Friday, February 29, 2008

In Praise of Imbalance

Today is Work-Life Balance Day, one of those happy-clappy events dreamed up by the social partners to help us keep things in (their) perspective.

Personally I find the phrase ‘work-life balance’ moronic. The juxtaposition of the words ‘work’ and ‘life’ somehow implies that the former is the antithesis of the latter. This is intellectually vacuous: life by definition encompasses work (and leisure and family and study and shopping and everything else we do). But then ‘Work-Shopping-Sleeping-TV Viewing Balance’ doesn’t have the same ring about it, does it?

Moreover, there is something unbalanced about such an unhealthy obsession with ‘balance’. Where did that come from? I don’t recall any of the great philosophers fretting about balance. Happiness, fulfilment, contentment sure: but ‘balance’? We seem to have traded ancient insights into the nature of Eudaimonia and the art of graceful living for modern day psycho-babble wrapped in platitudes. A lousy deal indeed.

Worse, there seems to be an assumption on the part of all those fretting about our ‘imbalanced’ lives that we are working too hard. Yet a recent study by the ESRI showed that the Irish enjoy more leisure time than other European countries for which data is available. A new analysis by Davy Stockbrokers shows that the percentage participation of Irish women aged 35-44 in the workforce is the lowest of the original EU-15 countries. In the interest of balance, do the social partners think we should force more of them to get a job?

A silly thought of course, but that’s where you end up with this kind of nonsense. It strikes me that ‘balance’ is something you might aim to achieve over a lifetime (if, indeed, it is something worth achieving), but not over a working week. As Henry Adams famously put it (back in 1910):

Stable Equilibrium is Death.
That’s the kind of balance I don’t mind postponing for another while yet.

Thursday, February 28, 2008

The Domestic Price of Exports

I came across this graph in the latest issue of the CSO's Wholesale Price Index. It struck me as quite shocking as it shows Irish manufacturers effectively using the Irish consumer to cross-subsidise their sales to overseas customers. How else do you explain a near 15% rise in output prices for home sales since 2000, alongside a near 20% reduction in export prices?

So far so bad, but it may be about to get a lot worse. With the euro hitting an all time high of $1.51 against the dollar yesterday, Irish and other eurozone exporters are going to be under more pressure to reduce their export prices.

But with consumer spending power weakening in Ireland as inflation and interest rates erode modest pay rises, there may be less room for Irish exporters to make up for reduced margins overseas through higher margins at home.

Things may be about to get even tougher for Irish exporters than they realise.

Tuesday, February 26, 2008

The Coming Food Shock

I remember giving a talk a few years ago and being asked what should people invest in. My answer, as best I recall it, was the energy sector in the short term, and farm land in the long term. The latter caused some consternation, did I mean 'land with development potential perhaps'? I answered 'no': I explained I meant land with good food growing potential - because farming would very likely be the boom industry of the next few decades in the face of imminent world food supply problems.

Needless to say most people thought I was joking, crazy or a tad alarmist. Perhaps not now: as witness the fact (reported in the Financial Times but in none of the Irish media) that world wheat prices jumped 25% yesterday to a record high. Nor are just cereal prices being affect: pig meat production is expected to go into sharp decline later this year as farmers find the cost of keeping their herds prohibitively expensive.

Amazingly, the shocking rise in food prices appears not to be of concern to Irish policy makers or even the Irish media. But Irish consumers are already feeling the effect, and we can expect a great deal more of the same in the months and years ahead. All the more reason for being disgusted at protectionist strokes like the ban on Brazilian beef, which serve the purpose solely of boosting the price Irish beef farmers can charge Irish consumers.

So for those of you wondering where to invest your surplus capital, my advice is to allocate some of your portfolio to good arable Irish land, preferably near to a city. With or without the aid of protectionist policies you can expect the price of what you produce to keep going up for some time to come.

