Christmas 2009

It's Different This Time / Plus Ca Change, Plus C'est la Meme Chose

In traditional Greek plays the main protagonists would usually be backed by two groups of choruses, each of which would propose diametrically different interpretations of the dilemma our hero would find himself in. Should I sleep with my mother? Should I kill my father? Should I poke my eye out with a sharp stick? The Greek heroes rarely had to ponder things the consequences of which went far beyond the philosophical. Today’s heroes have a bigger responsibility. We may continue to borrow from the future to keep the multitudes peacefully occupied making stuff nobody needs out of raw materials we can’t replace while destroying our planet (that would be the American Way), or we may focus humanity’s undoubted ingenuity and energies repairing some of the damage already wrought on the future generations while inventing a better way to harness the sun's energy into happiness, pleasure, satisfaction or utility, whichever term you prefer.

Sadly it would appear the cynical view that everything moves in cycles, and that human nature is what it is, warts and all, has gained the upper hand. I’m afraid that is not good enough. This time it really is different, and the current crisis is an opportunity to change. Human nature, unfettered, is well capable of self-destruction as demonstrated over and over again through history. “Yes, young Oglediwop, the human population of Planet Earth was utterly incapable of restraint, and stuffed itself with whatever resources was right in front of them without a thought for tomorrow, until they had completely destroyed their habitat. That provided us with a useful site for dumping --- [HEY! It’s you again. You from last year! Get out of my Christmas Greeting! Shoo!]

I really must apologize. I try to keep him on locked up on this blog. The truth is we've had another wonderful year, and we continue to count our blessings. We have, however, had reason to be even more concerned about what kind of planet we leave to the next generations - roughly 50% more concerned in fact (a little less for you pedants out there - call me if you want mathematical proof) in the form of gorgeous Catherine Louise who knocked on our door in late August. It never gets old. My lovely wife insisted it was the most painful of the three, but I was there and can't be fooled: it looked pretty routine to me, so next time it's the good, old public hospital again (this is where I get that look from Irene...).

No, I think realistically this is our after-tax baker's dozen, and that we consequently shouldn't require additions to Gloria Mundi - with perhaps the exception of a floating shed where as the sole carrier of chromosome Y in the immediate family I may retire every now and then to tend to my stamp collection and an obsession reminiscent of medieval alchemists with turning Chardonnay into philosophy.

The two older sisters continue to impress us, not least with their voracious appetite for reading; I believe I have to persuade the unemployed financial geniuses on Wall Street to start writing teen novels in 2010, or I foresee a major shortage. They have long since exhausted the supply in Dymock's Booksellers in Discovery Bay, but I suppose I could throw a couple of Harry Potters down in their pen; that should keep them occupied for a little while.

Other than that all that remains is to convey our very warmest regards, sentiments and best wishes for 2010.

Irene and Anders

Gross Domestic Product Rant

Is GDP growth a good thing? Most governments around the world appear to think so.

Are certain types of the economic activities that make up GDP unwanted in the sense that the production and consumption of the good does not yield a positive utility (let's use that term throughout this tantrum) to society as a whole?

Take the United States: the most heated debate of the day is that of the health care system which spends twice as much per person as the average European system. That is because Americans eat corn starch. $147bio is spent annually to treat obesity. $116bio each year to treat Type 2 diabetes. At the same time, the government subsidizes the corn industry - is that ironic? In the words of Michael Pollan: One of the leading products of the American food industry has become patients for the American health care industry. And this growth has created jobs while contributing to GDP growth. Not perhaps the greatest victory for GDP growth as a measure of society's utility.

Growth in the creation and treatment of war veterans is another subject along that line of thought, and a very unpleasant one.

Furthermore, does the satisfaction of 'manufactured needs' increase utility of the society?

