Apple recently announced that it has reached a deal to bring the iPhone and its Apps Store to China. This is a very interesting and potentially very insightful proving ground for technology and economics which was actually made possible by the Chinese government keeping the masses poor.
The iPhone handsets will be purchased by China Unicom, who will not share subscription revenue with Apple. This means, for Apple to capitalize on this opportunity to reach such a huge market, they have to sell Apps, lots and lots of Apps.
But, that huge marketplace is made up mainly of very low income individuals. Apple, and its army of application developers must come up with highly desired software at a price point that’s agreeable to poor people. In many cases that price point may be zero, or close to zero. The game will be to figure out how to get a little money from an enormous amount of people, consistently. New streams of revenue related to applications may have to subsidize the production and distribution of the applications. It could be advertising, data collection, storage, establishing networks, or some function nobody has imagined yet. There are further challenges. The iPhones in China will not be WiFi enabled. It sounds like a tough bed to grow in, but the parallel processing nature of the world of iPhone application development should make it up to the challenge.
Some believe the “economics of free” is a threat to capitalism. It’s not. Capitalists adapt and continue to find ways to improve their own lot by improving the lot of others. Government can change the rules, but they can’t kill the game. That’s because capitalism takes advantage of and works with human nature, whereas socialism aims to suppress it.
Of course, I don’t endorse repressive dictatorships as a means of market-testing ideas, but there it is. Americans, through commerce, have the opportunity to try to improve the quality of life of people across the globe, under severe restriction. Demonstration of the power of free markets and free people is a far more effective tool than either diplomacy or force in making the most of such an opportunity.
Saturday, August 29, 2009
Thursday, August 13, 2009
It's the volume stupid!
In response to lower revenues and budget shortfalls due to the recession, many state and local governments and agencies have resorted to raising fees, taxes, fines and whatever else they can think of. In my neck of the woods, the City of Fountain is contemplating a sales tax increase to pay for infrastructure projects. While I applaud the proponents for getting their plan before the public well in advance of even attempting to get it on the ballot, I think the focus is in the wrong direction.
It seems to me a better strategy would be to look for ways to increase sales volume rather than the sales tax rate. Government should be looking for opportunities to get out of the way. If government needs to cut spending, how about cutting in areas that make doing business cumbersome. Look for paperwork to eliminate, outdated or unnecessary codes or regulations. Less bureaucracy means fewer man hours. There's your savings.
Yes, that would mean a reduction in government's work force, but I believe those jobs would be made up many times over in a more vibrant private sector. Business doesn't want advisory boards, cheerleaders, commissions or more government assistance. It just wants you out of the way.
It seems to me a better strategy would be to look for ways to increase sales volume rather than the sales tax rate. Government should be looking for opportunities to get out of the way. If government needs to cut spending, how about cutting in areas that make doing business cumbersome. Look for paperwork to eliminate, outdated or unnecessary codes or regulations. Less bureaucracy means fewer man hours. There's your savings.
Yes, that would mean a reduction in government's work force, but I believe those jobs would be made up many times over in a more vibrant private sector. Business doesn't want advisory boards, cheerleaders, commissions or more government assistance. It just wants you out of the way.
Saturday, August 8, 2009
Cash for Clunkers for housing?
The Senate has added another $2 billion to the Cash for Clunkers program. This is in addition to the original $1 billion allocated to the program. In all, that's enough to subsidize the purchase of about 750,000 new cars. The program was originally supposed to run through November, but consumers jumped on the deal and even with the new money, it will probably be done within a week or so.
A major component of the program is that the cars traded in to qualify for the rebate must be destroyed. This takes used cars off the road and is allegedly good for the environment (although I don't know if building an entirely new car uses less energy than just keeping your old one). If this program is deemed a success, why not apply it in other areas?
