Why Old Media and Tom Cruise Should Worry About Cheaper Technology
Hal R. Varian
I occasionally give talks to “old media” executives where I am expected to say something provocative about “new media.” Here is what I have been saying for the last few years: “You have spent a lot of time worrying about piracy, but the biggest threat you face is the falling cost of producing and distributing digital content.”
None of the executives took this claim seriously years ago, but since blogs and video posting sites have become popular, media executives are starting to look worried. A few months ago, one of them offered a rebuttal: “The cost of making movies isn’t going down; stars’ salaries are exploding.”
The next time I was being provocative, I was careful to add, “It’s true that Tom Cruise’s salary keeps going up, but that’s just an economic rent, not a real cost.” Boy, was that a bad idea. The conversation subsequently degenerated into a discussion of whether it was actually possible to rent Mr. Cruise’s services...
I had committed the cardinal sin of using economics jargon. But economic rent is such a useful and important concept that it is sometimes hard to avoid.
David Ricardo, who lived from 1772 to 1823, developed the theory of economic rent in his essays opposing the 19th-century English Corn Laws. These were tariffs ostensibly intended to protect British farmers from cheap foreign grain. Ricardo observed that the tariffs had two effects: the obvious effect of raising the price of grain and the more subtle effect of pushing up the rent of land suitable for growing grain.
From the viewpoint of an individual tenant farmer, the rent he paid to the aristocratic landlord was a cost of production. But for the system as a whole, the land rent did not really determine the price of grain. It was the other way around: the price of grain determined land rent. So the real beneficiaries of the Corn Laws were not the tenant farmers, but the aristocrats who owned the land.
And so it is with Mr. Cruise. His salary, as that of other Hollywood stars, depends on the fact that large numbers of people will pay to see his movies. If, in the future, these people spend more time on YouTube and less time going to movies, Mr. Cruise’s compensation will probably fall. ...
From the viewpoint of the media executive, Mr. Cruise’s salary was definitely a cost: it was the stars’ salaries that contributed to making movies expensive. So what if software for editing video has been getting a lot cheaper? That’s a trivial part of production costs.
But amateur filmmakers don’t pay star salaries. From their point of view, cheaper editing software and cheaper broadband means that it is much easier to produce “garage video.”
So as technology advances and costs go down, a lot more amateur video will be produced. Economic rent comes from scarcity. It is true that there is only one Tom Cruise, but it is equally true that there are only 24 hours in a day. The more time young people spend watching Lonelygirl15, the less time they will have to watch Mr. Cruise.
I don’t think that the age of the megastar is over. Quite the contrary, there will still be big-budget movies, and stars with drawing power will still command high salaries.
But, at the same time, I believe that there will be a flowering of creative, inexpensive and compelling semiprofessional content available via the Internet. This content will occupy more and more of people’s attention, particularly young people.
What gets squeezed is the middle. Those actors, writers and directors who do not command the big audiences may well find it hard to compete for attention with the video blogs. True, the videos available there are often sophomoric. But there will always be sophomores to watch them. ...
Advances in printing and binding technology led to cheaper books, which, in turn, meant more demand for authors. Only a small fraction of these authors became rich and successful, but readers benefited tremendously from the increased variety of books. Today, we are seeing the same story play out for digital content. It is a great time to be a video fan.
Hal R. Varian
I occasionally give talks to “old media” executives where I am expected to say something provocative about “new media.” Here is what I have been saying for the last few years: “You have spent a lot of time worrying about piracy, but the biggest threat you face is the falling cost of producing and distributing digital content.”
None of the executives took this claim seriously years ago, but since blogs and video posting sites have become popular, media executives are starting to look worried. A few months ago, one of them offered a rebuttal: “The cost of making movies isn’t going down; stars’ salaries are exploding.”
The next time I was being provocative, I was careful to add, “It’s true that Tom Cruise’s salary keeps going up, but that’s just an economic rent, not a real cost.” Boy, was that a bad idea. The conversation subsequently degenerated into a discussion of whether it was actually possible to rent Mr. Cruise’s services...
I had committed the cardinal sin of using economics jargon. But economic rent is such a useful and important concept that it is sometimes hard to avoid.
David Ricardo, who lived from 1772 to 1823, developed the theory of economic rent in his essays opposing the 19th-century English Corn Laws. These were tariffs ostensibly intended to protect British farmers from cheap foreign grain. Ricardo observed that the tariffs had two effects: the obvious effect of raising the price of grain and the more subtle effect of pushing up the rent of land suitable for growing grain.
From the viewpoint of an individual tenant farmer, the rent he paid to the aristocratic landlord was a cost of production. But for the system as a whole, the land rent did not really determine the price of grain. It was the other way around: the price of grain determined land rent. So the real beneficiaries of the Corn Laws were not the tenant farmers, but the aristocrats who owned the land.
And so it is with Mr. Cruise. His salary, as that of other Hollywood stars, depends on the fact that large numbers of people will pay to see his movies. If, in the future, these people spend more time on YouTube and less time going to movies, Mr. Cruise’s compensation will probably fall. ...
