The residents of the Magenge Mapya Charcoal Camp in Tanzania face an uncertain future — the trees they rely on to make charcoal are being cut down to plant oil-producing plants for biofuels

Roughly a century ago, the Ottoman Empire was considered “the sick man of Europe” because of its poor economy, backwardness, and misrule. Today, the continent of Africa and in particular the sub-Saharan part could rightfully be considered the sick man of the world. Disastrous economics, shoddy rule, violent wars, and the plague of HIV have left a once promising continent the failure of the world.

Decade after decade of foreign aid have not been able to lift Africa out of its mire. Even the so-called “benevolence” of wealthier states has left a situation best described in dependency theory as: “the way in which resources flow from a “periphery” of poor and underdeveloped states to a “core” of wealthy states, enriching the latter at the expense of the former”. This exploitation continues today as Africa is now being utilized for the sake of biofuel production at the expense of locals. Der Spiegel reports about this new exploitation in Green Gold Rush: Africa becoming a biofuel battleground. An excerpt:

The consequences of this boom are dramatic. Experts agree that the worldwide push to grow energy plants is on overwhelming factor in the global explosion of food prices. According to one study by the World Bank, as much as 75 percent of the increase could be attributable to this change in the types of crops being farmed. Many farmers in industrialized countries are more than happy to accept government subsidies for corn or rapeseed, but this comes at the cost of the cultivation of wheat, potatoes and legumes.

Oil plants are not competing with intensively farmed land in Africa — yet. Investors argue that the land they are using is uncultivated or underused. But rising food prices and population growth will also increase pressure in the southern hemisphere to convert unused land to agricultural use.

With every story of exploitation comes a story of hope and this time it’s from Google. The IT giant is planning to bring broadband internet to the African continent (plus other underdeveloped areas) in partnership with financial institutions. It’ll cost roughly $750 million US and will be called 03B Networks.

Some would suggest that sum of money could be put to better use through irrigation schemes and trade education. Whether this is true or not, it’s much less exploitative to bring others the wonders of communication then it is to buy up land to use for the production of biofuels.

Fans of the legendary English soccer team Liverpool FC display their support

Fans of professional sports are a derided bunch. Usually associated with belonging to the lowest common denominator intellectually and culturally, others have gone as far as to claim that they represent the most prevalent form of social conditioning present in our modern society.

An observer in first century Rome coined the phrase bread and circuses to describe how Romans of that era chose food and fun over freedom, thus giving up their civic duty in favour of decadence. To people like Noam Chomsky, little has changed. In Manufacturing Consent Chomsky explains the role of sports in social conditioning:

Take, say, sports — that’s another crucial example of the indoctrination system, in my view. For one thing because it — you know, it offers people something to pay attention to that’s of no importance. [audience laughs] That keeps them from worrying about — [applause] keeps them from worrying about things that matter to their lives that they might have some idea of doing something about. And in fact it’s striking to see the intelligence that’s used by ordinary people in [discussions of] sports [as opposed to political and social issues]. I mean, you listen to radio stations where people call in — they have the most exotic information [more laughter] and understanding about all kind of arcane issues. And the press undoubtedly does a lot with this.

You know, I remember in high school, already I was pretty old. I suddenly asked myself at one point, why do I care if my high school team wins the football game? [laughter] I mean, I don’t know anybody on the team, you know? [audience roars] I mean, they have nothing to do with me, I mean, why I am cheering for my team? It doesn’t mean any — it doesn’t make sense. But the point is, it does make sense: it’s a way of building up irrational attitudes of submission to authority, and group cohesion behind leadership elements — in fact, it’s training in irrational jingoism. That’s also a feature of competitive sports. I think if you look closely at these things, I think, typically, they do have functions, and that’s why energy is devoted to supporting them and creating a basis for them and advertisers are willing to pay for them and so on.

Is being a fan of professional sports all that bad? New research by economists and psychologists suggests that sports fandom actually has some benefits.

The Boston Globe tells us how being a sports fan is not necessarily the bad thing it’s made out to be in The Secret Benefits of Fandom:

But a few scholars have started to suggest that there may indeed be another kind of benefit from big-time sports. There’s a catch, though: the team has to be good. In a forthcoming paper, economist Michael Davis and the psychologist Christian End say that having a winning NFL football team increases the incomes of the people who live and work in its hometown by as much as $120 a year. And while the study doesn’t identify exactly what causes the boost, the authors point to psychological literature suggesting that winning fans are at once harder workers and bigger spenders. In short, buoyed by the team’s success, we work longer hours, take bigger risks, and shop more avidly, all of which helps the local economy.

