Russ Savage: Digital Economics

surplus

Sun, 23 Jul 2006 00:10:13 GMT

From Business Week, July 31, 2006

Iran's annual oil and gas revenues:     $60.000 billion
annual aid contribution to Hezbollah: $   .180 billion
annual aid contribution to Hamas:    $   .040 billion

and from Business Week, July 31, 2006
Russia's government owned Gazprom gas company:

annual revenue: $60.000 billion

Some customers and their reliance on Gazprom:

Finland:            100%
Latvia:              100%
Lithuania:         100%
Slovkia:            100%
Greece:         87%
Czech Republic:    81%
Austria:             73%
Turkey:               66%

A Revolution in Wealth, by the Tofflers
What most business, political and civil leaders have not yet clearly understood
is a simple fact: An advanced economy needs an advanced society.
For every economy is a product of the society in which it is embedded
and is dependent on its key institutions.

(chapter 5)

in another place in the book, they mention the concept of: surplus complexity.
more on that later.

Who Will Pay? Coping with Aging Societies, Climate Change, and OtherLong-Term Fiscal Challenges:

Mon, 24 Nov 2003 02:41:45 GMT

Bradford Delong writes Notes: Long-Term Budgeting

Yet another book to add to the must-read-soon pile:

Which links to an Economist article, In the long run we are all broke, How to stop governments going bust.

...Most countries' explicit net debt - issued as bonds and traded every day in financial markets - is at manageable levels, relative to GDP. However, embodied in current tax and expenditure policies are a lot of obligations for which governments have not yet had to make explicit provision. This implicit liability arises mainly from future increases in spending on pensions and health care. Include it, and total debt vaults to levels last seen (for explicit debt) in wartime. Governments often fall into bad habits when their debts are so high, usually by resorting to the printing press and using inflation to cut the real value of their liabilities....

So what is to be done? First, governments must look much farther ahead than they do now. An increasing number of western countries are planning their public finances on a basis of three to five years, but this is nowhere near enough, argues Mr Heller. They need to incorporate a long-range perspective (of at least 25 years and preferably more) into their budgets. Second, these projections should be vetted by independent agencies such as America's Congressional Budget Office, because of governments' tendency to see the silver lining and not the cloud....

That links to an IMF publication, Who Will Pay? Coping with Aging Societies, Climate Change, and Other Long-Term Fiscal Challenges:

Sun, 02 Nov 2003 02:18:25 GMT

High Tech Energy Crisis.

According to the San Jose Mercury News, a recent survey by Deloitte & Touche demonstrates that increased scrutiny of option issuance has resulted in a notable decrease in option use by tech companies. 73% of the public companies surveyed said that they have reduced or will reduce the number of options they issue in the coming 12 months. And two thirds anticipate overhauling their compensation plans if the accounting rules require the expensing of options. To my mind, those are devastating numbers. Stock options are the fuel upon which tech companies are propelled. They give everyone in a company the incentive to strive to make the most of that company. If those incentives are dismantled, I fear that startups will no longer achieve the same velocity that has historically been the case in the United States. And that is not an economic advantage this country can afford to lose. [VentureBlog]

Sat, 01 Nov 2003 21:03:25 GMT

The Fiscal Problem of the 21st Century. Charles Jones, Visiting Scholar at the Federal Reserve Bank of San Francisco and Associate Professor at UC Berkeley, writes about the fiscal challenges ahead.

The fiscal problem of the 21st century, then, is this: Under current policies, the fraction of resources society devotes to health care appears likely to rise substantially over the next 50 years. Reasonable projections suggest that spending on Medicare and Medicaid as a percentage of GDP may well rise from 3.4% in 2000 to nearly 15% by 2075.

[Scott Loftesness]

Sat, 05 Apr 2003 22:31:46 GMT

GREENspan points to the place in the middle. Thanks to Scott Lazerwith and Murry Chapman for sending along this bit of good news: Alan Greenspan has signaled what other smart economists have been saying for a long time: That this race to protectionism in the field of intellectual property is not without cost. As Greenspan said, “If our objective is to maximize economic growth, are we striking the right balance in our protection of intellectual property rights? Are the protections sufficiently broad to encourage innovation but not so broad as to shut down follow-on innovation?“ This is good news for all things happy and light, for it helps a meme that we should be pressing hard: IP is of course good; but it does not follow that more IP is better. [Lessig Blog]