Companies have largely free access to peoples' mindspace and use that access to shift the demand curve upwards, or in layman's terms, create a need which may be satisfied by the consumption of a good. Those who consume that good pays the price for the creation of the need, and probably net has a positive experience (consumer's surplus). Let me spell it out in detail: by allowing the advert to shift your preference from a willingness to pay $800 for a pair of $875 sneakers to a willingness to pay $900, it has created - free as far as you're concerned - $25 of value to you since you now go ahead and buy them. So far so good.

But every time an image of Maria Sharapova sporting a new pair of rubber shoes is flashed across some screen, a small desire is created in everybody's mindspace (that is, the whole demand curve is shifted, not just those belonging to the consumers that end up buying it). An incremental additional measure of need is created for everybody - but only one in 100 will actually go and buy the pair of rubber shoes. The remaining mindspace now has a small increase in the desire for those shoes, but it remains unsatisfied, creating a non-positive impact on utility. Please call me if you don't get this. The upwards shift of the demand curve means everybody is more miserable. I would say this again, in bold, italic letters, but you're too intelligent to react to that, and you already get my drift. Let's say, for the purposes of annoying the proponents of that industry, that spending $100 to shift the consumers' demand curve $2 to the right creates $300 of misery, and you'll definitely see my point. This is not a digression, it's called labouring the point.

Add the externalities of disposing of the rubber shoes when a new model is created, and a new sexy tennis star is wearing them, and you'll see that the net effect of this type of activity cannot possibly add to the society's utility. Let's not get into the disconnect between how satisfied people anticipate they'll be when buying that pair, how long they believe such satisfaction lasts, as opposed to the experienced reality of such a purchase, but suffice it to say that this imbalance exacerbates the negative net effect on the utility as a whole.

Here's an idea for a self-regulating system, which will definitely bring down consumption of manufactured needs: society should charge for infringing individuals' mindspace, just like a society has the right to auction the 3G and radio bandwiths. Faced with a real charge for mindspace pollution raising the cost for advertising may deter much consumption.

Would media business collapse because of additional cost of advertising? OH NO, that wouldn't do! No more Cosmopolitan telling you what a freak you are. No more FT How To Spend It showing you that what you consider a pretty lavish lifestyle is best compared to life in a cave in 10,000 BC. And most importantly, no more treating my children as trainee consumers.

But I am perhaps a little unfair. In many cases a transaction is concluded: I offer up my mindspace and consent to having my demand curve shifted as a result of advertising, and in return I get to watch for free the Masters, or Caroline Wozniacky at the US Open (she's playing the semi-finals here in NYC in about an hour, and my pontifications are more a reflection of impatience and jetlag that a real urge to change the world. But I digress.) Hey, people buy glossy magazines in essentially the same transaction: give me some celebrity gossip, and you can have my subconscious attention on every odd numbered page. Is it a fair price? Is one article about Jennifer Aniston's weight change worth ten seconds' subconscious exposure to Procter & Gamble's new light gloss hair conditioner? Is watching Tiger Woods' chip on 16th on Sunday at the 2007 Masters sufficient compensation for shifting my desire for Nike golf balls by 45 cents per sleeve? (The answer to that, if anybody wonders, is yes. I wouldn't want my demand curve shifted by 45 cents to see another Korean win a ladies open, though. But I digress again.)

Those transactions are acceptable, although it would be preferable if advertising hadn't usurped sports events: suppose you are more susceptible to subconscious advertising than the average - then you're in effect paying more to watch Nadal whooping Gonzalez (your demand curve is more elastic), and you should have an option to pay, say, $10 to watch the match without advertising. Society should however impose a tax on things like billboards, telemarketing, big screen advertising on Times Square, and other infractions on mindspace where no such transaction is offered. Quantifying the Mindspace Tax is not a huge obstacle, given the vast data available on the value of such mindspace through other media.

Since the intention of the tax is not to fatten the government's balance sheet, the resulting tax revenues must be directed to repair the environmental damage of satisfying these manufactured needs, and give treatment to the many whose mindspace has paid for the positive experience of the few. This is Economics of Externalities 1-0-1.