Monday, February 25, 2008

The Halo Effect

What do IBM, ABB, Cisco and Lego all have in common? The answer, according to Phil Rosenzweig - author of The Halo Effect - is that once they were all darlings of the business media but then each in turn fell from grace (or lost their halo). I have just finished reading Rosenzweig's book and for once I am inclined to agree with the blurb on the cover, that this really is 'One of the most important management books of all time'. That's Nassim Nicholas Taleb who is being quoted, by the way.

However, Rosenzweig hasn't produced yet another 'In Search of Excellence' or 'Built to Last', rather it is something of an 'anti-book' to the popular business genre. Every decade it seems produces one or two businesses that are deemed to have cracked the secret of eternal success (think IBM and Microsoft in the 1980s, Intel and Dell in the 1990s, or Apple and Google in the noughties). And every decade yet another book comes out purporting to have analysed the numbers, conducted exhaustive research and finally revealed why IBM (or Dell or Google) has inevitably become successful and will inevitably continue to be so.

Rosenzweig de-constructs some of the more ludicrous claims of numerous studies to have found the five-step or six-stage or seven-secret formula for success. Their maths are usually dubious and their conclusions inevitably spurious. Business is messy and unpredictable; managers and staff are fickle and, alas, only human; and the old adage that 'nothing recedes like success' does seem to have been proved harshly accurate with the passage of time. Here's Rosenzweig on what really does leads to high performance, discounting all the self-serving hype served up in the business press equivalent of Mills & Boon romances:
If we set aside the usual suspects of leadership and culture and focus and so on - which are perhaps better understood as attributions based on performance rather than causes of performance - we're left with two broad categories: strategic choice and execution. The former is inherently risky since it's based on best guesses about customers, about competitors, and technology, as well as about our internal capabilities. The latter is uncertain because practices that work well in one company may not have the same effect in another. ... Wise managers know that business is about finding ways to improve the odds of success - but never imagine that success is certain. ... All of which helps explain why, seductive stories notwithstanding, there's simply no formula that can guarantee success.
The book provides some inoculation against the endless stream of ridiculous claims made for the importance of one business practice or strategic device or another. Take, for example, the recent report from the National Centre for Partnership and Performance showing that 'Equality' is good for business. Based on a survey of, er, 132 companies, the study shows that diversity and equality strategies are associated with 6.5% of the variance in labour productivity across this sample; 7.9% of the variance in workplace innovation and 4.4% of the variance in employee turnover. Note: that's 'associated': not 'caused'.

Or, taking a queue from Rosenzweig's skeptical approach to business research: diversity and equality strategies DID NOT explain 93.5% of the variance in labour productivity; they did not explain 92.1% of the variance in workplace innovation, and they failed to explain 95.6% of the variance in employee turnover.

I urge you to read it (Rosenzweig's book, not the NCPP report) - you too will find your BS-detecting antennae much enhanced by the experience.

Saturday, February 23, 2008

Lynch the Rich

There's nothing like an economic slowdown to put us all in touch with our inner socialist. Even the Financial Times has taken to advising the rich and wealthy on how best to avoid a lynching. As journalist John Thornhill puts it in today's FT:
What rankles are the “undeserving rich”: those who take risks with other people’s money but never suffer the consequences of their mistakes; those who receive massive pay-offs even when they have failed; those who evade taxes while benefiting from public goods. Here surely there is a case for more considered intervention.
Thornhill has in mind the finance and banking industry in general and the City of London in particular. As fellow journalist Martin Wolf put it recently, no other industry or sector has been as successful as banking at 'privatising gains and socialising losses'. UK taxpayers are presently learning the depth of this insight as they pay for the nationalisation of Northern Rock.

