereas the part near the top of the head generally seems to be involved in conventional intelligence, the "orbital" region tends to handle the processing of social information—that is, assessing the moods and personalities of other people.
Mr. Dunbar's "social brain hypothesis" rests on another idea—the theory of mind—which argues that we use our brains to imagine what others are thinking. So, drilling down further into the physiology of the brain, Mr. Dunbar's team has now found that a rich social network also goes with the ability to reason about others' intentional states. That is to say, people with more friends are better able to understand sentences like: "Sam thought that Henry knew the post office was on Bold Street and hence that Henry must have intended to mislead Sam." And that both of these features are well predicted by the volume of gray matter in two specific regions of the prefrontal cortex, regions that are known to be important in "decoupling the perspectives of other people from one's own."
All this supports a once-radical idea that has been floating about in psychology since put into words by the consciousness expert Nick Humphrey in the 1970s—that human beings evolved big brains not to understand the world, but to understand each other. The more fellow apes you need to understand, the bigger the mental engine you need.
Matt Ridley has some information in the Wall Street Journal's "Mind Over Matter" column:
"As far as scientific accolades go, a Nobel Prize is rare, a law named after you is rarer, your own unit of measurement is more elusive still, but the most select club of all is those who have their own number, or constant. Two hundred years ago this year, the Italian physicist Amedeo Avogadro put forward the hypothesis that eventually resulted in the naming of Avogadro's number—the number of molecules in a mole, 6.022 times 10 to the 23.
Avogadro dines in this exclusive club with Max Planck and Ludwig Boltzmann (and perhaps, to make a foursome, the science-fiction writer Douglas Adams, for his "Hitchhiker's Guide to the Galaxy," where the number 42 is a supercomputer's mysterious answer for the meaning of it all). In recent years, however, the evolutionary anthropologist Robin Dunbar has acquired future rights to membership in this posthumous Pantheon. Mr. Dunbar's eponymous number is 147.8, plus or minus a lot, and it is the size of the average human being's social network of friends, as predicted by the size of the average human brain.
Mr. Dunbar's "social brain hypothesis" rests on another idea—the theory of mind—which argues that we use our brains to imagine what others are thinking.
Many years ago Mr. Dunbar famously noticed that there is a tight correlation between the size of a primate's brain and the size of the social group its species generally forms. On this basis human beings should live in groups of around 150. The neat thing about this prediction was the way it seemed to fit the number of good friends most people have, as measured by the length of address books, the size of hunter-gatherer bands, the population of neolithic villages and the strength of army units. In recent years, Facebook has also seemed to confirm the hunch, with rosters of friends often settling around the Dunbar number.
Now Mr. Dunbar, who teaches at Oxford, has taken the argument a step further in work yet to be published, by correlating the size of a specific part of an individual's brain with the size of that individual's social network. He and his colleagues asked volunteers to list the initials of every person they had had social contact or communication with over the previous week, before stepping into a magnetic resonance scanner to measure the volume of their "orbitomedial prefrontal cortex." Sure enough, the size of this lobe of the brain correlates well with the size of a person's circle of friends. (It remains to be seen, of course, which causes which.)
The prefrontal cortex is the most peculiarly enlarged part of the brain in human beings, but whereas the part near the top of the head generally seems to be involved in conventional intelligence, the "orbital" region tends to handle the processing of social information—that is, assessing the moods and personalities of other people.
Mr. Dunbar's "social brain hypothesis" rests on another idea—the theory of mind—which argues that we use our brains to imagine what others are thinking. So, drilling down further into the physiology of the brain, Mr. Dunbar's team has now found that a rich social network also goes with the ability to reason about others' intentional states. That is to say, people with more friends are better able to understand sentences like: "Sam thought that Henry knew the post office was on Bold Street and hence that Henry must have intended to mislead Sam." And that both of these features are well predicted by the volume of gray matter in two specific regions of the prefrontal cortex, regions that are known to be important in "decoupling the perspectives of other people from one's own."
All this supports a once-radical idea that has been floating about in psychology since put into words by the consciousness expert Nick Humphrey in the 1970s—that human beings evolved big brains not to understand the world, but to understand each other. The more fellow apes you need to understand, the bigger the mental engine you need.
Save And Share :
Mubarak's Ouster: Lessons for China?
Across the globe, regime leaders in various locales - Iran, Myanmar, Venezuela and the US Republican party come to mind - are gathering to dissect the news from Egypt, assess their own internal security qua economic status, and most importantly, discuss how to make sure it does not happen to them. The Chinese leadership has to be concerned after last winter's outbursts in Guangdong Province over wages and working conditions, on top of the chronic complaints about low level corruption and land seizures. The Egyptians remind all of us that when economic stagnation and hopelessness meets educated, tech-savvy young people, stability is not generally the outcome. The lesson for all, whether US and UK bankers for whom the word 'enough' does not seem to exist, or Iranian mullahs or Myanmarese generals is that there do appear to be natural limits to the distress which people will tolerate in an informed global society.
Minxin Pei offers cogent insights from the Financial Times:
"The uprising in Egypt must have stunned Chinese leaders. Beijing has heavily censored news of the uprising, strongly indicating that the Chinese Communist party (CCP), which narrowly avoided collapse during a similar popular revolt in 1989, is gripped by the fear that it could encounter the same fate as befell Hosni Mubarak.
The insecurity displayed by China’s ruling elites may seem extreme. After all, unlike the Mubarak regime, the CCP has consistently delivered increasing standards of living and currently faces few threats to its authority at home. The conventional wisdom says China has a self-confident leadership that sees itself as a contender for global supremacy.
But look a little deeper and this ostensibly resilient regime is afflicted by many of the same pathologies as Egypt: repression, corruption, low accountability, a surprisingly narrow base of support and fast-rising inequality. Yes, growth and prosperity help the CCP maintain its legitimacy. But the regime knows that performance-based legitimacy is unreliable, at best. The same frustrations that drove Egyptians into the streets could be unleashed in China when its economy inevitably hits a speed bump.
With mounting developmental challenges, China’s continued economic prosperity is by no means guaranteed, while rising food price inflation is a particular cause of concern for the regime. For the CCP, meeting such challenges requires not only technocratic policy solutions but also ought to include political reforms that will open up participation, make the CCP more accountable, and create a new basis of legitimacy.
That said, it is likely that the CCP will conclude that Mr Mubarak’s regime should have practised even harsher repression, and nipped the revolt in the bud. Chinese leaders probably also blame western influence and conspiracy, as they did when the colour revolutions toppled unpopular regimes in Ukraine, Georgia and Kyrgyzstan a few years ago.
China’s leadership may also attribute Mr Mubarak’s fall to his mediocre economic record – particularly his failure to create jobs for college graduates. Rising unemployment of college graduates is a problem China shares with Egypt.
It is far from clear, however, that these are right lessons for Beijing to draw. Starting long-delayed democratic reforms from a position of relative political strength could actually be in the CCP’s self-interest. The peaceful and smooth democratic transitions in Taiwan, Mexico and Brazil show that authoritarian regimes that initiate political opening could fare better than those that do not.
Even so, the CCP is more likely to continue to rely on the survival strategy it has adopted when its solders crushed the Tiananmen pro-democracy movement in June 1989. But the sustainability of this strategy seems increasingly in doubt. In China today social frustrations rise almost as fast as economic growth.
If the Egyptian crisis teaches us anything, it is that the legitimacy of autocrats vanishes quickly when circumstances change, and such regimes’ flaws are laid bare. The durability of the CCP’s rule, rather than just China’s economic trajectory, should now again be a hot topic of speculation.
Such a conversation is certainly one Chinese leaders, long accustomed to basking in the international glow of their economic miracle, would prefer not to have. They may have no choice. Like financial contagion, the political contagion that originated in Tunisia and spread to Egypt has refocused the attention of the international community on the underlying political frailties of autocratic regimes. The more such regimes get scrutinised, the less attractive they look.
Here China’s recent history provides an apt lesson. Without Deng Xiaoping’s economic reforms, the CCP would certainly have not survived the devastation of the Cultural Revolution. But Deng’s reforms can take a fundamentally flawed political regime only so far. The more difficult of gradual democratisation still lies ahead. The unfolding Egyptian revolution of 2011 should remind Beijing that it is high time to confront this task.
Minxin Pei offers cogent insights from the Financial Times:
"The uprising in Egypt must have stunned Chinese leaders. Beijing has heavily censored news of the uprising, strongly indicating that the Chinese Communist party (CCP), which narrowly avoided collapse during a similar popular revolt in 1989, is gripped by the fear that it could encounter the same fate as befell Hosni Mubarak.
The insecurity displayed by China’s ruling elites may seem extreme. After all, unlike the Mubarak regime, the CCP has consistently delivered increasing standards of living and currently faces few threats to its authority at home. The conventional wisdom says China has a self-confident leadership that sees itself as a contender for global supremacy.
But look a little deeper and this ostensibly resilient regime is afflicted by many of the same pathologies as Egypt: repression, corruption, low accountability, a surprisingly narrow base of support and fast-rising inequality. Yes, growth and prosperity help the CCP maintain its legitimacy. But the regime knows that performance-based legitimacy is unreliable, at best. The same frustrations that drove Egyptians into the streets could be unleashed in China when its economy inevitably hits a speed bump.
With mounting developmental challenges, China’s continued economic prosperity is by no means guaranteed, while rising food price inflation is a particular cause of concern for the regime. For the CCP, meeting such challenges requires not only technocratic policy solutions but also ought to include political reforms that will open up participation, make the CCP more accountable, and create a new basis of legitimacy.
That said, it is likely that the CCP will conclude that Mr Mubarak’s regime should have practised even harsher repression, and nipped the revolt in the bud. Chinese leaders probably also blame western influence and conspiracy, as they did when the colour revolutions toppled unpopular regimes in Ukraine, Georgia and Kyrgyzstan a few years ago.
China’s leadership may also attribute Mr Mubarak’s fall to his mediocre economic record – particularly his failure to create jobs for college graduates. Rising unemployment of college graduates is a problem China shares with Egypt.
It is far from clear, however, that these are right lessons for Beijing to draw. Starting long-delayed democratic reforms from a position of relative political strength could actually be in the CCP’s self-interest. The peaceful and smooth democratic transitions in Taiwan, Mexico and Brazil show that authoritarian regimes that initiate political opening could fare better than those that do not.
Even so, the CCP is more likely to continue to rely on the survival strategy it has adopted when its solders crushed the Tiananmen pro-democracy movement in June 1989. But the sustainability of this strategy seems increasingly in doubt. In China today social frustrations rise almost as fast as economic growth.
If the Egyptian crisis teaches us anything, it is that the legitimacy of autocrats vanishes quickly when circumstances change, and such regimes’ flaws are laid bare. The durability of the CCP’s rule, rather than just China’s economic trajectory, should now again be a hot topic of speculation.
Such a conversation is certainly one Chinese leaders, long accustomed to basking in the international glow of their economic miracle, would prefer not to have. They may have no choice. Like financial contagion, the political contagion that originated in Tunisia and spread to Egypt has refocused the attention of the international community on the underlying political frailties of autocratic regimes. The more such regimes get scrutinised, the less attractive they look.
Here China’s recent history provides an apt lesson. Without Deng Xiaoping’s economic reforms, the CCP would certainly have not survived the devastation of the Cultural Revolution. But Deng’s reforms can take a fundamentally flawed political regime only so far. The more difficult of gradual democratisation still lies ahead. The unfolding Egyptian revolution of 2011 should remind Beijing that it is high time to confront this task.
Save And Share :
Feb 11, 2011
US Business Lobby Demanding Stronger IP Protection Laws
The US Chamber of Commerce is the premier US business lobby in Washington. It has an imposing building across Lafayette Park from the White House, a distance of a few hundred yards. On policy matters, however, it frequently seems to be light years away.
On the issue of IP protection, however, the distance may be closer. The Chamber has just announced that it is pushing as one of its priorities for this year a dramatic strengthening of US copyright and IP protections. The timing is not coincidental. As the US fights to regain its competitiveness, the R&D that fuels IP has belatedly achieved the recognition it deserves as a national strength. With the BRICs and others equalizing the economic battleground, the Chamber has decided that chronic IP violations can no longer be tolerated. This will further inflame relations with China and other competitors, but Us corporations are letting it be known that the stakes are worth it.
Jennifer Martinez has the background in Politico:
"The U.S. Chamber of Commerce said its top priority on intellectual property issues is pushing Congress to pass a law that tackles online copyright infringement and trade in counterfeit goods, setting up a potential clash between business interests and free-speech advocates.
Chamber officials also want to ensure that any U.S. free-trade pacts contain strong protections for U.S.-made goods and that the White House gets additional resources to fight copyright crime, according to letters that Chamber officials sent to the White House and Congress today.
Some members of the nation’s powerful business lobby — from record labels to Hollywood studios to the pharmaceutical industry — are ailing because of online copyright infringement and the sale of counterfeit goods on the Web.
Topping the Chamber’s IP priority list is for lawmakers to pass legislation this year aimed at shutting down websites that offer pirated goods or infringing content. The group supported Senate Judiciary Chairman Patrick Leahy’s Combating Online Infringement and Counterfeits Act, which the committee approved last fall but which was not brought to the floor. The COICA would allow federal authorities to seek court orders to shut down websites with infringing content by seizing their domain names.
The bill, however, was thwarted by Sen. Ron Wyden (D-Ore.), who echoed public interest group concerns that the measure would chill free speech online.
Chamber officials said some members of the House and Senate are interested in renewing attempts and that the timing may be in their favor this year, given that some of the thornier legislative battles over health care and taxes are out of the way.
“In a year where megabills were dominating the agenda, it’s harder for some of these things to get time to be considered in Congress. But this is a year where Congress can really focus on getting these really important pieces of [intellectual property] legislation done,” David Hirschmann, president of the Chamber’s Global Intellectual Property Center, told POLITICO. “It’s a real opportunity.”
With the next round of Trans-Pacific Partnership negotiations kicking off this month in Chile, the Chamber also wants the White House to ensure the trade agreement mirrors the same strong IP protections in the South Korea trade deal that President Barack Obama recently signed.
“The bar should be there or higher,” Hirschmann said.
In addition, White House IP Chief Victoria Espinel needs permanent staff and funding to implement the governmentwide IP enforcement strategy released last June, the Chamber argued.
“We’re not doing a good enough job protecting the consumer, protecting jobs and protecting IP,” Hirschmann said
On the issue of IP protection, however, the distance may be closer. The Chamber has just announced that it is pushing as one of its priorities for this year a dramatic strengthening of US copyright and IP protections. The timing is not coincidental. As the US fights to regain its competitiveness, the R&D that fuels IP has belatedly achieved the recognition it deserves as a national strength. With the BRICs and others equalizing the economic battleground, the Chamber has decided that chronic IP violations can no longer be tolerated. This will further inflame relations with China and other competitors, but Us corporations are letting it be known that the stakes are worth it.
Jennifer Martinez has the background in Politico:
"The U.S. Chamber of Commerce said its top priority on intellectual property issues is pushing Congress to pass a law that tackles online copyright infringement and trade in counterfeit goods, setting up a potential clash between business interests and free-speech advocates.
Chamber officials also want to ensure that any U.S. free-trade pacts contain strong protections for U.S.-made goods and that the White House gets additional resources to fight copyright crime, according to letters that Chamber officials sent to the White House and Congress today.
Some members of the nation’s powerful business lobby — from record labels to Hollywood studios to the pharmaceutical industry — are ailing because of online copyright infringement and the sale of counterfeit goods on the Web.
Topping the Chamber’s IP priority list is for lawmakers to pass legislation this year aimed at shutting down websites that offer pirated goods or infringing content. The group supported Senate Judiciary Chairman Patrick Leahy’s Combating Online Infringement and Counterfeits Act, which the committee approved last fall but which was not brought to the floor. The COICA would allow federal authorities to seek court orders to shut down websites with infringing content by seizing their domain names.
The bill, however, was thwarted by Sen. Ron Wyden (D-Ore.), who echoed public interest group concerns that the measure would chill free speech online.
Chamber officials said some members of the House and Senate are interested in renewing attempts and that the timing may be in their favor this year, given that some of the thornier legislative battles over health care and taxes are out of the way.
“In a year where megabills were dominating the agenda, it’s harder for some of these things to get time to be considered in Congress. But this is a year where Congress can really focus on getting these really important pieces of [intellectual property] legislation done,” David Hirschmann, president of the Chamber’s Global Intellectual Property Center, told POLITICO. “It’s a real opportunity.”
With the next round of Trans-Pacific Partnership negotiations kicking off this month in Chile, the Chamber also wants the White House to ensure the trade agreement mirrors the same strong IP protections in the South Korea trade deal that President Barack Obama recently signed.
“The bar should be there or higher,” Hirschmann said.
In addition, White House IP Chief Victoria Espinel needs permanent staff and funding to implement the governmentwide IP enforcement strategy released last June, the Chamber argued.