But let's end on a positive note (now twenty minutes to the match). In spite of the environmental destruction left in its path, in spite of the vast hordes of people who feel too skinny, too fat, too tall, too short, too sexually unfulfilled, and whose manufactured desires are left unsatisfied, GDP growth at least yields social mobility. Without GDP growth, a smart kid would have no chance to advance herself over and above her social station. That hope is perhaps more valuable than all the stolen mindspace acreage in the world. But let this be a call to all the newly unemployed financial analysts and derivatives structurers to work out a model that analyses society's utility properly. And let's not confuse the creation of blubber in America with growth in utility.

It is time. Go, girl!

This Is Not A Good Idea

Gobi, Day One, Sunday 14JUN09.
I was wrong. It is a fabulous idea. We have sun, sand, snowclad mountains in the distance, the air nimbly and sweetly recommends itself unto to our gentle senses. First stage was completed in what my fellow competitors dubbed the Gobi Tiptoe Shuffle, the last half in my Crocs. I had promised my lovely wife to be extremely modest in my aerobic ambition; she recollects Mikkelgate with fear and horror. Mikkel, I have spoken to the medical team: they send their love and hope to never see you again. Of course I'm much smarter than that: my method developed over years of hiking is, when I start getting a craving for certain types of music, I rehydrate. Today at around 2pm it set in. I Have A Crush On You (Frank Sinatra/Barbra Streisand) wouldn't exit my head... Immediate hydrolyte infusion and lots of water. Too bad Mikkel doesn't have my bad taste in music; the method obviously won't work if you don't have the proper music selection on your iPod. I'm let to believe the real performance athletes get airlifted out in helicopter the moment they start humming anything Celine Dion. But I digress. My Riz de Veaux Toulousienne is almost ready and the chef needs the oven for the souffles. More on the next stages.


Gobi, Day Three, Tuesday 16JUN09.

DEAR BOSS

IT GIVES US NO PLEASURE TO HAVE TO ADDRESS YOU IN THIS MANNER BUT YOU HAVE LEFT US LITTLE CHOICE. IT WAS BAD ENOUGH WHEN YOU LEARNED BALLROOM DANCING IN THE 1980S IN THOSE TIGHT SHINY SHOES PRANCING ABOUT LIKE A MINDLESS LUNATIC, BUT IT NEVER GOT AS GRUESOME AS THIS. OVER THE PAST TWO DAYS YOU HAVE DRAGGED US THROUGH A RAGING INFERNO LEADING TO THUMB-SIZED BLISTERS, LOOSE TOE-NAILS, TORN SKIN AND A GENERAL FEELING OF BEING THE ONION IN A PARTICULARLY HOT IRISH STEW. PAIN IS A COMPANION, NOT A FRIEND. AND BY THE WAY, NOT LOSING FACE IS NOT HIGH ON OUR PRIORITY LIST DOWN SOUTH.

OUR TERMS: YOU QUIT NOW AND WE'RE FRIENDS AGAIN. FOR EVERY FURTHER STAGE YOU DECIDE TO COMPLETE, WE GET 45 MINUTES FOOT-MASSAGE AND THE ATTENTION OF HONG KONG'S FINEST PEDICURIST. AND LOSE THOSE INFERNAL CROCS.

AND SIR, DON'T THINK WE'RE POWERLESS; YOU MUST HAVE HEARD OF GANGRENE.

WITH THE DEEPEST REGRET, WE REMAIN

SINCERELY YOURS

RIGHTY AND LEFTY

I found this note tucked into my shoe this morning in a handwriting unlike anything I have seen before. I may not be much of a democrat, but I have learned that power cannot be maintained if you ignore the lower classes, so I really don't have any choice but to comply. So here we are, 100km out of 250 is the score, but curiosity definitely satisfied, head cleared, dozens of the kind of conversations that can only be enjoyed in the middle of a desert amongst complete strangers. Would I do it again? Not according to the binding settlement reached with my feet, so the next one will of necessity have to be completed walking on my hands. Honeyko, break out the champagne, daddy is coming home.


