Tuesday, January 29, 2013


Quote of the day from Gregor Macdonald:
The combination of robots and cheap electricity could well unleash a new phase of profitability for corporations – and, of course, the owners of the means of production. What’s less likely, however, is that any such revolution is sustainable. 
Because unlike the Industrial Revolution, which added powerful BTUs in the form of coal to augment human labor, thus creating a tidal wave of profits and increased wages, a robot revolution promises to furnish the world with stuff at the expense of human employment. 
Many thinkers currently writing on this subject believe that a labor force deprived even further of purchasing power, yet given greater access to cheap goods, will wind up richer on the whole. I won’t say that’s wrong, but I will say it seems unlikely.
Chris Martenson has a great interview with Gregor here.

Monday, January 28, 2013

Behavioural Immigration

An interesting one this - from The Guardian no less - on how the British Government are planning to dissuade Romanians and Bulgarians from moving en masse to the UK next year when the curbs imposed in 2005 are lifted.

It seems they'll be using plain old 'anti-marketing' to get their message across:

Please don't come to Britain – it rains and the jobs are scarce and low-paid. Ministers are considering launching a negative advertising campaign in Bulgaria and Romania to persuade potential immigrants to stay away from the UK. 
The plan, which would focus on the downsides of British life, is one of a range of potential measures to stem immigration to Britain next year when curbs imposed on both country's citizens living and working in the UK will expire.
It might work better if they got the Behavioural Insights Team on the case?

Meanwhile in Ireland (since the same timescale applies) we will undoubtedly rely on the reports of the EU-IMF financial assistance programme to do the trick...

ht Marginal Revolution

Saturday, January 26, 2013

Lightly Along the Ledge

Like the proverbial bus, long awaited, I received not one but three different reports this week on the theme of risk and the challenges ahead. The first is the WEF's annual Global Risks report. It looks ahead to the likelihood of various risks manifesting themselves, and their impact should they happen.

The report provides a handy chart showing the consensus view on each risk across economic, environmental, geopolitical, social and technological categories:

The worrying thing - for the risk averse among us - is that WEF see the majority of these risks becoming more likely (and more impactful), rather than less, versus their views in 2012.

However, they have a very handy special report on how nations can build resilience to global risks across the five components of resilience, namely: robustness, redundancy and resourcefulness, as well as response and recovery. WEF have even produced a measure of Risk Management Effectiveness Score for 139 countries in 2013. Ireland ranks number 65 in the world in terms of our risk preparedness - not quite as good as Ethiopia but better than Burkina Faso. I think we need to do a bit more work on our national resilience...

The good news is that 'we' (i.e.: humanity) is getting better at anticipating risks - especially disasters. That's according to the second of our three reports, from the UK's excellent Foresight organisation. Simply called Reducing the Risk of Potential Disasters, the study contains the reassuring news that our ability to predict various disasters will likely improve in the future, though not uniformly as illustrated below:

But the story is less positive for 'man made' disasters, especially of the social and economic kind. Which brings us to the third report, Tullet Prebon's Perfect Storm: Energy, Finance and the End of Growth. It's a  cheery little essay alright. Unlike the first two reports, Perfect Storm assumes that the biggest risks are already 'baked in' to the future. It's a superbly well written report - and beautifully illustrated with photographs of the ruins of previous civilisations just to emphasise the message - and, it must be said, a pretty convincing thesis as well.

The author - Tim Morgan - identifies four key trends now shaping up to make the future very bumpy indeed. These are a global credit bubble, globalisation which enabled the bubble, mis-leading official statistics about growth and debt, and finally the end of cheap energy. The last one is crucial, according to Morgan we are entering the age of low EROEI, i.e.: energy return on energy invested:

There is also a crucial connection between money and energy:
The appreciation of the true nature of money as a tokenisation of energy also enables us to put debt into its proper context. Fundamentally, debt can be defined as ‘a claim on future money’. However, since we have seen that money is a tokenisation of energy, it becomes apparent that debt really amounts to ‘a claim on future energy’. Our ability, or otherwise, to meet existing debt commitments depends upon whether the real (energy) economy of the future will be big enough to make this possible. 
Therefore, the viability (or otherwise) of today’s massively-indebted economies depends upon the outlook for energy supply. If one chooses to believe that the exponential expansion in energy use that has powered the growth of the economy (and the global population) since the dawn of the industrial age can continue into the future, debts may be serviceable and repayable out of the economic (for which read ‘energy’) enlargement of the future. If such enlargement cannot be relied upon, however, then the debt burden can only be regarded as unsustainable.
All the more reason, perhaps, why we need to get working on our national resilience.