Should we therefore expect a resurgence of socialist politics and policies in Ireland and across Europe on the back of a populist backlash against capitalist excesses? I don't think so, for the curious reason that many socialists are losing their affection for state intervention. Here are socialists over at the excellent Red Pepper web site arguing that globalisation is good for you. They observe that:
In the end, the needs of the nation state override anything else. All the din of world politics, the babble of the ‘world community’, is about this hypocrisy – governments holding on greedily or trying to expand what power they have while conceding to markets only so much as is needed to maintain their revenues.
I can't see any of our local lefties adopting similar sentiments any time soon mind.

The key political issue is inequality. As I've written before, many on the left simply assume that poverty is caused by inequality and that reducing the latter will therefore alleviate the former. A more considered perspective, such as that set out by socialist Chris Dillow, recognises the limits to state interventionism whilst also challenging conservative assumptions that current class structures are somehow natural or inevitable.

I believe instead that the proper focus should be on poverty, not meaningless measures of inequality. But even in relation to poverty there are major definitional issues let alone difficult policy choices to be made. And at the end of the day, it is economic growth driven by private enterprise that will lift the majority of people out of poverty, not self-serving state intervention. It seems that (some) socialists and libertarians are now actually in agreement on that one.

Friday, February 22, 2008

Let It Rain

We hear a lot about Ireland's potential for renewable energy, not least from wind and marine power sources. But there is something even more constant than the wind in Ireland and that of course is the rain. So what if you could turn rain into a source of power? The good news (in a spirit of seeing the silver lining rather than the cloud ;-) is that scientists are working on precisely that.

I find this very encouraging, not least because one much touted 'renewable energy source', namely biofuels, looks likely to make our energy and emission problems worse rather than better. We need better alternatives to 'alternative fuels'. More good news is that some scientists are working on just that, planning to turn greenhouse gases into 'gas'.

Though many (but not all) environmentalists won't like the idea of technical fixes to the threat posed by greenhouse gases (preferring instead that we all return to a medieval standard of living), the rest of us will welcome these kind of initiatives. And if all else fails, we could just enjoy the warmer weather, after all global warming might actually lead to less violence. Now that's what I call a silver lining.

Thursday, February 21, 2008

Honey Trapped

Just when you think you've got capitalism sussed, along comes an innovation that makes you marvel at the entrepreneurial imagination. Or not, if - as reported in this article - you are on the unfortunate end of a 'honey trap' detective service designed to test your fidelity.

Just another upward ratchet in the sexual arms race perhaps?

Monday, February 18, 2008

Nanny Says Naughty

I often feel we Irish are in the habit of adopting all the bad ideas our English cousins invent, and ignoring all their good ones. So I am especially concerned at the 'nanny state' now emerging in the UK: as it may be a precursor to something similar here.

This week's New Statesman has an excellent article on the continuing tension between Paternalism and Liberalism at the heart of British politics. I've written before about the dangers of the nanny state in Ireland, and the New Statesman addresses some of the same concerns. As ever, there are some useful insights from behavioural economics that might be of use in negotiating our way between adopting the wrong policies and ignoring the right policies. Useful for businesses, not just policy makers.

Take this example cited in the article:
A story from the US scholar Robert Cialdini's Influence: Science and Practice - a bible for behaviourists - showed how a restaurant reduced the rate of people failing to turn up for a table booking from 30 to 10 per cent by making an apparently tiny change to the conversation when a table was booked. Staff had always said something like: "Please let us know if you can't come." Now they were asked to say: "You will let us know if you can't come, won't you?" and then - crucially - pause and wait for a response. The answer sealed a kind of contract.
The key word is contract: if anything the history of Western Civilisation has been about the negotiation and re-negotiation of the Social Contract. And that it seems is what we are trying to do now: only negotiating responsiblities not between citizens and the state (as in the past), but between the individual and his or her fellow citizens (e.g.: in relation to issues such as obesity or passive smoking). It took the west several centuries to transition from feudalism to democracy - so we shouldn't expect any immediate resolution to the current tensions at the heart of the 'nanny state' debate.