“We’re not doing a good enough job protecting the consumer, protecting jobs and protecting IP,” Hirschmann said
Save And Share :
Cross-Border Acquisitions: US Government Panel Against Huawei Tech Deal
While the US government is desperately trying to encourage investment, it finds that acquisitions of US companies by Chinese businesses still inspire resistance from the US government and Congressional conservatives. The security and economic conflicts are inherent in a global economy. The challenge for the US is to manage the need for security with the need for stimulus. The need for Chinese companies is to dispel the image (to say nothing of whatever may be the reality)that all economic deals have a strategic national interest.
Shayndi Raice has the story in the Wall Street Journal:
"A U.S. government panel is poised to recommend that the president unravel an acquisition made by China's Huawei Technologies Co., after the Pentagon sought review of the deal, people familiar with the matter said.
The Committee on Foreign Investment in the United States is reviewing the telecommunications-equipment maker's $2 million deal last May to buy the assets of 3Leaf Systems, a Bay Area developer of technology that lets collections of server computers work together as a more powerful machine.
The interagency committee reviews cross-border deals with national-security implications and makes recommendations to the president. A decision by CFIUS on the Huawei deal is due Monday. The transaction still could be approved, and the president is free to disregard a recommendation by the committee.
CFIUS doesn't release information about a company under review, but a person familiar with the CFIUS process said a president has vetoed a foreign transaction only two or three times. Typically, a company will withdraw its application if it gets an indication the committee will recommend against a deal.
The White House referred questions to the Treasury, and the Defense Department had no immediate comment on Huawei. Both typically refer questions on CFIUS matters to the Treasury, which declined to comment.
It was unclear what remedy the government could require of Huawei. The company hired 15 3Leaf employees, owns several former 3Leaf patents and purchased the start-up's servers out of bankruptcy.
"Huawei has been engaged in the CFIUS process related to 3Leaf in good faith for a number of months now and looks forward to the process concluding," said William Plummer, vice president of government affairs for Huawei.
The decision in the Huawei deal comes as President Barack Obama has been trying to defuse rising political and economic tensions with China. Huawei has struggled to gain a foothold in North America, thwarted on other deals by government officials who have said China's military could use Huawei equipment to disrupt or intercept U.S. communications.
The Chinese government considers Huawei a national champion in telecom, one of several industries in which the China aims to be globally competitive. Huawei is the world's second-largest maker of telecom equipment, after Telefon AB L.M. Ericsson, with estimated revenue last year of $28 billion, according to Huawei.
Companies generally are expected to request a CFIUS review before completing potentially sensitive cross-border deals. Huawei didn't seek review for the 3Leaf purchase in advance, however, saying it only bought intellectual property and hired staff but didn't acquire the Bay Area start-up outright.
But Pentagon officials disagreed that the deal shouldn't trigger review and took the unusual step of asking the company late last year to retroactively seek clearance, people familiar with the matter said.
Huawei then set the review process in motion, and the 45-day window that CFIUS has to review the deal closes Monday.
In a letter to Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke, five lawmakers wrote Thursday that Huawei poses a national-security risk and that attempts by the telecommunications-gear maker to acquire U.S. technology should receive close scrutiny. The Treasury and Commerce departments are among the agencies represented on CFIUS.
"The 3Leaf acquisition appears certain to generate transfer to China by Huawei of advanced U.S. computing technology," the letter said. It was signed by Sens. Jim Webb (D., Va.), Jon Kyl (R., Ariz.) and Richard Burr (R., N.C.) and Reps. Ileana Ros-Lehtinen (R., Fla.) and Sue Myrick (R., N.C.).
The lawmakers said Huawei has close ties to China's army and financial support from the Chinese government. The company's founder, Ren Zhengfei, was a former commander in China's People's Liberation Army.
Mr. Plummer, of Huawei, said the letter "rehashes unfounded innuendo in a seeming attempt to undermine the integrity of the CFIUS process."
"As Huawei has stated in the past, the company is 100% employee-owned and has no ties with any government, nor with the PLA," he said
Shayndi Raice has the story in the Wall Street Journal:
"A U.S. government panel is poised to recommend that the president unravel an acquisition made by China's Huawei Technologies Co., after the Pentagon sought review of the deal, people familiar with the matter said.
The Committee on Foreign Investment in the United States is reviewing the telecommunications-equipment maker's $2 million deal last May to buy the assets of 3Leaf Systems, a Bay Area developer of technology that lets collections of server computers work together as a more powerful machine.
The interagency committee reviews cross-border deals with national-security implications and makes recommendations to the president. A decision by CFIUS on the Huawei deal is due Monday. The transaction still could be approved, and the president is free to disregard a recommendation by the committee.
CFIUS doesn't release information about a company under review, but a person familiar with the CFIUS process said a president has vetoed a foreign transaction only two or three times. Typically, a company will withdraw its application if it gets an indication the committee will recommend against a deal.
The White House referred questions to the Treasury, and the Defense Department had no immediate comment on Huawei. Both typically refer questions on CFIUS matters to the Treasury, which declined to comment.
It was unclear what remedy the government could require of Huawei. The company hired 15 3Leaf employees, owns several former 3Leaf patents and purchased the start-up's servers out of bankruptcy.
"Huawei has been engaged in the CFIUS process related to 3Leaf in good faith for a number of months now and looks forward to the process concluding," said William Plummer, vice president of government affairs for Huawei.
The decision in the Huawei deal comes as President Barack Obama has been trying to defuse rising political and economic tensions with China. Huawei has struggled to gain a foothold in North America, thwarted on other deals by government officials who have said China's military could use Huawei equipment to disrupt or intercept U.S. communications.
The Chinese government considers Huawei a national champion in telecom, one of several industries in which the China aims to be globally competitive. Huawei is the world's second-largest maker of telecom equipment, after Telefon AB L.M. Ericsson, with estimated revenue last year of $28 billion, according to Huawei.
Companies generally are expected to request a CFIUS review before completing potentially sensitive cross-border deals. Huawei didn't seek review for the 3Leaf purchase in advance, however, saying it only bought intellectual property and hired staff but didn't acquire the Bay Area start-up outright.
But Pentagon officials disagreed that the deal shouldn't trigger review and took the unusual step of asking the company late last year to retroactively seek clearance, people familiar with the matter said.
Huawei then set the review process in motion, and the 45-day window that CFIUS has to review the deal closes Monday.
In a letter to Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke, five lawmakers wrote Thursday that Huawei poses a national-security risk and that attempts by the telecommunications-gear maker to acquire U.S. technology should receive close scrutiny. The Treasury and Commerce departments are among the agencies represented on CFIUS.
"The 3Leaf acquisition appears certain to generate transfer to China by Huawei of advanced U.S. computing technology," the letter said. It was signed by Sens. Jim Webb (D., Va.), Jon Kyl (R., Ariz.) and Richard Burr (R., N.C.) and Reps. Ileana Ros-Lehtinen (R., Fla.) and Sue Myrick (R., N.C.).
The lawmakers said Huawei has close ties to China's army and financial support from the Chinese government. The company's founder, Ren Zhengfei, was a former commander in China's People's Liberation Army.
Mr. Plummer, of Huawei, said the letter "rehashes unfounded innuendo in a seeming attempt to undermine the integrity of the CFIUS process."
"As Huawei has stated in the past, the company is 100% employee-owned and has no ties with any government, nor with the PLA," he said
Save And Share :
Starving the Regulators: Be Careful What You Wish For
The Republican Congress in the US is determined to cut the budgets of the agencies charged with monitoring the behavior of US financial institutions. Given that the recent financial crisis has been directly attributed to the atrophied regulatory environment under the Bush Administration, global investors may want to consider safe havens for their money.
Robert Schmidt reports in Business Week:
"When Congress overhauled the financial regulation system last year, it handed the U.S. Commodity Futures Trading Commission the tough task of policing the bulk of the derivatives business. Then lawmakers refused to give the tiny agency extra money to hire staff or upgrade its computer systems. The CFTC has been limping along on the same $169 million budget it had before its portfolio ballooned to include nearly $300 trillion in U.S. derivatives trades. It's a little like arming a big-game hunter with a pea shooter.
Six months after the Dodd-Frank law was enacted, the CFTC is struggling under the weight of its expanded duties. The agency has missed several deadlines as it tries to craft dozens of rules to make the derivatives market more transparent. It has restricted staff travel and cut $11 million from its technology budget. On Feb. 4, Chairman Gary Gensler had to address derivatives lawyers in Naples, Fla., by videoconference.
The agency recently warned Congress it may be forced to lay off at least 35 from a staff of about 700 next month unless it gets an emergency infusion of $31 million, according to two people familiar with the commission's budget problems. Even that small boost may never materialize, with Republican lawmakers and President Barack Obama girding for battle over how much to slice from the fiscal 2012 budget, which the President will release on Feb. 14. Representative Barney Frank (D-Mass.), a co-author of the financial overhaul, says the budget standoff could gut much of the law. "Let me be clear," says Frank. "This is a serious, serious threat."
The Securities and Exchange Commission is better off, though not by much. It's operating on a $1.1 billion budget, frozen at the 2010 level. Unable to afford new employees, SEC Chairman Mary Schapiro halted the creation of five offices required by the law, including units to supervise credit-rating firms, encourage whistle-blowers, and oversee municipal bonds. In a Feb. 4 speech, she said the funding problems were impeding the SEC's "core mission" of enforcing securities laws. The head of the SEC division that reviews company disclosures, Meredith Cross, says she's been unable to replace workers who have left and now looks out on 20 empty desks she hoped to fill. The SEC enforcement chief, Robert Khuzami, says he told his attorneys to interview witnesses by videoconference because of budget constraints. He says the agency can't afford technology upgrades to process the electronic tips and other evidence it receives.
Regulators are trying to balance congressional deadlines with writing sensible, practical rules, says Neal Wolin, deputy Treasury secretary. "There has not been any compromise thus far on getting it done right," he says. Frank sees the hand of Wall Street at work. "There is no question," he says, that Republicans are aiming their scalpels at the CFTC and the SEC to slow the derivatives rules that would harm bank profits more than any other new regulation. Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), Bank of America (BAC), and Citigroup (C) earned a combined $28 billion on derivatives trades in 2009, the year before the law passed, according to market sources and Federal Reserve data. Those profits are likely to decline as the complex securities are traded more in the open as required by the new law.
Republicans deny they are trying to help the banks. "It wouldn't be all that inappropriate to hit the pause button or extend some of those regulatory deadlines or requirements until we get our arms around where we're headed," says Randy Neugebauer (R-Tex.), who sits on the House Financial Services Committee.
Even without budget politics, the agencies would have had a tough time following the Dodd-Frank law's timetable. The act requires 243 new rules, 67 one-time studies, and 22 recurring reports. Most of the work is supposed to be completed in July, one year after the President signed the measure.
There have been some notable successes. The new Consumer Financial Protection Bureau, still operating within the Treasury Dept., has hired 150 employees and is beginning to focus on two priorities: making credit cards and mortgages more consumer-friendly. Its interim leader, Presidential adviser Elizabeth Warren, has set a goal of creating new loan forms that will eliminate 80 percent of the paperwork involved in buying a home.
Across the bureaucracy, most of the rules that are on track are at the earliest and least controversial proposal stage and could still encounter snags. Others are already provoking fierce opposition. Banks are fighting a Federal Reserve proposal to cap the debit-card fees retail merchants pay to banks that issue the cards. Some analysts have estimated the rule could drain $12 billion in revenue from banks. Camden Fine, head of a trade group for community banks, says he is usually fighting the large banks, but in this case they have banded together to stop the rule. "This has united the entire industry," he says.
While Wall Street firms and their trade associations say they're not asking Republicans to cut agency budgets, there's no denying they want to slow-walk the process. Timothy Ryan, president of the Securities Industry and Financial Markets Assn., cautioned Treasury Secretary Timothy Geithner in a letter earlier this month that the rule-making pace could disrupt markets. "In the balance between strict adherence to deadlines and creating regulations that work to the benefit of the broader economy," Ryan wrote, "I come down on the side of doing it right, rather than doing it fast." Doing it fast may no longer be a worry.
The bottom line: Instead of unleashing a regulatory tsunami, financial agencies are slowing the creation of new rules and warning of layoffs as funds run out.
Robert Schmidt reports in Business Week:
"When Congress overhauled the financial regulation system last year, it handed the U.S. Commodity Futures Trading Commission the tough task of policing the bulk of the derivatives business. Then lawmakers refused to give the tiny agency extra money to hire staff or upgrade its computer systems. The CFTC has been limping along on the same $169 million budget it had before its portfolio ballooned to include nearly $300 trillion in U.S. derivatives trades. It's a little like arming a big-game hunter with a pea shooter.
Six months after the Dodd-Frank law was enacted, the CFTC is struggling under the weight of its expanded duties. The agency has missed several deadlines as it tries to craft dozens of rules to make the derivatives market more transparent. It has restricted staff travel and cut $11 million from its technology budget. On Feb. 4, Chairman Gary Gensler had to address derivatives lawyers in Naples, Fla., by videoconference.
The agency recently warned Congress it may be forced to lay off at least 35 from a staff of about 700 next month unless it gets an emergency infusion of $31 million, according to two people familiar with the commission's budget problems. Even that small boost may never materialize, with Republican lawmakers and President Barack Obama girding for battle over how much to slice from the fiscal 2012 budget, which the President will release on Feb. 14. Representative Barney Frank (D-Mass.), a co-author of the financial overhaul, says the budget standoff could gut much of the law. "Let me be clear," says Frank. "This is a serious, serious threat."
The Securities and Exchange Commission is better off, though not by much. It's operating on a $1.1 billion budget, frozen at the 2010 level. Unable to afford new employees, SEC Chairman Mary Schapiro halted the creation of five offices required by the law, including units to supervise credit-rating firms, encourage whistle-blowers, and oversee municipal bonds. In a Feb. 4 speech, she said the funding problems were impeding the SEC's "core mission" of enforcing securities laws. The head of the SEC division that reviews company disclosures, Meredith Cross, says she's been unable to replace workers who have left and now looks out on 20 empty desks she hoped to fill. The SEC enforcement chief, Robert Khuzami, says he told his attorneys to interview witnesses by videoconference because of budget constraints. He says the agency can't afford technology upgrades to process the electronic tips and other evidence it receives.
Regulators are trying to balance congressional deadlines with writing sensible, practical rules, says Neal Wolin, deputy Treasury secretary. "There has not been any compromise thus far on getting it done right," he says. Frank sees the hand of Wall Street at work. "There is no question," he says, that Republicans are aiming their scalpels at the CFTC and the SEC to slow the derivatives rules that would harm bank profits more than any other new regulation. Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), Bank of America (BAC), and Citigroup (C) earned a combined $28 billion on derivatives trades in 2009, the year before the law passed, according to market sources and Federal Reserve data. Those profits are likely to decline as the complex securities are traded more in the open as required by the new law.
Republicans deny they are trying to help the banks. "It wouldn't be all that inappropriate to hit the pause button or extend some of those regulatory deadlines or requirements until we get our arms around where we're headed," says Randy Neugebauer (R-Tex.), who sits on the House Financial Services Committee.
Even without budget politics, the agencies would have had a tough time following the Dodd-Frank law's timetable. The act requires 243 new rules, 67 one-time studies, and 22 recurring reports. Most of the work is supposed to be completed in July, one year after the President signed the measure.
There have been some notable successes. The new Consumer Financial Protection Bureau, still operating within the Treasury Dept., has hired 150 employees and is beginning to focus on two priorities: making credit cards and mortgages more consumer-friendly. Its interim leader, Presidential adviser Elizabeth Warren, has set a goal of creating new loan forms that will eliminate 80 percent of the paperwork involved in buying a home.
Across the bureaucracy, most of the rules that are on track are at the earliest and least controversial proposal stage and could still encounter snags. Others are already provoking fierce opposition. Banks are fighting a Federal Reserve proposal to cap the debit-card fees retail merchants pay to banks that issue the cards. Some analysts have estimated the rule could drain $12 billion in revenue from banks. Camden Fine, head of a trade group for community banks, says he is usually fighting the large banks, but in this case they have banded together to stop the rule. "This has united the entire industry," he says.
While Wall Street firms and their trade associations say they're not asking Republicans to cut agency budgets, there's no denying they want to slow-walk the process. Timothy Ryan, president of the Securities Industry and Financial Markets Assn., cautioned Treasury Secretary Timothy Geithner in a letter earlier this month that the rule-making pace could disrupt markets. "In the balance between strict adherence to deadlines and creating regulations that work to the benefit of the broader economy," Ryan wrote, "I come down on the side of doing it right, rather than doing it fast." Doing it fast may no longer be a worry.
The bottom line: Instead of unleashing a regulatory tsunami, financial agencies are slowing the creation of new rules and warning of layoffs as funds run out.
Save And Share :
Growth Markets: Gay Retirees?
Segmentation has allowed marketers to better identify new business opportunities. Demographic analyses help target and focus the development's prospects. As the Baby Boom generation begins to hit age 60 in force, one element of that evaluation concerns an affluent segment of the cohort; gay retirees. There are a number of marketing concerns involved (for instance, do gays considering retirement even want to be segmented as such)but as Alissa Walker points out in Fast Co, real estate developers are preparing to invest a quarter of a billion dollars in the concept:
"After three years studying aging and design, architect Matthias Hollwich uncovered a disturbing truth. "Age discrimination is really prevalent in our society," he says. "Plus, you are actually discriminating against something you will be in your own future." The New York-based principal of Hollwich Kushner, who also co-founded the architect networking site Architizer, thinks architecture can help by creating inspiring, community-oriented spaces where retirees are empowered to give back to society. His new project BOOM, a $250 million development planned for the Palm Springs area that's coordinated by Hollwich's firm, is banking on the fact that hundreds of aging, creative boomers -- many of them part of the local gay community -- will move here to do it.
