Showing posts with label economic impact. Show all posts
Showing posts with label economic impact. Show all posts

June 26, 2008

China moving to World Bank Upper middle income classification in 2010

Although China's economic size on an exchange rated basis has passed Germany this year and will pass Japan in 2009 and will probably pass the United Statesin 2016, China is still classifed as a lower middle income country by the World Bank. This means that using a 3 year average of exchange rates and looking at the GDP according to the Atlas method on July 1st of a year, that China has per capita GDP between $906 - $3,595.

At the end of 2009, China's currency could have appreciated and the size of its economy grown so that it has $4153 per capita of GDP. But the level at the middle of the year not including Hong Kong and Macau would be about $3500. So it would take until 2010 to get to $3890 per capita using the 3 year average of currency appreciation if this sites forecast for growth and currency were correct. When China passes the United States it will probably not be what the World bank considers a high income country with per capita income at $11,116 or more.

UPDATE: The Economist magazine reports that China has a lot of hot money flowing into the country ($500 billion in 2008)

This causes inflation pressure and requires that China mass sterilization. Excess liquidity is mopped up by by issuing bills (as “sterilisation”) or by lifting banks’ reserve requirements. But all this complicates monetary policy.

To curb future inflation, China therefore needs to stem the flood of capital.

One solution would be a large one-off appreciation of the yuan so that investors no longer see it as a one-way bet. This, in turn, would give the PBOC room to raise interest rates. The snag is that the yuan would probably have to be wrenched perhaps 20% higher to alter investors’ expectations, and this is unacceptable to Chinese leaders, especially when global demand has slowed and some exporters are already being squeezed.

This implies that monetary policy will remain too loose. The longer that the torrent of hot money continues and interest rates remain too low, the bigger the risk that underlying inflation will creep up.


Thus the constant appreciation at a rate as fast or slightly faster than the 7% of the first half of 2008 seems likely. Perhaps 20-25% over the next 18 months. This would put the exchange rate with the US dollar of 5.15 to 5.5 at the end of 2009.

Achieving World Bank Upper middle income per capita income levels would be getting up to the level of Jamaica and a little better than Thailand in 2006. High income is getting up to the level of Hungary in 2006 or better.

When people say that China cannot catch up the overall size of the US economy then they are saying that China cannot raise per capita income to the level of Hungary.

China is a massive country with a population several times Europe. So the move to different income levels is and will be uneven. Shanghai is passing into High income levels. Hong Kong and Macau area already high income. The coastal cities and provinces are already upper middle income and will move to high income levels first. The rural and interior areas will lag at low income and lower middle income levels.

FURTHER READING
The 2006 list of upper middle income countries

American Samoa, Argentina, Belize, Botswana, Brazil, Bulgaria, Chile,
Costa Rica, Croatia, Dominica, Equatorial Guinea, Gabon, Grenada,
Hungary, Kazakhstan, Latvia, Lebanon, Libya, Lithuania, Malaysia,
Mauritius, Mayotte, Mexico, Montenegro, Northern Mariana Islands, Oman,
Palau , Panama, Poland, Romania, Russian Federation, Serbia,
Seychelles, Slovak Republic, South Africa, St. Kitts and Nevis,
St. Lucia, St. Vincent and the Grenadines, Turkey, Uruguay,
Venezuela, RB

China will have an installed nuclear power capacity of 40 million kilowatts on the mainland by 2020, or four percent of the total installed power generation capacity. New official projects with a combined capacity of 23 million kilowatts are being launched, involving a total investment of 450 billion yuan (about $60 billion).



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June 17, 2008

China's usage of cement

World cement usage in 2008 is 2.8 billion tons and is forecast to be 3.5 billion tons in 2012 China is using 1.3 billion tons in 2008 about 45% of the world total.

The cement usage is mainly driven by the fact that China is adding a one to one and half Los Angeles worth of city every year.

1.5%- 2% population migration from rural areas to small and large cities.
20 million to 30 million people into cities.

Building apartments, houses, roads, rail, airports, offices and factories.

China aims to increase its operational railway lines from 75,438 km in
2005 to more than 90,000 km by 2010.
So adding about 3000 km of rail per year.