In the housing market, we could reduce inventories and increase energy efficiency by offering a $20,000 rebate on the purchase of a new house when you agree to have your current home destroyed. It would be the end of the housing glut right? One could also apply it to electronics. Smash your old TV, get $100 off a new one. This could be the silver bullet we've been looking for. To get out of an economic downturn, all the government has to do is pay people to destroy their stuff and buy new stuff! It could be applied to services as well. Throw some mud on your car and the government will give you a voucher toward a car wash. Bring a steak to a restaurant and get a voucher toward a meal, providing the steak is destroyed. Show proof that you've destroyed an mp3 file and get half off your next song purchase. Divorce your spouse and get $3,000 toward your next wedding.
This does more than create economic activity. It allows the government to determine which economic activity to create. Instead of individuals running around allocating resources all willy nilly, the much more intelligent and wise experts in Washington D.C. can ensure that you're spending your money on what's best for society as a whole and not just wasting it on yourself and your family.
Sure it will be expensive, but with the government's new policy of actually printing on both sides of paper, the raw materials cost of printing more money should come down. No problem there. Crank up the presses!
A major component of the program is that the cars traded in to qualify for the rebate must be destroyed. This takes used cars off the road and is allegedly good for the environment (although I don't know if building an entirely new car uses less energy than just keeping your old one). If this program is deemed a success, why not apply it in other areas?
In the housing market, we could reduce inventories and increase energy efficiency by offering a $20,000 rebate on the purchase of a new house when you agree to have your current home destroyed. It would be the end of the housing glut right? One could also apply it to electronics. Smash your old TV, get $100 off a new one. This could be the silver bullet we've been looking for. To get out of an economic downturn, all the government has to do is pay people to destroy their stuff and buy new stuff! It could be applied to services as well. Throw some mud on your car and the government will give you a voucher toward a car wash. Bring a steak to a restaurant and get a voucher toward a meal, providing the steak is destroyed. Show proof that you've destroyed an mp3 file and get half off your next song purchase. Divorce your spouse and get $3,000 toward your next wedding.
This does more than create economic activity. It allows the government to determine which economic activity to create. Instead of individuals running around allocating resources all willy nilly, the much more intelligent and wise experts in Washington D.C. can ensure that you're spending your money on what's best for society as a whole and not just wasting it on yourself and your family.
Sure it will be expensive, but with the government's new policy of actually printing on both sides of paper, the raw materials cost of printing more money should come down. No problem there. Crank up the presses!
Friday, August 7, 2009
Sorry Big Brother, Technology Favors Freedom
Some politicians have had more success than others putting new information and communication technology to work for themselves. Ron Paul has used the internet very effectively to get out his message. Obama far out-manuevered his opponents on the net as well. Until recently, it was a matter of being the first to know what was available and how to use it. All that is about to change.
The internet, Twitter, Facebook, MySpace and other mass collaboration/communication networks are no longer a mystery to any one group of activists. In fact, the ability to communicate in real time with like minded people across the country and across the globe has made activists out of people who never felt like they had any control over the social-political landscape. This is bad news for collectivists and statists.
The new reality is that interest groups no longer need be a formal organization or even come with a long term commitment. Like minded individuals can band together for a rally this afternoon, and be on opposite sides of a different barricade later the same evening.
This type of "free radical" association favors those who tend to frown on central control in general. For people who truly value the preservation of individuality, free association and free markets, this mode of operating is right in their wheelhouse. It's actually a real life demonstration of the principals they espouse.
The White House is frantically trying to put the genie back in the bottle in response to the ad hoc association of people opposed to the health care overhaul. They've put out a call for people to report "fishy" information put out in emails, blog posts, even casual conversation. If they think that's going to stifle open communication, they couldn't be more wrong. I imagine the inbox at "flag@whitehouse.gov" contains more angry and sarcastic emails than "fishiness" reports.
Monitoring and manipulating groups of neatly organized citizens is far easier than trying to corral 300,000,000 "free radicals". Some are panicked by the emerging social trends enabled by mass communication technology. They would refer to it as chaos. I believe the founders would refer to it as beautiful.
The internet, Twitter, Facebook, MySpace and other mass collaboration/communication networks are no longer a mystery to any one group of activists. In fact, the ability to communicate in real time with like minded people across the country and across the globe has made activists out of people who never felt like they had any control over the social-political landscape. This is bad news for collectivists and statists.