Thu, 13 Mar 2003 12:25:43 GMT

Tiny Transactions, Without the Coins. TOKYO. By Ken Belson. [New York Times: Technology]

Thu, 06 Mar 2003 11:40:40 GMT

Contactless Payments. Earlier today I posted an announcement about the Smart Card Alliance's new white paper on contactless payments. I read through the paper this afternoon and would like to highly recommend it as very useful background for anyone wanting to understand what's happening in this important emerging technology arena. By the way, I've been calling them "proximity payments" -- and have set up a separate weblog category to cover that subject. [Scott Loftesness]

Smart Card Alliance: Contactless Payments White Paper. The Smart Card Alliance has released a new white paper on contactless payments.
The latest trend in retail payment applications is contactless payment. Contactless payment systems are used successfully in Asia, Europe and North America and offer a number of advantages to issuers, retailers, and consumers. Contactless payment allows issuers to penetrate the cash payment market, enjoy increased customer transaction volume, and improve customer retention and loyalty. Retailers realize benefits due to faster transaction times, increased revenue, improved operational efficiency, and lower operating costs. Consumers enjoy the convenience of hands-free payment, the ability to pay for multiple services using one device, and the security of not having to display a card for payment.
[Scott Loftesness]

So this salesman comes into a bar with a portable MRI...

Fri, 28 Feb 2003 12:36:31 GMT

Looking Inside the Brains of the Stingy
"...The Player 1's who do not follow the presumably rational strategy often wind up better off. Even without communicating with fellow players, they are able to cooperate for mutual benefit.

"Why do people react differently to the same situation? And why do so many people give up money to punish anonymous cheapskates?

"Experimental economists have mapped out these anomalies and tested how much they affect economic interactions. Now a new field, called neuroeconomics, is using the tools of neuroscience to find the underlying biological mechanisms that lead people to act, or not act, according to economic theory.

"In neuroeconomics, volunteers go through exercises developed by experimental economists studying trust or risk. Instead of simply observing subjects' behavior, however, researchers use imaging technologies, like M.R.I.'s, to see which brain areas are active during the experiment...."
[New York Times]

Fri, 28 Feb 2003 12:10:41 GMT

New Mobile Payment Services Association announced. Orange, Telefonica Moviles, T-Mobile and Vodafone have announced that they are forming a new Mobile Payment Services Association.
For customers, the aim is to provide the opportunity to purchase a wide range of digital and physical goods and services with their mobile phones using an easy, secure solution. The solution aims to become the industry standard for m-commerce payments. Merchants and merchant acquirers will benefit from a standard set of interfaces through which they will gain access to a potentially huge international customer base. Software and solution vendors will benefit from published technical interfaces enabling the development of compliant m-payment products and services. Operators will benefit from a standard way of integrating and efficiently managing their relationships with merchants, merchant acquirers and content providers.
Former NatWest executive Tim Jones will be CEO of this new organization. [Scott Loftesness]

Credit Card Cos. Watch Own Backs. MasterCard, Visa, American Express and the banks that issue credit cards don't do enough to protect merchants and consumers from the perils of fraud, reports analyst firm Gartner. By Michelle Delio. [Wired News]

Plastic is on a payroll The next time payday rolls around, imagine going without a paycheck or direct-deposit slip. Instead, your money essentially is downloaded onto a piece of plastic that resembles a credit card. From that, you make ATM withdrawals and debitlike purchases
[The Arizona Republic]

Mon, 10 Feb 2003 14:03:47 GMT

Kansas City Federal Reserve Bank: Nonbanks in the payment system. An excellent overview (by Terri Bradford, Matt Davies, and Stuart E. Weiner of the Federal Reserve Bank of Kansas City) of the US payment system and the many roles that nonbanks play in the system. PDF format.
Nonbanks have always been a key component of the nation?s payments system. In recent years, however, nonbanks have become even more prominent. This heightened visibility raises several questions. What payments activities are nonbanks engaged in? What roles do nonbanks play in specific payments types? What types of risk are potentially associated with nonbank participation? This paper begins to address these questions. Preliminary findings include: (1) Nonbanks are involved in a myriad of activities and roles, both in traditional and emerging payments types; (2) Nonbank business relationships with banks and other participants in the payments systems are often highly complex and interrelated; (3) Nonbanks are rarely directly involved in settlement activities and, hence, appear to be associated with limited settlement and systemic risk; (4) Both nonbanks and banks appear to be increasingly susceptible to operational risk factors.
[Scott Loftesness]

Mon, 10 Feb 2003 11:47:40 GMT

CNN: Cashless society gets mixed reviews. CNN carries an AP wire story about Moneo, the new French electronic purse chip cards. A friend, just back from Paris, notes that many Parisians don't like all of the change introduced by the conversion to the Euro. It's some of those subtle consumer convenience advantages that may just result in success. But some don't agree:
"We all know that the future of money is completely virtual," said Torris, the Forrester analyst. "Moneo is a first step toward that."