Postscript

As a keen coffee drinker I've fretted in the past about the risk of coffee being demonised just like alcohol is at present, so I was delighted to read recently more evidence confirming the beneficial impact of coffee on attention and productivity. We're safe for another while yet - whew!

Saturday, February 16, 2008

Election 2.0

I have to confess that I'm not all that interested in the US presidential primaries. My head says it's important (as US presidents tend to have an impact beyond the United States), but my heart says it's their country and their election - not mine.

One thing though that has caught my attention is the way in which the different candidates have used the tools of web 2.0 to run very different campaigns to those of the past. Surprisingly it is the oldest candidate - Ron Paul - who has been cleverest at using social networking and email marketing to raise funds and spread his message.

There will be lessons from this for Irish candidates in forthcoming elections. Though I think it will be some time before we see an Irish politician using YouTube to get his message across as effectively as Barack Obama (Yes.You.Can), and even using the same music video format to parody his opponent (John McCain)!

So while I'm not that engaged in the US elections, I do find the emergence of Election 2.0 tactics and techniques fascinating and I don't doubt we'll see more of the same this side of the Atlantic in due course.

Friday, February 15, 2008

27 Into 1 Won't Go

I remember the excitement at the time the Single Market was launched in 1993, and how it seemed to herald the final emergence of a Europe that benefited all its people. We were promised cheap mortgages from French banks, cheaper cars straight from the assembly line in Germany, and much, much cheaper wine to toast our political masters for delivering a Europe for the consumer.

That was fifteen years ago - and a lot has happened since: but then again, a lot has not happened. A new report from Forfás reviewing the Single Market shows how it has failed to deliver many of the benefits promised by its progenitors: at least from an Irish viewpoint. We have some of the highest comparative prices in Europe a decade and a half after the Single Market came into effect. Some of these price gaps, of course, are due to the decisions of our own politicians not to pass on the 'price savings' of a single market, and instead to impose new taxes. Think Vehicle Registration Tax, for example.

So is the Single Market a failed experiment? It would be tragic indeed if it was. The Single Market personified, for me anyway, the European Ideal at work - the free movement of people, capital, goods and services to the benefit of our collective standard of living. But Europe's politicians (like all politicians) suffer from an addiction to managerialism which compels them to constantly tweak and change and modify what is best left alone - indulging grand fantasies, for example, about a Europe that is the equal (or better) of the United States.

Worse, some politicians even want to reverse the little progress there has been with The Single Market. Hence French President Sarkozy's insistence in the Lisbon Treaty negotiations that a reference to 'free and undistorted competition' as one of the EU's goals be removed from the treaties it updates. Why? Here's his take on competition:
Competition as an ideology, as a dogma, what has it done for Europe? It has only brought fewer and fewer people who vote in European elections and fewer and fewer people who believe in Europe.
A bizarre statement to be sure: competition is criticized for reducing the turnout in European elections! Perhaps he imagines we're all too busy shopping to vote or something. Still, his is hardly the sentiment of a friend of The Single Market.

So I am not optimistic about the future of The Single Market, limited and all as its success to date has been. But we can at least hope that Europe's businesses will stay one step ahead of the managerialist politicians, much like Ryanair has. Give me one Michael O'Leary to 27 Nicholas Sarkozys any time there's a decision to make affecting the welfare of Europe's consumers.

Thursday, February 14, 2008

Women are from Venus, Men are from Mullingar

I caught the Rough Magic production of Shakespeare's The Taming of the Shrew recently. It's a glorious production, with Pauline McGlynn and Owen Roe in the lead roles (as Katherina and Petruchio respectively).

The production's setting of the play in rural Ireland (circa 1960) is brilliant - and once again shows the power of Shakespeare's works to talk to us centuries after they were first penned. It also highlights some of the eternal verities of gender politics and married life.

So despite our online dating algorithms and scientific understanding of kissing, we are all of us (on the day that's in it) still confronted with the same delicious and delightful turbulence that is love, romance and, occasionally, the battle of the sexes.