The new reality is that interest groups no longer need be a formal organization or even come with a long term commitment. Like minded individuals can band together for a rally this afternoon, and be on opposite sides of a different barricade later the same evening.
This type of "free radical" association favors those who tend to frown on central control in general. For people who truly value the preservation of individuality, free association and free markets, this mode of operating is right in their wheelhouse. It's actually a real life demonstration of the principals they espouse.
The White House is frantically trying to put the genie back in the bottle in response to the ad hoc association of people opposed to the health care overhaul. They've put out a call for people to report "fishy" information put out in emails, blog posts, even casual conversation. If they think that's going to stifle open communication, they couldn't be more wrong. I imagine the inbox at "flag@whitehouse.gov" contains more angry and sarcastic emails than "fishiness" reports.
Monitoring and manipulating groups of neatly organized citizens is far easier than trying to corral 300,000,000 "free radicals". Some are panicked by the emerging social trends enabled by mass communication technology. They would refer to it as chaos. I believe the founders would refer to it as beautiful.
Thursday, July 9, 2009
Gangland and Politics
I watch a lot of History Channel's Gangland. I also watch a lot of news. Today, I connected some dots:
How political parties are like gangs
Recruit the needy. Gang members tend to be individuals looking for something to belong to; a family. Politicians, for the most part, are individuals who crave acceptance and approval.
You have to get "beaten in". We call this non-stop barrage of vicious attacks being "vetted by the media". It's a rite of passage. If you survive, your in. If you don't, your out.
Parties stake out territories, just as gangs do. Look at the boundaries of electoral districts. They are designed to favor the incumbents.
Currency transactions are hidden through money laundering. Both gangs and politicians trade in cash and favors and are very careful not to explicitly connect the payment to the deed.
Constantly looking to expand their territory. Being powerful within a single country is not enough. There is a growing "global community" movement, which of course is administered by a level of government above sovereign nations.
Prey on the weak of will. Gangster deal in vices like drugs and prostitution. Politicians deal in vices like government assistance, contracts and subsidies. In both cases, once you become dependent, they own you.
Both gangs and political parties are self-perpetuating and are not dependent on any particular individual for their long-term survival. Police infiltrate gangs with multi-year sting operations, resulting in hundreds of arrests and convictions, and they keep coming back strong. Political parties also have their purges and downfalls, but a new crop of power hungry recruits is always there to take it to a new level.
For the most part, neither gangs nor political parties go directly after the strong of will. Their prey consists of those who are attracted to bright shiny objects; fame, "free" money, drugs, crime, the need to be accepted by a group. Things generally go badly for both when they try to force their world on people who have no interest in it. Political parties have avoided a lot of potential bad blood by directing the cash flow to their organizations through employers. You get paid less, but you don't notice. You just focus on the net take home, and you feel good about the refund check that comes every year because they took a little extra from you each pay period.
Both gangs and political parties prefer to operate in an atmosphere of chaos. There has to be some degree of order, so there will always be someone to rob. But you also want to avoid facing any consequences for your actions. Creating chaos in the political world is simply a matter of expanding "grey areas" and becoming very adept at the art of rationalization and pragmatism. In fact, pragmatism (changing your code of behavior to suit your circumstances) is openly heralded as a virtue among politicians. Actually establishing a core set of beliefs and striving to live by them makes you an "idealogue" which is an insult in the political world. They've sold this mindset to the public at large, and for the most part, we bought it. It's very appealing after all. Rather than feeling bad about your missteps and moments of weakness, you talk yourself into seeing them as virtuous. Others, who do the same, are not going to argue with you, no matter how ridiculous the justification.
So the formula goes something like this: Recruit the needy (emotionally speaking). Create a common bond through trauma. Prey on the weak. Avoid direct confrontation with the strong. Promote ambiguity and chaos and attack any attempt to promote logic and reason as a means of arriving at an objective truth. Distasteful as it is, it seems to be working so far.
How political parties are like gangs
Recruit the needy. Gang members tend to be individuals looking for something to belong to; a family. Politicians, for the most part, are individuals who crave acceptance and approval.