Try telling that to Christine Berube.

She is refusing to offer the service at her tobacco counter in a dimly lit bar that serves up endless glasses of cheap table wine and cups of coffee to mostly elderly regulars.

"I think it's useless," the 46-year-old tobacconist said to nods of agreements from clients who draw heavily on their cigarettes. "I know how to count change quickly and don't want to enrich the banks."
[Scott Loftesness]

Mon, 10 Feb 2003 11:43:52 GMT

Washington Post: The Check's Last Writes. Jackie Spinner reports on the growth in electronic payments.
Checks still account for nearly 60 percent of all retail non-cash payments, according to Federal Reserve data. By comparison, electronic payments made up 7.9 percent of the pie in 2000.

The Fed, which actually does not process the majority of checks written, now believes that check writing has peaked, for real. In an August 2002 report, the Fed said it appears that the number of checks written began to decline sometime in the mid-1990s after a high of 49.5 billion in 1995.

A key point: Electronic payments are growing, at a rate of 18 percent from 1979 to 2000, compared with a growth rate of 1.2 percent for checks in the same period.
[Scott Loftesness]

Sun, 26 Jan 2003 01:30:30 GMT

At the Beating Heart of an Export Machine. China's Pearl River delta has been the scene of an acrimonious struggle over who will control the highways, bridges, tunnels and ports that transport an ever-growing river of goods. By Keith Bradsher. [New York Times: Business]

Thu, 02 Jan 2003 14:15:28 GMT

Report: Online spending busts records. Buoyed by a rising population of online shoppers and more liberal spending by online shopping veterans, e-commerce in the United States leaps nearly 40 percent in 2002. [CNET News.com]

Statistics reveal incremental online shopping growth
By Ephraim Schwartz, InfoWorld, December 31, 2002

Putting aside the hype coming from companies that track e-commerce industry growth, government statistics reveal that the online shopping industry barely reaches beyond 1% of total retail sales.

Transparent Accounting

Tue, 31 Dec 2002 19:46:44 GMT

Pushing Accounting Rules to the Edge of the Envelope. Can accounting that follows the stated rules still be unreliable? In other words, is there a gap in GAAP? By Kurt Eichenwald. [New York Times: Business]

Enough penance for corporations?. Public ire and lawmakers' fury in '02 led to broad reforms - and more are coming. [Christian Science Monitor | Top Stories]

New Law of Demand and Supply

Mon, 30 Dec 2002 13:55:57 GMT

San Jose Mercury News: Law of supply and demand turned on its head. Cecil Johnson reviews Rick Kash's book The New Law of Demand and Supply.

Sears Credit supplies Kash with an example of how knowing the wishes and needs of your most profitable demand segment pays off. The author tells of the panic that hit Sears Credit when the corporation decided to begin accepting MasterCard and Visa. Thought was first given to reducing the percentage rate on the Sears Card to compete. But that approach was discarded after research revealed that the percentage rate didn't matter that much to Sears' most profitable demand group. Those customers just wanted low minimum monthly payments and Sears' commitment to stand by its products. The Sears customers in the researchers' target group said they would continue to use their Sears cards in order to leave room on their other cards, which could be used at other stores. "If they maxed out those cards and the refrigerator broke down, only the Sears card stood between them and no refrigerator," Kash writes. The Sears Credit team used its findings, Kash writes, to enable Sears Credit to give up its monopoly and still increase business performance. "It raised the Sears share of credit card transactions in its stores, and its margins actually went up," he writes. "Over three years, its profits on the card rose by 44 percent."

Looks like a most interesting book (published last September) -- it gets great reviews on Amazon -- will have to check it out! His firm's web site also has an interview with Rick Kash. [Scott Loftesness]

San Jose Mercury News: "Today's demand economy is marked first and foremost by oversupply in virtually every business category," Kash writes. "As a result, each competitor must first select its target groups of customers, then create supply that more fully satisfies them than the supply offered by competitors. Unless you ask the 'whom' question first, you will inevitably create supply that falls short of meeting demand and you will generate lower returns and less profit."