From the viewpoint of the media executive, Mr. Cruise’s salary was definitely a cost: it was the stars’ salaries that contributed to making movies expensive. So what if software for editing video has been getting a lot cheaper? That’s a trivial part of production costs.
But amateur filmmakers don’t pay star salaries. From their point of view, cheaper editing software and cheaper broadband means that it is much easier to produce “garage video.”
So as technology advances and costs go down, a lot more amateur video will be produced. Economic rent comes from scarcity. It is true that there is only one Tom Cruise, but it is equally true that there are only 24 hours in a day. The more time young people spend watching Lonelygirl15, the less time they will have to watch Mr. Cruise.
I don’t think that the age of the megastar is over. Quite the contrary, there will still be big-budget movies, and stars with drawing power will still command high salaries.
But, at the same time, I believe that there will be a flowering of creative, inexpensive and compelling semiprofessional content available via the Internet. This content will occupy more and more of people’s attention, particularly young people.
What gets squeezed is the middle. Those actors, writers and directors who do not command the big audiences may well find it hard to compete for attention with the video blogs. True, the videos available there are often sophomoric. But there will always be sophomores to watch them. ...
Advances in printing and binding technology led to cheaper books, which, in turn, meant more demand for authors. Only a small fraction of these authors became rich and successful, but readers benefited tremendously from the increased variety of books. Today, we are seeing the same story play out for digital content. It is a great time to be a video fan.
par Pancho Villa
publié dans :
Hal Varian
Many Theories on Income Inequality, but One Answer Lies in Just a Few Places
by Hal Varian
It is widely recognized that income inequality increased in the 1990’s, but nobody knows quite why. Despite the lack of hard evidence, there are plenty of theories.
One says the culprit was declining unionization. Another ties it to immigration and outsourcing. A third theory is that the demand for high-level cognitive skills has increased, while other explanations range from changes in executive compensation to the lack of policy initiatives directed toward the working poor.
All these factors may have contributed..., but there is little solid evidence about their relative importance. Two University of Texas researchers, James K. Galbraith and Travis Hale, added an interesting twist to this debate in a paper, “Income Distribution and the Information Technology Bubble.”
According to Mr. Galbraith and Mr. Hale, much of the increase in income inequality in the late 1990’s resulted from large income changes in just a handful of locations around the country — precisely those areas that were heavily involved in the information technology boom.
Their study used data on average income and population by county available from the Bureau of Economic Analysis... The authors compute a measure of inequality known as the Theil index... They present their results in two ways. The most visually arresting is an animated map ..., which shows how per capita income by county has changed over time. The other depiction is a simple plot of the Theil index from 1990 to 2000. ...
A big advantage of looking at county data is that it is possible to identify counties that contributed the most to the increase in income inequality from 1994 to 2000. It turns out that the five biggest winners in this period were New York; King County, Wash. (with both Seattle and Redmond); and Santa Clara, San Mateo and San Francisco, Calif., the counties that make up Silicon Valley. The five biggest losers were Los Angeles; Queens; Honolulu; Broward, Fla.; and Cuyahoga, Ohio.
What do the counties in the first list have in common? Their economies were all heavily driven by information technology in the late 90’s. ... The implication is that the income gains of the 1990’s associated with the technology bubble not only accrued to a relatively small number of people but also occurred in a relatively small number of geographic areas.
To drive this point home, the authors asked what would have happened to the index if just 4 of the 3,100 counties in the United States exhibited average income growth in the technology boom years. The four are Santa Clara, San Mateo, San Francisco (all associated with Silicon Valley) and King County, Wash. (home of Microsoft).
Note the remarkable difference... If the per capita income in just these four counties had grown at the same rate as the average in the United States, income inequality across counties would have changed little in the late 1990’s. In other words, only four counties drove most of the change across the 3,100 counties.
The findings by Mr. Galbraith and Mr. Hale offer something to all sides in the debate. Perhaps options grants and initial public stock offerings had a lot to do with income inequality. Changing compensation patterns for technology-related skills could also be significant.
But the biggest point that I take away is a simple one: there’s no substitute for being in the right place at the right time.
par Pancho Villa
publié dans :
Hal Varian
par Pancho Villa
publié dans :
Hal Varian
The Rapidly Changing Signs at the Gas Station Show Markets at Work
The recent gyrations in oil prices offer a textbook illustration of how financial markets and commodity markets interact. Oil prices are notoriously volatile, particularly when times are tense in oil-producing countries -- just about all the time these days. So when BP announced this month that it might have to suspend as much as 8 percent of the nation's oil production because of corrosion in pipes on the North Slope of Alaska, the price of crude oil immediately shot up by 3 percent and wholesale gasoline prices simultaneously increased by about 2 percent.
But why? Even if it will cost more to produce gasoline in the future, gasoline being sold today was made with cheaper oil. This must be a rip-off, right? Actually, no. The reason behind the quick price change is a phenomenon known as storage arbitrage.