You have to get "beaten in". We call this non-stop barrage of vicious attacks being "vetted by the media". It's a rite of passage. If you survive, your in. If you don't, your out.
Parties stake out territories, just as gangs do. Look at the boundaries of electoral districts. They are designed to favor the incumbents.
Currency transactions are hidden through money laundering. Both gangs and politicians trade in cash and favors and are very careful not to explicitly connect the payment to the deed.
Constantly looking to expand their territory. Being powerful within a single country is not enough. There is a growing "global community" movement, which of course is administered by a level of government above sovereign nations.
Prey on the weak of will. Gangster deal in vices like drugs and prostitution. Politicians deal in vices like government assistance, contracts and subsidies. In both cases, once you become dependent, they own you.
Both gangs and political parties are self-perpetuating and are not dependent on any particular individual for their long-term survival. Police infiltrate gangs with multi-year sting operations, resulting in hundreds of arrests and convictions, and they keep coming back strong. Political parties also have their purges and downfalls, but a new crop of power hungry recruits is always there to take it to a new level.
For the most part, neither gangs nor political parties go directly after the strong of will. Their prey consists of those who are attracted to bright shiny objects; fame, "free" money, drugs, crime, the need to be accepted by a group. Things generally go badly for both when they try to force their world on people who have no interest in it. Political parties have avoided a lot of potential bad blood by directing the cash flow to their organizations through employers. You get paid less, but you don't notice. You just focus on the net take home, and you feel good about the refund check that comes every year because they took a little extra from you each pay period.
Both gangs and political parties prefer to operate in an atmosphere of chaos. There has to be some degree of order, so there will always be someone to rob. But you also want to avoid facing any consequences for your actions. Creating chaos in the political world is simply a matter of expanding "grey areas" and becoming very adept at the art of rationalization and pragmatism. In fact, pragmatism (changing your code of behavior to suit your circumstances) is openly heralded as a virtue among politicians. Actually establishing a core set of beliefs and striving to live by them makes you an "idealogue" which is an insult in the political world. They've sold this mindset to the public at large, and for the most part, we bought it. It's very appealing after all. Rather than feeling bad about your missteps and moments of weakness, you talk yourself into seeing them as virtuous. Others, who do the same, are not going to argue with you, no matter how ridiculous the justification.
So the formula goes something like this: Recruit the needy (emotionally speaking). Create a common bond through trauma. Prey on the weak. Avoid direct confrontation with the strong. Promote ambiguity and chaos and attack any attempt to promote logic and reason as a means of arriving at an objective truth. Distasteful as it is, it seems to be working so far.
Tuesday, June 30, 2009
New Gallup poll says 'A pox on both your houses.'
A new poll posted on Gallup.com today states:
"A Gallup Poll finds a statistically significant increase since last year in the percentage of Americans who describe the Democratic Party's views as being "too liberal," from 39% to 46%. This is the largest percentage saying so since November 1994, after the party's losses in that year's midterm elections."
It goes on...
"Notably, there has been no change over the past year in the percentage of Americans who say the Republican Party is "too conservative," though the 43% who say the party leans too far to the right matches the historical high mark set last year."
So record high numbers of respondents believe the Democrats are too liberal and the Republicans are too conservative. So ideally, they move closer to each other and become "just right", right? Wrong.
We don't need Republicans to become more like Democrats or vice versa. The big lie is that solutions to the problems facing this country lie somewhere along a straight line between the two major parties. In reality, both parties agendas are more like a plate of spaghetti that occasionally intersects with the truth.
The common thread between most politicians of all persuasions is control. Republicans generally believe we should all adhere to Judeo-Christian values and that they should be institutionalized to a large extent. Democrats tend to believe that we are all each others keepers and the good of the community and society should be paramount. Both parties seem to believe that the preservation of the "too big to fail" trumps free market principals. Americans believe none of it.