Thu, 26 Dec 2002 13:53:03 GMT

One-Word Shoppers' Lexicon: Price. The once-mysterious ways of merchandising have been reduced, in most places, to a single element: price. By Constance L. Hays. [New York Times: Business]

The Profitability of Digital Money

Fri, 20 Dec 2002 14:10:49 GMT

[gathered by Scott Loftesness, 12/19/02]
Globe and Mail: Big retailers bet on bank cards. Marina Strauss reports on how big retailers in Canada are relying heavily on bank cards for their profits.

At Toronto-based Hudson's Bay Co., which runs the Bay and Zellers, most operating profit -- 94 per cent of it -- came from card earnings last year, DBRS figures indicate. That's almost double the 44 per cent of HBC's total operating profit from card earnings in the previous year, DBRS said. Meanwhile, Sears Canada Inc. saw 57.5 per cent of its operating profit come from credit card earnings in 2001, up from 19.9 per cent a year earlier, DBRS said. At Toronto-based Canadian Tire Corp. Ltd., 26.4 per cent of its operating profit came from credit card earnings last year, up from 17.6 per cent in 2000.

West Australian: Credit card slug looming. Gay McNamara reports on the situation in Australia as merchants beginning January 1 are free to surcharge credit card transactions.

The Reserve Bank estimates the service fees on credit cards cost merchants about $1.5 billion a year, which is passed to consumers through higher prices. Small retailers are the hardest hit, paying an average 3 per cent to 3.5 per cent and some paying more than 4 per cent. But they were restricted from passing the cost to customers under credit card scheme rules.

Internet meet Globalization. Globalization, Internet

Wed, 18 Dec 2002 13:30:10 GMT

Play nice. (perhaps the bridge is in the "Here's more from Britt" part)

Ring of Net.

On the NEA (Nobody owns it, Everybody can use it, Anybody can improve it) debate (that started here and continued here) about the nature of the Net, Chuq explains how Linus doesn't really own Linux... or, why he does and doesn't. Not an easy line to draw. It's a yes but no kinda thing.

Which is why it's just easier to use the NEA characterization than to explain its many exceptions. Think of it as a slogan, a tagline or a rallying cry [~] like Land of the free, home of the brave. Yes, there are exceptions; but it has the ring of truth to it. That ring alone makes its point.

Here's more from Britt.

[Source: The Doc Searls Weblog]

From a fascinating piece on economics and (anti-)globalisation, by 1998 Nobel economics laureate, Amartya Sen:

The [anti-globalisation] protest movements are often ungainly, ill-tempered, simplistic, frenzied and frantic, and they can also be highly disruptive. And yet, at another level, they also serve the function, I would argue, of questioning and disputing the unexamined contentment about the world in which we live.

In this sense, the global doubts can help to broaden our attention and extend the reach of policy debates, by confronting the status quo and by contesting global resignation and acquiescence. That, it can argued, is a creative role of doubts, even if some of the presumptions and many of the proposed remedies that go with the protest movements are themselves under examined and unclear.

It is important to recognise that the question-mongering role of doubts can itself be creative and productive, and we have to separate the disruptive parts of the protest movements from their constructive function.

[Source: [ t e c h n o c u l t u r e ]]

digital Money

Sat, 14 Dec 2002 16:04:37 GMT

New Wall St. Pitch: Buy Low, Sell High and Pay Bills, Too. Brokerage firms are no longer satisfied with managing long-term investments for their clients. Now they want their checking accounts, too.
By Patrick Mcgeehan. [New York Times: NYT HomePage]

"We believe very strongly that the financial adviser is in transition to a balance-sheet adviser in our clients' eyes," Mr. Naratil [senior vice president at UBS PaineWebber] said. "It is going to be one of the great opportunities for brokerage firms going forward. You can give better advice to a client if you can understand more of their financial picture. One of the ways to do that is to have them consolidate all of their assets with you."

Globe and Mail: How thieves took $2,000 from my bank account.
By Jane Armstrong, The Globe and Mail Saturday, December 14, 2002

Two weeks ago, I was robbed. Twice. The bandits struck while I was out of the country, visiting the Oregon Coast during American Thanksgiving.

The first theft happened on a Friday afternoon, when I would have been climbing around a rock jetty at Rockaway Beach. The thieves got $1,000 in cash. The next day, while I lolled on a deck chair overlooking the Pacific Ocean, they stole another $1,000.