Tuesday, February 12, 2008

A Toast to Our Wealth

The news this morning that Irish households have combined wealth in excess of €1trillion is good news indeed. But already there has been the inevitable carping about 'inequality' and 'affluenza'. We are all familiar with the truism that 'the rich get richer and the poor get poorer'. In other words, an increase in inequality (however measured - a debate in itself) leads to an increase in poverty. This is utter nonsense of course.

As I noted in a previous post, poverty is in decline in Ireland - not that the poverty industry is shouting about it. Yes, we have had an increase in inequality: especially between those who own a home, and those who don't. But so what? The thing that would be an affront to our moral sense of fairness would be the co-existence of extreme poverty alongside extreme wealth. But what we have in Ireland is the co-existence of materially comfortable standards of living for those on social welfare or pensions, alongside substantial material wealth for the less than 1% of the population worth over €1 million each (and a tiny handful worth a great deal more than that).

In a country like Ireland we are dealing with relativities - not absolutes. A person on social welfare is poor relative to a person earning the average wage - but they are wealthy relative to the 1 billion people around the world living on less than $1 a day. The average millionaire is poor relative to the average billionaire - and we're all poor relative to Bill Gates and Warren Buffett. But so what?

I was at a talk organised by the Friends of the LSE in Ireland last night in DCU. Professor Danny Quah was the speaker, one of the world's leading authorities on globalisation and inequality. He pointed out that globalisation has lifted more than half a billion Chinese out of grinding poverty, more than have ever been lifted out of poverty by aid or charity.

Moreover, he pointed out the extraordinary success enjoyed by Ireland over the past fifteen years or so relative to many other countries. Capitalism has been good for Ireland - so let's be grateful for our wealth and success; and let's inspire and guide others to follow in our path. To hell with the begrudgers!

Sunday, February 10, 2008

Who Will Be The Next Fritz Haber?

If I mention the name 'Thomas Malthus' you will probably have heard of him. He was the early 19th century economist who famously forecast that population would rise faster than our capacity to grow food and so our destiny was one of mass starvation.

What is less well known is that his forecast nearly came to pass at the beginning of the 20th century. Throughout the 19th century agriculture in Europe became increasingly dependent on imported, artificial sources of nitrogen fertilizer (either in mined, mineral form or as guano) to compensate for the depletion of organic nitrogen in Europe's soil as demand for food increased - thanks to industrialisation and population growth.

However, by 1900 the main sources of artificial nitrogen were rapidly approaching depletion - and many began to worry that Malthus's forecast might come to pass. The challenge was to fix nitrogen chemically from the unlimited reserves in the air, but no one was quite sure how to do this (in a way that was economically sustainable). One man figured it out precisely one hundred years ago in 1908, and his name was Fritz Haber (pictured). Haber's achievement, and his subsequent work with Carl Bosch to refine the Haber-Bosch Process, is why Malthus's forecast was postponed. For a fascinating introduction to the subject of nitrogen, food and the role of Fritz Haber see this guide from the European Fertilizer Manufacturers Association.

Today, 99% of all the artificial fertilizer in use in growing food around the world is produced using the Haber-Bosch Process. Haber's achievement should therefore not be underestimated: to put it starkly, some 5-6 billion of us would not be alive today were it not for Fritz Haber's invention. That's quite a legacy for any man (he also pioneered chemical warfare, but we'll pass over that for now).

That was then, this is now. The H-B Process is energy intensive - and 97% of nitrogen fertilizer is derived from ammonia, the production of which is highly dependent on natural gas. But while the future demand for food is set to rise inexorably as the global population increases, the future supply of energy is anything but guaranteed. For the first time it seems, energy and food prices are now moving in lock step, as reported in the Sunday Telegraph today:
The current "supercycle" is a break with history because energy and food have "converged" in price and can increasingly be switched from one use to another.