Monday, January 21, 2013

Robots Don't Buy Cars

Kevin Kelly is worried. His answer to Edge's 2013 question - what should we be worried about? - is: the under-population bomb. That's right: forget the earth over-shooting it's carrying capacity - it looks like we're in for a long undershoot instead. But while that might mean good news for the earth's ecology, it might not be so good for the earth's economy. Here's Kelly:
A lower global population is something that many folks would celebrate. The reason it is scary is that the low will keep getting lower. All around the world the fertility rate is dropping below replacement level country by country so that globally there will soon be an un-sustaining population. With negative population growth each generation produces fewer offspring, who producer fewer still, till there are none. Right now Japan's population is way below replacement level, as is most of Europe, Eastern Europe, Russia, the Former Soviet Republics, and some Asia countries. It goes further; Japan, Germany and Ukraine have absolute population decline; they are already experiencing the underpopulation bomb.
Slate covered the issue recently: quoting one set of forecasts that estimate a halving of the global human population by 2200. And it's all down to... no one particular thing. Slate says the education of women, others say better contraception and still others point to urbanisation. The recent documentary - Demographic Winter - illustrates just how complex the various factors are - and how difficult is any answer to the problems that arise:

While a falling population can be a good thing in the short run (on a per capita basis, the economic cake gets divided among fewer people), it's not that sustainable in the long run. In fact, we've never had to deal with anything like this before - here's Kelly again:
Here is the challenge: this is a world where every year there is a smaller audience than the year before, a smaller market for your goods or services, fewer workers to choose from, and a ballooning elder population that must be cared for. We've never seen this in modern times; our progress has always paralleled rising populations, bigger audiences, larger markets and bigger pools of workers. It is hard to see how a declining yet aging population functions as an engine for increasing the standard of living every year. To do so would require a completely different economic system, one that we are not prepared for at all right now.
We can see some pointers to this already, in Japan for example, and in Germany. Note the gradual, long run decline in car sales in Germany, despite a better economic performance than most. Robots can build cars, but they don't buy them. Here in Ireland we're still some way away from the demographic cliff facing parts of central and Eastern Europe, but deferred gratification will eventually work its effects here too. 

Robots don't pay taxes either, come to think of it.

Mad Map

Via The Big Picture:

Explains a lot...

Friday, January 18, 2013

Wednesday, January 16, 2013

Spontaneous Recovery

Hireland.ie is one year old today. In the past twelve months Hireland has inspired over 1,400 Irish companies to pledge over 6,000 jobs: the vast majority of which have been filled.

Hireland illustrates the Hayekian concept of spontaneous order; of how economic growth and job creation emerge from the private decisions of many individuals, resulting in rich and complex economies and societies. Hireland's job is simply to nudge those individuals sitting on the 'emergent fence', so that we can get to a 'spontaneous recovery' sooner rather than later.

The 2013 campaign kicks off this week - it's going to be even bigger and better than last year:

Monday, January 14, 2013

Behind Bars

I've noted Ireland's contrarian policy before when it comes to gold. Our Central Bank apparently doesn't believe in holding on to the 'barbarous relic' in any great quantities at all at all.

According to the latest World Gold Council report on official reserves of gold, Ireland has 6 tonnes of gold in reserve, equivalent to 19.3% of all foreign reserves. That compares to 73.5% in Germany, 72.8% in Italy and 71.2% in France. The eurozone average, by the way, is 64.2%. Funnily enough, we're closer to the UK reserves ratio - they're at 16.2%.

And that's where it gets interesting: because apparently our reserves are 'stored' alongside their reserves. Or maybe not. According to Goldcore, the Central Bank of Ireland won't say where its our gold is stored, nor whether they've been loaned or leased out into the market.

Maybe we should send one of our public interest directors to have a snoop around the Bank of England on our behalf?

