October 23, 2011

Part 2: Sharing the Wealth. Of Knowledge.

"Us" is the western, industrialized world. "Them" is the developing world. People in the industrialized countries grow up in small families and enjoy long lives. Developing countries? They grow up in large families and have short lives. Why the difference? And what can be done about it?

The rich are getting richer, and the poor are getting poorer. What is the relationship between the richest nations on earth and the poorest ones? Do we know the truth? Does education, investment, and free trade make any difference? What is the answer to this question?

Before we can answer any important questions, we need to know what is the truth, what the data tells us. Because the better our understanding, the better the questions we can ask. And the better the questions we ask, the better the answers we can have.

If you haven't explored the world of TED Talks yet, you've been living in a cave. Hans Rosling, Swedish scientist with the Karolinska Institute, is an unlikely candidate for myth-busting, data-liberating, knowledge-sharing hero. He's the founder of Gapminder, a nonprofit organization that seeks to make information accessible to ordinary people. Their mandate is to share the wealth. Of knowledge. Because that is what will propel the world forward in the Information Age.

Rosling has enthusiastically taken on the biggest challenge of our time, providing nothing short of brilliance in the service of worldwide progress. In the video, he explores three topics. 1. Income and family size differences in developed and developing countries. 2. World income distribution and its relationship to development and health. And 3. Data collection and the sharing of that information, and its role in solving the problems we face today in the world.

His enthusiasm is infectious. Watch at 4:20 to see it. Again, at 15:00. "Why are we not using the data we have?" he asks. "We have data in the United Nations, the national statistical agencies, and in universities and in other nongovenmental organizations. ....The data is hidden, down in the databases. ...... the internet is there, but we have still not used it effectively."

He implores us to think. Indeed, there are websites that upload some of the data that has been collected, "but people put prices on them, stupid passwords, and boring statistics." Brilliant!

So what is needed? "A search function, where we can copy the data up to searchable format, and get it out in the world."

And what do we hear? "Everyone says its impossible, this can't be done.....we can't give the information free to the students, free to the entrepreneurs of the world. But this is what we would like to see."

Liberate the world's information, share the knowledge, and enable the capture of the tremendous value that such freedom of information generates. Please enjoy the next 20 minutes of enlightenment.

Share the Wealth. Of Knowledge.

October 22, 2011

Part 1: Perceptions Versus Reality: Asking the Questions.

Ever looked for something you've misplaced? Sure you have. But you didn't look too hard because you thought it was probably somewhere else? Then you went somewhere else to look for it. But, it wasn't there either, so you returned to the first place you looked, and looked again? And it wasn't there either, was it? C'mon, admit it: We didn't expect to find it. And so we didn't.

Our perception of the truth is often tainted by what we think is true. What we believe to be true can sometimes be very different from what is actually true. For example, what do you know about conditions in developing economies? Let's take a test about a gruesome statistic, shall we?

Which country has the higher child mortality rate, Sri Lanka or Turkey? Think about it. Then make a choice.

Did you pick one? Think you're right?
Here is the truth: Sri Lanka vs Turkey

Which country has the higher child mortality rate, Poland or South Korea? Make your choice.
The truth: Poland vs South Korea

Which country has the higher child mortality rate, Malaysia or Russia? Decide now.
The truth: Malaysia vs Russia

Which country has the higher child mortality rate, Pakistan or Vietnam? Surprised yet?
The truth: Pakistan vs Vietnam

One more. Thailand or South Africa? You think you know?
The truth: Thailand vs South Africa

So how did you do? Genius or Chimpanzee?

Solving problems often means that we need to see the problem as it really is, not as we perceive it to be. Our perceptions mislead us. We're all guilty of allowing our expectations to guide our actions, when, in fact, the logic of the reality would suggest a completely different course of action. Small problems (misplaced keys) and large problems (global economy) both suffer from this effect. Human nature.

Next time, more answers. Bigger questions.