Cement used for NYC subway was about 8000 cubic yards per mile. 11,260 tons per mile. (1.42 tons per cubic yard)

China has about 34,000 km of highways (2006), a number that's expected to more than double by 2020.

China now has 3.57 million km of roads, linking 88 percent villages and 98.5 percent rural towns.

About 13 million tons of cement is needed per 100,000 km of rural road. [33 pounds of cement per square yard of road, 7 yards wide, 1760 yards per mile = 203 tons per mile or 127 tons per km]

Some 270,000 km of rural highways will be built and upgraded in 2008. By comparison, 423,000 km of countryside highways were built or upgraded in 2007, a record high. So about 35 million tons of cement in 2008 and 60 million tons of cement in 2007.

The interstate highway in the US was responsible for 31% of the productivity increase in the USA after it was build and still boosts productivity

Construction non-residential buildings was two fifths of building construction in China

New construction will advance at a nine percent annual rate in real terms through 2011, continuing to outpace improvements and repairs. This trend will sustain through the next decade as China continues a high pace of economic development and industrialization. New construction also dwarfs improvements and repairs in size, accounting for over three-quarters of all construction expenditures in 2011.

China is building the equivalent of a 3 gorges dam every 2 years. They are putting dams on many other rivers. But the dam only used 10.8 million tons of cement. Less than 1% of one year's demand.


Construction expenditures in China are forecast to increase 8.8 percent annually through 2011 to ¥6.4 trillion in real (inflation-adjusted) terms. An ever expanding domestic economy, continuing endeavors to upgrade infrastructure, sustained strength in foreign investment funding, healthy demand for Chinese manufactured goods, and
further population and household growth will all work to drive construction market gains in China.

Nonbuilding construction expenditures will climb ten percent annually in real terms through 2011, fueled primarily by the government's efforts to modernize and expand China's physical infrastructure. These efforts include plans to upgrade the nation's rail system, to expand the national highway network -- known as the "7918 Network", and to enhance energy supplies through construction of new power plants such
as the Xiluodu Hydropower Plant and the Yangjiang Nuclear Power Station

Nonbuilding construction fastest growing end use

Cement consumption in nonbuilding construction will continue to post the best gains of any end-use segment, rising 6.8 percent yearly through 2010. Gains will be stimulated mainly by strong growth in China's nonbuilding construction activity. The government's continued efforts to modernize the country's infrastructure is exemplified by such massive projects as the South-North Water Diversion -- designed to redirect water to the northern plains from central and south China. This project, scheduled for completion in 2050, will result in annual cement consumption of over one million metric tons.

Nonresidential building will remain the largest end use for cement in China, growing at a 4.6 percent annual rate through 2010. Continued strength in foreign and private direct investment in commercial real estate development will help spur market gains.

Ready-mix concrete manufacturers in China will be the strongest market for cement, climbing at an annual pace of 12.9% to reach 194 million metric tons in 2008. Growth will be driven by the government's 2004 ban on onsite concrete production, enacted to help reduce environmental damage from onsite cement operations and improve the overall quality of concrete used in construction

FURTHER READING
McKinsey on China's urbanization

China's urban population will expand from 572 million in 2005 to 926 million in 2025 and hit the one billion mark by 2030. In 20 years, China's cities will have added 350 million people—more than the entire population of the United States today [17.5 million per year]. By 2025, China will have 219 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.


This site believes that China's urbanization is happening faster than official Chinese figures have indicated.

China is expecting 24 million new job seekers in cities and towns

Official figure was 577 million (44%) urban population in 2006

China was 37.7% urban in 2002 6.3% increase in 4 years. 1.6% per year increase. 21 million per year.

The Economist magazine talks about China's infrastructure splurge

Worldwide construction report

Construction machinery China is a booming business as is all construction related activity in China

China cement is more expensive than Thailand's cement

China's cement demand

China's CO2 emissions

Cement at wikipedia

Read More...

June 11, 2008

Death and Taxes

U.S. life expectancy has been steadily rising, usually by about two to three months from year to year. This year's jump of fourth months to 78.1 years is
"an unusually rapid improvement," Preston said.