They didn't break into my house or steal my purse. They ransacked a savings account using a counterfeit debit card. My own card was safely tucked in my wallet.

Fri, 13 Dec 2002 19:00:34 GMT

MasterCard tests high-tech payments. The credit-card giant is trying out a new system designed to speed the payment process at check-out counters and replace cash transactions at places such as fast food restaurants. [source: CNET News.com]

TaiwanNews.com: Mondex Taiwan expands card's reach to Hi-Life.

Cash is good but a smart card is better, e-wallet advocate Mondex Taiwan said yesterday. Mondex Taiwan, a subsidiary of MasterCard, announced that 600 Hi-Life convenience stores would be accepting its store value card starting next Tuesday. "You can purchase anything from newspapers to pientang (lunchboxes) using our Mondex card," said company spokesman Harrison Hou. "You don't have to worry about loose change and large bills anymore." Mondex's electronic cash program can store value for up to five currencies and is globally inter-operable, said Hou. In Taiwan, cardholders are allowed to store up to NT$10,000 in their e-wallets, he continued.

[source: Scott Loftesness]

Fri, 13 Dec 2002 18:55:28 GMT

Indianapolis Star: New card makes credit a present. Chris O'Malley writes about the surge in interest in gift cards.

"The proliferation of gift cards is tremendous," said Robert G. Markey Jr., vice president of consumer retail financial services at Bain & Co. in New York. Bain estimates that sales of gift cards -- proprietary store cards and Visa/MasterCard versions -- have grown from about $13 billion in 1998 to $38 billion in 2002, and "this may be on the low side," Markey said.

[Scott Loftesness]

Thu, 12 Dec 2002 15:51:23 GMT

MasterCard: PayPass utilizes contactless card technology. MasterCard has announced PayPass, a new "contactless" card payment program that provides consumers with "a simpler way to pay." More info available at www.paypass.com .

MasterCard PayPass is an enhanced payment card that features a hidden embedded computer chip and antennae. A cardholder simply taps or waves his or her MasterCard PayPass card on a specially equipped merchant terminal. The card then transmits payment details wirelessly, eliminating the need for a cardholder to hand over his or her card for a merchant to swipe through a reader. Account details are communicated directly to the special terminals and are then processed through MasterCard's highly trusted acceptance network. Moments after a consumer taps the terminal with his or her PayPass card, they receive payment confirmation and are on their way. MasterCard PayPass is built around globally interoperable standards and relies on the ISO Telecommunications Standard #14443 to transmit Track 2 data via radio frequency. In North America, where the majority of transactions are authorized on-line, the payment application data is based on the magnetic stripe information. The card/terminal interaction is based the MasterCard Proximity Chip - Online Profile, which is a subset of EMV/ISO7816 commands.

[Scott Loftesness]

Wed, 11 Dec 2002 22:24:27 GMT

Electronic Business: TI's RFID Technology makes wireless watch tick. Mark Long reports on TI's involvement in creating the Timex-built wireless wrist-watches for the ExxonMobil Speedpass Network.

When Speedpass-enabled customers arrive a the McDonald's drive-thru window, they simply order their food from the menu board, drive on to the payment window and wave their RFID-equipped wristwatches or key chains at the Speedpass reader. The reader/antenna then passes that information onto the appropriate value added network to verify the customer's profile and credit information. Upon authentication, the Golden Arches light up to indicate that the tag is read. The system then automatically bills purchases to the credit/check card of the customer's choice, prints a receipt, and the customer is on his way. There are no extra fees when using this method of payment.

[Scott Loftesness]

Wed, 11 Dec 2002 12:58:41 GMT

U.S. firms move IT overseas (HP, EDS, IBM, etc)
By Ed Frauenheim, Staff Writer, CNET News.com, December 11, 2002, 4:00 AM PT
Under pressure from overseas rivals, U.S. companies selling information technology services have a new mantra: If you can't beat them, join them.

... Already, more than 300 of the Fortune 500 firms do business with Indian IT services companies, according to Gartner. The research firm predicts that by 2004, more than 80 percent of U.S companies will have considered using offshore IT services. In addition, more than 40 percent of U.S. corporations will have completed some type of offshore IT pilot program or will be using IT services with an overseas component by that time.

That IT services seepage is confirmed by a November report from Forrester Research. It estimated that the number of computer jobs moving overseas will grow from 27,171 in 2000 to 472,632 five years after that. Forrester researchers predict that other services--including call center services and back-office accounting--will follow IT services in moving abroad....