Government's job is to enable us to freely associate in the absence of force. It is not to mold us into the people they want us to be. We don't have to all get on the same page. In fact, that is the antithesis of what this country is about. This is a nation where people of all kinds of beliefs, with all kinds of personalities and backgrounds find a way to live, work and play in relative peace. This is not accomplished through conformity. It's accomplished by eliminating the requirement for conformity except that we agree not to initiate force against one another.
We don't need Democrats to get more Republican or Republicans to become more like Democrats. We need both parties to get out of our face.
"A Gallup Poll finds a statistically significant increase since last year in the percentage of Americans who describe the Democratic Party's views as being "too liberal," from 39% to 46%. This is the largest percentage saying so since November 1994, after the party's losses in that year's midterm elections."
It goes on...
"Notably, there has been no change over the past year in the percentage of Americans who say the Republican Party is "too conservative," though the 43% who say the party leans too far to the right matches the historical high mark set last year."
So record high numbers of respondents believe the Democrats are too liberal and the Republicans are too conservative. So ideally, they move closer to each other and become "just right", right? Wrong.
We don't need Republicans to become more like Democrats or vice versa. The big lie is that solutions to the problems facing this country lie somewhere along a straight line between the two major parties. In reality, both parties agendas are more like a plate of spaghetti that occasionally intersects with the truth.
The common thread between most politicians of all persuasions is control. Republicans generally believe we should all adhere to Judeo-Christian values and that they should be institutionalized to a large extent. Democrats tend to believe that we are all each others keepers and the good of the community and society should be paramount. Both parties seem to believe that the preservation of the "too big to fail" trumps free market principals. Americans believe none of it.
Government's job is to enable us to freely associate in the absence of force. It is not to mold us into the people they want us to be. We don't have to all get on the same page. In fact, that is the antithesis of what this country is about. This is a nation where people of all kinds of beliefs, with all kinds of personalities and backgrounds find a way to live, work and play in relative peace. This is not accomplished through conformity. It's accomplished by eliminating the requirement for conformity except that we agree not to initiate force against one another.
We don't need Democrats to get more Republican or Republicans to become more like Democrats. We need both parties to get out of our face.
Sunday, June 21, 2009
Why I didn't buy a GM car
sumitted by Nathan Thompson
First, the United Auto Workers Union has strangled the life out of GM. There are too many unproductive people being kept on the payroll, and GM isn't permitted to lay any of them off unless they shell out a year or two's worth of income and benefits to the layed-off employee. Retirees receive almost full wages and benefits, even many years after having retired. The executives of GM paid themselves millions in bonuses even while the company lost money on every vehicle. They allowed the company to amass over $170 Billion in debt.
This debt was purchased by pension funds, insurance companies, and investors who believed in GM and were willing to trust their money and future incomes to this giant of American industry. Now, those investors have just had their money stolen from them, by way of the Obama administration and the bankruptcy court. Bondholders have always been first in line when a company goes bankrupt, and the bondholders get their money first. This has been true since the beginning of capitalism. But now, bondholders are toast. They were put at the END of the line (illegally), behind the UAW labor union and Uncle Sam himself. This massive theft from bondholders should be a warning to anyone who thinks free-market capitalism still works for the common man. GM ran itself just like our government does. It borrowed more and more, even while revenues and market share shrank and shrank. If you want to know how the government intends to pay off all of its treasury bond debt, look no further than how it just treated GM bondholders.
So, why didn't I buy a GM car instead of a new Kia this month? As an American shouldn't I have "rushed to the aid of fellow citizens" by supporting GM? Heck no, GM is toast, and so is the broken system of debt issuance for our government. I don't run MY business this way, and I DO NOT support a system where Peter is robbed so that Paul can continue to do the same ole' same ole'. No, in fact I'll NEVER buy another GM, even though I already own three. I'm pissed off at how they have enabled the biggest and best car company in the world to turn into a poorly run operation that doesn't honor its debts. I'm proud to be an American: I PAY my debts; all of them. If GM doesn't, then I will not support them by buying their vehicles. Nor will I continue to purchase T-Bills or treasury bonds from the US Treasury Dept. I will sell any I hold, and instead, send the money to KIA to pay for my new car, which incidentally, is thousands of dollars lower in cost than the GM, with twice the warranty. Besides the IRS, the only government agency I will voluntarily surrender my hard-earned dollars to is the US Mint. At least they will exchange your devalued currency for real money, silver and gold coins, that never lose their value and represent honest money unencumbered by debt. Wake up America! First, they screwed up the mortgage industry and housing. Then, they wrecked the banks. Then, they caused a stock market collapse. Then, they took over the auto industry. They have consistently strangled the domestic oil industry. Now, commercial real estate is collapsing, and the insurance industry is reeling. Now they want to screw up the health care industry. How much longer until they mess up the farming industry and decimate our food supply. I don't know about you, but I'm buying canned food as fast as I cash my paycheck, because I don't trust these guys anymore. I have lost faith in the ability of the American government to simply do what is right for tax-paying citizens.
