Attempted revolution in Iran

It's been grim watching the rigged election and subsequent riots and repression in Iran over the past weeks. Videos put out over the internet show a young woman apparently killed in the rioting; police on motorbikes riding through the crowds swinging batons, soldiers firing into crowds from rooftops. The bravery of the protesters is impressive as is the cruelty of their pathological government. I've been disappointed that condemnation from our half of the world hasn't been louder. There needs to be some way of restraining and punishing governments run amok. There are too many examples. This one is right up there with Tiananmen Square in 1989 and Burma in 2007 to name a couple.

Debt to GDP ratios headed higher

Country | Debt to GDP ratio
===========================
US      |  45%
UK      |  50%
Japan   | 171%
Germany |  39%
Canada  |  42%
China   |  20%
Brazil  |  36%

* Q4 2008

The big picture blog quotes Bill Gross of PIMCO's "Staying Rich in the New Normal". The US deficit of nearly $1.5 trillion is 10% of GDP. In 5 years, that get's us to a debt to GDP ratio of 100%. Add funding the baby-boomer's healthcare and retirement and your in the banana republic territory of 300%.

I dunno where they got the above numbers. Google says the national debt is 11 trillion while GDP is 14 trillion, which gives 78%. Looks like we're right about at the point of no return. Doh!

The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.

Healthcare results compared

“According to the Economist the total US spend on healthcare is 15.4% of GDP including both state and private . With that it gets 2.6 doctors per 1,000 people, 3.3 hospital beds and its people live to an average age of 78.2.
“As a whole Europe spends 9.6% of GDP on healthcare, has 3.9 doctors per 1,000 people, 6.6 hospital beds and live until they are 81.15 years old.

Roubini says the dollar's hosed

THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. ... This decline of the dollar might take more than a decade, but it could happen even sooner if we do not get our financial house in order.

Digital rights management sucks

Cartoon by Rayma, originally in reference to Venezuelan politics.

The free market works when participants in the market are rewarded in proportion to the amount of good they contribute. With DRM this proposition is reversed. Society gains less benefit from a protected work, but the owner of the work gets more reward. (Or so they hope.) On top of that, copy protection mechanisms invariably provide a less useful product even to the paying customers. This helps explains why DRM is so universally reviled.

The crux of the problem is that traditional economics states that the price of goods in a competitive free market should approach the marginal cost to produce them. This works nicely for manufactured goods like cars, where the cost of capital, like factory equipment, can be amortized over large numbers of the manufactured product. For digital goods, the marginal cost approaches zero and the traditional economic model stops working.

Consider, also, the difference between rival and nonrival goods. To understand rival goods, imagine you want to build a house on a piece of empty land. Someone else wants to turn that land into a farm. Only one of those two uses can be accommodated. Either you or the farmer will have to outbid each the other for the use of the land. The theory goes that this competition will tend toward the most efficient use of scarce resources. But nonrival goods, for example information, can be put to an unlimited number of uses. Copying information is usually very easy compared to the effort of deriving the information in the first place, whether we're talking about a scientific theory or a piece of music. This creates a situation in which the most benefit is had by copying the information as widely as possible, yet it's very hard for the original creator to capture much of the wealth he has created. This is a very real dilemma, but the solution favored by intellectual property rights advocates - that of creating scarcity where no natural scarcity exists - sacrifices some fraction of the utility that would otherwise be gained in order to increase the portion that property holders can capture.

The publishing industry has set itself up as a middleman between the real content providers and consumers. They seek to use legislation to preserve this privileged position. A truly free-market approach would be to allow the middlemen to be made obsolete. This is what will happen eventually, the efforts of our toadying crony capitalist government notwithstanding.

We need to find market mechanisms that more closely align reward with contribution for the real content providers, the creative people. This is a tricky problem with no obvious solutions. For now, we'll have to put up with a lot of stupidity because so few people even clearly understand the problem.

This guy is my new hero

Shoe thrower Muntadar al-Zaidi.

Time to buy that first house?

The NYT has a peice out called Maybe It’s Time to Buy That First House. The author tries to shade the article towards encouraging people to buy. He links to a report from the Center for Economic and Policy Research that basically says, don't look for gains in home equity any time soon. All the talk about bailing out over-indebted home "owners" pisses me off. I'm glad somebody is saying this: "If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers."