Tag Archives: Globalization

Got Optimal?

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It seems to me that one of the most underrated notions in the world is that of the “optimal” arrangement.    You hear a lot of folks talking about things like  “exploitation”, “growth”, “fairness”, “maximizing profits”, etc, etc, but it seems to me we don’t talk nearly enough about how to structure the world in the way that best benefits the most people, ie to seek the optimal arrangement given the needs and contributions of all the players involved.

Nearsighted conservatives will sometimes mistake that kind of discussion as “socialist” because they see it as veering away from the competitive, individual forces that very effectively drive  highly productive economies, but they forget that in the game of economics we should generally be looking at metrics such production divided by number of people (GDP), and this number will be bigger if we optimize correctly.

The left in this sense is usually too “far sighted”, looking to distribute the wealth that may vanish if we eliminate those individual and corporate competitive structures that are the hallmark of industrialization and the spectacular rise in the average standard of living in the industrialized world over the past century.

So, how to optimize things?   Economist Vilfredo Pareto  (OMG he’s Italian?!  economic credibility challenge alert!) had some neat ideas with respect to optimizing systems where we’d examine them to find ways to increase the well being of some participants without decreasing that of others.    http://en.wikipedia.org/wiki/Pareto_efficiency

I think this simple basic idea should factor in a lot more, especially for those who fret a lot about the inequitable distribution of production towards the rich.    Those folks generally, and very wrongly, assume that redistribution won’t have negative effects on production.    It will, although that certainly does not mean we should not redistribute anything.   It just means we need to redistribute with *great caution* to avoid the catastrophic kinds of problems faced by basket case economies like North Korea.

I think the single greatest challenge of optimizing is the degree to which you factor in the needs of other nations.   Optimizing with the rural Pakistan peasantry in mind is different than if we draw our lines at the US border and say to heck with the needs of everybody else.   Although I believe we have a moral imperative to take the needs of the world into much better account than we do now, I also recognize that it’s not practical or even possible for those of us who enjoy the many benefits of industrialized capitalism to successfully integrate our economies with those of countries like North Korea or China or even very friendly “economic allies” like India.     Fortunately for those guys – and probably for us too – industrial globalization and the communications  and technology revolution are handling much of this task, often via the invisible hand of Adam Smith style free marketeering.

The future … is better optimized !

Does your Storytelling Trump the Truth?

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One of the greatest confusions of my life has been watching otherwise very sharp folks descend into a sort of silly crazed madness – or at least incoherency – with respect to complex topics like politics, economy, global warming, etc.

AT THE VERY LEAST a thinking person should realize that we generally don’t have enough data or enough experiments to draw firm and certain conclusions about most complex topics, yet most of us seem to want to do exactly that.     I like to think I’m open minded about most things and generally happy to entertain even the most skeptical views of ideas I hold dear, but I’m sure I fall into this incoherency sometimes too.   However I try to insist to myself that I’m going to let the facts drive my conclusion rather than create stories and then fit in only those facts that support them.

Happily I think I …. finally …. understand why smart people can believe such dumb things, or support their views so strongly without regard to a reasoned analysis of all the information.

Storytelling trumps the truth !

It is not clear to me why we humans are so enamored with stories as opposed to data analysis, but clearly we have a huge preference for the storybook versions of things.     This is fun and entertaining when it comes to films, theater, music, and reading stories to your kids.    Unfortunately our storytelling obsession often gets in the way of good science, politics, and economics, all of which are best driven by cold hard facts and cool, rational interpretations of that data.

The storytelling obsession is SO powerful in fact that I often have people argue with me over something that is downright totally obvious if you view it rationally for even a moment.    It’s the idea that we should all work very strongly against politically motivated spending patterns and try to prioritize spending so we spend where it does the most good.    Most people will initially agree with this, but as soon as you say, for example, that we should take money AWAY from keeping comatose folks alive and put that money towards prenatal care in the Bronx (or, heaven forbid, Africa!),  many people do the descent into irrationality and say things like “well, what if it’s your friend who is in a coma?”.      If you say we should cut the defense budget they say (irrationally) “But how will we protect ourselves”, as if spending and protection obviously go hand in hand.      Stories allow us to spin and bend the data and analysis to our own agendas, and this is not a healthy process.

Many will relate personal stories or create stories to describe scenarios where – in some limited set of circumstances – they would have been hurt by a system that did not prioritize things in their way.    OF COURSE we will all have times when a rational system does not meet our needs!    This happens all the time.    But political / storytelling  spending – which is now rampant – will in all cases virtually guarantee we have suboptimal allocation of resources.

The answer is that a rational person recognizes that we’re all in this together and we need more rational rules about spending and we’ll all need to live with (or die by) those rules.    Sure there can be processes for exceptions to the general rules, but it’s simply not rational to suggest, as many do, that “we should always spend all the money in the world to save every single person”.