Corn can be used for ethanol in cars and power plants, for plastics, as well as in baking tortillas. Natural gas can be made into fertiliser for food output. "Peak Oil" is morphing into "Peak Food".

I have written before about the The Great Grain Robbery that is now threatening consumers with double digit food price inflation. Last week's CSO report on the Consumer Price Index for January shows flour prices in Ireland rising at 44.4% - that's TEN TIMES the overall inflation rate. Nor is this a local phenomenon: global food prices are on an unprecedented upward trend, driven in part by the rapid rise in affluence in India and China and subsequent shifts in food consumption patterns.

In the coming years we will face a dual challenge in the form of peaking supplies of fossil fuels, AND surging demand for artificial fertilizer to both feed the world as well as grow bio-fuel alternatives. So will Malthus be proved right after all? It certainly seemed that way back in 1908. Today we need another Fritz Haber to square the circle of diminishing energy supplies and rising food demand; to find an answer to the questions now facing our civilisation.

Whoever she or he is, we will all be indebted to their genius - as will our children and grandchildren. Assuming, of course, there is an answer to be found.

Saturday, February 9, 2008

Blog Cuttings 2

Nothing's better guaranteed to make you feel smug than old forecasts - check out the Usborne Book of the Future: how the year 2000 looked from the vantage point of 1979. Actually, it's delightful - and their forecasts for the 'house of the future' and 'computers in the home' weren't a million miles off.

*****

And here are some technology forecasts for 2008 from the vantage point of, er, February 2008: though I think many of the forecasts suffer from the (by now familiar) observation that technology innovation happens a lot faster than technology adoption.

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Looking a tad further ahead, two big picture energy scenarios to 2050 from Big Oil's poster child: Shell no less. Shell effectively invented the scenario forecasting technique. My money's on 'Scramble' rather than 'Blueprint' - though I'd sleep better if I thought the latter were the likelier scenario ...

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Sticking with energy, there have been a lot of calls recently for a 'proper debate' in Ireland about nuclear energy. Perhaps we don't need to as the debate has already taken place. I'm with one of the contributors who concludes that "this makes nuclear power one of those necessary, but not sufficient, components of our energy future in the near and long terms."

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If all this futures talk is making you think about your own future, then check out this excellent source of career advice on a post card (well, 21 cards to be precise). Very funny, very perceptive observations on life, work and careers (you'll LOL at no. 14): from the wonderful Jessica Hagy.

*****

Margaret Thatcher Was Right

I have to admit I am not a big fan of Margaret Thatcher (I guess I was on too many CND marches to have mellowed over the years) but it does seem she was right about one thing: women are better at managing finances than men. Though she tended to overdo the homilies about 'household budgets' and 'holding the purse strings' it seems that neuroeconomics is now verifying her insight.

A recent article in the Wall Street Journal reports on a study of male and female fund managers which found that:
... female managers traded less, were more risk-averse and were more consistent in their investment style. Interestingly, the study also found that female managers received far less new cash from investors, despite generating returns that, on average, were comparable with those of male managers.
These and other insights into neuroeconomics and finance are explored in the fascinating new book Your Money and Your Brain by Jason Zweig. He finds that our 'caveman' and 'cavewoman' brains continue to shape our daily economic lives. Which begs the question: would we be experiencing the current financial crises if we had more female central bankers, hedge fund managers and finance ministers?

The answer, it seems, is probably not.

Thursday, February 7, 2008

Where's The Rest of It?

If, like me, you are the proud owner of an Apple iMac then at some stage you'll have been asked the inevitable question: "where's the rest of it?"

It seems the Danish police recently had a similar dilemma when they went to seize the computer of a notorious blogger. Enjoy ...