To spell out the argument, imagine that you own a storage tank full of gasoline that is currently worth $2 a gallon at wholesale prices. It is widely believed, however, that the price of gasoline will be $2.10 next week. You would be crazy to sell your gasoline now: just wait a few days and the higher price will be yours. But if everyone waits a few days, there is no gasoline to be sold now and the resulting shortage pushes the price of gasoline up. How high does it have to go? The answer is $2.10 a gallon. That is the price necessary to induce those who have gasoline to sell it now rather than to wait till next week.
This argument does not depend on whether you think the gasoline market is a paragon of perfect competition or an evil oligopoly. All it requires is that you believe that people who own gasoline, like just about everybody with something to sell, prefer to receive a higher price rather than a lower price. Even if the price of gasoline were set by a perfectly benevolent conservationist, we would expect to see the same pattern of price movements. If oil will be scarcer in the future because of the BP pipeline shutdown, we would want to conserve the already-produced gasoline that we have now. That means that the price of gasoline has to rise right away to prevent hoarding and to encourage conservation.
Storage arbitrage arguments were featured in a recent article in the Sunday Business section of The New York Times with the headline "Is a Futures Stampede Keeping Oil Prices High?%" The article described a provocative report written by Ben P. Dell, an analyst at Sanford C. Bernstein & Company, that blamed speculation in oil futures markets for high oil prices. Mr. Dell's argument was that inexperienced institutional investors had been investing in contracts for future delivery of oil, driving up futures prices. If the price of oil to be delivered in the future goes up, it has to pull the current spot price up as well....
Milton Friedman argued that speculation normally helps to stabilize prices rather than destabilize them.... If speculative trading tends to push prices higher when they are already high and lower when they are already low, then traders must be buying high and selling low. That would mean that traders have to lose money on average.... To the contrary, speculative traders try to buy low and sell high, activities that by their nature tend to push prices up when they are too low and down when they are too high.... If speculators start to worry that the price of oil could soon be significantly lower, some of that stored oil would come back on the market, pushing spot prices down, and offering welcome relief to consumers.
par Pancho Villa
publié dans :
Hal Varian
Superbe approche 'pedagogique' de la part de Mark Thoma qui decrit un dialogue fictif base sur le texte de Hal Varian (The Global Interest Rate Dance, With Bernanke Leading) apparu dans le NYT...
Hal Varian, what do you do for fun? Now that the World Cup and the Tour de France are behind us, the most exciting global spectator sport is watching Ben S. Bernanke. Yeah, we have a pool going at work on the outcome of the next meeting. We're all pretty excited. What questions are you most interested in? Will he raise interest rates in August or not? And what does his decision mean for world financial markets? Good questions. We've heard a lot about the domestic consequences of tighter policy, but not as much about the effects on the dollar and trade flows. Suppose the Fed does raise rates, what happens? When the Fed raises interest rates, global investors find dollar-denominated investments more attractive. This increased demand for American assets tends to raise the value of the dollar. But the higher the value of the dollar, the more expensive American goods become for foreigners and the cheaper foreign goods become for Americans, worsening the balance of trade. Eventually, a highly valued dollar can lead to a drop in production in industries that are sensitive to imports or depend on exports... If the dollar continues to strengthen this summer, we could see weaker demand for exports and increased demand for imports by next spring and summer, worsening the balance of trade. P.-V. ajoute (en passant): ' si t-i augmente, Md augemente, valeur $ augmente, Ex(d) baissent vu que $ a augemente, DBC augemente, Id baissent, CPI devrait baisser (de peu, mais devrait baisser) ou bien rester const., etc. etc. etc.' So, higher interest rates would cause a deterioration in the trade balance and a drop in production? I may have to change my bet in the pool. But that’s not the whole story. The demand for dollars depends not just on interest rates in the United States, but also on interest rates on assets in other currencies, and they are moving up as well. (ah ouais, une seule personne ne peut pas deplacer un mur....mais si chacun deplace une brique, on peut ainsi meme deplacer des montagnes...? Coordination des BC est dans ce cas imperative...) On July 14, the Bank of Japan raised overnight interest to 0.25 percent... Euro interest rates are also rising... These higher interest rates on euro and yen assets will tend to reduce the demand for American assets, counteracting the effects of the higher interest rates in the United States. So a coordinated rise in interest rates internationally will save the day? The international financial system is like a 19th-century ballroom dance. The central bankers lead with an interest rate adjustment. Their partners, the global investors, watch them closely, trying to anticipate their every move. ... But how will the dance end? It looks as if the United States interest rate increases will soon stop, if not in August then in September. The euro and yen rates will probably continue to rise for several months after that. (pas si sur, I wouldn't bet on it...) Given the direction of foreign rates, it is also possible that the dollar will become relatively less attractive to foreign investors over the next several months. A weaker dollar would stimulate demand for American exports, which would partly counteract the impact of the higher interest rates here. At least that’s the rosy outlook. That sounds better. I don't think I'll change my bet after all. But there are lots of things that could happen between now and then. Such as? Now I'm starting to worry again. Disruption in the Middle East could push oil prices even higher, setting off a ripple effect on