Gobi, Day Four, Wednesday 17JUN09.

This has been an absolute thrill and delight. Yes, my feet are neither use nor ornament right now, but the spirit is high sitting within spitting distance from the bar in Kashgar International Hotel waiting for two other sensible competitors. Sensible is boring, but sensible gets you home in one piece. I stand as ever in awe and admiration of the determination of the competitors cursed blessed with plenty of testosterone giving them that burning desire to complete a truly staggering test such as this, many of them in far worse shape than I when I bailed - I feel you, guys and gals, even if my own level of testosterone never strayed out of the green zone. It has been a complete privilege to be fly on the wall and pretend to be one of you if only for a few days, and I wouldn't have missed it for anything. The comradeship of the whole group and our tent Villa Miao in particular was unforgettable. I can safely say when Mary and team plans an endurance event with a theme more atuned to foie gras consumption than waist high mud and 45 degree desert, I'll be the first to sign up. Thank you to all from the bottom of my heart for your cheerful support and comments, it has been a big part of the whole experience! Out from Gobi. ---

Grazing The Planet, June 2009

What's your sporting background, if any?

I've always been a keen racket player, tennis, squash, badminton, I enjoy hiking, but running is out of the question for me!

How did you hear about the 4 Deserts and the Gobi March?

My friend Mikkel Larsen for whom I feel nothing but love and respect made an arse of himself at last year's event. There is no such thing as bad publicity.

What made you want to take part in a 4 Deserts event and why did you choose the Gobi March as the first one?

Mainly because a number of merciless friends get a kick out of poking fun at my midlife crisis; I can assure you hardship is not my thing! I was originally looking at the Namibia event, but was told Gobi would be more suitable for my, for lack of a better word, athletic condition. Besides, I have teed myself up by asking for donations from friends and colleagues, and I pay double if I don't complete, so that adds to the determination. Incidentally if anybody is short of ideas, half goes to Room to Read and half to Kiva (microlending).

How have you approached your training for the event? How does it differ from the training you've done for other events/sports you've participated in?

It's really just about getting mileage in the legs as far as I'm concerned. I have as I said no intention of running...

What are your hopes for the Gobi March?

Completing is my only ambition. My other hope is that, on the Silk Road, I chance upon a travelling foie gras merchant, or failing that, perhaps a fish and chips stall. I must confess my biggest dread is the thought of that gawdawful food you have to eat there. I could also guarantee brisk business if a bartender could look me up at 5:30 daily with a few Extra Dry Martinis.

Are you planning at this stage to run further 4 Deserts events?

To be honest I doubt it. Getting one under my belt should shut up the mid-life crisis voice I should think; unless of course a Fat Cat Endurance Race event came along - something involving bringing one's own butler...

Obituary: Democracy (508BC - AD 2009)

It has been brought to our attention that there is a global crisis going on. The frequent reader of this blog will know that we usually have between little and no truck with democracy; see for example how car-making in the United States has been kept alive for far too long, simply because a democracy cannot shut down an industry whose workers can place any candidate they want in Congress. Creative destruction is one of the most vital elements of a market economy; everybody knows Detroit should have been turned into a theme park the day the first Toyota landed on the American coast 40 years ago.

Here's Scottish economist Alexander Fraser Tytler in 1760: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves funds from the public treasury. From that moment on, the majority votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy". Very prescient of him; so workers associated with the car industry votes themselves large subsidies from the government, but the government should, as he suggests, go bankrupt doing this. So why hasn't it? Democratic governments rather ingeniously responded by finding excuses to borrow peoples' savings, or issue government bonds as the sanitized term is, rather than tax their voters. That means future generations must pay for the cash that today's voters have awarded themselves. That is generational theft. But politicians are not malicious; they don't enter politics with a plan to borrow money to buy votes. It's just that the candidate who demands hardship of his voters will not get elected, so the path of least resistance guides the democratic process, and the debts keep piling up.