I think see these storytelling effects best on the far left and right of issues.    These can be political where President Obama is portrayed as a conservative corporate stooge by the incoherent left and a communist non-citizen by the incoherent right.   Neither view lines up with any but a delusional view of reality, yet both are fairly popular (and incompatible) ideas.

On a global scale we see religious fanatics use storytelling to weave their madness and bring continued instability to many regions.     I’d argue that a major challenge for many nations is to abandon leaders who are primarily charismatic storytellers in favor of resolute and analytical problem solvers.    Ideally you’ll find people who are both and in my opinion Obama may fit that bill if he can extricate himself from old school Democratic party economic delusions.

Bill Gates’ Critics – they just can’t handle the truth!

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I get so tired of reading the innane drivel criticizing Bill Gates’ excellent vision of global prosperity through more innovative approaches to global capitalism.    Gates is right on, and this should be obvious to those who care about capitalism OR who care about bringing prosperity to the billions who suffer in developing countries.

Over at TechCrunch people are ranting irrationally about bootstrap prosperity in the selfish and foolish way US technophiles often do, oblivious to the causes and circumstances of poverty in the developing world and without any compassion for the *hundreds of millions* of children mired in poverty around the world.  

Here’s how I vented over there:

Bravo to Gates. Many of the comments here floored me with their lack of insight.
First, to suggest Gates is not sincere is nonsensical. His record of philanthropy is clear, focused, and brilliant. Whatever you think of Microsoft’s history of sometimes ruthless corporate dominance you simply are not paying attention to think Gates vision of global prosperity is not genuine. I’d even go so far as to suggest Gates fortune was made largely through the purchases of other affluent people, and now he’s giving most of it to the poor. That is a virtuous cycle if I ever saw one.

Second, the notion that unfettered capitalism is the most expeditious way to feed the poor and improve the infrastructures of poor countries is naive and dangerous. Even Adam Smith noted that types of intervention are needed to preserve the integrity and power of free market forces. In nations that suffer from corrupt or short sighted leadership and cumbersome bureaucracies (that is to say, all nations), we need to bring modified capitalism to bear ASAP if we want to stabilize prosperity and lift the billion+ people who are simply out of the virtuous globalized capital loop. Gates point is that more innovative approaches to capitalism will benefit everybody, and he’s spot on.

Meanwhile Open Sourcer Matt Asay is conflating open source issues and Microsoft with global development, seeming to suggest that the fastest way to global prosperity is to bring Open Source to the world and kill Microsoft.   Here’s what I wrote over there:

No. Emphatically. You are correct that Open Source is great, and also that Microsoft has strategically fought against open source. But Gates is correctly working to reallocate personal and corporate responsibilities. He’s saying that more of the big profits and big innovation should be focused on improving the lot of those in the developing world. This is a profound approach and a virtuous one.

I don’t think it is reasonable to ask Microsoft to be a key player in dismanting decades of their corporate dominance, even though I’m happy to see that fade. It’s also unreasonable to suggest the benefits of Open Source development will necessarily flow to the world’s poorest people. More likely they’ll flow to those of us in first world who are able to take advantage of them. I’m big on Open Source, but hardly think Microsoft should be a leader in that space. I’m even bigger on focusing attention on developing world problems and the kind of conflation of issues here simply confuses people.

Gates is speaking today at the Davos conference.   It would be nice if  people actually listen to what he is saying.

Joe Duck – Chinese Edition

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Click HERE for my Chinese Edition.    Cool?

Actually, any web page can be auto-translated in this fashion by Google.  It’s a really cool feature though I’m guessing the translations must leave something to be desired.    My understanding is that you still need humans to pull quality meaning from one language to another.    Still, this is a huge step forward and the advent of hand held translation units, online translation, and a lot more global travel is breaking down one of the barriers to international understanding – language.

China is expected to be the world’s top travel destination by 2020 and I don’t doubt that estimate.  It is one of the reasons I’m anxious to get over there to SES China in Xiamen, the Xianglu Grand Hotel (though I’m not clear if this is the SES China venue or not), The Great Wall of China, Beijing and the Forbidden City, Hong Kong Harbor, Hong Kong, Kowloon, and much more of the amazing China Travel landscape. I want to start exploring and understanding the nation and culture that may eventually eclipse the USA in terms of global influence  (I’m not predicting that – just noting it is a possibility.  What is a certainty is that China will continue to be one of the most influential nations for some time to come).      One of the most interesting graphs I have ever seen showed the global GDP of about 1850, noting that India+China were over half the global totals, and the USA was not even in the same league.    The USA’s remarkable industrial rise since that time led us to the global economic dominance we now enjoy, but things could change … again.   I don’t see this shift in Economic dominance as a negative, rather more an inevitable balancing and levelling of an increasingly globalized playing field – the world Tom Friedman has described so well in his book “The World is Flat”.