employment. Central bankers would probably pause or reverse their rate increases to cushion such a blow. Another worry is a natural or man-made disaster: a hurricane or a major terrorist attack could rattle the markets. China is a wild card as well. It might change its exchange rate policy, allowing the yuan to appreciate more against the dollar to cool its own economy. Or it might change its investment policy to favor euro-denominated bonds rather than investing primarily in United States Treasury bonds. Neither of these things is necessarily bad for the United States, but such changes may have a big impact on exchange rates and global markets. I don't think I should be betting on these things, there's too much uncertainty. I suppose you're going to tell me there's even more to worry about? There is a palpable sense of anxiety in financial markets these days, as investors contemplate these and other possibilities. Low interest rates lulled financial markets into complacency. As rates move up, volatility in stock prices has returned with a vengeance. This is all taking place against the backdrop of continued deficit spending by households and the federal government. If we can’t balance our private and public budgets, we will have to continue to borrow from the rest of the world to make up the difference. But will they continue to lend? The current interest rate increases are an attempt to slow the economy to avoid inflation. But over the next decade, we may be forced to raise interest rates simply to attract foreign lending to finance our budget deficit. Such high rates would damp economic growth, putting more pressure on the Fed to return to the low-interest, easy-money policy we have seen in the past few years. And if they succumb to the pressure? Such a policy runs the risk of stimulating inflation. The easy-money policies in the past few years have had a surprisingly small impact on wages, in part because of the threat of jobs moving to countries with lower labor costs. But if the dollar fell far enough, foreign labor would no longer be a bargain, giving domestic workers more leverage in wage negotiations. (Hmmmm, cela depend aussi quand meme de l'influence, de la presence, et de la perspicacite des syndicats...) In this chain of events, an inflationary spiral would become a real possibility, making the cost of a stumble on policy higher. Let us hope central bankers can keep dancing in step as they move interest rates back to normal levels. (He, ho,....faudra pas oublier qu'il y a quand meme un deficit a financer...et pour cela, faudra bien appater les investisseurs etrangers, car ce sont eux qui le financent en ce moment meme ou je suis en train d'ecrire ce texte, a l'aide de leurres qui en valent bien la peine...) I shouldn't have bet so much. |
par Pancho Villa
publié dans :
Hal Varian
Looking for the Incentives That Will Prompt Americans to Save More
By HAL R. VARIAN
ECONOMISTS are in almost universal agreement that Americans save too little, and several policies have been proposed with the goal of encouraging them to save more.
The Bush administration favors increasing contribution limits on tax-deferred savings accounts like I.R.A.'s. Critics argue that there would be little impact on total savings from such policies, since wealthy households would simply transfer assets from taxable accounts to tax-sheltered accounts.
Leaving aside the behavior of high-income households, responsible members of both parties recognize that providing better incentives to low-income people is the most challenging problem. How can we get this group to save more?
It is possible for low- and middle-income groups to increase savings. After a detailed examination of the financial circumstances of people close to retirement, two economists, Stephen F. Venti of Dartmouth and David A. Wise of Harvard, concluded that the primary reason for differences in retirement assets was differences in propensities to save. It is not unusual to see low-income households with high savings rates holding more financial assets at retirement than high-income households who saved a smaller fraction of their income.
One promising proposal has been to set defaults for enrollment in 401(k) plans so that employees are automatically enrolled in an appropriate plan unless they explicitly choose otherwise. Brigitte C. Madrian, an economist at the University of Pennsylvania, and Dennis F. Shea, from the UnitedHealth Group, have found that this simple policy increases participation rates dramatically.
Another suggestion is to provide matching grants to low-income individuals. Esther Duflo of M.I.T., William G. Gale and Peter Orszag of the Brookings Institution, Jeffrey B. Liebman of Harvard and Emmanuel Saez of the University of California, Berkeley, recently released a working paper examining the design of such a plan. ("Saving Incentives for Low- and Middle-Income Families: Evidence From a Field Experiment With H&R Block"; a nontechnical summary is available at http://www.nber.org/digest/may06/w11680.html.)
In this experiment, about 14,000 low- and middle-income families in the St. Louis area were offered a 20 percent match on their contributions to an I.R.A., a 50 percent match or no match at all. Individuals could make a direct contribution or allocate part of their tax refund to an Express I.R.A. account offered by H&R Block.
Only 3 percent of the individuals who had no match � the control group � contributed to an I.R.A. But 8 percent of those with a 20 percent match rate contributed, and 14 percent of those with a 50 percent match contributed. The amount contributed was four times as much as the control group for the 20 percent match rate and seven times as much for the 50 percent match rate.
These figures exclude the matching funds; they refer only to the individuals' own contributions. Including the matching contributions raises the contribution amounts to 4.5 and 10 times as much, respectively. And most people stuck with their plans: four months after the initial contribution, over 90 percent of the individuals still kept the money in their I.R.A.'s.
These effects are far larger than those of the Saver's Credit, an existing program that provides a tax credit based on the amount of tax-deferred savings. The problem is that a tax credit is useful only if you pay taxes, and many low-income individuals have little or no tax liability after other deductions and credits are applied.