Friday, January 11, 2013

Handling the Truth

Quote of the day from Tim Morgan:
Yet the facts are simple enough. Britain and the US are much poorer than they were. In fact, since the pre-2008 “boom” was actually borrowing masquerading as “growth”, it’s truer to say that they are poorer than they thought they were. These are borrowing-junkie economies, incapable of growth in the absence of continuous debt fixes. Take away even half of the deficit (which is what the fiscal cliff really amounted to) and you plunge the US into recession. Cut just £3bn from a £200bn benefits bill are you are accused of heartlessness. Where is the reality in any of this? 
It would be all too easy to dismiss British and American politicians (of all persuasions) as being blissfully ignorant of the economic realities. In fact, I suspect that some may be all too well aware that they are presiding over failed systems for which the only question is “when”, not “what”. Their last refuge, it seems to me, is to put off the evil day for as long as they can.
Meanwhile here in Ireland we'll borrow €1 billion a month this year; a sign of austerity, apparently. Maybe our politicians need to be more honest with us?

Thursday, January 10, 2013

Losing Our Mojo?

The latest Eurobarometer survey on Entrepreneurship in Europe suggests that there's a 'retreat to safety' on the part of Irish workers - the vast majority would rather be employees than self-employed:

We're hardly alone - the report shows that the same trend is evident (and sometimes more pronounced) in other EU countries (and even in the United States).

It's hardly a surprise - like I've said before, entrepreneurship can put your family's wellbeing at risk. So it's no wonder that hundreds of millions of people across Europe and the developed world prefer to let others take the risk while they keep taking the paycheck (while it lasts). We Irish might be losing our mojo - but so it seems is everyone else.

Though here's an interesting thought: what if they gave a recovery and nobody came? Can we have a low/no start-up recovery? Looks like we'll soon find out.

Wednesday, January 9, 2013

The Facts of Tax

I snapped this at my local petrol station:

I think it's interesting that a business has taken to educating its customers about the facts of tax. Tax has replaced sex as the taboo subject in Ireland, i.e.: something everybody knows about but are embarrassed to discuss in public.

David Quinn recently pointed out that the Irish media are obsessed with spending cuts and practically indifferent to tax increases:
For example, the big controversy after last month's budget wasn't the property tax but the cut to the respite care grant. 
In other words, it was ordained that what really concerned the average person wasn't the fact that they are about to be hit with a big new tax, but a cut to a particular item of spending. This reflects the view that public spending and tax increases are basically good things in themselves. As mentioned, Fine Gael in power is trying to resist increases to income tax. However, what we rarely hear from Fine Gael – or anyone else – is the moral case for lower taxes. 
As a result of this near silence, what we hear incessantly instead is the moral case for public spending. 
This case is easy to make; public spending helps the poor and the vulnerable, the sick and the elderly. 
It allows us to educate our children. Any cut to public spending is therefore an attack on all these categories. Higher taxes allow us to help them even more. 
The first argument against high taxes is obviously the pragmatic one that if you remove from people too much of what they earn you remove the incentive to get ahead and that harms the economy for everyone.
As a result of the focus on cuts rather than taxes, we have extraordinarily high levels of spending on social welfare and health that are somehow taken as inevitable. But as Donal DeBuitleir recently illustrated, we have one of the youngest, healthiest populations in Europe and yet our spending on health services relative to GNP is easily the highest in the EU. Something's not quite right...

Perhaps when the bill for the property tax lands on the nation's doormats we'll see more debate about the facts of tax - though I don't expect any of our politicians to lead the discussion.

Monday, January 7, 2013

End of History...

... Illusion. Yet another cognitive bias to add to the lexicon. According to Daniel Gilbert:
"Middle-aged people — like me — often look back on our teenage selves with some mixture of amusement and chagrin. What we never seem to realize is that our future selves will look back and think the very same thing about us. At every age we think we’re having the last laugh, and at every age we’re wrong."
It's a fascinating article, which argues that we tend to admit to lots of change in our past, but to assume lots of continuity in our the future. The implications are pretty serious when you think about it. Sure, the authors reference decisions about tattoos and marriage that maybe don't turn out to be so smart in hindsight. But there's a bigger story here, namely: democracy.

Every four to five years we put numbers in boxes opposite party logos and candidate pictures in expectation of what exactly? Probably that the things that are important to each of us now will continue to be important to us in 4-5 years time. And we're probably wrong.

But it isn't just the politicians who are prone to short-term thinking (though Eoin O'Malley has some clever ideas for mitigating at least some of the tendency), we the voters are equally short-term in our thinking. I doubt many fifty-somethings (and I know a few) are really all that vexed about pre-school child-minding facilities nor about the services available in their local retirement home. But they probably were once about the former, and they probably will be eventually about the latter.

Still, maybe a radically different future will put paid to our End of History Illusions...

ht BBC Future

Related Posts Plugin for WordPress, Blogger...