Goodbye GM. You had your moment in the sun. Goodbye American economy. You killed the golden goose. Now it is time for we citizens to stand on our own and protect our own families from the excesses of our government!
Respectfully submitted,
Nathan Thompson
citizen, Fountain, CO
First, the United Auto Workers Union has strangled the life out of GM. There are too many unproductive people being kept on the payroll, and GM isn't permitted to lay any of them off unless they shell out a year or two's worth of income and benefits to the layed-off employee. Retirees receive almost full wages and benefits, even many years after having retired. The executives of GM paid themselves millions in bonuses even while the company lost money on every vehicle. They allowed the company to amass over $170 Billion in debt.
This debt was purchased by pension funds, insurance companies, and investors who believed in GM and were willing to trust their money and future incomes to this giant of American industry. Now, those investors have just had their money stolen from them, by way of the Obama administration and the bankruptcy court. Bondholders have always been first in line when a company goes bankrupt, and the bondholders get their money first. This has been true since the beginning of capitalism. But now, bondholders are toast. They were put at the END of the line (illegally), behind the UAW labor union and Uncle Sam himself. This massive theft from bondholders should be a warning to anyone who thinks free-market capitalism still works for the common man. GM ran itself just like our government does. It borrowed more and more, even while revenues and market share shrank and shrank. If you want to know how the government intends to pay off all of its treasury bond debt, look no further than how it just treated GM bondholders.
So, why didn't I buy a GM car instead of a new Kia this month? As an American shouldn't I have "rushed to the aid of fellow citizens" by supporting GM? Heck no, GM is toast, and so is the broken system of debt issuance for our government. I don't run MY business this way, and I DO NOT support a system where Peter is robbed so that Paul can continue to do the same ole' same ole'. No, in fact I'll NEVER buy another GM, even though I already own three. I'm pissed off at how they have enabled the biggest and best car company in the world to turn into a poorly run operation that doesn't honor its debts. I'm proud to be an American: I PAY my debts; all of them. If GM doesn't, then I will not support them by buying their vehicles. Nor will I continue to purchase T-Bills or treasury bonds from the US Treasury Dept. I will sell any I hold, and instead, send the money to KIA to pay for my new car, which incidentally, is thousands of dollars lower in cost than the GM, with twice the warranty. Besides the IRS, the only government agency I will voluntarily surrender my hard-earned dollars to is the US Mint. At least they will exchange your devalued currency for real money, silver and gold coins, that never lose their value and represent honest money unencumbered by debt. Wake up America! First, they screwed up the mortgage industry and housing. Then, they wrecked the banks. Then, they caused a stock market collapse. Then, they took over the auto industry. They have consistently strangled the domestic oil industry. Now, commercial real estate is collapsing, and the insurance industry is reeling. Now they want to screw up the health care industry. How much longer until they mess up the farming industry and decimate our food supply. I don't know about you, but I'm buying canned food as fast as I cash my paycheck, because I don't trust these guys anymore. I have lost faith in the ability of the American government to simply do what is right for tax-paying citizens.
Goodbye GM. You had your moment in the sun. Goodbye American economy. You killed the golden goose. Now it is time for we citizens to stand on our own and protect our own families from the excesses of our government!
Respectfully submitted,
Nathan Thompson
citizen, Fountain, CO
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