None of the invited firms had done work around aging before, insuring fresh ideas.
Hollwich's firm is one of ten architectural firms including Diller Scofidio + Renfro, Juergen Mayer H., and Lot-Ek who are contributing to the project, which will be developed by Los Angeles-based Boom Communities, Inc. Each firm was given a piece of the 100-acre plot and total freedom to inject their personal style into the space. The only requirements for the architects were that their structures had to epitomize high design in order to fight the stereotypical look of retirement communities, and that none of the firms could have ever done work around aging before, so they could come to the project with fresh ideas. The 300 residences will break ground in 2012, a number that will more than double with the completion of phase two.
The project began as part of Hollwich's line of study on architecture and aging at the University of Pennsylvania, which culminated in a conference held last September called New Aging. BOOM is a chance to design a contemporary retirement community from the ground up, one that ignores those stereotypical architectural motions, he says -- a ramp here, a wide doorway there-- that reinforces the feeling of being a second-class citizen. Throughout BOOM's pedestrian-only community, Hollwich proposed providing elements for a range of abilities that Hollwich says will empower residents. "Inconvenience will help to trigger people and get them to do a little bit more activity than they think they can," he says. If they encounter other people doing the same thing, even better. "It becomes a socializing moment." Landscaping proposals by Surfacedesign offer multiple paths to a park's vista, ranging from stairs to ramps, giving residents the empowering ability to make a choice and help each other along the way.
Even the definition of "family" was different for the gay community.
What began specifically as a community to serve Palm Springs's burgeoning gay community that's 65 and over soon began to skew younger, namely when Hollwich's research uncovered a bigger shift in LGBT lifestyles that happened around 40. "You might shift from a party life into one that's more settled down," he says, making it a perfect time to start looking for different living options. Hollwich then examined other lifestyle trends that changed BOOM's focus even more. For example, even the definition of "family" was different for the gay community, says Hollwich. The people they spoke to considered a wide range of people, including ex-partners and close friends, to be their immediate family, some of whom might not identify as LGBT at all.
"We got so much response from the outside that asked for it to be a community for all," says Hollwich. So the plan expanded to become more of a destination, with dining, retail, and boutique hotels. Specific elements like the Healing Funhouse by Arakawa + Gins, a colorful, highly textured playground, are designed for both kids to scramble over and for their grandparents to stretch and condition their bodies.
Even though the development is open to all, Hollwich is still counting on the LGBT community to drive BOOM's culture. "The LGBT community has a very entrepreneurial role in society, they choose to be very innovative with how they live their lives," he says. Hollwich hopes to see everything from mentoring programs to art studios to small businesses initiated by the residents in a way that can serve the greater community but also acknowledges the "vibrancy and diversity" the LGBT community is known for. There's no other place like this, he says. "In the gay community, many people go back into the closet after they go into assisted living facilities."
But there are issues with what is basically a theme park for gay retirees.
With BOOM's high-profile architects each contributing work in radically different styles, it does have the overly-speculative scent of a certain other big-ticket desert development, say, a CityCenter for old people. But Hollwich says they have a plan to prevent some of the economic pitfalls that the Vegas development has confronted during its first year of operation. "We don't want to just have this product ready and then get people to buy into it," says Hollwich. "We want people to get involved and become part of the community earlier."
To do that, they've set up an online community, designed by Bruce Mau Design (who also designed the logo and identity) where potential residents can provide feedback on the community and tell the architects what they want to see in the next round of renderings. People will also be able to join advisory boards and put together committees for initiatives like community gardening or theater groups. If they "Like" BOOM on Facebook, says Hollwich, the team will reference their profiles to make sure planned activities are serving their interests.
Additionally, there will be a chance for real-life community building. A popular event promoter in the local LGBT community will be having launch events in 10 cities to recruit new residents. Construction events planned at the site will engage the local community early on and allow potential residents to meet their future neighbors and participate in some activities, like a collaborative building project at a community center.
Still, BOOM will have to work extra hard to win the right kind of socially-focused, culturally-savvy resident. It's not nestled in the resurging hipness of Palm Springs, rather, it's on the fringe, in a community called Rancho Mirage, where sleepy golf courses and stucco-covered condos aren't a huge draw. For BOOM to succeed in luring the right brand of design-enthusastic retirees, it will likely have to draw them out of big cities where they have access to urban amenities like world-class restaurants and well-funded museums.
And while catering to active older people with non-traditional draws like a "rooftop disco" -- insert visions of Cocoon in the desert --- there are some issues with designing what's essentially a theme park for gay retirees. Healthy, young tourists likely won't want to spend their vacation staying at a retirement home, even if they're welcome, and locals might not want to do their shopping at a nursing home, where extensive healthcare facilities -- however well-designed -- are so prevalent. There's also the possibility that many potential straight residents who are interested in the design won't feel comfortable in a community driven by gay culture.
Still, if what Hollwich is saying is true, the residents themselves can mold this diverse community into their own version of a gently-graying utopia. Time will tell if it's BOOM or BUST
"After three years studying aging and design, architect Matthias Hollwich uncovered a disturbing truth. "Age discrimination is really prevalent in our society," he says. "Plus, you are actually discriminating against something you will be in your own future." The New York-based principal of Hollwich Kushner, who also co-founded the architect networking site Architizer, thinks architecture can help by creating inspiring, community-oriented spaces where retirees are empowered to give back to society. His new project BOOM, a $250 million development planned for the Palm Springs area that's coordinated by Hollwich's firm, is banking on the fact that hundreds of aging, creative boomers -- many of them part of the local gay community -- will move here to do it.
None of the invited firms had done work around aging before, insuring fresh ideas.
Hollwich's firm is one of ten architectural firms including Diller Scofidio + Renfro, Juergen Mayer H., and Lot-Ek who are contributing to the project, which will be developed by Los Angeles-based Boom Communities, Inc. Each firm was given a piece of the 100-acre plot and total freedom to inject their personal style into the space. The only requirements for the architects were that their structures had to epitomize high design in order to fight the stereotypical look of retirement communities, and that none of the firms could have ever done work around aging before, so they could come to the project with fresh ideas. The 300 residences will break ground in 2012, a number that will more than double with the completion of phase two.
The project began as part of Hollwich's line of study on architecture and aging at the University of Pennsylvania, which culminated in a conference held last September called New Aging. BOOM is a chance to design a contemporary retirement community from the ground up, one that ignores those stereotypical architectural motions, he says -- a ramp here, a wide doorway there-- that reinforces the feeling of being a second-class citizen. Throughout BOOM's pedestrian-only community, Hollwich proposed providing elements for a range of abilities that Hollwich says will empower residents. "Inconvenience will help to trigger people and get them to do a little bit more activity than they think they can," he says. If they encounter other people doing the same thing, even better. "It becomes a socializing moment." Landscaping proposals by Surfacedesign offer multiple paths to a park's vista, ranging from stairs to ramps, giving residents the empowering ability to make a choice and help each other along the way.
Even the definition of "family" was different for the gay community.
What began specifically as a community to serve Palm Springs's burgeoning gay community that's 65 and over soon began to skew younger, namely when Hollwich's research uncovered a bigger shift in LGBT lifestyles that happened around 40. "You might shift from a party life into one that's more settled down," he says, making it a perfect time to start looking for different living options. Hollwich then examined other lifestyle trends that changed BOOM's focus even more. For example, even the definition of "family" was different for the gay community, says Hollwich. The people they spoke to considered a wide range of people, including ex-partners and close friends, to be their immediate family, some of whom might not identify as LGBT at all.
"We got so much response from the outside that asked for it to be a community for all," says Hollwich. So the plan expanded to become more of a destination, with dining, retail, and boutique hotels. Specific elements like the Healing Funhouse by Arakawa + Gins, a colorful, highly textured playground, are designed for both kids to scramble over and for their grandparents to stretch and condition their bodies.
Even though the development is open to all, Hollwich is still counting on the LGBT community to drive BOOM's culture. "The LGBT community has a very entrepreneurial role in society, they choose to be very innovative with how they live their lives," he says. Hollwich hopes to see everything from mentoring programs to art studios to small businesses initiated by the residents in a way that can serve the greater community but also acknowledges the "vibrancy and diversity" the LGBT community is known for. There's no other place like this, he says. "In the gay community, many people go back into the closet after they go into assisted living facilities."
But there are issues with what is basically a theme park for gay retirees.
With BOOM's high-profile architects each contributing work in radically different styles, it does have the overly-speculative scent of a certain other big-ticket desert development, say, a CityCenter for old people. But Hollwich says they have a plan to prevent some of the economic pitfalls that the Vegas development has confronted during its first year of operation. "We don't want to just have this product ready and then get people to buy into it," says Hollwich. "We want people to get involved and become part of the community earlier."
To do that, they've set up an online community, designed by Bruce Mau Design (who also designed the logo and identity) where potential residents can provide feedback on the community and tell the architects what they want to see in the next round of renderings. People will also be able to join advisory boards and put together committees for initiatives like community gardening or theater groups. If they "Like" BOOM on Facebook, says Hollwich, the team will reference their profiles to make sure planned activities are serving their interests.
Additionally, there will be a chance for real-life community building. A popular event promoter in the local LGBT community will be having launch events in 10 cities to recruit new residents. Construction events planned at the site will engage the local community early on and allow potential residents to meet their future neighbors and participate in some activities, like a collaborative building project at a community center.
Still, BOOM will have to work extra hard to win the right kind of socially-focused, culturally-savvy resident. It's not nestled in the resurging hipness of Palm Springs, rather, it's on the fringe, in a community called Rancho Mirage, where sleepy golf courses and stucco-covered condos aren't a huge draw. For BOOM to succeed in luring the right brand of design-enthusastic retirees, it will likely have to draw them out of big cities where they have access to urban amenities like world-class restaurants and well-funded museums.
And while catering to active older people with non-traditional draws like a "rooftop disco" -- insert visions of Cocoon in the desert --- there are some issues with designing what's essentially a theme park for gay retirees. Healthy, young tourists likely won't want to spend their vacation staying at a retirement home, even if they're welcome, and locals might not want to do their shopping at a nursing home, where extensive healthcare facilities -- however well-designed -- are so prevalent. There's also the possibility that many potential straight residents who are interested in the design won't feel comfortable in a community driven by gay culture.
Still, if what Hollwich is saying is true, the residents themselves can mold this diverse community into their own version of a gently-graying utopia. Time will tell if it's BOOM or BUST
Save And Share :
China Requires Parental Monitoring Option for On-Line Gaming
Information may want to be free but not everyone in the tangible world agrees. China has promulgated rules requiring monitoring services for under-age on-line gamers. While this is consistent with previous Chinese regulatory oversight of the 'net, the question is whether the gamers, a pretty resourceful bunch, have already figured out how to, forgive us for saying this, game the system.
Qiu Bo relays the news in China Daily:
"Online game operators in China will be required to provide services for parents to monitor their children's game-playing in the latest effort to prevent minors becoming addicted to Internet games.
A notice issued on Monday by eight central government departments, including the Ministry of Culture and Ministry of Public Security, ordered the implementation of the Parents' Guardian Project for Minors Playing Online Games on March 1.
Under the plan, which was first introduced on a pilot basis in February 2010, all online game operators must cooperate with parents in monitoring their children's online game-playing.
As long as the parents can prove their identity as guardians and the gaming account of their children, the game operators should follow the parents' request to restrict their young children's online game-playing, including setting a limit on the daily or weekly playing time or even imposing a total ban.
The operators must also regularly monitor the game account and help parents to prohibit or restrict the inappropriate playing of online games, the document said.
It also urged game operators to employ special personnel and to set up special webpages and hotline services for the project.
The document suggested a school student play online games for less than two hours every week and spend no more than 10 yuan ($1.5) on playing online games every month.
The move is the latest effort to address growing Internet addiction among minors as statistics from the Chinese Academy of Social Sciences suggest the number of teenage Internet addicts in China has risen to 33 million.
However, experts have expressed doubts about the likely effectiveness of the move.
"It's a governmental gesture rather than an efficient solution," Gu Jun, a sociologist from Shanghai University, told China Daily. Gu said a good intention does not always lead to a feasible method.
"The parents, whose underage children get addicted to online games, are also victims, and how can you expect such a move to eliminate a family conflict?" Gu said.
Gao Wenbin, a psychology specialist at the Chinese Academy of Sciences, said most people in China addicted to the cyber world were aged between 15 and 20, and 80 to 90 percent of them concentrated on games.
Gu said the government should regulate Internet cafes that unscrupulously accept minors and game operators instead of bothering parents.
It is estimated that the country had 200,000 authorized Internet cafes by the end of 2010.
According to Macao Daily News, 457 million Chinese netizens are now sharing 250 million IP addresses, which means many of them use Internet cafes.
The General Administration of Press and Publication said this month the country's online game industry's annual sales reached 32.4 billion yuan last year, a year-on-year increase of 26.3 percent.
Xie Guangji, a 38-year-old parent in Cangzhou, Hebei province, said he wouldn’t respond to the regulation because he is already managing the game time for his 14-year-old son, a junior middle school student.
"It's unnecessary and it will prompt more rebelliousness from the children," Xie said.
This move is not the first time the government has addressed Internet addiction among minors.
In August 2010, the Ministry of Culture issued the Interim Provision of Real-Name Registration of Online Gaming to prevent minors from becoming addicted to cyber games.
"The kids can easily use a fake adult ID to get back into the game. They can just hide from their parents," said Liu Kun, a 27-year-old gamer in Beijing.
Qiu Bo relays the news in China Daily:
"Online game operators in China will be required to provide services for parents to monitor their children's game-playing in the latest effort to prevent minors becoming addicted to Internet games.
A notice issued on Monday by eight central government departments, including the Ministry of Culture and Ministry of Public Security, ordered the implementation of the Parents' Guardian Project for Minors Playing Online Games on March 1.
Under the plan, which was first introduced on a pilot basis in February 2010, all online game operators must cooperate with parents in monitoring their children's online game-playing.
As long as the parents can prove their identity as guardians and the gaming account of their children, the game operators should follow the parents' request to restrict their young children's online game-playing, including setting a limit on the daily or weekly playing time or even imposing a total ban.
The operators must also regularly monitor the game account and help parents to prohibit or restrict the inappropriate playing of online games, the document said.
It also urged game operators to employ special personnel and to set up special webpages and hotline services for the project.
The document suggested a school student play online games for less than two hours every week and spend no more than 10 yuan ($1.5) on playing online games every month.
The move is the latest effort to address growing Internet addiction among minors as statistics from the Chinese Academy of Social Sciences suggest the number of teenage Internet addicts in China has risen to 33 million.
However, experts have expressed doubts about the likely effectiveness of the move.
"It's a governmental gesture rather than an efficient solution," Gu Jun, a sociologist from Shanghai University, told China Daily. Gu said a good intention does not always lead to a feasible method.
"The parents, whose underage children get addicted to online games, are also victims, and how can you expect such a move to eliminate a family conflict?" Gu said.
Gao Wenbin, a psychology specialist at the Chinese Academy of Sciences, said most people in China addicted to the cyber world were aged between 15 and 20, and 80 to 90 percent of them concentrated on games.
Gu said the government should regulate Internet cafes that unscrupulously accept minors and game operators instead of bothering parents.
It is estimated that the country had 200,000 authorized Internet cafes by the end of 2010.
According to Macao Daily News, 457 million Chinese netizens are now sharing 250 million IP addresses, which means many of them use Internet cafes.
The General Administration of Press and Publication said this month the country's online game industry's annual sales reached 32.4 billion yuan last year, a year-on-year increase of 26.3 percent.
Xie Guangji, a 38-year-old parent in Cangzhou, Hebei province, said he wouldn’t respond to the regulation because he is already managing the game time for his 14-year-old son, a junior middle school student.
"It's unnecessary and it will prompt more rebelliousness from the children," Xie said.
This move is not the first time the government has addressed Internet addiction among minors.
In August 2010, the Ministry of Culture issued the Interim Provision of Real-Name Registration of Online Gaming to prevent minors from becoming addicted to cyber games.
"The kids can easily use a fake adult ID to get back into the game. They can just hide from their parents," said Liu Kun, a 27-year-old gamer in Beijing.
Save And Share :
Can WiFi For All Save the US Economy?
President Obama has twice proposed that expanding wireless access for almost all Americans could lift the economy and create sustainable growth. And he is prepared to invest billions to do it. Can this work? Realistically, not by itself - the economy is global, after all, and far too complicated. The implementation will take years and there is no guarantee Congress will vote the funds. However, given the data the Administration has available and the options open to them to stimulate growth while creating jobs, they have picked this idea.
Kristina Chew explains why in Care2:
"Is wireless access for all Americans the key to economic recovery?