“This collective mass of people in a good mood, that is something that could really bolster the economy,” says End, an assistant professor of psychology at Xavier University.

and:

The new work suggests that this kind of success on the field can shape a positive mind-set that affects the rest of our lives. Studies have shown, for example, that fans are not only happier when their team wins, they feel smarter, more athletic, luckier, and even more attractive. Other research shows that happy, self-confident people tend to be more successful – at work, in school, in any realm they’re competing in – suggesting how the successes and failures of our sports heroes become our own.

“Greed is Good” – Michael Douglas as the corporate vulture Gordon Gekko in Oliver Stone’s “Wall Street”

The scene is certainly an unforgettable one. Gordon Gekko, the notorious Wall Street corporate vulture, stands in front of a shareholder meeting playing Robin Hood to the unsuspecting people in attendance as he confronts the executives of the company and pulls off a hostile takeover by appealing to peoples’ baser instincts when explaining that “greed is good”.

Although Gekko was meant to represent the cutthroat corporate culture of America in the high-flying 80s, many took his philosophy to heart. The argument went that man’s selfishness is what has propelled human invention and evolution. But is that the case?

Michael Shermer, writer, historian, and founder of The Skeptics Society tells us that this argument is in fact completely wrong. Read the interview with Michael Shermer here. Here’s a sample:

Why, if capitalism is so great, did the Enron scandal occur? Some have suggested that it was a few bad apples in the corporation.

The “bad apples” theory doesn’t explain what really happened at Enron, and it doesn’t explain the nature of corporate evil. Jeff Skilling, the CEO of Enron, set up what he thought was a Darwinian marketing environment. Skilling was a fan of Richard Dawkins’s important book The Selfish Gene, which Skilling misread. He took it to mean that evolution is driven by cutthroat competition and self-centered egotism. He liked the notion of the “survival of the fittest.” Skilling set up a Peer Review Committee, which became known as “rank and yank.” Everybody was ranked on a scale of one to five, and 20 percent of all fives had to be fired. The reviews were posted on a company website with a picture of the employee, increasing the potential for personal humiliation. Good luck being able to go out and have some fun with your teammates. Teammates! These are people who may be taking my job. Once you set up an environment like that, people begin violating rules. Skilling’s evaluation system led to a lot of behind-the-scenes wheeling and back-door dealing between department heads and managers, swapping review evaluation points. In addition to his belief in an outdated and untenable doctrine of social Darwinism, Skilling was a high-risk taker — short on dopamine, we might conjecture. What causes corporate corruption is an environment of evil established by the founders, corporate executives, and managers — a corporate psychology — that creates situations that encourage our hearts of darkness to beat faster.

A UK conservative think-tank suggests that cities in the North of England are declining without a chance of recovery

The conservative UK think-tank Policy Exchange has sent a shockwave through English politics by suggesting that England’s northern cities are declining without hope of recovery. Furthermore, they propose that residents of cities such as Liverpool and Sunderland move to the more prosperous Southeast of England and that government help this internal migration by building three million new homes to house these people.

The outrage is compounded by the fact that Policy Exchange is tied to UK Tory leader David Cameron and will no doubt have an affect on Tory support (what little that they do have) in these post-industrial cities.

As for these northern cities, Nigel Morris reports:

In its report, the think-tank said: “We need to accept above all that we cannot guarantee to regenerate every town and every city in Britain that has fallen behind. Just as we can’t buck the market, so we can’t buck economic geography either.”

Policy Exchange said many large coastal cities had lost their raison d’etre with the decline of shipping and raised the alarm over the future of Liverpool, Sunderland, Hull, Scunthorpe and Blackpool. It said it was unrealistic to expect the prosperous cities of Manchester, Leeds and Newcastle to regenerate less well-off neighbours such as Liverpool, Rochdale, Bradford and Sunderland. It said such places were not “doomed” and could not be abandoned, but people had to face up to the fact that they had “little prospect of offering their residents the standard of living to which they aspire”. The think-tank said all three million new homes earmarked for England by 2020 should be built in the South-east, making it easier for people in less well-off areas to move. It also called for massive building in Oxford and Cambridge, taking advantage of their high skills base and favourable location.

