Monthly Archives: November 2005

It’s A Flat World, Or Is It?

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Thomas Friedman’s The World is Flat, a personal account of the challenges and benefits of globalisation, has just won the inaugural Financial Times and Goldman Sachs Business Book of the Year Award.

But Stephen Roach, writing in yesterday’s Morgan Stanley GEF, doesn’t agree. For him the world is ‘hardly a flat one‘.

With all due respect to Tom Friedman, there’s nothing flat about this unbalanced global economy. The image of a “flat world” is most appropriate for the endgame of globalization. In my view, that ideal state is decades into the future — if that. In the meantime, the global economy is distinguished far more by its disparities and tensions — and how the resulting imbalances are likely to be vented in world financial markets

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Hollywood’s Big Loss

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No more free money from Germany.

Even though its focus may be far removed from the geopolitics of Europe, Hollywood has reason to be concerned with the recent results of the German elections. The newly designated Minister of Finance Peer Steinbrück announced on Nov. 12 that he was retroactively eliminating the part of the tax code that allows German investors in media funds to defer their taxes. This German tax shelter, as I have previously pointed out, provided Hollywood with an El Dorado of easy cash for the past quarter-century and allowed studios to increase their earnings without any risk. Now it is dead.

I love Edward Jay Epstein’s columns.

Multiculturalism vs. “multiculturalism”

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I’m not alone in thinking that our last debate about multiculturalism was marred by the fact that nobody seemed to agree on what the word actually meant. The following bit from a Christian Science Monitor opinion piece caught be eye:

Supposedly [European authorities] were enlightened “multiculturalists” who respected differences; for many, the real reason was a profound discomfort with the idea of “them” becoming “us.” Naively, they imagined they could preserve their nations’ cultural homogeneity while letting in millions of foreigners and smiling on their preservation and perpetuation of values drastically different from their own.

Perhaps we need to distinguish between “multiculturalism” and multiculturalism?
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Denationalise Tamiflu Immediately!

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The title is really an ironic (if somewhat affectionate) reference to this post from Brad DeLong. Reading the news this morning, it seems that Tamiflu may not be such an unambiguously good thing as it was being made out to be:

Roche, the Swiss pharmaceutical group, on Thursday moved to reassure investors after US regulators said they would on Friday examine reports of up to 12 deaths and 75 cases of children who suffered health problems after using Tamiflu, the company’s anti-flu drug.

The US Food and Drug Administration said it was in “active communication” with regulators in Japan, the country with the widest use of Tamiflu for regular seasonal flu treatment, and where all the deaths and most of the other incidents of side-effects occurred.

I think a number of points could be made here. Firstly in this game there will be no free lunches. There are risks one way and there will be risks the other. Individuals may have to take decisions based on the best available information. Secondly, at the end of the day Tamiflu is not going to be virus-specific for any possible variant of avian flu simply because we don’t yet know the variant, so forward planning and risk assessment is inherently a complicated business here.

Lastly, when Brad said this: ” Low-probability but high-payoff projects are likely to be underfunded by the government–but properly funded by private companies willing to roll the dice. However, these ex ante considerations vanish ex post when an epidemic threatens…”, ( maybe I would say better rather than properly, but that’s a detail) – he was both right and wrong, IMHO, since the real issue which lies behind the argument is the moral hazard one. If you let the market regulate drug development, but then when you have a drug which is a big winner you immediately take it over, it isn’t clear that the market will work as well as you want it to next time round. On the other hand, governments can’t just stand back in the face of a real and present danger to their citizens. So I guess the only answer is negotiation and consensus, and maybe this consensus would include compensating those companies who are given the green light to go ‘full speed ahead’ if it turns out that – post ante – that decision was a bad one.

All in all a complex situation where prudence is indicated.

Turnering The Screw

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The Turner Report is about to appear. The Turner in question is the UK peer Lord Adair Turner, and the subject of the report the future of the UK pensions system. Although the final report is not due till the end of the month, the FT has been ‘ leaking’ some of the possible contents.

The commission will apparently suggest that the age at which workers can claim their full state pension should, over time, rise from 65 to 67. The increase is intended to come in stages, starting after 2020 when the UK’s women’s state pension age is set to be aligned with men’s at 65. Thereafter, state pension age should rise in line with increasing longevity, the commission will say. Now this idea seems to me to be a very important one, and I’d just like to take the time out to explain why I think this.
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No Smoke Without Fire?

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Does this add a new dimension to the term “laying down a smokescreen“?

The British military uses white phosphorous in Iraq but only to lay smoke screens, the government said Wednesday, after allegations that U.S. troops used the incendiary weapon against civilians during the battle of Fallujah last year…

“In the British army, we only use white phosphorous as a cover, as a smoke screen,” Defense Secretary John Reid told reporters at a NATO training exercise in Germany.

Signs Of The Times

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Well, for once some news is good news. Also, it seems to confirm what I always suspected: people and cultures do change, they do ‘move on’, even if sometimes it seems they do so impossibly slowly.