President Obama said as much on Thursday in pitching a plan for providing high-speed wireless coverage to 98 percent of Americans in five years, the February 10th New York Times reports.
The President plans to use $18 billion in federal funds to create this nationwide network. He will request a one-time investment of $5 billion from Congress to bring wireless coverage to the nation's rural areas, and also seeks to get a '$10.7 billion commitment' to support what is described as a '“nationwide wireless broadband network” for public safety.' In addition, $3 billion will be allocated to a government research program to develop methods for using 'mobile Internet access for emerging technologies and for health, education and energy applications.'
The Washington Post provides more details about how the administration hopes to execute this all-across America Internet plan:
To get there, the federal government will try to bring more radio waves into the hands of wireless carriers to bolster the nation's networks and prevent a jam of Internet traffic. He said he hoped to raise about $27.8 billion by auctioning airwaves now in the hands of television stations and government agencies.
And with that auction money, the government would fund new rural 4G wireless networks and a mobile communications system for fire, police and emergency responders. The remaining funds raised - about $10 billion - would go toward lowering the federal deficit over the next decade. The Congressional Budget Office has said the deficit will climb to $1.5 trillion this year.
First outlined in Obama's State of the Union speech, the plan is part of a push to reshape the nation's infrastructure of deteriorating roadways and manufacturing plants into one with high-speed railways and high-speed Internet networks that the president said are essential for the United States to compete in the global economy.
Experts have raised caveats about the President's plan, noting that it is both 'ambitious' and 'complicated,' the Washington Post says. The plan calls for television broadcasters to give up an asset they are something more than disinclined to part with, their share of the airwaves. Thus, there are no guarantees as to how much money these 'incentive auctions' might raise:
"We aren't against the plan but want to make sure this is truly voluntary, and we want to hold harmless those who don't want to participate," said Gordon Smith, president of the National Association of Broadcasters, a trade group.
The broadcasters are sitting on what is considered beachfront spectrum that is ideal for hosting powerful Internet connections from the flood of Droids, iPhones and Xoom tablets hitting the market.
As the Washington Post notes, the White House has said that 'the auction proceeds would mean that funds won't come out of taxpayer pockets.' But the question remains, how much the auction will provide at all---and without sufficient funds, how much of the President's plan be carried out?
The President described his plan in Marquette, a city of about 21 residents on Michigan's Upper Peninsula. Marquette is home to Northern Michigan University, which has worked on expanding wireless coverage both on its campus and in the surrounding community, and which has for the past decade given each student a new laptop. In his speech, Obama noted that his new plan 'isn’t just about a faster Internet or being able to find a friend on Facebook.' It is rather about connecting Americans together and providing everyone with more opportunities for information and also for commerce. Said the President:
It’s about connecting every corner of America to the digital age. It’s about a rural community in Iowa or Alabama where farmers can monitor weather across the state and markets across the globe. It’s about an entrepreneur on Main Street with a great idea she hopes to sell to the big city. It’s about every young person who no longer has to leave his hometown to seek new opportunity — because opportunity is right there at his or her fingertips.
Will this projected new Internet infrastructure do for the US what the Interstate system of highways did for a previous generation?
Kristina Chew explains why in Care2:
"Is wireless access for all Americans the key to economic recovery?
President Obama said as much on Thursday in pitching a plan for providing high-speed wireless coverage to 98 percent of Americans in five years, the February 10th New York Times reports.
The President plans to use $18 billion in federal funds to create this nationwide network. He will request a one-time investment of $5 billion from Congress to bring wireless coverage to the nation's rural areas, and also seeks to get a '$10.7 billion commitment' to support what is described as a '“nationwide wireless broadband network” for public safety.' In addition, $3 billion will be allocated to a government research program to develop methods for using 'mobile Internet access for emerging technologies and for health, education and energy applications.'
The Washington Post provides more details about how the administration hopes to execute this all-across America Internet plan:
To get there, the federal government will try to bring more radio waves into the hands of wireless carriers to bolster the nation's networks and prevent a jam of Internet traffic. He said he hoped to raise about $27.8 billion by auctioning airwaves now in the hands of television stations and government agencies.
And with that auction money, the government would fund new rural 4G wireless networks and a mobile communications system for fire, police and emergency responders. The remaining funds raised - about $10 billion - would go toward lowering the federal deficit over the next decade. The Congressional Budget Office has said the deficit will climb to $1.5 trillion this year.
First outlined in Obama's State of the Union speech, the plan is part of a push to reshape the nation's infrastructure of deteriorating roadways and manufacturing plants into one with high-speed railways and high-speed Internet networks that the president said are essential for the United States to compete in the global economy.
Experts have raised caveats about the President's plan, noting that it is both 'ambitious' and 'complicated,' the Washington Post says. The plan calls for television broadcasters to give up an asset they are something more than disinclined to part with, their share of the airwaves. Thus, there are no guarantees as to how much money these 'incentive auctions' might raise:
"We aren't against the plan but want to make sure this is truly voluntary, and we want to hold harmless those who don't want to participate," said Gordon Smith, president of the National Association of Broadcasters, a trade group.
The broadcasters are sitting on what is considered beachfront spectrum that is ideal for hosting powerful Internet connections from the flood of Droids, iPhones and Xoom tablets hitting the market.
As the Washington Post notes, the White House has said that 'the auction proceeds would mean that funds won't come out of taxpayer pockets.' But the question remains, how much the auction will provide at all---and without sufficient funds, how much of the President's plan be carried out?
The President described his plan in Marquette, a city of about 21 residents on Michigan's Upper Peninsula. Marquette is home to Northern Michigan University, which has worked on expanding wireless coverage both on its campus and in the surrounding community, and which has for the past decade given each student a new laptop. In his speech, Obama noted that his new plan 'isn’t just about a faster Internet or being able to find a friend on Facebook.' It is rather about connecting Americans together and providing everyone with more opportunities for information and also for commerce. Said the President:
It’s about connecting every corner of America to the digital age. It’s about a rural community in Iowa or Alabama where farmers can monitor weather across the state and markets across the globe. It’s about an entrepreneur on Main Street with a great idea she hopes to sell to the big city. It’s about every young person who no longer has to leave his hometown to seek new opportunity — because opportunity is right there at his or her fingertips.
Will this projected new Internet infrastructure do for the US what the Interstate system of highways did for a previous generation?
Save And Share :
The Pirate Economy: What the Somalis Can Teach Us About Global Competition
Despite NATO Naval Task Forces and international awareness of the threat they present, the Somali pirates continue to hijack ships and successfully extract multi-million dollar ransoms from their owners. Rather than view them as a nettlesome but antiquated throwback to an earlier age, it is useful to assess their success in the context of global corporate competition. In doing so one finds that they understand market research, customer knowledge, staffing, compensation and supply chain management.
Michael Lynn provides an assessment in the Financial Times:
"As Somali pirates become ever more audacious, they are regularly portrayed in the press as vicious aggressors, taking innocent people hostage, only to auction them off at vast ransoms. There is much truth in that: on Thursday one pirate band hijacked a US-bound oil tanker even as it emerged that another had killed two Filipino crewmen in late January after a botched rescue mission. But there is another way to assess these buccaneers: as businessmen, who have smartly figured out the way trade is flowing, and how to get their share.
The booming piracy industry is a neat metaphor for our globalised economy. Just about everything you need to know about how money is made and lost is encapsulated in the daily battles between cargo captains and the pirate skiffs in the Somali basin.
For starters, know your customer. One of the keys to understanding the modern multinational is to realise it hates embarrassment. Bear in mind that when faced with any challenge, whether from a lobby group, government or nerdy teenager on Twitter, its instinctive response is to crumple. Then imagine what it will do when confronted with poor people with guns: give in without a fight. Sure enough, most shipping companies don’t even allow their guards to bear weapons. It is not the kind of thing Human Resources wants to get involved in. All the pirates have to do is take a ship, steer it to harbour, then ask for a few million dollars for its return. So long as they don’t hurt anyone – and usually they don’t – they have understood that a modern multinational will always pay up, to make the problem go away.
Second, as the economy changes, stay flexible and be ready to reinvent yourself. Somalia was not always a hotbed of piracy. Its main industry in the Puntland region where the pirates have their hub, was fishing. After the government collapsed, however, its territorial waters could not be enforced, and other fleets came and stole the stock. But, as the saying has it, there are always other fish in the sea. At the same time, the mighty Chinese export machine was cranking into action, sending quantities of material to Europe. The most economical route was up through the Suez Canal, which meant that Puntland’s ex-fishermen had billions of dollars of stuff sailing right past them. All they needed to do was ask for a fraction of that – what bond traders would call a quarter of a basis point. And, hey presto, they’d become toll collectors rather than fishermen.
Three, equip yourself with the right kit. You never want to let your IT department get behind the curve. Piracy is, just like everything, fundamentally an information business. You are not going to get much of a ransom for a ship full of wheat or cement. What you want is a boatload of snazzy Samsung 3D TVs, or, even better, iPhones. Fortunately, ships are now fitted with the Automatic Identification System, a computer system that logs details of every ship, its crew and cargo. It is great for customs, and ship management: unfortunately, the pirates are smart enough to hack into it. They know precisely which vessels are worth targeting. When that fails, they use spotters in Dubai and Oman to make note of valuable boats. As anyone in the City of London will tell you, the only trades worth doing are the inside ones. The pirates have learnt that lesson.
Four, pay the staff right. The economics of a hit are as precisely tabulated as a McKinsey time-and-motion study. Each attack costs about $6,000. An investor puts up the capital in return for a third of the takings: London’s private equity houses would probably drive a harder bargain, but would recognise the structure of the deal. The money is used for the information, the skiff, the guns, and the khat, a powerful narcotic the pirates chew constantly. Remaining profits are split equally between the men. The youngest member of the attack force, usually about 14, will scale the ship first – a dangerous job, with the highest probability of getting killed – but will get 30 per cent extra. Get some gung-ho youngsters, and allow them to take huge if potentially lethal risks, with the promise of a vast bonus if by some miracle they get out alive? There probably isn’t a director of an investment bank who wouldn’t recognise the business model.
Finally, if nothing else, the pirates’ success shows that trickle-down economics does work eventually. Parts of Somalia are growing rich on the “tolls” their seafarers collect from cargo ships steaming between Asia and Europe. It’s just that sometimes you need a few AK-47s to make sure some of the wealth trickles down to you.
Michael Lynn provides an assessment in the Financial Times:
"As Somali pirates become ever more audacious, they are regularly portrayed in the press as vicious aggressors, taking innocent people hostage, only to auction them off at vast ransoms. There is much truth in that: on Thursday one pirate band hijacked a US-bound oil tanker even as it emerged that another had killed two Filipino crewmen in late January after a botched rescue mission. But there is another way to assess these buccaneers: as businessmen, who have smartly figured out the way trade is flowing, and how to get their share.
The booming piracy industry is a neat metaphor for our globalised economy. Just about everything you need to know about how money is made and lost is encapsulated in the daily battles between cargo captains and the pirate skiffs in the Somali basin.
For starters, know your customer. One of the keys to understanding the modern multinational is to realise it hates embarrassment. Bear in mind that when faced with any challenge, whether from a lobby group, government or nerdy teenager on Twitter, its instinctive response is to crumple. Then imagine what it will do when confronted with poor people with guns: give in without a fight. Sure enough, most shipping companies don’t even allow their guards to bear weapons. It is not the kind of thing Human Resources wants to get involved in. All the pirates have to do is take a ship, steer it to harbour, then ask for a few million dollars for its return. So long as they don’t hurt anyone – and usually they don’t – they have understood that a modern multinational will always pay up, to make the problem go away.
Second, as the economy changes, stay flexible and be ready to reinvent yourself. Somalia was not always a hotbed of piracy. Its main industry in the Puntland region where the pirates have their hub, was fishing. After the government collapsed, however, its territorial waters could not be enforced, and other fleets came and stole the stock. But, as the saying has it, there are always other fish in the sea. At the same time, the mighty Chinese export machine was cranking into action, sending quantities of material to Europe. The most economical route was up through the Suez Canal, which meant that Puntland’s ex-fishermen had billions of dollars of stuff sailing right past them. All they needed to do was ask for a fraction of that – what bond traders would call a quarter of a basis point. And, hey presto, they’d become toll collectors rather than fishermen.
Three, equip yourself with the right kit. You never want to let your IT department get behind the curve. Piracy is, just like everything, fundamentally an information business. You are not going to get much of a ransom for a ship full of wheat or cement. What you want is a boatload of snazzy Samsung 3D TVs, or, even better, iPhones. Fortunately, ships are now fitted with the Automatic Identification System, a computer system that logs details of every ship, its crew and cargo. It is great for customs, and ship management: unfortunately, the pirates are smart enough to hack into it. They know precisely which vessels are worth targeting. When that fails, they use spotters in Dubai and Oman to make note of valuable boats. As anyone in the City of London will tell you, the only trades worth doing are the inside ones. The pirates have learnt that lesson.
Four, pay the staff right. The economics of a hit are as precisely tabulated as a McKinsey time-and-motion study. Each attack costs about $6,000. An investor puts up the capital in return for a third of the takings: London’s private equity houses would probably drive a harder bargain, but would recognise the structure of the deal. The money is used for the information, the skiff, the guns, and the khat, a powerful narcotic the pirates chew constantly. Remaining profits are split equally between the men. The youngest member of the attack force, usually about 14, will scale the ship first – a dangerous job, with the highest probability of getting killed – but will get 30 per cent extra. Get some gung-ho youngsters, and allow them to take huge if potentially lethal risks, with the promise of a vast bonus if by some miracle they get out alive? There probably isn’t a director of an investment bank who wouldn’t recognise the business model.
Finally, if nothing else, the pirates’ success shows that trickle-down economics does work eventually. Parts of Somalia are growing rich on the “tolls” their seafarers collect from cargo ships steaming between Asia and Europe. It’s just that sometimes you need a few AK-47s to make sure some of the wealth trickles down to you.
Save And Share :
Feb 10, 2011
Trade Metrics: Outmoded Process Creates Misleading Data
Accurately measuring global trade is essential to understanding how our economic system functions. One of the problems with the current system is that the global supply chain has rendered irrelevant the old bilateral input measurement approach. Sourcing components from multiple countries means that the value added can be misleading because the country from which the final product is shipped - or in which it is assembled - any not be the most important.
The World Trade Organization is hosting a conference to address this measurement issue. Jonathan Lynn of Reuters explains the implications:
"In an age of global supply chains, trade figures give an increasingly misleading picture of what is going on -- and trade statisticians are out to change that. Trade figures have become politically explosive -- witness the sensitivity of the U.S. deficit with China for relations between the two powers.
Trade is still measured in the traditional way -- looking at bilateral flows between one country and all the others.
Nowadays many goods are made up of components sourced from many different countries, based on designs and research from others, and assembled in one before being sold.
Measuring where value is added at each stage gives a more precise picture of who is buying what from whom, and for how much. "Economic reality is changing so fast that there is a need to change our statistics," said Hubert Escaith, chief statistician at the WTO.
The World Trade Organization is keenly interested in all this, and is hosting a meeting of experts this week.
WTO Director-General Pascal Lamy cites a recent study by the Asian Development Bank Institute of the trade flows involved in Apple's (AAPL.O) iPhone, assembled in China with components from many countries then exported to the United States and elsewhere.
Using traditional country of origin methods, the iPhone contributed $1.9 billion to the U.S. trade deficit with China.
But if China's iPhone exports to the United States were measured in value added -- the value added by China to the components -- those exports would come to only $73.5 million, he wrote in the Financial Times on Jan. 24.
FROM BLACK-AND-WHITE TO COLOUR
Deputy Director-General Alejandro Jara compares the new approach to moving from black-and-white television to colour.
This value-added approach will tend to reduce bilateral deficits and surpluses, and could even reverse the plus or minus signs on small amounts, although a country's overall balance with the rest of the world will be little affected.
For instance the United States would have a smaller deficit with China, but a bigger one with Malaysia and other countries.
"The deficit between the United States and China will not be what it is, but is going to be less, definitely less," Jara said. "How much less? I don't know."
Looking at figures in this way has huge implications for policymakers keen to defend or create jobs.
"You may be focusing on the wrong cause of your lack of competitiveness when you focus on one country," Escaith said.
One obvious area for re-examination is bilateral exchange rates. Many politicians in the United States urge pressure on China to appreciate the yuan and thus reduce the U.S. deficit. That may be the wrong -- or not the only -- target.
Or it may turn out that offshoring -- having things made abroad cheaply -- underpins more valuable research and design jobs at home.
At this week's conference the WTO has invited 150 statisticians from developed and developing countries to Geneva from Feb. 2 to 4.
The meeting will lay out the research challenges for the coming years and look at how to help developing countries finance the new way of counting.
Research is likely to show that some countries, including China and states in Southeast Asia and the European Union, are heavily integrated into international supply chains.
Other areas like Latin America -- with the exception of Mexico, some sectors in Brazil and Costa Rica -- appear not to be, raising the question: Why?
The new approach also looks at what combination of goods and services goes into assembling a product, and shows that services make up a much bigger share of trade than thought.