The preliminary number of deaths in the United States in 2006 was 2,425,900, a 22,117 decrease from the 2005 total. With a rapidly growing older population, declines in the number of deaths (as opposed to death rates) are unusual, and the 2006 decline is likely the result of more mild influenza mortality in 2006 compared with 2005.

37 page preliminary analysis of the proposed McCain and proposed Obama tax plans The plans would reduce tax revenues by $3.7 trillion (McCain) and $2.7 trillion (Obama) over the next 10 years, or approximately 10 and 7 percent of the revenues scheduled for collection under current law, respectively.

This is confirming this site's previous analysis that Obama's plan to tax the rich will not result in more tax revenue More of what people in the higher income brackets report will be taxed but there will be less revenue because of changes in tax strategies to avoid taxation.

So the CDC report on 2006 US life expectancy and the Urban Institute and Brooking Instition tax policy center analysis are indicating less death and less tax revenue.


Tax plan summaries

Senator McCain would permanently extend the 2001 and 2003 tax cuts, increase deductions for taxpayers supporting dependents, reduce the corporate income tax rate, and allow immediate deductions for the cost of certain short-lived capital equipment. Senator Obama would permanently extend certain provisions of the 2001 and 2003 tax cuts primarily affecting taxpayers with incomes under $250,000; increase the maximum rate on capital gains and qualified dividends; and enact new and expanded targeted tax breaks for workers, retirees, homeowners, savers, students, and new farmers. Senator McCain proposes to extend permanently the AMT "patch" that has prevented most individuals and families with incomes below $200,000 from being affected by the tax, and in our interpretation of his proposal, Senator Obama would do the same. Each candidate would also increase the estate tax exemption and reduce the estate tax rate compared with current law in 2011 and beyond, although Senator McCain would cut the tax much more than Senator Obama. Finally, each candidate promises to broaden the tax base and reduce corporate loopholes. McCain lists eight breaks for oil companies as targets but, other than that, is short on details for his pledge to eliminate "corporate welfare." Obama identifies a variety of steps, including basis reporting for capital gains, taxing carried interest as ordinary income, and enacting sanctions on international tax havens that don't cooperate with enforcement efforts, but he would also need additional as-yet-unspecified policies to achieve his revenue target for base broadening.


How there were fewer deaths in 2006
The 2006 increase is due mainly to falling mortality rates for nine of the 15 leading causes of death, including heart disease, cancer, accidents and diabetes.

"I think the most surprising thing is that we had declines in just about every major cause of death," said Robert Anderson, who oversaw work on the report for the health statistics center.

The overall death rate fell from 799 per 100,000 in 2005 to about 776 the following year.

Perhaps the most influential factor in the 2006 success story, however, was the flu. Flu and pneumonia deaths dropped by 13 percent from 2005, reflecting a mild flu season in 2006, Anderson said. That also meant a diminished threat to people with heart disease and other conditions. Taken together, it's a primary explanation for the 22,000 fewer deaths in 2006 from 2005, experts said.


FURTHER READING
History of tax in the USA

2007 tax brackets at wikipedia

Top incomes and composition (salary, business income, capital gains)


Year top rate and income level of top rate

Tax policy center site

tax brackets by year

Individual tax rates

How many in the higher tax brackets

Sources of historical tax information

Historical networth 1989 to now

Effective tax rates

Read More...

June 10, 2008

Blog Economics

Chitika, an ad network, had a study of the revenues of the top 50,000 blogs for 2006 Chitika made the assumption that an estimate of total advertising revenues for a blog would be 3 times as much as the Chitika revenue for the blog. Using revenue trends and statistics from a representative
sample for the 12000+ Chitika publisher network. Ad revenue in a blog is more sensitive to the rank of the blog than what one would expect in a typical Zipf Law 80/20 curve situation. [More money for the top blogs and less for the the bottom]. Blog ranking was determined by Technorati ranking.

Top 50,000 made $500 million in advertising in 2006.

Top 10 blogs in Technorati, $40 million in ad revenue.