Furthermore, the Saver's Credit is complicated and hard to understand. A matching contribution to a savings program is much easier to comprehend.
The H&R Block Express I.R.A. program shows that savings incentives can work, though the specific H&R Block program was the subject of a lawsuit filed March 15 by the New York attorney general's office. The suit accused H&R Block of fraudulent marketing of the Express I.R.A.'s, contending that the disclosure of fees was inadequate.
The fees were not terribly high ($15 to set up an account, $10 each year for maintenance of accounts under $1,000). But since short-term interest rates have been low for the last couple of years, those who contributed only a few hundred dollars actually lost money since the interest earned could easily be less than the fees.
It may be true that ordinary bank savings accounts are better than I.R.A.'s for individuals who can contribute only a small amount, and one would hope that such individuals would be given appropriate recommendations.
But for those who can contribute more, I.R.A.'s can be a very attractive savings vehicle, particularly if coupled with the strong incentives provided by a matching grant program.
As the authors put it, "Taken together, our results suggest that the combination of a clear and understandable match for saving, easily accessible savings vehicles, the opportunity to use part of an income tax refund to save, and professional assistance could generate a significant increase in contributions to retirement accounts, including among middle- and low-income households."
Matching grants also have a long and venerable history as an American institution. They were invented by none other than Benjamin Franklin in conjunction with his fund-raising efforts for the Pennsylvania Hospital, the first public hospital in America, established in 1751.
Franklin persuaded the legislature to participate by indicating that it would receive "the credit of being charitable without the expense" and explained to the donors that "every man's contribution would be doubled." No doubt the sage of Philadelphia would heartily approve of his innovation being used to encourage the virtue of thrift.
par Pancho Villa
publié dans :
Hal Varian
Red States, Blue States:
New Labels for Long-Running Differences
By Hal R. Varian
The red state-blue state division has captured the pundits' imaginations... According to some, the country is splitting into two opposing camps, with political divisions becoming more polarized and more spatially segregated than they have been in the past.
A recent working paper, "Myths and Realities of American Political Geography," by ... Edward L. Glaeser and Bryce A. Ward challenges this conventional wisdom... The economists examined a number of contemporary and historical data sources on cultural, religious, economic and political attitudes and compared these responses across states.
They found that differences in political attitudes across states are nothing new: the Civil War and Roaring Twenties had much larger geographic variation in political views than we do today. ... Furthermore, America is not becoming more polarized. ... attitudes have hardly changed since 1978. It is fair to point out, though, that attitudes seem to have become somewhat more partisan in the last few years.
The most remarkable phenomenon is the rise of religion in politics. Thirty years ago, income was a better prediction of party affiliation than church attendance, but this is no longer true. Religion also played a big role in politics a century ago, so we may well be returning to the historical norm.
Cultural and religious attitudes play a big role in voting behavior. For example, the fraction of the population who agreed with the statement "AIDS is God's punishment for immoral sexual behavior" was highly correlated with whether the state was red or blue... The differences in religious attitudes between Vermont and Mississippi are huge.
These cultural divisions have been around for a long time. In the 1936-37 Gallup poll, residents of New England and the Middle Atlantic states were far more likely than citizens elsewhere to support federally financed health measures aimed at venereal disease, to support a free press and to be willing to vote for Catholic or Jewish candidates.
Consumption patterns seem to be correlated with cultural attitudes. For example, the states with the largest level of wine consumption per capita also tend to have the most liberal political and social attitudes. ... Another peculiar connection is the strong correlation between religiosity and militarism. Respondents to Pew's survey who agree that "prayer is an important part of my daily life" also agree that the "best way to ensure peace is through military strength."
So why are these cultural and political divisions so persistent? The authors offer both some simple correlations and some more elaborate theories. It turns out that the degree of industrialization 85 years ago is an "astonishingly good predictor of Democratic support" among today's voters, as is the fraction of the population that is foreign-born.
But the biggest effect seems to be the correlation between religion and Republicanism. Among white voters who attend religious services at least once a week, 71 percent voted Republican in the last election...
Republicans have traditionally appealed to those with higher incomes. The genius of Republicans, beginning with Ronald Reagan and continuing with Karl Rove, was to bring the religious vote into their party, forming a winning coalition of Main Street businessmen, the very wealthy and evangelical Christians. Strange bedfellows, to be sure, but they win elections.
Mr. Glaeser and Mr. Ward offer some speculation about why religion is such an attractive theme for politicians. According to their theory, direct appeals to voters on issues like abortion are tricky, because strong positions inspire groups on both sides of the issue, who then cancel each other out in votes. The trick is to send "coded messages" to different groups of voters. Strong opponents of abortion, for example, may react positively to certain religious allusions that appear innocuous to mainstream voters.
The Economist magazine characterizes American politics as a contest between the incompetence of Republicans and the incoherence of the Democrats. ... Ultimately, both parties face the same challenge: how to keep the support of their cultural and political extremists without giving them so much power that they alienate the middle-of-the-road voters.