And let's have a wee think about America's 'trading' relationship with China: (a) the American consumer spends lots of money on his credit-card buying Chinese made sofas and refrigerators, (b) Visa and American Express sends the cash they got from the investment bankers in charge of securitisation to China to pay for the goods; (c) China lends the money to the American Treasury (by buying government bonds); (d) the American government can't quite believe their luck, but like a sailor in port decides to spend it all on a pointless war in Iraq. Perhaps it's just me but it seems like every dollar is spent twice. And that the Chinese's savings have gone kablooie.

This is what passes for the best of all economic systems; unpopular but absolutely vital decisions cannot be made. And now it has to contend with the fear factor, too.

When we are fearful, we tend to return to a primal state where all that matters is survival. Out goes concern for the environment, out goes appreciation of the positive effects of global trade, out goes any sense of charity and compassion with our fellow human beings. Those letters from UNICEF go straight into the bin. Populist protectionism gets all the airtime. Strangers look more threatening that ever. Nobody so much as smiles at their mother-in-law. We are not capable of making rational, long-term decisions in that state of mind, and we are certainly not competent to vote. We stink.

Right.

What are our options then? Well, first of course we have to suspend democracy globally. Good riddance. Unfortunately our democratic institutions don't just manage themselves so we need at least some form of leadership, and looking around in the region that has so far been least affected by the recession - well, a stash of USD4 trillion foreign currency reserves sort of steadies the nerves - it seems painfully obvious that we need to go with Enlightened Tyranny. That should be pretty uncontroversial.

What is controversial of course is, who gets to be that tyrant, and how is she chosen. A word on the gender profile of this tyrant: I'm afraid I've rather had it as it were with combining testosterone and leadership. Excess testosterone makes people less sensitive to risk, caring only about the potential reward associated with a decision. Testosterone makes people more competitive and less likely to make rational decisions. A beagle is basically a wolf without testosterone. You can hold testosterone largely responsible for the concept of honour killing, the invasion of Iraq, everything that's wrong in South America, the last 15 minutes of the trading session on the Korean Future Exchange (don't ask), the 1980s, and of course the current financial crisis. Note how Iceland has given the pink slip to all males in the banking sector, and put two housewives in charge of the entire financial system. In fact rather than a swearing-in ceremony we'd all be better off with a castration ceremony, thereby eliminating the source of the testosterone. Interested readers may learn more about the effects of testosterone in scientific papers by Robert Sapolsky ("T is trouble", 1998) and Dave Barry ("Dave Barry's Guide to Guys", 1995), but I think this digression has gone far enough.

So I don't think I'm being controversial when I insist this tyrant should be a woman. My primary school teacher of Danish Literature would seem ideal, except of course in terms of the requirement to be enlightened, so we shall pass on her; Mother Theresa appears to have passed away - although that was never a problem when in 1997 North Koreans voted to fill the position of Eternal President of the Peoples' Paradise for the Worker, and overwhelmingly came out in support of the founder, Kim Il Sung. He died in 1994. But I digress. Hillary Clinton has to be ruled out on account of having too much testosterone, I'm afraid (sorry, mate), and while Lindsey Lohan would look good on the commemorative stamps, I'm sorry, she's a dumb git. I have previously recommended Barbara Bush, but she's a wee bit long in the tooth now.

We would appear to be stuck.

But listen: why don't I temporarily take the global leadership. I'll be a benevolent dictator practicing full frontal honesty. Note that no castration would be required since my tenure would only be temporary: you have my word that the moment I feel power beginning to corrupt, or the moment a proper qualified candidate appears, I'll relinquish office immediately. Trust me. You know you can.