The top 1% accounted for approximately 20% of the total revenue.
Top 500 blogs made $100 million. Avg $200,000
11-500 blogs made $60 million. Avg $120,000

The top 5% accounted for approximately 50% of the total revenue.
Top 2500 blogs made $250 million
$150 million for 501-2500 Avg $75,000

The top 10% accounted for approximately 80% of the total revenue.
Top 5000 blogs made $400 million
2501 through 5000 made $150 million Avg $60,000

The top 15% accounted for approximately 90% of the total revenue.
Top 7500 blogs made $450 million
5001 through 7500 made $50 million Avg $20,000

7501 through 50,000 made $50 million Avg $1176.

Converting Alexa ranking to daily pageviews
Rank
242 www.saatchi-gallery.co.uk 0.5% reach 68 million page views/day
500 www.huffingtonpost.com 40 million page views/day
5000 www.space.com (4600) 6 million pv/day
35000 800,000 pv/day
70000 20-100,000pv/day

CPMs of $1 are low and $4 are average but it depends upon topic and being able to sell the inventory of CPM. It also matters how hard the site is trying to monetize.

Some Technorati to Alexa Ranks

http://makezine.com/blog
Technorati Rank: 10,810 Alexa: 6400 4 million pv/day

http://pajamasmedia.com/instapundit
Technorati Rank: 280 Alexa: 35000 250,000 pv/day

http://theoildrum.com
Technorati Rank: 2780 Alexa: 32000 70,000 pv/day

http://liewcf.com
Technorati Rank: 5752 Alexa: 18621 300,000+ pv/month

http://www/hackszine.com
Technorati Rank: 9073 Alexa: 50530 10k-30k per day

top 25 blog properties (5-15 times annual profit for valuation) for 2008

1.The Gawker Properties: $150 million. Gawker (#228), ValleyWag (#34 technorati), Gizmodo (#3 technorati), Wonkette (#678 technorati), and a number of smaller websites. The company claims 30 million monthly unique visitors. $11 million in revenue.

2. MacRumors: $85 million.Blog. It ranks No. 2,700 in Alexa. Page views at 33 million, which seems a bit high. Advertising at least $30 per page CPM. est $12 million and with 60% margin.

3.Huffington Post: $70 million. In late 2007 management claimed that the website had 4 million unique visitors per month and would bring in $7.5 million for the year.
#1 ranking on Technorati.

4.PerezHilton: $48 million. Is No 400-755 in Alexa. Compete show 1.3 million visitors a month. Quantcast puts month page views at 191 million. That seems high. It would put revenue at $900,000 million a month with a $5 CPM.

5.TechCrunch: $36 million. The TechCrunch network claims almost 3.2 million unique visitors and 14.6 million page views. Alexa 951-1795. CPM yield estimate $30. Revenue from advertising at $438,000 a month or $5.3 million a year. #2 ranking on Technorati.

6 (tied): Ars Technica $15 million. Sites ranks 2,500 in Alexa. #7 technorati. Audience is growing very rapidly. Quancast has reach at 1.1 million. Ads are all premium clients. Est $40 per page CPM. Page views are probably six million a month. Revenue of almost $3 million.



FURTHER READING
Craigslist revenue for 2008 is about $80 million

TV station web revenue $1.2 billion

Myspace revenue $800 million

Guy Kawasaki blog revenue was not very good in 2007

Adsense case study of Weblogs inc. $90K/month, 1 million/year, 60 million pageviews

10 steps to seven figure income from your site

Read More...

June 09, 2008

Obama's plan to tax the rich won't work

Businessweek discusses Obama's plan to increase the marginal tax rate back to the level under Bill Clinton and before the Bush tax cuts

Of the 149 million households filing federal income taxes for 2006, some 3% reported income between $200,000 and $500,000; fewer than 1% claimed income above half a million dollars.

The Bush administration instituted a federal tax cut for all taxpayers. Among other changes, the lowest income tax rate was lowered from 15% to 10%, the 27% rate went to 25%, the 30% rate went to 28%, the 35% rate went to 33%, and the top marginal tax rate went from 39.6% to 35%

Many people believe that increasing the marginal rate will collect more revenue from the the rich or for the government in general. Historically it does not matter if the top marginal rate is 90% or 25% the government collects 19.5% of GDP. The only way to get more tax revenue is to increase GDP. Such as a concerted effort to accelerate a manufacturing and construction revolution using new systems and technology.




Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser's Law says it will also lower tax revenue. That's a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice. It would surely be unpopular today with those presidential candidates who plan to raise tax rates on the rich – if they knew about it.

Although Hauser's Law sounds like a restatement of the Laffer Curve (and Mr. Hauser did cite Arthur Laffer in his original article), it has independent validity. Because Mr. Laffer's curve is a theoretical insight, theoreticians find it easy to quibble with. Test cases, where the economy responds to a tax change, always lend themselves to many alternative explanations. Conventional economists, despite immense publicity, have yet to swallow the Laffer Curve. When it is mentioned at all by critics, it is often as an object of scorn.

Because Mr. Hauser's horizontal straight line is a simple fact, it is ultimately far more compelling. It also presents a major opportunity. It seems likely that the tax system could maintain a 19.5% yield with a top bracket even lower than 35%.


The fact that no matter what the rates and brackets all that can be obtained is 19.5% that argues for as simple a tax code as possible for getting that 19.5%.

The fair tax
or a
Relatively flat tax

The wealthier someone is then the more control they can have over their financial profile. Money can be shifted between income, corporate profits, dividends and capital gains and new income can be shifted between jurisdictions.

FURTHER READING

Tax brackets 1971-1978

1975 Median income 11,800 Mean income 13,779
Someone making 5 times the median income. Would be in the 60k-70k range.
(equal to someone now making 200,000).
Tax rate would be 53-55%.


1965 Median income was $6900 Five times that was 35,000 for 50-53% tax rate.

CBO analysis of long term taxes

Heritage examination of taxes

Comparing some tax burdens between countries


Comparing top marginal individual and corporate tax rates


Historical lessons of lower tax rates

Read More...

June 05, 2008

Built for Speed: Printing Buildings


Contour Crafting is an effort to scale up rapid prototyping/manufacturing (a billion dollar industry to make 3 dimensional parts) and inkjet printing techniques to the scale of building multi-story buildings and vehicles. The process could accelerate the trillion dollar (US only) construction industry by 200 times. Projections indicate costs will be around one fifth as much as conventional construction. (Land prices are unchanged, so the actual prices of homes would not change as much in say Hawaii, Tokyo, Manhattan or San Francisco). Using this process, a single house or a colony of houses, each with possibly a different design, may be automatically constructed in a single run, embedded in each house all the conduits for electrical, plumbing and air-conditioning. [H/T to a reader Bonesteel] Contour crafting could be one part of a new manufacturing revolution

The machine will cost between $500K to $700K for average size (2000 sq ft -- 200 m2) detached houses. This is not much given that a concrete pump truck is now $300k-$400K. Note that with one machine numerous homes can be built. The first commercial machines to be available this year, 2008. The machine will be collapsible to form into an easy truck load. The unloading and setup will take between 1-2 hours.

Behrokh Khoshnevis is the visionary who has been driving this concept. He is the Director of the Center for Rapid Automated Fabrication Technologies (CRAFT) and Director of Manufacturing Engineering Graduate Program at USC.

Initial plan is to use the technology for emergency shelters and low-income housing in underdeveloped countries (Mexico, with the demand for nearly 500,000 houses per year, seems to be a good starting choice for implementation), almost immediately after its development they will address local building codes for commercial deployment of CC in the US.

Because of the unprecedented speed of CC construction, attendant improvements in the construction inspection process will be required. They plan to develop advanced sensory systems and information technologies for automated real-time inspection and feedback to municipal computers overseeing ongoing CC construction activities at various locations.



Competing Construction Automation
There are two categories of automation considered by the Japanese construction companies. The first uses single task robots that can replace simple labor
activities at the construction sites. Single task robots can be classified by four different types- concrete floor finishing, spray painting, tile inspection, and material handling.