In this sort of game, the incumbents tend to have an advantage, unless they are perceived as having messed up so badly that even their most fervent supporters desert them. Hey, maybe the Democrats have a chance after all.
P.-V. voudrait rajouter en rapport a cet article ceci...:
par Pancho Villa
publié dans :
Hal Varian
A Plug for the Unplugged $100 Laptop Computer for Developing Nations
By HAL R. VARIAN
ONE of the more interesting technology sessions at Davos, Switzerland, this year was Nicholas Negroponte's presentation of a $100 laptop computer intended for developing countries.
Mr. Negroponte, the founder of the Massachusetts Institute of Technology Media Laboratory, announced that Quanta Computer would be manufacturing the device, based on a chip from Advanced Micro Devices and the Linux operating system. Quanta, a Taiwan company, makes about 30 percent of the world's laptops, so its involvement lends considerable credibility to the project.
The mock-up that Mr. Negroponte demonstrated had a spill-resistant keyboard and a carrying handle. The final version will have a screen that can be read in direct sunlight, wireless networking capabilities and a hand crank to generate power.
Despite the technological ingenuity of the device, it engendered considerable skepticism. One audience member asked what good a $100 laptop was when network connections cost at least $25 a month. Mr. Negroponte responded that the laptops would send and receive Internet data only when higher-paying commercial data was not being transmitted, leading to lower networking costs.
Microsoft's vice president and chief technology officer, Craig J. Mundie, argued that a cellphonelike device would make more sense than a laptop computer in developing countries, because the demand for wireless communications services is strong and growing.
As he suggested, there are proven uses for cellphones in developing countries: migrant workers use them to call relatives back home and farmers use them to check crop prices. There are also successful business models like the one pioneered by GrameenPhone of Bangladesh, which has fostered a network of entrepreneurial "phone ladies" who provide communications services for entire villages. Often cellphone use among the poor in developing countries involves text messaging, which is much cheaper than voice.
In the discussion after his presentation Mr. Negroponte emphasized the educational value of laptops, while Mr. Mundie and others focused on the business models enabled by cellphones.
These views are not necessarily at odds: as with cellphones, there are many potential business models that can be built around cheap laptops. After all, the most important application for personal computers back in 1979 was VisiCalc, an early spreadsheet used by businesses.
Going even further back in history, the must-have technology of 1853 was the sewing machine. Its success was largely because it offered purchasers a way to make money by taking in mending. Isaac Singer capitalized on this application by inventing a new way to sell products to consumers: the installment plan.
What is the 21st-century equivalent of taking in mending? Let me suggest that using the $100 laptop as a cash register could be quite attractive. These days, a cash register is nothing but a personal computer with a different interface. A simple cash register program plus accounting software would be useful to merchants whether or not a network was available.
If the computer was networked, there could be other valuable commercial applications. One could imagine using a networked laptop as a way to transfer funds, something like an A.T.M. with a human operator. Such an application is quite compatible with the Hawala system of monetary transfer that has been used in the Middle East, Africa and Asia for more than 1,200 years, providing a solid tradition on which entrepreneurs of the cyberage could build.
Low-cost laptops could also serve as a way to record and preserve contracts and other legal documents. The Peruvian economist Hernando de Soto has argued that the lack of formal titles to land and other property has prevented the poor from posting collateral to secure loans. Perhaps cheap, networked laptops could serve as repositories for such documents. Replicating legal documents across a network using peer-to-peer technology would ensure that they would remain accessible even if an individual laptop were lost or stolen.
Telephones are now viewed as an essential device for commerce, but it was not always so. The phone was not taken seriously by businessmen back in the 1870's, since there was no written record of transactions. The telegraph, which provided such a record, was viewed as far more trustworthy. Perhaps the virtue of having written (or at least electronic) records of transactions would be as useful in developing countries today as it was in 19th-century America.
Of course, written communication requires a literate population. But that is a good thing. If reading, writing and typing are the key to employment, people will be highly motivated to acquire those skills. And, circling back to Mr. Negroponte's education vision, the $100 laptop can help people become literate. There are already computer programs to teach reading from scratch using simple pictures and animation.
The great thing about computers is that they are what economists call general-purpose technologies. That is, they provide a platform on which other applications can be built, whether they are cash registers, A.T.M.'s, document repositories or instructional tools.
Ultimately, both sides of the Davos debate are right: cellphones have proven uses and will continue to spread rapidly in developing countries. But cellphones have their limits. Offering general-purpose technologies like low-cost laptops is a riskier strategy, but it just might have a big payoff.
P.-V. voudrait rajouter, en rapport a cet article ceci...
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par Pancho Villa
publié dans :
Hal Varian
Hal Varian explique l'augmentation recente de la productivite et les differences qui existent , en ce qui concerne celle-ci, entre les E.U. et l'Europe.
La difference s'explique principalement a travers l'integration plus effective des ordinateurs dans le processus de production afin d'optimiser le flux (le courant) d'informations, un domaine dont les E.U. ont su prendre le dessus.