To get a bunch of grapes from Chile to an American supermarket requires more than a farmer to grow it, Jara said. Transport, packaging, quality control, legal services, accountants, telecoms and agronomists all play a role.
The World Trade Organization is hosting a conference to address this measurement issue. Jonathan Lynn of Reuters explains the implications:
"In an age of global supply chains, trade figures give an increasingly misleading picture of what is going on -- and trade statisticians are out to change that. Trade figures have become politically explosive -- witness the sensitivity of the U.S. deficit with China for relations between the two powers.
Trade is still measured in the traditional way -- looking at bilateral flows between one country and all the others.
Nowadays many goods are made up of components sourced from many different countries, based on designs and research from others, and assembled in one before being sold.
Measuring where value is added at each stage gives a more precise picture of who is buying what from whom, and for how much. "Economic reality is changing so fast that there is a need to change our statistics," said Hubert Escaith, chief statistician at the WTO.
The World Trade Organization is keenly interested in all this, and is hosting a meeting of experts this week.
WTO Director-General Pascal Lamy cites a recent study by the Asian Development Bank Institute of the trade flows involved in Apple's (AAPL.O) iPhone, assembled in China with components from many countries then exported to the United States and elsewhere.
Using traditional country of origin methods, the iPhone contributed $1.9 billion to the U.S. trade deficit with China.
But if China's iPhone exports to the United States were measured in value added -- the value added by China to the components -- those exports would come to only $73.5 million, he wrote in the Financial Times on Jan. 24.
FROM BLACK-AND-WHITE TO COLOUR
Deputy Director-General Alejandro Jara compares the new approach to moving from black-and-white television to colour.
This value-added approach will tend to reduce bilateral deficits and surpluses, and could even reverse the plus or minus signs on small amounts, although a country's overall balance with the rest of the world will be little affected.
For instance the United States would have a smaller deficit with China, but a bigger one with Malaysia and other countries.
"The deficit between the United States and China will not be what it is, but is going to be less, definitely less," Jara said. "How much less? I don't know."
Looking at figures in this way has huge implications for policymakers keen to defend or create jobs.
"You may be focusing on the wrong cause of your lack of competitiveness when you focus on one country," Escaith said.
One obvious area for re-examination is bilateral exchange rates. Many politicians in the United States urge pressure on China to appreciate the yuan and thus reduce the U.S. deficit. That may be the wrong -- or not the only -- target.
Or it may turn out that offshoring -- having things made abroad cheaply -- underpins more valuable research and design jobs at home.
At this week's conference the WTO has invited 150 statisticians from developed and developing countries to Geneva from Feb. 2 to 4.
The meeting will lay out the research challenges for the coming years and look at how to help developing countries finance the new way of counting.
Research is likely to show that some countries, including China and states in Southeast Asia and the European Union, are heavily integrated into international supply chains.
Other areas like Latin America -- with the exception of Mexico, some sectors in Brazil and Costa Rica -- appear not to be, raising the question: Why?
The new approach also looks at what combination of goods and services goes into assembling a product, and shows that services make up a much bigger share of trade than thought.
To get a bunch of grapes from Chile to an American supermarket requires more than a farmer to grow it, Jara said. Transport, packaging, quality control, legal services, accountants, telecoms and agronomists all play a role.
Save And Share :
Consumer-Sourced Innovation: Supplanting Corporate R&D With the Help of Technology and Personal Cash - The Scalability of Self-Empowerment
Corporations have traditionally led the way in funding and identifying whatever 'the next big thing' might be. New research from the UK, however, suggests that as corporations cut back, consumers are using technology and their own funds to create products with commercial potential. The implications for business value creation, for IP law and for bank lending strategies could be intriguing. User innovation, as it is called, comes as political innovation is also bubbling up from below. It is not clear that the trends are connected, but the scalability of self-empowerment may be here to stay.
Patricia Cohen reports in the New York Times:
"Daniel Reetz loves trash bins. A big one in Fargo, N.D., was where he found most of the materials he used to build a scanner that was fast enough to scan a 400-page book in about 20 minutes without cracking the binding. The two Canon PowerShot A590 cameras and two lights that he lashed together with a few pieces of acrylic and wood cost him about $300 in all, considerably less than the $10,000 commercial book scanners that were on the market.
When he was finished, Mr. Reetz, now 29 and working at Disney Research’s laboratories, put his 79-step how-to guide on a Web site. Since the post went up nearly two years ago, about 1,000 people have joined Mr. Reetz’s forum, and about 50 have built their own scanners from castoff furniture, aircraft aluminum, whiskey boxes and plastic foam.
Do-it-yourselfers like Mr. Reetz may not know it, but their tinkering is challenging a deeply entrenched tenet of economic theory: that producers, not consumers, are the ones who innovate.
Since the Austrian economist Joseph A. Schumpeter published “The Theory of Economic Development” in 1934, economists and governments have assumed that the industrial and business sectors are where ideas for products originate. A complex net of laws and policies, from intellectual property rights to producer subsidies and tax benefits, have flowed from this basic assumption.
However, pathbreaking research by a group of scholars including Eric A. von Hippel, a professor of technological innovation at M.I.T.’s Sloan School of Management, suggests that the traditional division of labor between innovators and customers is breaking down.
Financed by the British government, Mr. von Hippel and his colleagues last year completed the first representative large-scale survey of consumer innovation ever conducted.
What the team discovered, described in a paper that is under review for publication, was that the amount of money individual consumers spent making and improving products was more than twice as large as the amount spent by all British firms combined on product research and development over a three-year period.
“We’ve been missing the dark matter of innovation,” Mr. von Hippel said from his office in Cambridge, Mass. “This is a new pattern for how innovations come about.”
Carliss Y. Baldwin, a business administration professor at the Harvard Business School, called the research remarkable, adding: “What makes Eric’s work so significant is that it is unprecedented to try to measure the extent of user innovation. He shows that we’ve had on a set of mental blinders.”
To Ms. Baldwin and others who study innovation, the results point to the necessity of rethinking patent law as well as government incentives for research and open sourcing. As Stian Westlake, executive director of policy and research at the British National Endowment for Science, Technology and the Arts, put it in a report: “This democratization of innovation has potentially critical implications for innovation policy.”
The types of product modifications and innovations that Mr. von Hippel’s group found among the nearly 1,200 people surveyed ranged from the most elementary to the complex. One woman colored two halves of a clock dial different shades to teach her children how to tell time; a man concocted a device made from a fishing rod and a large hook to trim his treetops; another reprogrammed his GPS unit to make it easier to use and tailored to his needs.
The Internet is an obvious engine of consumer innovation in the digital realm. Twitter’s List and Retweet features, for example, were inspired by users. While consumers have always fiddled with products, the Web makes it so much easier for people with similar interests to come together and form online communities like DIYbookscanner.
The very study of collaborative user innovation is a relatively new phenomenon that began only in the mid-1990s when advocates for open-source software began to argue that computer code should be freely available for thousands of independent minds to play with and improve. “They overturned the widely held model,” Ms. Baldwin said.
The Western tradition of the isolated heroic genius toiling away in a lab or study is based on myth as much as fact, she added. That model has had a powerful impact, helping to discount the more collaborative aspects of innovation, but it is “completely dated,” Ms. Baldwin said.
Mr. von Hippel, who has been researching innovation for 30 years, estimates that when it comes to scientific instruments 77 percent of the innovations come from users. Fields like medicine can be particularly fertile for creative tinkering. A classic example of user innovation is the heart-lung machine. In the late 1930s Dr. John Heysham Gibbon approached manufacturers about building one, but they did not know how to do it or whether there was a market for it. So Dr. Gibbon spent years developing one himself before this essential device was manufactured commercially.
Sport enthusiasts, like windsurfers, cyclists and fly fishermen, commonly modify equipment. William W. Fisher III, a Harvard law professor and an active ice climber, was one of the enthusiasts who in the 1970s had the idea of adding a leash to ice hammers and axes so they could hang on them while climbing frozen waterfalls. Other climbers followed suit. In time, manufacturers incorporated the leashes into their products.
As consumer innovators proliferate, the tensions with producers have escalated, and the courts are increasingly going to be called in to adjudicate, Mr. Fisher predicted. He is skeptical that easing intellectual property law would significantly spur economic efficiency, but he does say it would foster creativity and community. In a recent article in the Minnesota Law Review, Mr. Fisher argues that altering equipment — like music, novels and other cultural artifacts — is a way of expressing creativity, and that the law should take that into account. “User innovation,” he writes, “offers opportunities for self-fulfillment.”
Mr. von Hippel said that the Finnish and Portuguese governments were financing him to conduct research similar to the British survey. As for the United States, he said, “there doesn’t seem to be as much interest here.”
Patricia Cohen reports in the New York Times:
"Daniel Reetz loves trash bins. A big one in Fargo, N.D., was where he found most of the materials he used to build a scanner that was fast enough to scan a 400-page book in about 20 minutes without cracking the binding. The two Canon PowerShot A590 cameras and two lights that he lashed together with a few pieces of acrylic and wood cost him about $300 in all, considerably less than the $10,000 commercial book scanners that were on the market.
When he was finished, Mr. Reetz, now 29 and working at Disney Research’s laboratories, put his 79-step how-to guide on a Web site. Since the post went up nearly two years ago, about 1,000 people have joined Mr. Reetz’s forum, and about 50 have built their own scanners from castoff furniture, aircraft aluminum, whiskey boxes and plastic foam.
Do-it-yourselfers like Mr. Reetz may not know it, but their tinkering is challenging a deeply entrenched tenet of economic theory: that producers, not consumers, are the ones who innovate.
Since the Austrian economist Joseph A. Schumpeter published “The Theory of Economic Development” in 1934, economists and governments have assumed that the industrial and business sectors are where ideas for products originate. A complex net of laws and policies, from intellectual property rights to producer subsidies and tax benefits, have flowed from this basic assumption.
However, pathbreaking research by a group of scholars including Eric A. von Hippel, a professor of technological innovation at M.I.T.’s Sloan School of Management, suggests that the traditional division of labor between innovators and customers is breaking down.
Financed by the British government, Mr. von Hippel and his colleagues last year completed the first representative large-scale survey of consumer innovation ever conducted.
What the team discovered, described in a paper that is under review for publication, was that the amount of money individual consumers spent making and improving products was more than twice as large as the amount spent by all British firms combined on product research and development over a three-year period.
“We’ve been missing the dark matter of innovation,” Mr. von Hippel said from his office in Cambridge, Mass. “This is a new pattern for how innovations come about.”
Carliss Y. Baldwin, a business administration professor at the Harvard Business School, called the research remarkable, adding: “What makes Eric’s work so significant is that it is unprecedented to try to measure the extent of user innovation. He shows that we’ve had on a set of mental blinders.”
To Ms. Baldwin and others who study innovation, the results point to the necessity of rethinking patent law as well as government incentives for research and open sourcing. As Stian Westlake, executive director of policy and research at the British National Endowment for Science, Technology and the Arts, put it in a report: “This democratization of innovation has potentially critical implications for innovation policy.”
The types of product modifications and innovations that Mr. von Hippel’s group found among the nearly 1,200 people surveyed ranged from the most elementary to the complex. One woman colored two halves of a clock dial different shades to teach her children how to tell time; a man concocted a device made from a fishing rod and a large hook to trim his treetops; another reprogrammed his GPS unit to make it easier to use and tailored to his needs.
The Internet is an obvious engine of consumer innovation in the digital realm. Twitter’s List and Retweet features, for example, were inspired by users. While consumers have always fiddled with products, the Web makes it so much easier for people with similar interests to come together and form online communities like DIYbookscanner.
The very study of collaborative user innovation is a relatively new phenomenon that began only in the mid-1990s when advocates for open-source software began to argue that computer code should be freely available for thousands of independent minds to play with and improve. “They overturned the widely held model,” Ms. Baldwin said.
The Western tradition of the isolated heroic genius toiling away in a lab or study is based on myth as much as fact, she added. That model has had a powerful impact, helping to discount the more collaborative aspects of innovation, but it is “completely dated,” Ms. Baldwin said.
Mr. von Hippel, who has been researching innovation for 30 years, estimates that when it comes to scientific instruments 77 percent of the innovations come from users. Fields like medicine can be particularly fertile for creative tinkering. A classic example of user innovation is the heart-lung machine. In the late 1930s Dr. John Heysham Gibbon approached manufacturers about building one, but they did not know how to do it or whether there was a market for it. So Dr. Gibbon spent years developing one himself before this essential device was manufactured commercially.
Sport enthusiasts, like windsurfers, cyclists and fly fishermen, commonly modify equipment. William W. Fisher III, a Harvard law professor and an active ice climber, was one of the enthusiasts who in the 1970s had the idea of adding a leash to ice hammers and axes so they could hang on them while climbing frozen waterfalls. Other climbers followed suit. In time, manufacturers incorporated the leashes into their products.
As consumer innovators proliferate, the tensions with producers have escalated, and the courts are increasingly going to be called in to adjudicate, Mr. Fisher predicted. He is skeptical that easing intellectual property law would significantly spur economic efficiency, but he does say it would foster creativity and community. In a recent article in the Minnesota Law Review, Mr. Fisher argues that altering equipment — like music, novels and other cultural artifacts — is a way of expressing creativity, and that the law should take that into account. “User innovation,” he writes, “offers opportunities for self-fulfillment.”
Mr. von Hippel said that the Finnish and Portuguese governments were financing him to conduct research similar to the British survey. As for the United States, he said, “there doesn’t seem to be as much interest here.”
Save And Share :
Where's Mine? Unpaid HuffPost Bloggers Want Piece of the Acquisition Loot
File this under 'Annals of Inevitability.' As soon as the promise arises of actual money changing hands, previously happy unpaid contributors to any enterprise decide they want a piece of the action. The Huffington Post's model has been that unpaid bloggers contribute material in return for the PR value of seeing their name splashed in front of @100 million page viewers. Some of that might lead to additional work or, at least, local celebrity.
Since AOL offered $315 million for HuffPost earlier this week, some of the bloggers are rethinking their view on the equitability of that arrangement. Compensation has been much in the news with inequality of wealth topping the emotional charts. While this appears to have been a well-known and entirely consensual business model, bloggers and other providers of free content in return for...whatever... may rethink future participation in such ventures. However, it is not clear they have many real options besides simply not playing.
Felix Gillette explains both sides in Bloomberg Business Week:
"At 7:48 a.m. on Feb. 7, the morning after AOL (AOL) executives had completed a deal to purchase the Huffington Post for $315 million, the thousands of actors, authors, activists, academics, and comedians who collectively make up the blogging corps of the Huffington Post received an e-mail from the site's founder.
"Thank you," Arianna Huffington wrote, "for being such a vital part of the HuffPost family—which has suddenly gotten a whole lot bigger."
Huffington assured the bloggers that although her role is shifting—she will oversee all content at the new, merged venture—their roles aren't. "Together, our companies will have a combined base of 117 million unique U.S. visitors a month—and 250 million around the world—so your posts will have an even bigger impact on the national and global conversation," she wrote. "That's the only real change you'll notice—more people reading what you wrote." Conspicuously unmentioned: the subject of pay.
Since its launch in 2005, the Huffington Post has relied on unpaid contributors to stock the news-and-aggregation site with myriad opinions on everything from health care to Palin hair. It's an arrangement unlikely to change soon. "We're in the business of paying people for original reporting," says Roy Sekoff, the site's founding editor. "If people want to express their opinions, they do so on the site for free."
Sekoff, who will play a major (so far unspecified) editorial role in the new organization, says it's too early to say how the volunteer model might apply to the AOL blogs that do pay, which include TechCrunch, Engadget, and PopEater. "We haven't done all the nuts and bolts yet," says Sekoff. As rumors circulated about the size of Arianna Huffington's payday, some questioned the fairness of the compensation model. Dan Gillmor, the director of the Knight Center for Digital Media Entrepreneurship at Arizona State University, wrote that Huffington should cut checks to "the most productive contributors on whose work she's built a significant part of her new fortune."
Sekoff says the grumblers are a minority who show up whenever the site's finances are in the news. "No one has ever tried to fool anybody," says Sekoff. "When we started we had 500 contributors. Now we've had close to 15,000 people blogging at least once. They came to us and said, 'Please, can my stuff be on your site?' "
Currently, the Huffington Post has 255 paid employees, including 148 editorial staffers. Sekoff says the site invests much time and money in preparing bloggers' submissions for publication—editing the content, optimizing it for search engines, and moderating the millions of comments attached to posts every month. "It's a symbiotic relationship," says Sekoff.
Loyal contributors have long since grown accustomed to laboring gratis. "I'd love to be paid, but it doesn't seem like it's in the cards," says Bob Cesca, who has been writing a popular weekly political column since August 2005. He says his exposure on the Huffington Post helped him land a book deal in 2008, and that traffic from his columns generates enough ad revenue on his personal blog to cover "beer money."