Big ideas with big money backing them couldn’t turn these sites into winners

It was only a little over a decade ago that we were told the internet would completely revolutionize how we would shop, read, interact, learn, invest, and smell. Maybe the order was a tall one and maybe the internet didn’t replace our traditional methods of doing all of these things, but it certainly has given us more options. The 1990s saw the proliferation of websites devoted to e-commerce of one sort or another as well as e-applications. These resulted in the dot.com boom that became a dot.com fizzle as everyone tried to tap into this new online market for their products and services. From Homer Simpson and his Compuglobalhypermeganet Systems to The Onion’s e-graters.com, everyone was taking a swipe at the hysteria.

Some sites have managed to survive and thrive, ebay.com and amazon.com being the two most notable.

The Business Pundit lists for us the top 25 Internet Startups that didn’t make it. All your favourites are there, including pets.com, etoys.com, and the spam-friendly lycos.com.

Speaking of which, whatever happened to these guys?

Bling Bling! Conspicuous Consumption is more prevalent amongst those with less money

Bling Culture has become a part of the American fabric thanks to the commercialization of crass hip hop that has occurred over this past decade. Label whores, big rims, oversized and too-too bright jewelry and accessories……but why?

Virginia Postrel gives us the lowdown in A New Theory of the Leisure Class:

Conspicuous consumption, this research suggests, is not an unambiguous signal of personal affluence. It’s a sign of belonging to a relatively poor group. Visible luxury thus serves less to establish the owner’s positive status as affluent than to fend off the negative perception that the owner is poor. The richer a society or peer group, the less important visible spending becomes.

On race, the folk wisdom turns out to be true. An African American family with the same income, family size, and other demographics as a white family will spend about 25 percent more of its income on jewelry, cars, personal care, and apparel. For the average black family, making about $40,000 a year, that amounts to $1,900 more a year than for a comparable white family. To make up the difference, African Americans spend much less on education, health care, entertainment, and home furnishings.

Read more at the link.

Bern, the Swiss capital, being sheltered by the Alps in the background

Quick question: What are the first three things you think of when you hear the word “Switzerland”? The most common answers tend to be The Alps, chocolate, and banking (with watches coming a close fourth).

Having lived in Switzerland for a year, I was shocked to see how rural much of the country is and by “rural” I mean rustic. I was always under the impression that Switzerland has wealthy for most of its several centuries existence but was shocked to learn that it was quite poor until this past century.

Being a strong admirer of Switzerland’s highly autonomous and decentralized political system that quite often relies on localized direct democracy, I learned that their system had much to do with their economic success. A highly skilled workforce combined with high exports, a stable currency and most of all, a stable financial/political regime has allowed Switzerland to prosper and become the envy of the world.

Could it all be thanks to the Gnomes of Zurich? John Fund explains the success story that is this alpine country in: Cuckoo for Switzerland.  

Let’s see what he says about Switzerland’s political system:

In reality, the Swiss have produced a remarkable success story that goes far beyond the signature tourist products they are known for: chocolates, watches, and knives. They have one of the world’s most stable economies, a skilled workforce, internationally recognized export companies, a sound currency, and renowned banking and financial services. All this is combined with remarkable social harmony, given that Switzerland has four national languages and great religious diversity.

The nation also has a high degree of personal freedom, linked to a decentralized government in which voters are the ultimate sovereign through an elaborate system of direct democracy—citizens can both propose their own laws and challenge any action of the government. As a matter of fact, Swiss citizens may advance new legislation or “initiatives,” which must be put to a nationwide vote if their proponents can round up 100,000 signatures in support of the legislation. By means of referendum, the Swiss can also challenge a piece of legislation already approved by the federal parliament. If opponents of the new legislation amass 50,000 signatures in the first 100 days after the law is published, the electorate is allowed to make the decision.

On trade:

Today, Switzerland looms much larger in the world economy than its small size and population of only 7.5 million people would lead one to guess. Its passion for quality has raised global standards worldwide in fields from pharmaceuticals to biotechnology to medical devices. It ranks among the top 20 global exporters. When only services are considered, Switzerland ranks among the top 12 exporters.

Trade, along with efficient industries (such as machinery and electronics), has been essential to Swiss economic well-being. Its lamentable agricultural protectionism aside (it pays each of its famous cows an annual subsidy of more than $1,500), Switzerland benefits from relatively open trade policies. And its bank law structure makes Switzerland a uniquely attractive destination for foreign investment.