October 21, 2011

Waiting for Seasons in Vancouver

We're all waiting for autumn to arrive. Usually this season happens after summer. However, this is the year Vancouver almost didn't have summer. The year without summer. Well, almost . Summer in Vancouver arrived August 20th, the day after I left on vacation to a hot, sunny place. A summer place. Cue the theme.

Each year summer bakes Alberta, Saskatchewan, Manitoba. Long. Hot. Sunny skies. Beautiful! And points east. They do summer too.

The rest of Canada also does winter. Vancouver doesn't do winter. Long. Cold. Sunny skies. Beautiful! You have to experience it to understand. Once is enough.

The Inuit are said to have over 100 words for snow. Vancouverites have almost as many for rain. Is it raining now? Yes, it's sprinkling. Nothing to do with the lawn. Drizzle, downpour, deluge. At least you don't have to shovel it.

The English language has quite a few words for snow too. Most of them are spelled with the letters found on the top row of the keyboard.

Snow wreaks havoc on the roads in Vancouver. Everyone fears when the tlapripta falls, creating tlayopi, until eventually maxtla covers the entire city. Everyone here knows Vancouver doesn't get tla.

Reserve me a spot under the palm tree this winter. Aloha! Palm tree in the wind
Photo courtesy of 4nitsirk under Creative Commons

October 17, 2011

Income. Equality. Income Equality.

We all saw the marches on TV, but did everyone understand the “why” behind the marching? I must confess that I really didn’t pay much attention to the reports in the media, and didn’t worry much about the fact that I hadn’t planned on attending any of the rallies, even though Occupy Vancouver had a nice ring to it. Wow, could we really do something as big and as authoritative as to Occupy Vancouver? Impressive.

The issues are important. Very important, in fact. No doubt about that. But can we go back to the beginning? The issues actually stem from events which began in the last century. Yes, that far back. Who suspected?

During the 1980's and 1990's, the economy was chugging along quite effectively. There were a few minor issues, such as a surprise stock market meltdown in 1987. Click to enlarge.

Computer program trading was the culprit. Think of it as a buying opportunity. Many did.

A touch of inflation appeared in the late 1970s , early 1980's. But the Governor of the Bank of Canada saw to it that the inflation threat was taken care of pronto. Interest rates promptly rose to plus 20%. And you know that loan and mortgage rates build from the Bank of Canada rate. BOC Rates Check out August 1981. Put that in your mortgage payment calculator!

The high interest rate certainly killed the inflation. Unfortunately, it killed the economy too. But, then again, that’s how you kill inflation. After that, the economy rebounded and actually did reasonably well, and people made quite a bit of money. Lots of it, if you’re the kind of person who’s inclined to count. By the end of the 1980's, the economy was sizzling hot, and of course, time for the Bank of Canada to pour water on our economic dreams again. Cue the high interest rates! Of course, not as high as 1981, but high enough to kill the inflation threat again. And kill the economy, too. Rinse and repeat. You kind of get the idea.

But, we raised ourselves out of the early 1990s quagmire of economic malaise, and soon, we were making lots of money again. Life was good. Quick question for you: Who made money? Answer: That would be the baby boomers . They made all the money. Not that they didn’t deserve it, they did. They worked hard at the retail shops and auto plants and financial institutions. They even made a movie about that part of it. Remember Wall Street with Michael Douglas? Those were the good old days.

But the 1990s had a few scares, to be sure. Inflation reared its head and interest rates popped briefly in 1994 and 1996, and in 1998 the Asian Financial Crisis hit the Asian Tigers. Hit us too. Setbacks for the economy again, but nothing to worry about. Really. Nothing. The emergence of the computer sector as a major growth factor worldwide contributed greatly to the economic prosperity Canadians experienced through the mid-to-late 1990s. Shareholders made a lot of money on Microsoft, RIM, Nortel, and others. Until the Dot.com stock market crash in 2001, that is. Made a lot, lost a lot. Get ready for the next bubble.