Wednesday, February 6, 2008

The Drugs Policies Don't Work

Alcohol, Ecstasy, Cannabis, LSD: which is the most harmful? If you watched the recent BBC Horizon programme on the 20 most dangerous drugs then you'll know that the answer is 'A' for alcohol. Horizon was reporting on a controversial study published in the Lancet late last year.

The fact that so many illegal drugs are less harmful than the legal ones (alcohol and tobacco in the list) is depressing testimony to the stupidity of our laws on drugs. But not only are the present laws stupid, they don't work - as evidenced by the shocking increase in drug related murder and violence on our streets.

The latest crime statistics for Ireland show that:
In 2007, there were 84 Murder/ Manslaughter incidents ... an increase of 17 (25.4%) on the 2006 total of 67 such incidents. The number of recorded incidents of Murder attempts and threats rose by 61.2% over the same period, from 103 incidents in 2003 to 166 during 2007.

Incidents classified as Drugs offences rose from 3,632 in 2006, to 4,423 in 2007, an increase of 21.8%. The largest percentage increase in this category (58.5%) was in Cultivation, manufacture or importation of drugs of which there were 214 incidents in 2007.
Of course, this is a worldwide problem - mainly because of the adoption of almost universal prohibition on the same set of drugs as in Ireland. Unfortunately this global picture reflects the dominance of the United States in shaping and operating UN drug control agencies and policies. It is as if the 'prohibition impulse' didn't go away in America but instead got channeled from alcohol into cannabis, LSD, heroin etc. But the sheer cost (financial, political, social and moral) of the current 'War on Drugs' is forcing a rethink in several countries - even in the United States.

Organisations like the UK's Transform Drug Policy Foundation are working "to reduce harm and promote sustainable health and wellbeing by bringing about a just and effective system to regulate and control drugs at local, national and international levels" by "raising the debate on the prohibition, legalisation and regulation of all drugs including heroin, cocaine and cannabis." Their analyses are thoughtful, insightful and realistic - nobody is calling for overnight legalisation and to hell with the consequences.

The good news is that the best weapon we can wield in the war against drug-related crime is actually economics. Jeremy Berkoff has written a brilliant paper on The Opium Economy: A Possible Approach to Reform, in which he proposes an 'incremental approach' moving from prohibition to legalisation that would:
... focus on steadily squeezing - and ideally ultimately eliminating - the profits earned in the illicit trade. It would do this: (i) by diverting trade from illicit traffickers to (licit) public agencies; (ii) by using a form of predatory pricing that squeezed the margin available to illicit traffickers; and (iii) by maintaining - even enhancing - the costs to illicit traffickers through continued active prohibition and interdiction. Over time, as the illicit trade withered, local regulated markets in consuming countries might become feasible, in which case the public operations might - to a limited extent - give way to the private sector. As in the case of tobacco and alcohol, supply in private markets would be regulated and taxed with the general aim of suppressing demand and minimising harm. To achieve these goals, pricing would be complemented by appropriate advisory and educational measures designed to guide and educate potential and actual users.
I am convinced that the plain old price mechanism can do more to rid us of the drug barons - and the whole sub-culture of criminality that they spawn - than any promises of 'more gardai' and 'stiffer sentences'.

One definition of insanity is to 'keep on doing the same thing expecting to get a different result'. Sadly, that is where we are with our drugs policies in Ireland. And plainly the drugs policies don't work. But slowly we are acquiring the confidence for policy innovation in Ireland (rather than 'policy aping') - think of world firsts like the plastic bag tax and the smoking ban. So why not take the global lead with our drugs policies, rather than bequeathing to the next generation a dreadful legacy of further policy failures?

For the sake of our children and our country I really hope we do.

Tuesday, February 5, 2008

Heads You Win, Tails You Die

I was thinking of calling this post 'confessions of a former futurist' as I reflected on a podcast interview with Paul Saffo, Silicon Valley's futurist-in-residence. Listening to Saffo it struck me that the most important aptitude required for forecasting is humility.