The second category consists of fully automated systems that can construct high
raised steel buildings or steel reinforced concrete buildings using prefabricated
components. An example of this approach is Big-Canopy, which is the world’s first automated construction system for building a precisely defined concrete structure and has four independent masts supporting an overhead crane which delivers components at the control of a simple joystick. All tasks are scheduled and controlled by a centralised information control system. The introduction of robotics at construction sites has contributed to productivity, safety, and quality improvements. Yet, the contribution of robotics at current levels is not revolutionary and current automation approaches are still geared toward conventional processes. Automating conventional processes (such as using a brick laying robot) is invariably expensive, hence the associated cost saving is minimal. Fast changing construction requirements and project complexities create complicated requirements and exceptional challenges for automation technology to meet.

The Big Canopy construction system can be divided into the following subsystems:
· a roof supported by four tower crane posts, which are situated outside the building
· a complex hoist system with three cranes mounted against the roof
· a jib crane on the roof to mount and to dismantle the tower crane posts
· a high-speed construction lift to all floors
· all components bar-coded for easy identification
· a material management system to manage the flow of materials and components

The Big Canopy automated construction system ensures good working and environmental conditions, shorter construction time (about 13% less), less waste and improved overall productivity (0.9% less cost).

There are Prefabricated homes
Modular homes
Panelized homes

Panelized home construction can complete the project in 90 days from the time we begin to dig. Custom plans generally take four-to-six months from start of construction to finish. The weather-tight shell finished in days, as opposed to the many weeks required with "site framing."

So all prior efforts to improve building construction are vastly inferior to contour construction if contour construction delivers on its goals.

Three subsystems are required to build a complete house in one day. The Extrudable Materials and Fabrication (EMF) thrust will research and develop materials, extrusion systems, and structures built by extrusion of materials. The Modular Components and Assembly (MCA) thrust will research and develop the non-extrudable components required by the grand challenge ­ such as reinforcement, electrical, plumbing, and sensor systems ­ and on the robots required both to assemble these components and to deploy the extrusion systems developed by the first thrust. The Integrated Software Systems (ISS) thrust will research and develop the software needed to go from design through construction, including planning and controlling the behavior of the multitude of robots to be developed by the previous thrust, and providing the logistical support required for constructing a house in a day, or beyond this to constructing a full community in a small number of days.

Environmental benefits
Globally more than 40 percent of all raw materials are consumed in the construction process. Each of the 6 million new houses built in the United States have 3-7 tons of waste from construction.

FURTHER READING
This concept is like the inflatable electric car idea. Rethinking the process for how a major segment of our economy works to enable cost breakthroughs.

Inflatable cars and scaling up printer technology for making buildings are the kind of powerful ideas that could enable acceleration of economic growth even without successful development super technologies (like fusion, molecular nanotechnology or super artificial intelligence). It is similar to how Henry Ford's mass production methods accelerated economic growth at the beginning of 1900s. However, there is no reason we cannot re-invent the car and construction and develop super technologies. So even without molecular nanotechnology there
could be a step up in economic growth rate with ideas like this and inflatable electric cars. These ideas are also very compatible with a nanofactory world.

Youtube Contour Crafting videos





Center for Rapid Automated Fabrication Technologies at the University of Southern California

The goal of the Center for Rapid Automated Fabrication Technologies (CRAFT) is to develop the science and engineering needed for rapid automated fabrication of objects of various size up to mega-scale structures such as, boats, industrial objects, public art and whole building structures.

Selective Inhibition sintering (SIS) method is capable of making plastic as well as metallic parts without the use of laser.

Megascale fabrication article

Read More...

June 02, 2008

Better Robots and AI are not the only ways your job could disappear in the future

When people talk about the Technological Singularity and advanced robots and artificial (general) intelligence, it seems a large part of the denial of that future is the idea that "a machine cannot do what I do" or "a machine cannot replace my job".

It does not necessarily take more "intelligence".

People have known about vending machines for decades.


But was it smarter computers and robots that enabled fully automated convenience stores in the US and Japan ?
The picture is not the japanese version but a Kroger automated convenience store in the USA.