Europe is by far the most important Swiss trading partner, with four-fifths of all imported goods and almost two-thirds of all exported goods being traded with the EU. But the ties between the United States and Switzerland, which share a similar federal democratic structure, are extensive. The United States is the biggest foreign investor in Switzerland, and Switzerland represents the sixth-largest foreign investor in the United States. Indeed, America imports more Swiss goods than any other country except Germany. As a direct investor in the States, Switzerland’s share is greater than all of Latin America, Africa, and Asia (excluding Japan) combined.

Read the rest at the link

These guys are wanted at parties, but are hard to find according to game theory

Guys: do you remember how difficult it was to get a woman when you were 18? It seemed that a few select guys would get more than their share while the rest of us got a few or none at all. And would you agree that the older you have grown the easier it has been to attract woman?

Is it because we become more appealing with age?

Do we look better?

Are we more interesting?

Is it an economic issue?

Or is it that there are less of us and more of them?

Maybe game theory can explain it.

Mark Gemein takes the game theory approach in The Eligible Bachelor Paradox:

The problem of the eligible bachelor is one of the great riddles of social life. Shouldn’t there be about as many highly eligible and appealing men as there are attractive, eligible women?

Actually, no—and here’s why. Consider the classic version of the marriage proposal: A woman makes it known that she is open to a proposal, the man proposes, and the woman chooses to say yes or no. The structure of the proposal is not, “I choose you.” It is, “Will you choose me?” A woman chooses to receive the question and chooses again once the question is asked.

The idea of the woman choosing expressed in the proposal is a resilient one. The woman picking among suitors is a rarely reversed archetype of romantic love that you’ll find everywhere from Jane Austen to Desperate Housewives. Or take any comic wedding scene: Invariably, it’ll have the man standing dazed at the altar, wondering just how it is he got there.

Wait, there’s more!

You can think of this traditional concept of the search for marriage partners as a kind of an auction. In this auction, some women will be more confident of their prospects, others less so. In game-theory terms, you would call the first group “strong bidders” and the second “weak bidders.” Your first thought might be that the “strong bidders”—women who (whether because of looks, social ability, or any other reason) are conventionally deemed more of a catch—would consistently win this kind of auction.

But this is not true. In fact, game theory predicts, and empirical studies of auctions bear out, that auctions will often be won by “weak” bidders, who know that they can be outbid and so bid more aggressively, while the “strong” bidders will hold out for a really great deal. You can find a technical discussion of this here. (Be warned: “Bidding Behavior in Asymmetric Auctions” is not for everyone, and I certainly won’t claim to have a handle on all the math.) But you can also see how this works intuitively if you just consider that with a lot at stake in getting it right in one shot, it’s the women who are confident that they are holding a strong hand who are likely to hold out and wait for the perfect prospect.

This is how you come to the Eligible-Bachelor Paradox, which is no longer so paradoxical. The pool of appealing men shrinks as many are married off and taken out of the game, leaving a disproportionate number of men who are notably imperfect (perhaps they are short, socially awkward, underemployed). And at the same time, you get a pool of women weighted toward the attractive, desirable “strong bidders.”

Works for me :)

Once people have an annual income of about $10,000 per capita, further income does little to promote happiness

Does a larger income automatically equate to greater happiness? Economists studying happiness emphatically conclude that it doesn’t. Mixing statistics with psychology in order to uncover glaring truths, economists are revealing some things about ourselves that those of us without a business degree from Harvard already know.

Tom Green explores the Economics of Happiness in this month’s Adbusters. Here are a few excerpts from his excellent piece:

The results are terrifying Milton Friedman’s disciples. Consider this: once people have an annual income of about $10,000 per capita, further income does little to promote happiness. Worse yet, economic growth in most industrial nations, which has tripled or quadrupled our wealth since 1970, hasn’t made us noticeably happier. In some countries, despite all this vast increase in wealth and consumption, folks are less happy than they were a generation ago.

Here’s another one:

“Some of the very basic things we assumed in economics are not consistent with the evidence. This idea that income is so important to happiness is not correct. All the evidence seems to be pointing in the direction that we are working too much. In fact, we’re happy if we work less. We are spending too much time on work and too little time with friends and family. So there’s a mistake in the economic models that suggest happiness will come from more income.”

Read the rest of the article to see how what we’ve been told is completely wrong.