Change in Northern Ireland may be so slow it appears imperceptible, but the writing is on the wall for one of the most negative of its cultural traditions — murals glorifying paramilitary violence. Often covering entire side walls of buildings, they are a common sight in working class areas of large towns, acting as a territorial marker, badge of victory or mark of sorrow in a country still deeply divided along religious and national lines.

However, with the Irish Republican Army pledging to end its armed campaign against British rule and some paramilitary groups loyal to Britain also committing to end violence, the menacing paintings that for decades symbolized the province’s conflict are slowly being replaced.

Where once masked gunmen and shadowy assassins loomed from building walls, pictures of sports stars, authors and landscapes are beginning to spring up — most recently in pro-British “unionist” or “loyalist” areas where armed groups are starting to stand down…..

A portrait of Belfast-born writer C.S. Lewis, author of the Narnia stories, now graces a wall in east Belfast, a pro-British area, as does a painting of George Best, Northern Ireland’s favorite soccer-playing son.

Children Of The World Unite!

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Or should that be children of the world connect (to each other) using your new – Nicholas Negroponte facilitated – 125 dollar laptop. This initiative to bring cheap and abundant computing and connectivity to the world’s children seems absolutely terrific. Obviously, and at one foul swoop, the global playing field is going to become a lot flatter. If all this works, and gains enough traction to become unstoppable even in those countries who will surely resist, then the biggest digital divide of the future will surely be an age-related one.

The laptop can be powered either with an AC adapter or via a wind-up crank, which is stored in the housing of the laptop where the hinge is located. The laptops will have a 10 to 1 crank rate, so that a child will crank the handle for one minute to get 10 minutes of power and use. When closed, the hinge forms a handle and the AC cord can function as a carrying strap, according to Negroponte. The laptops will be ruggedized and probably made of rubber, he said. They will have four USB (Universal Serial Bus) ports, be Wi-Fi- and cell phone enabled and come with 1GB of memory. Each laptop will act as a node in a mesh peer-to-peer ad hoc network, Negroponte said, meaning that if one laptop is directly accessing the Internet, when other machines power on, they can share that single online connection.

The lab will initially target Brazil, China, Egypt, South Africa and Thailand, according to Negroponte, as well as the U.S. state of Massachusetts, which has just committed to equipping every schoolchild with a laptop. Negroponte hopes to start mass production of some 5 million to 15 million laptops for those markets towards the end of 2006. Come December 2007, he estimated production of the laptops at between 100 million and 150 million, three times the number of annual shipments of commercial laptops.

Kurdish TV in Denmark

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One of the many reasons I continue to support the Turkish EU accession process is because I think it will be good for human rights and democracy in Turkey, and good for the Kurds. This latest spat between Turkish prime minister Tayyip Erdogan and his Danish hosts, is simply another good example of this at work. The pressure is constantly on Turkey.

Turkish prime minister Tayyip Erdogan boycotted a joint press conference with the Danish leader in protest at the presence of a Kurdish TV station on Tuesday (15 November), highlighting European values on free speech.

“There is a fundamental difference between Turkey and Denmark in matters of freedom of expression,” the Danish prime minister Anders Fogh Rasmussen said at the press conference his Turkish counterpart avoided.

The Turkish prime minister was visiting the Danish capital Copenhagen as the first stop in a tour around EU capitals to discuss the prospects of Turkey’s EU membership. Mr Erdogan stayed away from the press conference in protest at the presence of a journalist from the Danish-based TV channel Roj TV.

Turkey has repeatedly urged Denmark to close the channel, which sends news, entertainment, debate and children’s’ programs to Kurds in Denmark, arguing it is financed by the Kurdish rebel party, the PKK, which is on the EU’s list of terrorist organisations. Danish police are investigating the station, but have not found evidence of links to forbidden organisations so far.

Source: EU Observer

UK Growth and Inflation News

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The UK economy is still very much hanging in the balance between going up and going down IMHO. The latest BoE growth estimates, coupled with not especially good employment numbers, and indications that inflation may be coming down (and hence interest rates may follow) has caused a noteable pressure on the pound sterling. BoE governor Mervyn King has put it like this: there are “substantial risks” both to the outlook for inflation and growth. The risks are “broadly balanced” so that the eventual outturn is ” just as likely to be stronger or weaker than the forecast”.

Inflation in the UK has fallen for the first time in more than a year, increasing the chance that the next move in interest rates will be down. The annual consumer price index, which is the Bank of England’s target measure, fell from 2.5 per cent in September to a weaker-than-expected 2.3 per cent in October, according to official figures.
Source: Financial Times

Unemployment in the UK continued to rise in October, but there was little evidence of inflationary pressure on pay as the growth in average earnings and bonuses fell slightly, according to official figures published on Wednesday. The claimant count, which measures unemployment as those out of work and claiming benefit, increased by 12,100 to 890,100 in October, the ninth consecutive month it has nudged higher.
Source: Financial Times