Sekoff points out that plenty of bloggers don't need the money. Dan Rather, the former CBS Evening News (CBS) anchor, who writes roughly three items a month for the Huffington Post, says he's "empathetic to those who are scrambling for an income and take the position, 'well, it's time to start paying something.' "
Comedian and regular Huffington Post contributor Andy Borowitz recently took to Twitter to weigh in on the deal. "My share of the Huffington Post sale, zero dollars, was a little disappointing," he tweeted. Asked by Bloomberg Businessweek to elaborate, Borowitz seemed ready to explore a new pay model. "I will be happy to make a comment," Borowitz replied via e-mail, "if you will pay me."
Since AOL offered $315 million for HuffPost earlier this week, some of the bloggers are rethinking their view on the equitability of that arrangement. Compensation has been much in the news with inequality of wealth topping the emotional charts. While this appears to have been a well-known and entirely consensual business model, bloggers and other providers of free content in return for...whatever... may rethink future participation in such ventures. However, it is not clear they have many real options besides simply not playing.
Felix Gillette explains both sides in Bloomberg Business Week:
"At 7:48 a.m. on Feb. 7, the morning after AOL (AOL) executives had completed a deal to purchase the Huffington Post for $315 million, the thousands of actors, authors, activists, academics, and comedians who collectively make up the blogging corps of the Huffington Post received an e-mail from the site's founder.
"Thank you," Arianna Huffington wrote, "for being such a vital part of the HuffPost family—which has suddenly gotten a whole lot bigger."
Huffington assured the bloggers that although her role is shifting—she will oversee all content at the new, merged venture—their roles aren't. "Together, our companies will have a combined base of 117 million unique U.S. visitors a month—and 250 million around the world—so your posts will have an even bigger impact on the national and global conversation," she wrote. "That's the only real change you'll notice—more people reading what you wrote." Conspicuously unmentioned: the subject of pay.
Since its launch in 2005, the Huffington Post has relied on unpaid contributors to stock the news-and-aggregation site with myriad opinions on everything from health care to Palin hair. It's an arrangement unlikely to change soon. "We're in the business of paying people for original reporting," says Roy Sekoff, the site's founding editor. "If people want to express their opinions, they do so on the site for free."
Sekoff, who will play a major (so far unspecified) editorial role in the new organization, says it's too early to say how the volunteer model might apply to the AOL blogs that do pay, which include TechCrunch, Engadget, and PopEater. "We haven't done all the nuts and bolts yet," says Sekoff. As rumors circulated about the size of Arianna Huffington's payday, some questioned the fairness of the compensation model. Dan Gillmor, the director of the Knight Center for Digital Media Entrepreneurship at Arizona State University, wrote that Huffington should cut checks to "the most productive contributors on whose work she's built a significant part of her new fortune."
Sekoff says the grumblers are a minority who show up whenever the site's finances are in the news. "No one has ever tried to fool anybody," says Sekoff. "When we started we had 500 contributors. Now we've had close to 15,000 people blogging at least once. They came to us and said, 'Please, can my stuff be on your site?' "
Currently, the Huffington Post has 255 paid employees, including 148 editorial staffers. Sekoff says the site invests much time and money in preparing bloggers' submissions for publication—editing the content, optimizing it for search engines, and moderating the millions of comments attached to posts every month. "It's a symbiotic relationship," says Sekoff.
Loyal contributors have long since grown accustomed to laboring gratis. "I'd love to be paid, but it doesn't seem like it's in the cards," says Bob Cesca, who has been writing a popular weekly political column since August 2005. He says his exposure on the Huffington Post helped him land a book deal in 2008, and that traffic from his columns generates enough ad revenue on his personal blog to cover "beer money."
Sekoff points out that plenty of bloggers don't need the money. Dan Rather, the former CBS Evening News (CBS) anchor, who writes roughly three items a month for the Huffington Post, says he's "empathetic to those who are scrambling for an income and take the position, 'well, it's time to start paying something.' "
Comedian and regular Huffington Post contributor Andy Borowitz recently took to Twitter to weigh in on the deal. "My share of the Huffington Post sale, zero dollars, was a little disappointing," he tweeted. Asked by Bloomberg Businessweek to elaborate, Borowitz seemed ready to explore a new pay model. "I will be happy to make a comment," Borowitz replied via e-mail, "if you will pay me."
Save And Share :
Why Do Some Countries' Economies Grow Faster Than Others?
Cesar Hidalgo is a physicist working at MIT's Media Lab. His recent work has focused on determining the factors that drive economic growth. The data suggest that the diversity of a country's production capacity rather than its magnitude. He looks at a broad data set that includes education, transportation and other inputs. At the bottom of the article he discusses the relative growth of Korea and Peru, which provides support for his thesis.
This article comes from the MIT News:
"Where do you make your academic home if your PhD is in physics, you did a postdoc at Harvard’s Kennedy School of Government, and you’re researching macroeconomic theories that defy the conventional wisdom in the field? The MIT Media Lab, naturally.
That, at least, is the unusual career path taken by César Hidalgo, one of two new assistant professors to join the Media Lab last fall. Hidalgo says that one of his heroes is Francis Bacon, the 16th-century English statesman, philosopher, lawyer and essayist generally credited with inventing the scientific method, and it’s the breadth of Bacon’s intellectual appetite that Hidalgo finds inspiring. In his PhD thesis, Hidalgo applied mathematical tools largely derived from statistical physics to problems in economics and urban planning and to the analysis of cell-phone networks; in other work, he’s used similar tools to study gene expression and disease epidemiology.
But in recent years, Hidalgo has been concentrating on development economics. And as might be expected from someone trained as a physicist, his approach to the subject is unorthodox.
Hidalgo argues that by lumping together a huge variety of resources under the general heading “capital,” the standard theoretical framework for development economics can obscure distinctions that are crucial to an accurate understanding of countries’ economies. In a series of papers cowritten with Ricardo Hausmann, director of the Center for International Development at Harvard’s Kennedy School of Government, Hidalgo has argued that, indeed, the best predictor of a country’s future economic health is not the magnitude but the diversity of its production capacity.
Ins and outs
Economists think of production in terms of inputs and outputs. The outputs are the goods that a country produces. The inputs are everything that’s required to produce those goods. In 19th-century America, lumber was an example of a product with relatively few inputs. Exporting it required little more than the manpower and tools to chop down trees and haul them to shipping ports. Twentieth-century digital-signal-processing chips, on the other hand, are products that require a lot of inputs: the ability to extract and purify exotic materials like gallium arsenide, computer-aided design software to produce circuit layouts, and the chemicals and vacuum chambers required for the deposition of different layers of material, among other things.
Hidalgo and Hausmann argue that the diversity of a country’s production capacity, and thus the true strength of its economy, depends on the diversity of both its outputs and its inputs. Two countries could export the same number of products — they could have the same diversity of outputs — but if one exports only garments, it’s likely to have many fewer inputs than a country that exports a mix of garments and other light manufacturing, agricultural products, electronics and cultural goods. And the country with more inputs, the researchers claim, will adapt better to a changing world economy.
It’s an intuitively plausible claim, but getting a quantitative handle on it is difficult. Diversity of outputs is easy enough to measure: Economists have developed some standard schemes for classifying products that have borne up well in empirical studies. But almost anything could count as an input: not just natural resources or factories but, say, a good public-transportation system that makes the labor market more efficient, or intellectual-property laws that reward entrepreneurship.
That’s where Hidalgo’s mathematical tools come in. Rather than try to exhaustively categorize inputs — probably an impossible task — Hidalgo simply assumes that products that require a lot of inputs are scarcer than those that don’t: More countries export lumber than export digital-signal-processing chips. By analyzing both the diversity of a country’s products and the number of other countries capable of producing the same products, Hidalgo is able to quantitatively assess the diversity of the country’s inputs.
Cash value
Hidalgo and Hausmann have found that GDP correlates pretty well with diversity of outputs, but it correlates much better with diversity of inputs. And the cases where the correlation breaks down could actually be more interesting than the cases where it holds, because they could indicate economies poised for growth. In 1970, for instance, the Korean economy had much greater diversity of inputs, according to Hidalgo’s measure, than the Peruvian economy; but Peru had twice Korea’s GDP per capita. Over the next 30 years, the relative diversity of inputs in the two countries’ economies stayed more or less the same, but by 2003, Korea had four times Peru’s GDP per capita.
Moreover, Hidalgo points out, Korea’s surge is impossible to explain using the standard factors of production. “In 1970, Peruvian workers were working with four times the capital per worker, and they were working with two and a half times the land per worker, and they had the same level of education as Korean workers,” Hidalgo says
This article comes from the MIT News:
"Where do you make your academic home if your PhD is in physics, you did a postdoc at Harvard’s Kennedy School of Government, and you’re researching macroeconomic theories that defy the conventional wisdom in the field? The MIT Media Lab, naturally.
That, at least, is the unusual career path taken by César Hidalgo, one of two new assistant professors to join the Media Lab last fall. Hidalgo says that one of his heroes is Francis Bacon, the 16th-century English statesman, philosopher, lawyer and essayist generally credited with inventing the scientific method, and it’s the breadth of Bacon’s intellectual appetite that Hidalgo finds inspiring. In his PhD thesis, Hidalgo applied mathematical tools largely derived from statistical physics to problems in economics and urban planning and to the analysis of cell-phone networks; in other work, he’s used similar tools to study gene expression and disease epidemiology.
But in recent years, Hidalgo has been concentrating on development economics. And as might be expected from someone trained as a physicist, his approach to the subject is unorthodox.
Hidalgo argues that by lumping together a huge variety of resources under the general heading “capital,” the standard theoretical framework for development economics can obscure distinctions that are crucial to an accurate understanding of countries’ economies. In a series of papers cowritten with Ricardo Hausmann, director of the Center for International Development at Harvard’s Kennedy School of Government, Hidalgo has argued that, indeed, the best predictor of a country’s future economic health is not the magnitude but the diversity of its production capacity.
Ins and outs
Economists think of production in terms of inputs and outputs. The outputs are the goods that a country produces. The inputs are everything that’s required to produce those goods. In 19th-century America, lumber was an example of a product with relatively few inputs. Exporting it required little more than the manpower and tools to chop down trees and haul them to shipping ports. Twentieth-century digital-signal-processing chips, on the other hand, are products that require a lot of inputs: the ability to extract and purify exotic materials like gallium arsenide, computer-aided design software to produce circuit layouts, and the chemicals and vacuum chambers required for the deposition of different layers of material, among other things.
Hidalgo and Hausmann argue that the diversity of a country’s production capacity, and thus the true strength of its economy, depends on the diversity of both its outputs and its inputs. Two countries could export the same number of products — they could have the same diversity of outputs — but if one exports only garments, it’s likely to have many fewer inputs than a country that exports a mix of garments and other light manufacturing, agricultural products, electronics and cultural goods. And the country with more inputs, the researchers claim, will adapt better to a changing world economy.
It’s an intuitively plausible claim, but getting a quantitative handle on it is difficult. Diversity of outputs is easy enough to measure: Economists have developed some standard schemes for classifying products that have borne up well in empirical studies. But almost anything could count as an input: not just natural resources or factories but, say, a good public-transportation system that makes the labor market more efficient, or intellectual-property laws that reward entrepreneurship.
That’s where Hidalgo’s mathematical tools come in. Rather than try to exhaustively categorize inputs — probably an impossible task — Hidalgo simply assumes that products that require a lot of inputs are scarcer than those that don’t: More countries export lumber than export digital-signal-processing chips. By analyzing both the diversity of a country’s products and the number of other countries capable of producing the same products, Hidalgo is able to quantitatively assess the diversity of the country’s inputs.
Cash value
Hidalgo and Hausmann have found that GDP correlates pretty well with diversity of outputs, but it correlates much better with diversity of inputs. And the cases where the correlation breaks down could actually be more interesting than the cases where it holds, because they could indicate economies poised for growth. In 1970, for instance, the Korean economy had much greater diversity of inputs, according to Hidalgo’s measure, than the Peruvian economy; but Peru had twice Korea’s GDP per capita. Over the next 30 years, the relative diversity of inputs in the two countries’ economies stayed more or less the same, but by 2003, Korea had four times Peru’s GDP per capita.
Moreover, Hidalgo points out, Korea’s surge is impossible to explain using the standard factors of production. “In 1970, Peruvian workers were working with four times the capital per worker, and they were working with two and a half times the land per worker, and they had the same level of education as Korean workers,” Hidalgo says
Save And Share :
New Technologies Developed By NGOs in Wake of Haitian Earthquake May Have Global Benefits
It has been the hope that technology would provide solutions to many of the world's problems under the assumption that knowledge and the ability to communicate beyond one's immediate vicinity would open up opportunities not previously available, thus lifting people out of poverty, providing medical care to those in need and a host of other benefits. That hope remains more aspirational than real, but the crisis in Haiti, borne of a massive earthquake that fractured an already traumatized society has provided creative technological answers to practical problems. The ultimate benefit may be that these advances offer help not just to those suffering the aftereffects of calamities, but to those desperate to improve their everyday lives.
Jocelyn Zuckerman explains in Fast Company:
"Since the 2010 earthquake, not-for-profits and corporations have developed new technologies to better deliver services to Haitians, transforming aid in disaster areas everywhere.
Jokebed Auguste, a 31-year-old single mother from Mirebalais, in Haiti's Central Plateau, has come to see her cell phone in a whole new light. A team leader in one of the cash-for-work programs run by the international relief agency Mercy Corps -- she oversaw 15 colleagues in an initiative to clean up roads and canals -- Auguste was among the first Haitians to begin receiving payments for the project directly through her phone. The convenience of the T-Cash system means she doesn't have to stand in line for hours at the bank, but even more important is the security. "There's no cash for people to steal," she says, "and nobody knows how much money you have, or how much you're taking out." The "mobile wallets" are one example of a handful of new technologies that emerged in the aftermath of the earthquake that rocked the Caribbean nation one year ago -- and that will likely impact disaster-relief and development efforts for years to come.
More than a third of Haiti's banks, ATMs, and money-transfer stations were destroyed in the earthquake (and even before the disaster, fewer than one in 10 Haitians had ever used a traditional bank). So last June, the Bill & Melinda Gates Foundation and the U.S. Agency for International Development created a $10 million competition to jump-start financial services by mobile phone. "When the earthquake happened," explains Amolo Ng'weno, deputy director of the foundation's Financial Services for the Poor Initiative, "we were sitting in Seattle watching on TV and saw the long, long lines of people trying to get money." She and her colleagues figured that if they could get companies to build mobile financial services, it would not only help get money into the hands of Haitians but also reduce the risks and costs of financial transactions.
Among those competing for the award is Voilà, a mobile provider with more than a million Haitian subscribers that is the partner of Mercy Corps on its T-Cash program. In December, the charity also began transmitting $40 monthly vouchers to thousands of families who have taken in quake survivors and suffer from strained resources. Recipients type in a code on their phones in designated shops to indicate they want to make a purchase with the funds; the merchant then confirms that transaction on his own phone. "Normally, when you have money in your hands, you spend it easily," explains Auguste. "But when it's on your phone, it's a whole process you have to think about." The hope is that, over time, mobile banking will give Haitians access to savings and other financial programs that weren't widely available before the quake.
It was also in the aftermath of the quake that Voilà and the International Federation of Red Cross and Red Crescent Societies (IFRC) created a short-message-service application that could target cell-phone users based on their specific location. In the days following the January 12th disaster, more than 1 million SMS messages went out every day containing information in Creole about emergency treatment, vaccinations, and other IFRC programs. Voilà also helped the group establish a hotline, in English and Creole, that allowed victims to call (at no cost) for information about hygiene, water and sanitation, and condom distribution. In August, when storms were bearing down on the country, the IFRC sent messages to subscribers near the northern coast instructing them to prepare or relocate. SMS messaging continues to play an important role in the ongoing cholera crisis, replacing old-fashioned practices like pamphlet distribution. (Cell phones also have been key to the continued success of Noula, a call center established last year by the Haitian government and Solutions Inc. that incorporates a database of major health-care facilities and enables callers in distress to get information on the nearest places to get help.)
Another important initiative came out of a conference call organized by the U.S. State Department shortly after the quake. Attended by various nongovernmental organizations and players in the tech community, the call addressed the synchronization of the missing-persons databases that had been launched by everyone from The New York Times and The Miami Herald to CNN and your random bighearted geek. Within 36 hours, Google engineers built and launched Person Finder, which linked the different databases through a common, back-end technology. Aid agencies could embed Person Finder on their own websites and any information entered would automatically go into the centralized pool. An extension of a program that Google had developed after Hurricane Katrina in 2005, Person Finder was so successful that the Chilean government used it after the earthquake in its country, and moving forward, it is expected to be the go-to app for missing people.
Tracking-device technology was revolutionized by the quake as well. In particular, a program called Last Mile Mobile Solutions, or LMMS, which had been developed by a Canadian software company and the Christian organization World Vision, found an entirely new application. LMMS is a digital system that replaces paperwork associated with ration cards and registration. Capable of functioning in places without electricity or Internet, LMMS had been piloted in Africa but had never been used in a "rapid-onset emergency" situation. Nor had it entailed distributions of anything other than food. In Haiti, World Vision began using the system's laptops and handheld devices to register people at distribution sites (beneficiaries receive photo IDs with scannable bar codes) and to track goods dispersed. The result was not only fewer errors but also vastly shorter waiting times: Instead of spending the entire day standing in the hot sun, Haitians now were able to join the line and walk away an hour later with their food and supplies. Similarly, the Salvation Army automated its distributions tracking, replacing handwritten ration cards with bar-code Trackpad technology, developed by the delivery company UPS to find displaced pets after Katrina.