New Century. New hope. In 2001, Canadian airports invited orphaned 9-11 passenger planes to land on our soil, the United States went to war, and plane travel changed forever. The U.S. had a brief recession in 2001, but Canada skated through this one pretty much unscathed. Three cheers for the good guys! That’s us.

World economic growth accelerated into the middle of the new decade. Nearly everyone in the world got to participate this time: people in China, India, Brazil, Iceland, Ireland, to name a few. And sadly, a few countries, mostly African, mostly war-related, went backwards economically. A lot of people made a lot of money. And I do mean a lot.

And that’s the problem. Here’s a view of incomes of the countries of the world. You’ll notice it’s pretty skewed. That means some have a lot, and some have very little.

If you’re not convinced, here’s another image. Now, let me ask you: Who can see to take care of their goats at night, and who cannot?

The National Bureau of Economic Research (NBER) measures economic activity in the U.S. The U.S. economy reached a peak in December 2007 and shortly thereafter slid headlong into recession. The Great Recession. Wow! Who saw that coming?

In July 2007, bond rater Standard and Poor's placed 612 subprime-backed securities on credit watch. Later that month, ex-solvent investment bank Bear Stearns liquidated two hedge funds that held mortgage-backed securities. And the Federal Open Market Committee (FOMC) issued a warning on August 17, 2007 about the financial market turmoil: Indeed, they believed that the “downside risks to growth have increased appreciably.” Funny, they all suspected it by early 2007, long before the U.S. economy peaked. Here’s the exact date all the little people figured it out too.

That’s really what people are marching about. The imbalance of advantage/disadvantage that has developed over the last few decades of our generations. The protest took a long time to get a head of steam. For a while, it seemed that everybody was getting richer, even the poor. But we know now that the rich were in a much better position to take advantage of the opportunities that each economic setback provided. For a while, no-one seemed to care that the rich got the lion’s share each time. It didn’t seem to matter. Maybe next time, its our turn. OK. I ran the treadmill as hard as I could, the good little hamster that I am. I fretted that somehow I didn’t exploit the opportunities that came my way as well as I should have. And now? Someone finally cares. Someone finally cares to speak up.

September 26, 2011

Live. Life. Full. Your Way.

Everybody wants their first blog post to be epic. It almost certainly is not. My first one contains some interesting ideas, but nothing epic here either. So take from it what you wish. It doesn't matter much to me. Here's what you need to know about me. I'm an economist. I’ve studied and practised it for a long time now, and I have come to believe in the magic. I even teach it. From that background, you might expect a pro-business perspective at this blog, a free market free-for-all, if you wish. And you’d be quite wrong, because I don’t believe the market always gets it right. Not everything can be bought and sold in a free market, with the price determined solely by supply and demand.

Along the way I've discovered that the economy is for people -- all kinds of people, from rich to poor. From us to them, and everyone in between. It can't be any other way, and endure. I also understand that wealth conveys economic power, and with that economic power comes political power and the ability to set the rules of the game. You can be sure I fully comprehend how intensely compelling it is to implement rules that favour oneself. It’s endemic; remember the kid who owns the bat and ball never strikes out.

With all the economic, political, social, and human distress occurring today in our world, some things indeed are very important, and some things are not important at all. Not globally, not personally. In my posts, I will eventually work my way through most of the really important stuff, some of the less important stuff, and hopefully none of the useless stuff, which abounds. But not today. Today’s post is for me. Or for you too, if you like it. For me it will be the post I’ll look at when I need a boost. It will be the one I search out when I get bogged down in mundane matters and need some inspiration. It’s the post that will remind me to keep working, moving, playing, laughing, jumping. It’s the post I’ll come back to when I forget to breathe.

In the language of today’s motivational speakers, you need to find your passion and follow it. Every day of your life. In other words, live your life. Yours. Like these guys live theirs. I love their energy. You don't have to risk your life to be alive, but you do need to do what makes you feel life. It’s a pretty simple message. Live. Life. Full. Your way. So, like I said before, there's nothing new here. Nothing epic. Move along, please move along.......and don’t forget to breathe.

nope, that's me again.