(Mais a mon avis principalement (80%?) dans le domaine financier, ou, et de nouveau a mon avis, l'avenir sera avant tout base sur le 'management' du nombre toujours plus croissant de parametres (en fonction des flux et des transactions) afin d'optimiser les 'interfaces' intra et extra-bancaires pour atteindre, au bout du compte une plus grande flexibilite en ce qui concerne p.ex. des transactions pre-definies a long et a court terme etc. etc.. (Prochain Sujet: 'Application de l'etude des ensembles des parametres pre-definis entre 'acheteurs' et 'vendeurs', un autre jour...)
P.S:. Le mot 'productivite' est, pour moi, un mot tres vage et a mon avis il faut clairement faire la separation entre les differentes formes de productivite en fonction des secteurs (primaire, secondaire, tertiare)...
Si l'on parle d'augmentation de la productivite grace a une meilleure implantation et donc effectivite des ordinateurs dans le secteur primaire je pense: NIET aux E.U et DA en Europe, secteur secondaire: NIET aux E.U. et DA en Europe, surtout en Allemagne (sinon il ne seraient pas les champions mondiaux de l'exportation), secteur tertiaire(avant tout commerce, finances et communication...): DA aux E.U et NIET en Europe....
Le probleme se pose avant tout en voulant definir, en tant que politique economique du futur: Quel secteur(s) voulez-vous supporter et subventionner le plus?
Aux E.U (tout comme clairement en Grande Bretagne) il y a eu un 'shift' du support (politique et economique!!!) du secteur secondaire vers le secteur tertiaire ces dernieres 15 annees et qui est toujours encore en train d'evoluer dans cette direction... (avant tout commerce, finances et communication...mechant Mao :)), mais il faudra faire gaffe....encore environ 50% (ah, tiens...?) des populations actives respectives, travaille actuellement dans le secteur secondaire et primaire (ceci dit, c'est deja beaucoup moins qu' en Europe continentale) et et et ....
Bill Gross: "Because the U.S. economy has evolved into a highly levered finance-based economy, it stands to our reason that this modern day version is more sensitive to changes in interest rates than those of years past. " |
Quel est le meilleur choix?
En sachant que tout est relatif, au bout du compte il y a toujours un 'dominant' (sacre Marquis) et un 'domine', a vous de choisir votre camp.....
Demain j'essaierai de mettre en ligne certains diagrammes des fonctions du support des different secteurs aux E.U et en Europe.....
Hasta Pancho Villa
American Companies Show an Edge in Putting Information to Work
By HAL R. VARIAN
PRODUCTIVITY just keeps humming along. Growth in output per hour in the third quarter of 2005 was a striking 5.4 percent. In fact, output per hour has grown at an average annual rate of nearly 3.5 percent over the last three years.
These are large numbers by historical terms. From 1974 to 1995, productivity grew at around 1.4 percent a year. Productivity growth in the United States accelerated to about 2.5 percent a year from 1995 to 2000. Since then, productivity has grown at a bit over 3 percent a year, with the last few years looking particularly strong.
Unlike the United States, European countries have not seen the same surge in productivity growth in the last 10 years. Why the difference?
The answer, according to Nick Bloom, Raffaella Sadun and John Van Reenen, researchers at the Center for Economic Performance at the London School of Economics, is that American companies make much more effective use of information technology than European companies. (A selection of their studies can be downloaded from http://cep.lse.ac.uk/research/innovation/ict.asp.)
Nowadays, most economists agree that information technology is a significant part of the explanation for the post-1995 productivity surge in the United States. In fact, when you look at productivity statistics by industry, those industries that make and use information and communications technologies intensively in the United States have accounted for the bulk of the productivity growth, with other industries showing little change.
The story is quite different in the European Union. In the late 1990's, when productivity growth in the United States was accelerating, productivity growth in Europe was static. But Europe has access to the same information technology that the United States does, at more or less the same prices. Why didn't those countries get the same increase in productivity?
To answer the question, we have to move away from macroeconomics and look at the experience of individual companies. Work by the economist Erik Brynjolfsson and his colleagues at M.I.T. suggests that organizational factors are quite important. Just dropping a bunch of new personal computers on workers' desks is unlikely to contribute to productivity. A company has to rethink how business processes are handled to get significant cost savings.
As the Stanford economic historian Paul A. David has pointed out, the productivity effects from the electric motor did not really show up until Henry Ford and other industrialists figured out how to use it effectively to create the assembly line. The same is true for computers: just as the early industrialists had to learn how to use manufacturing technology to optimize the flow of materials on the factory floor, companies today must learn how to use information technology to optimize the flow of information in their organizations.
It appears that United States companies are much farther up the learning curve than European companies. Professors Bloom, Sadun and Van Reenen looked at 7,500 establishments in Britain and found that in terms of value added per worker, American multinational corporations were 23 percent more productive than the average in Britain. Non-American multinationals were about 16 percent more productive than the average, while British companies were about 11 percent less productive than average.