In fairness, I think Saffo has this aptitude. He quotes Stuart Brand as saying that "in the past strategy was about 'ready-aim-fire', in the future it will be 'ready-fire-steer'". In other words, forget the five year plan and think about it as more of a dance with customers, competitors and markets ... or maybe it's musical chairs?

In a world divided between 'Mediocristan' and 'Extremistan' (to use the terminology coined by Nassim Nicholas Taleb) we need to think in terms of probabilities rather than certainties. Which is why I like Long Bets - using prediction markets to anticipate big changes in the future. For example, the odds on there being fewer humans in the world in 206o than there are today: 47%.

Of course, who'll survive to collect their winnings is a different matter entirely.

Sunday, February 3, 2008

Ageing Disgracefully

I was at a lecture last week in Trinity College Dublin given by Professor Robert Winston. Winston and his team in Imperial College have pioneered a number of innovations in IVF and related fertility treatments.

One of his charts related to the trend in the rising average age of mothers at birth of first child. This in turn has contributed to some of the fertility problems that Winston and others are now dealing with. His was UK data, so I was curious to establish whether we have had a similar trend in Ireland. Sure enough, as the chart from the CSO shows, we have undergone a similar demographic transformation, especially for married women. Back in the mid-1970s a married woman in Ireland was likely to have her first child about the age of 25. By early 2007 the average had risen to nearly 32 years of age.

Winston's talk was organised by TILDA - The Irish Longitudinal Study of Ageing. The TILDA initiative will play a vital part in understanding how demographic changes such as those highlighted by Professor Winston will affect Irish society in the decades to come.

Though sometimes discussions about ageing can lead to a fairly gloomy outlook in relation to health and other issues, it is reassuring to know that growing older is actually associated with increased happiness rather than the reverse! According to a recent 55 country comparison by David Blanchflower and Andrew Oswald, happiness is distributed 'U-Shape' by age: middle age is miserable, whereas youth and older age are much happier. The 'trough' in average happiness in Ireland is reached at 50.3 years precisely: a lot older than in Australia (40.2 years of age), but much younger than in France (61.9 years of age).

So maybe the Frisky Fifties really are something to look forward to (for those of us not there just yet), or indeed to celebrate once you are there. Time will tell of course ...

Saturday, February 2, 2008

Light at the End of the Beer Glass

The Competition Authority continues to live up to its reputation as one of the more sensible state quangos. Its recent submission to the Government's Alcohol Advisory Group urges the group to resist calls for the reintroduction of a ban on below-unit cost selling of alcohol or minimum prices for alcohol.

The Competition Authority draws attention to some of the same statistics I have referred to in previous posts, especially the point that alcohol consumption has been declining since the start of the decade. Their conclusions make it very plain what will go wrong if a ban is re-introduced:
Any attempt to ban below-cost selling, however one tries to define it, will simply allow breweries and wholesalers to set prices across all retail outlets. It would be a victory for the vested interests in the alcohol industry as the profits from the sale of alcohol would be given special protective status under the law. Protected margins encourage greater sales promotions via advertising and other non-price competitive tools. Making the sale of alcohol more profitable is not a good way of discouraging its consumption.
Let's hope that, for once, reason rather than emotion will shape our national policy on alcohol when the Advisory Group submits its report.

Friday, February 1, 2008

It's Getting Bumpy

This is the moment in the flight when the voice announces that "we're experiencing a little turbulence so please remain seated and fasten your safety belt". Falling consumer confidence, falling house prices and rising unemployment are sure signs that it's going to get bumpy for Irish marketers in 2008.

Nevertheless, the Central Bank points out in its Quarterly Economic Commentary published today that consumer spending is forecast to rise from €90.6 billion last year to €96.5 billion this year. That's nearly €6 billion of extra spending. Hardly a message of doom and gloom.

So maybe we need to take Samuel Brittan's advice and 'buck up'; whilst also buckling up for the bumpy bits ahead.
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