Some look at the developments in Haiti and see the potential for a model wireless society -- the first "copper-free" country in the world. Whether that comes to pass or not, the technological fruits of the Caribbean nation's disaster are already spreading far beyond the country. World Vision hopes to soon roll out its LMMS system in Pakistan and China, and Otto Farkas, the organization's director of humanitarian and emergency affairs, resource development, and collaborative innovation, has visions of LMMS one day being adopted by all aid organizations, in every emergency situation. "This is the holy grail," he says, "to get real-time data that's all integrated." He concedes, of course, that such cooperation isn't just about solving a few technological glitches. "We can't just throw technology at the human challenges," he says, "but certainly, technology can help."
Jocelyn Zuckerman explains in Fast Company:
"Since the 2010 earthquake, not-for-profits and corporations have developed new technologies to better deliver services to Haitians, transforming aid in disaster areas everywhere.
Jokebed Auguste, a 31-year-old single mother from Mirebalais, in Haiti's Central Plateau, has come to see her cell phone in a whole new light. A team leader in one of the cash-for-work programs run by the international relief agency Mercy Corps -- she oversaw 15 colleagues in an initiative to clean up roads and canals -- Auguste was among the first Haitians to begin receiving payments for the project directly through her phone. The convenience of the T-Cash system means she doesn't have to stand in line for hours at the bank, but even more important is the security. "There's no cash for people to steal," she says, "and nobody knows how much money you have, or how much you're taking out." The "mobile wallets" are one example of a handful of new technologies that emerged in the aftermath of the earthquake that rocked the Caribbean nation one year ago -- and that will likely impact disaster-relief and development efforts for years to come.
More than a third of Haiti's banks, ATMs, and money-transfer stations were destroyed in the earthquake (and even before the disaster, fewer than one in 10 Haitians had ever used a traditional bank). So last June, the Bill & Melinda Gates Foundation and the U.S. Agency for International Development created a $10 million competition to jump-start financial services by mobile phone. "When the earthquake happened," explains Amolo Ng'weno, deputy director of the foundation's Financial Services for the Poor Initiative, "we were sitting in Seattle watching on TV and saw the long, long lines of people trying to get money." She and her colleagues figured that if they could get companies to build mobile financial services, it would not only help get money into the hands of Haitians but also reduce the risks and costs of financial transactions.
Among those competing for the award is Voilà, a mobile provider with more than a million Haitian subscribers that is the partner of Mercy Corps on its T-Cash program. In December, the charity also began transmitting $40 monthly vouchers to thousands of families who have taken in quake survivors and suffer from strained resources. Recipients type in a code on their phones in designated shops to indicate they want to make a purchase with the funds; the merchant then confirms that transaction on his own phone. "Normally, when you have money in your hands, you spend it easily," explains Auguste. "But when it's on your phone, it's a whole process you have to think about." The hope is that, over time, mobile banking will give Haitians access to savings and other financial programs that weren't widely available before the quake.
It was also in the aftermath of the quake that Voilà and the International Federation of Red Cross and Red Crescent Societies (IFRC) created a short-message-service application that could target cell-phone users based on their specific location. In the days following the January 12th disaster, more than 1 million SMS messages went out every day containing information in Creole about emergency treatment, vaccinations, and other IFRC programs. Voilà also helped the group establish a hotline, in English and Creole, that allowed victims to call (at no cost) for information about hygiene, water and sanitation, and condom distribution. In August, when storms were bearing down on the country, the IFRC sent messages to subscribers near the northern coast instructing them to prepare or relocate. SMS messaging continues to play an important role in the ongoing cholera crisis, replacing old-fashioned practices like pamphlet distribution. (Cell phones also have been key to the continued success of Noula, a call center established last year by the Haitian government and Solutions Inc. that incorporates a database of major health-care facilities and enables callers in distress to get information on the nearest places to get help.)
Another important initiative came out of a conference call organized by the U.S. State Department shortly after the quake. Attended by various nongovernmental organizations and players in the tech community, the call addressed the synchronization of the missing-persons databases that had been launched by everyone from The New York Times and The Miami Herald to CNN and your random bighearted geek. Within 36 hours, Google engineers built and launched Person Finder, which linked the different databases through a common, back-end technology. Aid agencies could embed Person Finder on their own websites and any information entered would automatically go into the centralized pool. An extension of a program that Google had developed after Hurricane Katrina in 2005, Person Finder was so successful that the Chilean government used it after the earthquake in its country, and moving forward, it is expected to be the go-to app for missing people.
Tracking-device technology was revolutionized by the quake as well. In particular, a program called Last Mile Mobile Solutions, or LMMS, which had been developed by a Canadian software company and the Christian organization World Vision, found an entirely new application. LMMS is a digital system that replaces paperwork associated with ration cards and registration. Capable of functioning in places without electricity or Internet, LMMS had been piloted in Africa but had never been used in a "rapid-onset emergency" situation. Nor had it entailed distributions of anything other than food. In Haiti, World Vision began using the system's laptops and handheld devices to register people at distribution sites (beneficiaries receive photo IDs with scannable bar codes) and to track goods dispersed. The result was not only fewer errors but also vastly shorter waiting times: Instead of spending the entire day standing in the hot sun, Haitians now were able to join the line and walk away an hour later with their food and supplies. Similarly, the Salvation Army automated its distributions tracking, replacing handwritten ration cards with bar-code Trackpad technology, developed by the delivery company UPS to find displaced pets after Katrina.
Some look at the developments in Haiti and see the potential for a model wireless society -- the first "copper-free" country in the world. Whether that comes to pass or not, the technological fruits of the Caribbean nation's disaster are already spreading far beyond the country. World Vision hopes to soon roll out its LMMS system in Pakistan and China, and Otto Farkas, the organization's director of humanitarian and emergency affairs, resource development, and collaborative innovation, has visions of LMMS one day being adopted by all aid organizations, in every emergency situation. "This is the holy grail," he says, "to get real-time data that's all integrated." He concedes, of course, that such cooperation isn't just about solving a few technological glitches. "We can't just throw technology at the human challenges," he says, "but certainly, technology can help."
Save And Share :
Crowd Sourcing Influences Corporate Social Responsibility Initiatives: Identification of Critical Issues the Biggest Benefit
Corporate social responsibility (CSR) has demonstrated that it is not simply public relations window dressing. Many executives believe it helps cement relationships with critical constituencies and influences internal decision-making and resource allocation as well as external perceptions.
WeberShandwick has released a new study expanding on that theme, demonstrating that crowd-sourcing is a valuable source of intelligence in corporate issue-prioritization.
Leslie Gaines-Ross and Mashable have the story:
"Weber Shandwick released new research Wednesday, suggesting that “the crowd” knows a thing or two when it comes to corporate social responsibility (CSR).
The study, conducted last October by the PR firm‘s Social Impact speciality group in partnership with KRC Research, interviewed 216 executives from Fortune 200 companies involved with philanthropic or community outreach to determine the value of crowdsourcing and social media to CSR.
While only 44% of the executives said they had used crowdsourcing to generate ideas and spur decision making, 95% of those reported that it had been valuable to their organization’s CSR programming. Crowdsourcing helped create new perspectives, new energy, build audience relationships and find new clients, the report claimed.
Social media reversed that ratio with 72% saying they had used a social media service in regards to CSR, but only 59% believed that it had a positive impact on their communications with consumers. Facebook (67%) was seen as the most valuable social network while Twitter (46%) and Foursquare (44%) lagged behind blogs (60%) and LinkedIn (58%) in terms of perceived value.
In an earlier report from the same sample set, Social Impact and KCR Research reported that these executives valued CSR most for its impact on critical issues rather than more business-oriented motivations like customer loyalty. This is encouraging as CSR becomes increasingly important for major companies. Corporate social responsibility is a nebulous term that variably refers to the way businesses try to help and give back to the community and public well-being. CSR goals and expectations change from business to business, making it difficult to measure just how “socially responsible” a business is without internal documents.
These studies point to promising results, with top executives viewing non-profits as ideal partners because they make CSR investments more effective and provide a critical foundation and infrastructure.
Read below for the full report along with lots of graphs breaking down the core results by effectiveness. What do you think of CSR as a concept, are these results a step in the right direction?
The report has a +/- 6.8 percentage point margin of error at the 95% confidence level.
WeberShandwick has released a new study expanding on that theme, demonstrating that crowd-sourcing is a valuable source of intelligence in corporate issue-prioritization.
Leslie Gaines-Ross and Mashable have the story:
"Weber Shandwick released new research Wednesday, suggesting that “the crowd” knows a thing or two when it comes to corporate social responsibility (CSR).
The study, conducted last October by the PR firm‘s Social Impact speciality group in partnership with KRC Research, interviewed 216 executives from Fortune 200 companies involved with philanthropic or community outreach to determine the value of crowdsourcing and social media to CSR.
While only 44% of the executives said they had used crowdsourcing to generate ideas and spur decision making, 95% of those reported that it had been valuable to their organization’s CSR programming. Crowdsourcing helped create new perspectives, new energy, build audience relationships and find new clients, the report claimed.
Social media reversed that ratio with 72% saying they had used a social media service in regards to CSR, but only 59% believed that it had a positive impact on their communications with consumers. Facebook (67%) was seen as the most valuable social network while Twitter (46%) and Foursquare (44%) lagged behind blogs (60%) and LinkedIn (58%) in terms of perceived value.
In an earlier report from the same sample set, Social Impact and KCR Research reported that these executives valued CSR most for its impact on critical issues rather than more business-oriented motivations like customer loyalty. This is encouraging as CSR becomes increasingly important for major companies. Corporate social responsibility is a nebulous term that variably refers to the way businesses try to help and give back to the community and public well-being. CSR goals and expectations change from business to business, making it difficult to measure just how “socially responsible” a business is without internal documents.
These studies point to promising results, with top executives viewing non-profits as ideal partners because they make CSR investments more effective and provide a critical foundation and infrastructure.
Read below for the full report along with lots of graphs breaking down the core results by effectiveness. What do you think of CSR as a concept, are these results a step in the right direction?
The report has a +/- 6.8 percentage point margin of error at the 95% confidence level.
Save And Share :
Strategy and Tactics: Chinese Hackers Breach Major Oil Companies' Computer Systems
Given the Chinese need for oil, this story suggests a strategic focus on determining where the so-called 'super majors,' the world's largest oil companies, are searching and what innovations they may be making in refining. The combination of Chinese technological expertise with their specific focus on a critical natural resource suggests degrees of strategy execution that many in the west can only dream about.
John Markoff has the story in the New York Times:
"At least five multinational oil and gas companies suffered computer network intrusions from a persistent group of computer hackers based in China, according to a report released Wednesday night by a Silicon Valley computer security firm.
Computer security researchers at McAfee Inc. said the attacks, which were similar to but less sophisticated than a series of computer break-ins discovered in late 2009 by Google, appeared to be aimed at corporate espionage. Operating from what was a base apparently in Beijing, the intruders established control servers in the United States and Netherlands to break into computers in Kazakhstan, Taiwan, Greece and the United States, according to a report, “Global Energy Cyberattacks: ‘Night Dragon.’ ”
The focus of the intrusions was on oil and gas field production systems as well as financial documents related to field exploration and bidding for new oil and gas leases, according to the report. The attackers also stole information related to industrial control systems, the researchers noted, but no efforts to tamper with these systems were observed.
McAfee executives declined to name the victim companies, citing nondisclosure agreements it signed before being hired to patch the vulnerabilities revealed by the intrusions. Last year, when Google announced that intellectual property had been stolen by Chinese intruders, it expressed frustration that while it had observed break-ins at a variety of other United States companies, virtually none of the other companies were willing to acknowledge that they had been compromised.
“We have confirmed that five companies have been attacked,” said Dmitri Alperovitch, McAfee’s vice president for threat research. He said he suspected that at least a dozen companies might have been affected by the team of computer hackers seemingly based in Beijing and who appeared to work during standard business hours there.
“These people seemed to be more like company worker bees rather than free-spirited computer hackers,” he said. “These attacks were bold, even brazen, and they left behind a trail of evidence.”
It was not possible to tell whether the attacks were the work of a government organization or a particular group of cybercriminals, Mr. Alperovitch said.
Jenny Shearer, a spokeswoman for the Federal Bureau of Investigation in Washington, said that the agency was aware of the McAfee report, but had no comment.
According to the report, the intruders used widely available attack methods known as SQL injection and spear phishing to compromise their targets. Once they gained access to computers on internal company networks, they would install remote administration software that gave them complete control of those systems. That made it possible for the intruders to search for documents as well as stage attacks on other computers connected to corporate networks.
In addition to their parallels to the Google attacks of last year, the intrusions resembled a Chinese-based electronic espionage network that was found in 2009 and named GhostNet. In that case, researchers at the Munk Center for International Studies at the University of Toronto uncovered an elaborate network aimed at government computers as well as those of nongovernmental organizations like the office of the Dalai Lama. The researchers concluded that the control servers of the attack system were based on the island of Hainan, which is part of China.
The McAfee report was released shortly before the annual RSA Conference on Web security in San Francisco. The annual computer security industry trade show and conference routinely leads to an outpouring of accounts of computer network vulnerabilities and new reports of intrusions and data thefts
John Markoff has the story in the New York Times:
"At least five multinational oil and gas companies suffered computer network intrusions from a persistent group of computer hackers based in China, according to a report released Wednesday night by a Silicon Valley computer security firm.
Computer security researchers at McAfee Inc. said the attacks, which were similar to but less sophisticated than a series of computer break-ins discovered in late 2009 by Google, appeared to be aimed at corporate espionage. Operating from what was a base apparently in Beijing, the intruders established control servers in the United States and Netherlands to break into computers in Kazakhstan, Taiwan, Greece and the United States, according to a report, “Global Energy Cyberattacks: ‘Night Dragon.’ ”
The focus of the intrusions was on oil and gas field production systems as well as financial documents related to field exploration and bidding for new oil and gas leases, according to the report. The attackers also stole information related to industrial control systems, the researchers noted, but no efforts to tamper with these systems were observed.
McAfee executives declined to name the victim companies, citing nondisclosure agreements it signed before being hired to patch the vulnerabilities revealed by the intrusions. Last year, when Google announced that intellectual property had been stolen by Chinese intruders, it expressed frustration that while it had observed break-ins at a variety of other United States companies, virtually none of the other companies were willing to acknowledge that they had been compromised.
“We have confirmed that five companies have been attacked,” said Dmitri Alperovitch, McAfee’s vice president for threat research. He said he suspected that at least a dozen companies might have been affected by the team of computer hackers seemingly based in Beijing and who appeared to work during standard business hours there.
“These people seemed to be more like company worker bees rather than free-spirited computer hackers,” he said. “These attacks were bold, even brazen, and they left behind a trail of evidence.”
It was not possible to tell whether the attacks were the work of a government organization or a particular group of cybercriminals, Mr. Alperovitch said.
Jenny Shearer, a spokeswoman for the Federal Bureau of Investigation in Washington, said that the agency was aware of the McAfee report, but had no comment.
According to the report, the intruders used widely available attack methods known as SQL injection and spear phishing to compromise their targets. Once they gained access to computers on internal company networks, they would install remote administration software that gave them complete control of those systems. That made it possible for the intruders to search for documents as well as stage attacks on other computers connected to corporate networks.
In addition to their parallels to the Google attacks of last year, the intrusions resembled a Chinese-based electronic espionage network that was found in 2009 and named GhostNet. In that case, researchers at the Munk Center for International Studies at the University of Toronto uncovered an elaborate network aimed at government computers as well as those of nongovernmental organizations like the office of the Dalai Lama. The researchers concluded that the control servers of the attack system were based on the island of Hainan, which is part of China.
The McAfee report was released shortly before the annual RSA Conference on Web security in San Francisco. The annual computer security industry trade show and conference routinely leads to an outpouring of accounts of computer network vulnerabilities and new reports of intrusions and data thefts
Save And Share :
The New ROE: Returns to Extravagance; 2011 Trend Line Looking Shaky
During the past six weeks the world has watched in amazement as seemingly downtrodden and largely forgotten citizens of the Arab world have risen up to demand economic and political rights. Thanks to technology, they have learned the truth about global living standards - and their place in the queue. Repressive regimes are right to fear rapid communication and the dissemination of knowledge; people do act when they sense they are getting a bad deal.
In the west, particularly the US, we have observed, but perhaps not fully comprehended a few seemingly unrelated events in the past few weeks that may shed some light on current socio-political attitudes reflective of the larger world. First, and most emblematic of the distance between business leaders, government big-wigs and 'the people' is the relative disinterest with which most of the known world, including the chattering classes, regarded the annual World Economic Forum at Davos. Michael Elliott provides below a cogent assessment of the limited truths to emerge from this year's event, but the most significant fact appears to have been how little attention was paid, especially in contrast to the uprising in Cairo which analysts say has become the most widely followed event in history. Whether this means that the 'net and associated social media have finally come to dominate global thinking about priorities remains to be seen but one is left with the impression that the musings of business moguls and photogenic politicians carry less heft than they have in the past.