Furthermore, the authors suggest that information technology capital may be a big part of the productivity difference: American companies in Britain use a whopping 40 percent more information technology capital per worker than the average company. Not only did American companies use more information technology, they used it more effectively. According to the economists, "U.S. firms appeared to simply get more productivity out of the same amount of I.T. (this was not true of non-I.T. capital)."
There is an additional piece of evidence: the big returns to information technology use by American companies operating in Britain were in wholesale and retail trade - the same industries that have been so productive in the United States.
Why the difference in effective use of information technology? This is still something of a mystery, but part of the answer seems to be managerial practices. According to the authors, American companies are more likely than European companies to adopt practices like merit-based promotion and pay, lean manufacturing techniques, performance management and employee autonomy.
Personally, I have found that American managers are much more comfortable with computers than their European counterparts. Until a few years ago, a typical European manager could not even type. This is no longer true of the younger generation of European managers, and I would venture to guess that as they move up in their organizations, managerial comfort with information technology in European companies will broaden.
As a business school professor, I sometimes worry whether we are giving our students the right skills in finance, accounting, marketing and leadership. But the one thing I never worry about is their skills in PowerPoint and Excel; in these areas, the students far surpass their professors. Perhaps the comfort of young American managers in using computers and other sorts of information technology contributes more than we realize to productivity growth.
par Pancho Villa
publié dans :
Hal Varian
Hal Varian nous livre ici une explication pourquoi les sociétés financent leurs investissements grâce aux propres bénéfices 'retenus' (a la source?) (càd. obligations etc. etc. non-versés à leurs investisseurs) plus souvent que les modèles financiers ne peuvent le suggérer. (loop I, ou bien la fonction itérative I, vive le chaos pré-programmé?)
What Can We Learn From How a Manager Invests His Own Money?
By HAL R. VARIAN
In the simplest textbook model of financial markets, companies pay cash dividends each year to their shareholders, who can then invest this money ... [in] its most profitable use. In reality, companies often retain earnings and invest them internally rather than distribute profits to their shareholders. Such behavior is generally considered detrimental for shareholders since it forces them to reinvest in the same company... Furthermore, these retained earnings can seriously distort corporate investment decisions. If a good investment arises that is too large to be financed out of existing cash reserves, companies may pass it up ... On the flip side, internal investments that are not particularly profitable may be financed just because there is a lot of cash on hand.
Why do companies retain earnings, if they reduce shareholder choice and lead to investment distortions? According to one theory, managers are overly sensitive to cash on hand because their interests are not fully aligned with shareholders. They would rather use retained earnings to buy corporate jets or walnut desks than pay more dividends. An alternative explanation rests on ... access to information: corporate insiders understand investment opportunities available to them better than the stock market, so they prefer to invest using internal funds rather than pay the higher financing costs associated with the stock or bond markets.
In the December 2005 issue of The Journal of Finance, Ulrike M. Malmendier of Stanford Business School and Geoffrey Tate of the Wharton School offer a new and provocative explanation ... They argue that this behavior is partly explained by the personality characteristics of the chief executive. The title says it all: "C.E.O. Overconfidence and Corporate Investment." Their explanation begins with the Lake Wobegon effect: we all tend to think that we are above average.
("Der Mensch ist ein Seil, geknüpft zwischen Tier und Übermensch, - ein Seil über einem Abgrunde", sagt Nietzsche in "Also sprach Zarathustra"P.V.- Hier scheint es ja klar zu sein, ein Übermensch...) ...
Successful business executives are particularly susceptible to this affliction. An overconfident chief executive may well believe that he can value investments better than financial markets and thus decide that retaining and investing earnings is better for the shareholders than letting them invest the money themselves. Alternatively, whenever he does not have cash at hand, ... [b]eing overconfident, he feels that his company and his investment plans are undervalued by investors and bankers and, hence, finds that raising the equity or the debt to finance the project is too expensive.
One way to see whether executives may be overconfident in corporate investments is to look at their behavior in their personal investments. Top executives often receive large grants of options and stock as compensation. Having all your eggs in one basket is quite risky, and prudent investors diversify as soon as it makes economic sense. The authors determine a sensible policy for ... a chief executive and then identify those who depart from such a policy as "overconfident." They tend to be chief executives who exercise their options much later than would seem reasonable and hold more company stock than appears prudent.
The question is whether these executives ... also appear to be overconfident with respect to the corporate investments they control. ... They found ...[that] chief executives who appear to be overconfident in their personal investment practices seem to be particularly sensitive to cash flows in their corporate investment decisions. The authors also examine how other personal characteristics ... affect corporate investment decisions. Those with engineering or science backgrounds tend to be more sensitive to cash flow in making investments than those with a financial background. The chief executives who grew up in the Great Depression seem to be particularly influenced by cash on hand, perhaps because they developed a distrust of financial markets and a predilection for self-sufficiency.... A chief executive who sells shares may be signaling prudent investment behavior rather than pessimism about future prospects. Examining how a chief executive manages his own money may well signal how he will manage yours.
par Pancho Villa
publié dans :
Hal Varian