Secondly, the annual US football Super Bowl, held this year in Dallas, Texas, the US capital of excess-worship, was the most widely watched in history (history being 45 years in this case). However, there was an air of disapproval surrounding the event; the $ 1 billion-plus stadium and its self-promotional owner were greeted less by the usual smarmy accolades than by overwhelming media schadenfreude at the cold, snowy weather which caused innumerable problems and not a few injuries. The capstone story was about a ticketing snafu that caused approximately 1,000 fans with tickets not be seated (their temporary seats had not been completed in time). The Super Bowl is an annual feel-good event at which politics are put aside so that food, drink and sports can be celebrated. That such negative tidings dominated the event is perhaps reflective of the increasing sense that all is not right in this country - and many others - so that those who flaunt their wealth may expect less adulation than they have hoped for.
Finally, theater-lovers have been treated to a similar spectacle on Broadway in New York. Noted director Julie Taymor (The Lion King, etc) created an extravaganza costing $65 million to produce, several times the all time record. The production has been plagued by injuries to actors who have fallen, been hit or otherwise damaged by the complex workings required for this attempt at bringing movie screen sensibilities to the stage. The reviews, which came out before the production even formally opened, were uniformly critical, even hostile. Surveys have suggested that ticket-buyers are going to witness tech problems and injuries, not the script. There again appeared to be a sense that an elitist and possibly self-absorbed ego had sacrificed common sense and other people's safety for her own edification.
In all these cases, there is an underlying recurrent theme of resentment towards elites and extravagance at a time when not only many are suffering, but those who have benefitted from the public largesse have not shown the good grace to acknowledge that. This is consistent with diminshed corporate and government reputation. The returns to extravagance (ROE) mentioned above may be a useful metric for determining whether putatitve leaders continue to enjoy the support of the crowd or whether the actions in Cairo may be reflect a growing determination to demand better, whatever that may be.
Michael Elliott in Time magazine reflects on this year's Davos:
"The most interesting sessions at Davos this year were not about emerging markets but about the prospects for the Atlantic core of the developed world. With memories of the 2010 bailouts in Greece and Ireland still fresh — and the fear of more trouble to come in Portugal and Spain — top European policymakers arrived in Davos with a tough task ahead of them. They not only had to convince investors that the measures taken last year had stabilized the financial system; much more significantly, they had to give a sense that policy decisions made in 2011 would ensure that such crises did not happen again. Those policies — to enhance the Financial Stability Fund, to increase the surveillance of fiscal and budgetary decisions by euro-zone member states and generally to create a framework of "economic governance" in Europe without moving toward full-blown federalism — are both complex and contentious.
That did not deter policymakers one bit. One after the other, European leaders went to the podium or spoke in private meetings with a single message: Europe escaped a meltdown last year by the skin of its teeth, and its leaders were now united in an effort to make sure that systems are put in place to reduce sovereign risk and enhance cooperation. Above all, the euro would be defended. Those savants on the other side of the Atlantic who had long predicted its demise could go choke on a fistful of dollars.
With variations appropriate to each speaker's circumstances, that was the message from European Central Bank (ECB) president Jean-Claude Trichet (for my money, the true star of Davos this year); French President Nicolas Sarkozy and his Finance Minister, Christine Lagarde; German Chancellor Angela Merkel and her Finance Minister, Wolfgang Schäuble; and even British Prime Minister David Cameron and his Chancellor of the Exchequer, George Osborne. (One of the interesting side notes at Davos was how European both Cameron and Osborne sounded — none of the pandering to the euroskeptic wing of the Conservative Party in which they might be tempted to indulge at home.) The European choir was in such harmony that I assumed (as did others) that the score and parts had been agreed to in advance, though I was reliably informed that they had not been.
It fell to Sarkozy, with all the brio he brings to special occasions, to make the key point. In an impassioned defense of the euro, Sarkozy made an argument that few Americans fully understand. "The euro," Sarkozy said, in a passage worth quoting at length, "spells Europe, and Europe means 60 years of peace on our continent. We and the Germans fought three barbaric wars. If Europe has become the most peaceful continent, it is because we built the European Union. The single currency is a magnificent symbol of that. [The euro] is not an economic or monetary issue. It has to do with our identity as Europeans. We will be there whenever it needs to be defended." A day later Merkel made the same point, if without Sarkozy's passion. "The euro," she said, "is the embodiment of Europe. Should the euro fail, Europe will fail."
For Europe in 2011, the key question is whether the public will always think that being "European" is worth some economic pain. Or to put it another way: Will those nations on the periphery of Europe and most at risk of a new or renewed sovereign-debt crisis sacrifice short-term economic prospects for the long-term benefit of remaining members in good standing of the euro zone? My guess — based on the Greek and Irish cases and the reform now under way in Spain — is that they will. But whether they can at the same time build economies that are creative and entrepreneurial enough to satisfy the aspirations of their young people is a different matter, one that will take more than a year to resolve.
The question for the U.S. is the same. Secretary of the Treasury Timothy Geithner was in Davos, making the argument that the American recovery was on track and that President Obama's commitment to policies that encourage innovation was the key to future success. There are obvious risks, of course — notably, the U.S.'s deteriorating fiscal position, which the real doom merchants imagine will one day lead to a flight from the dollar — or the jacking up of interest rates when the economy is still too frail to cope with it.
He resisted calls for immediate deep budget cuts, and more than one commentator pointed out that in the debate over whether to make cuts now (the British position) or make cuts later (the American one), Washington seems to have the evidence on its side. Cameron and Osborne arrived at Davos in the shadow of awful U.K. growth figures for the last quarter of 2010.
Yet Geithner was realistic about what recovery means. The U.S. expansion, he said, was "not a boom — it's not going to offer the prospect of a rapid decline in the unemployment rate." American companies have a tendency to get through tough times by shedding labor, especially at home. The result is that the U.S. is likely to see "a tragically more moderate reduction in unemployment as the economy recovers."
A sustained period of high unemployment means that what one U.S. official called "exceptionally high income inequality" will continue to be a feature of the economy for some time. In this, the U.S. won't be alone. The breathtaking speed of economic growth in nations such as China, India and Brazil often obscures the fact that the benefits of that growth are unevenly spread: more go to the cities and to those with marketable modern skills; fewer go to the villages and those with ancient work practices. Zhu Min, a well-known Chinese economist who is now a special adviser to the IMF, went so far as to call growing income inequality "the single most severe challenge facing the world." It's a problem that will only intensify as rising commodity prices put pressure on the developing countries' poor, who spend half their income on food and oil.
The social and political dangers of inequality are well understood in emerging markets. Chinese leaders routinely stress the need to extend growth inland from the coastal provinces (labor shortages and high wages on the coast are helping the transition), while the Indian government is committed to "inclusive" growth that delivers benefits to the villages.
Not so in the Atlantic world. One senior business leader said frankly that during the crisis, companies around the world had "sacrificed the workers to please the shareholders" and called for a more "humanistic" approach. Another mused that although new technology had done wonders in creating marvelous products, so far it had not demonstrated that it could create millions of middle-class jobs to replace the ones disrupted out of existence. Add to that the opportunity for shifting high-skilled, high-paid jobs from the Atlantic core to Asia and other areas of the developing world on a scale never seen before and it becomes easy to understand why frustration with conventional policies and institutions may grow.
In these circumstances, those who have done well from global capitalism might at least show a degree of sensitivity. At one plenary panel, there was a priceless exchange between Lagarde and Bob Diamond, the CEO of Barclays Bank. Meaning well, no doubt, Diamond expressed heartfelt thanks to the authorities for rescuing the global financial system in 2008-09. Thanks, Lagarde told him tartly, were not enough. What the banks needed to do was lend more, improve their capital ratios and reform their compensation structures.
It was a reminder that plenty of people have not yet seen any benefit from the recovery; millions of small businesses need capital as much as middle-class families need jobs. Until they get those things, there will be the risk — which, of course, will manifest itself in different ways in different societies — that ordinary people in the rich world will lose confidence in the processes of globalization that have done so much to lift millions in the developing world out of poverty. As they looked to the sunlit uplands at the Schatzalp, did the Davos attendees this year feel a chilly breath from those who have not yet felt any warmth at all from the recovery? If they were wise, they did.
In the west, particularly the US, we have observed, but perhaps not fully comprehended a few seemingly unrelated events in the past few weeks that may shed some light on current socio-political attitudes reflective of the larger world. First, and most emblematic of the distance between business leaders, government big-wigs and 'the people' is the relative disinterest with which most of the known world, including the chattering classes, regarded the annual World Economic Forum at Davos. Michael Elliott provides below a cogent assessment of the limited truths to emerge from this year's event, but the most significant fact appears to have been how little attention was paid, especially in contrast to the uprising in Cairo which analysts say has become the most widely followed event in history. Whether this means that the 'net and associated social media have finally come to dominate global thinking about priorities remains to be seen but one is left with the impression that the musings of business moguls and photogenic politicians carry less heft than they have in the past.
Secondly, the annual US football Super Bowl, held this year in Dallas, Texas, the US capital of excess-worship, was the most widely watched in history (history being 45 years in this case). However, there was an air of disapproval surrounding the event; the $ 1 billion-plus stadium and its self-promotional owner were greeted less by the usual smarmy accolades than by overwhelming media schadenfreude at the cold, snowy weather which caused innumerable problems and not a few injuries. The capstone story was about a ticketing snafu that caused approximately 1,000 fans with tickets not be seated (their temporary seats had not been completed in time). The Super Bowl is an annual feel-good event at which politics are put aside so that food, drink and sports can be celebrated. That such negative tidings dominated the event is perhaps reflective of the increasing sense that all is not right in this country - and many others - so that those who flaunt their wealth may expect less adulation than they have hoped for.
Finally, theater-lovers have been treated to a similar spectacle on Broadway in New York. Noted director Julie Taymor (The Lion King, etc) created an extravaganza costing $65 million to produce, several times the all time record. The production has been plagued by injuries to actors who have fallen, been hit or otherwise damaged by the complex workings required for this attempt at bringing movie screen sensibilities to the stage. The reviews, which came out before the production even formally opened, were uniformly critical, even hostile. Surveys have suggested that ticket-buyers are going to witness tech problems and injuries, not the script. There again appeared to be a sense that an elitist and possibly self-absorbed ego had sacrificed common sense and other people's safety for her own edification.
In all these cases, there is an underlying recurrent theme of resentment towards elites and extravagance at a time when not only many are suffering, but those who have benefitted from the public largesse have not shown the good grace to acknowledge that. This is consistent with diminshed corporate and government reputation. The returns to extravagance (ROE) mentioned above may be a useful metric for determining whether putatitve leaders continue to enjoy the support of the crowd or whether the actions in Cairo may be reflect a growing determination to demand better, whatever that may be.
Michael Elliott in Time magazine reflects on this year's Davos:
"The most interesting sessions at Davos this year were not about emerging markets but about the prospects for the Atlantic core of the developed world. With memories of the 2010 bailouts in Greece and Ireland still fresh — and the fear of more trouble to come in Portugal and Spain — top European policymakers arrived in Davos with a tough task ahead of them. They not only had to convince investors that the measures taken last year had stabilized the financial system; much more significantly, they had to give a sense that policy decisions made in 2011 would ensure that such crises did not happen again. Those policies — to enhance the Financial Stability Fund, to increase the surveillance of fiscal and budgetary decisions by euro-zone member states and generally to create a framework of "economic governance" in Europe without moving toward full-blown federalism — are both complex and contentious.
That did not deter policymakers one bit. One after the other, European leaders went to the podium or spoke in private meetings with a single message: Europe escaped a meltdown last year by the skin of its teeth, and its leaders were now united in an effort to make sure that systems are put in place to reduce sovereign risk and enhance cooperation. Above all, the euro would be defended. Those savants on the other side of the Atlantic who had long predicted its demise could go choke on a fistful of dollars.
With variations appropriate to each speaker's circumstances, that was the message from European Central Bank (ECB) president Jean-Claude Trichet (for my money, the true star of Davos this year); French President Nicolas Sarkozy and his Finance Minister, Christine Lagarde; German Chancellor Angela Merkel and her Finance Minister, Wolfgang Schäuble; and even British Prime Minister David Cameron and his Chancellor of the Exchequer, George Osborne. (One of the interesting side notes at Davos was how European both Cameron and Osborne sounded — none of the pandering to the euroskeptic wing of the Conservative Party in which they might be tempted to indulge at home.) The European choir was in such harmony that I assumed (as did others) that the score and parts had been agreed to in advance, though I was reliably informed that they had not been.
It fell to Sarkozy, with all the brio he brings to special occasions, to make the key point. In an impassioned defense of the euro, Sarkozy made an argument that few Americans fully understand. "The euro," Sarkozy said, in a passage worth quoting at length, "spells Europe, and Europe means 60 years of peace on our continent. We and the Germans fought three barbaric wars. If Europe has become the most peaceful continent, it is because we built the European Union. The single currency is a magnificent symbol of that. [The euro] is not an economic or monetary issue. It has to do with our identity as Europeans. We will be there whenever it needs to be defended." A day later Merkel made the same point, if without Sarkozy's passion. "The euro," she said, "is the embodiment of Europe. Should the euro fail, Europe will fail."
For Europe in 2011, the key question is whether the public will always think that being "European" is worth some economic pain. Or to put it another way: Will those nations on the periphery of Europe and most at risk of a new or renewed sovereign-debt crisis sacrifice short-term economic prospects for the long-term benefit of remaining members in good standing of the euro zone? My guess — based on the Greek and Irish cases and the reform now under way in Spain — is that they will. But whether they can at the same time build economies that are creative and entrepreneurial enough to satisfy the aspirations of their young people is a different matter, one that will take more than a year to resolve.
The question for the U.S. is the same. Secretary of the Treasury Timothy Geithner was in Davos, making the argument that the American recovery was on track and that President Obama's commitment to policies that encourage innovation was the key to future success. There are obvious risks, of course — notably, the U.S.'s deteriorating fiscal position, which the real doom merchants imagine will one day lead to a flight from the dollar — or the jacking up of interest rates when the economy is still too frail to cope with it.
He resisted calls for immediate deep budget cuts, and more than one commentator pointed out that in the debate over whether to make cuts now (the British position) or make cuts later (the American one), Washington seems to have the evidence on its side. Cameron and Osborne arrived at Davos in the shadow of awful U.K. growth figures for the last quarter of 2010.
Yet Geithner was realistic about what recovery means. The U.S. expansion, he said, was "not a boom — it's not going to offer the prospect of a rapid decline in the unemployment rate." American companies have a tendency to get through tough times by shedding labor, especially at home. The result is that the U.S. is likely to see "a tragically more moderate reduction in unemployment as the economy recovers."
A sustained period of high unemployment means that what one U.S. official called "exceptionally high income inequality" will continue to be a feature of the economy for some time. In this, the U.S. won't be alone. The breathtaking speed of economic growth in nations such as China, India and Brazil often obscures the fact that the benefits of that growth are unevenly spread: more go to the cities and to those with marketable modern skills; fewer go to the villages and those with ancient work practices. Zhu Min, a well-known Chinese economist who is now a special adviser to the IMF, went so far as to call growing income inequality "the single most severe challenge facing the world." It's a problem that will only intensify as rising commodity prices put pressure on the developing countries' poor, who spend half their income on food and oil.
The social and political dangers of inequality are well understood in emerging markets. Chinese leaders routinely stress the need to extend growth inland from the coastal provinces (labor shortages and high wages on the coast are helping the transition), while the Indian government is committed to "inclusive" growth that delivers benefits to the villages.
Not so in the Atlantic world. One senior business leader said frankly that during the crisis, companies around the world had "sacrificed the workers to please the shareholders" and called for a more "humanistic" approach. Another mused that although new technology had done wonders in creating marvelous products, so far it had not demonstrated that it could create millions of middle-class jobs to replace the ones disrupted out of existence. Add to that the opportunity for shifting high-skilled, high-paid jobs from the Atlantic core to Asia and other areas of the developing world on a scale never seen before and it becomes easy to understand why frustration with conventional policies and institutions may grow.
In these circumstances, those who have done well from global capitalism might at least show a degree of sensitivity. At one plenary panel, there was a priceless exchange between Lagarde and Bob Diamond, the CEO of Barclays Bank. Meaning well, no doubt, Diamond expressed heartfelt thanks to the authorities for rescuing the global financial system in 2008-09. Thanks, Lagarde told him tartly, were not enough. What the banks needed to do was lend more, improve their capital ratios and reform their compensation structures.
It was a reminder that plenty of people have not yet seen any benefit from the recovery; millions of small businesses need capital as much as middle-class families need jobs. Until they get those things, there will be the risk — which, of course, will manifest itself in different ways in different societies — that ordinary people in the rich world will lose confidence in the processes of globalization that have done so much to lift millions in the developing world out of poverty. As they looked to the sunlit uplands at the Schatzalp, did the Davos attendees this year feel a chilly breath from those who have not yet felt any warmth at all from the recovery? If they were wise, they did.
Save And Share :