There are more than 5.5 million vending machines operating in Japan--that's one for every 20 people--and last year they raked in a total of $56 billion in sales, according to the Japan Vending Machine Manufacturers Association (JVMA). You deposit your coins and make your choice: dried squid or hair tonic, batteries or green tea, boxers or beer. Sanyo's Auto Shop Vendor isn't just bigger than the Coke-and-coffee machines of the past; advanced mechanical engineering allows it to handle what was until recently an unthinkable variety of necessities and impulse purchases. "This is four vending machines in one," exults Sanyo deputy general manager Misao Awane. "It holds 200 different products, at three different temperatures."

The question is not can a machine do exactly what I do the way I do it ?
The question: Is there a successful business model where what you do is no longer necessary ? The good news is that people will be freed up to be involved in new businesses that grow the economy.

There have been more mundane job displacement:
There is self checkout at Walmart, Home Depot and other stores
Self service gas stations
Ecommerce where shopping and business transactions are mostly removed from bricks and mortar
Wikipedia killing encyclopedia companies.
Collaboration systems eliminating repeating the same research work many times over.
Open source software eliminating jobs where the same work is repeated at many companies.

Automated teller machines or websites like Paypal can reduce the people involved in financial businesses. So can new investment products like Exchange Traded Funds


Going down the list of jobs and looking at how many people have different jobs which are the jobs that are safe from displacement ? Even if a class of jobs is not completely eliminated could demand be severely reduced ?

23.3 million jobs in the USA for office administration and support. (New business systems that require fewer people. Web 2.0 companies only need a handful of people or one person to do what took hundreds only a few years ago).
14.3 million jobs in the USA for sales and related work. (Automation and new sales processes)
11.3 million jobs in food preparation and serving. (Improved frozen meals)
10.1 million jobs in production. (Automation and process re-engineering)
9.6 million jobs in transportation and material moving. (more local production : high rise farming, rapid prototyping and manufacturing systems)
8.3 million jobs in education, training and library. (online learning, MIT recordings of the best professors.)
6.9 million healthcare practitioners and technical. (Biomarker tracking with cheap devices to catch and treat diseases early or in the developing stages. Keep people healthier and avoiding the need for more costly and people intensive intervention).
6.7 million jobs in construction and extraction (pre-fab buildings and panels).
6.0 million Management. Re-engineering to flatten organizations and take out layers of management. Web 2.0'ing a business. Reinvent it where a lot fewer people are needed.
5.4 million Installation, Maintenance, and Repair. Redesign things where the quality is better and it does not break or does not need service or is simple to install.
etc...

It is good to increase productivity because it is the process by which an economy becomes more wealthy.

FURTHER READING
Smart stores: re-inventing stores around RFID

Read More...

April 10, 2008

China currency stronger than 7 to the US dollar

China's yuan is now stronger 7 to 1 versus the US dollar [6.99 as of April 10, 2008]

The Asia Times discusses the advantages of a strong currency for China.

Beijing may have so far the strongest incentive not to wage any currency wars but to accelerate the pace of yuan’s appreciation. In January, the consumer price index in China went up 7.1% from a year earlier, followed by a 8.7% year-on-year increase in February (Bloomberg, March 28). A major appreciation of the yuan, together with raising the interest rate further, is seen as the most effective way of bringing China's ongoing inflation under control.


A stronger yuan, Yu Yongding [director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences and former member of the country's powerful Currency Committee] writes, will certainly have an impact on China's export volumes, and potentially affect some manufacturing jobs. But the impact will be limited given the size of the Chinese economy. Furthermore, China's imports will become cheaper, thus canceling out any negatives that may come from the reduced exports. Ultimately, such macro-level adjustment will make the Chinese economy much healthier and more competitive.


The NY Times take on the stronger yuan

Many specialists believe the shifting fortunes of the yuan and the dollar are healthy for the global economy because they reflect the reality of a weakening American economy and China’s growing wealth. Before, many economists complained, America was consuming far too much and China was overproducing and not consuming enough.

“This is helping rebalance the global economy,” an economist at Credit Suisse, Dong Tao, said. “But this is also very significant for China’s export sector. We forecast that as many as one third of export manufacturers may close down over the next three years.”


FURTHER READING
The yuan passed 7.3 at the end of 2007

Some are project the yuan to be at 6.45-6.8 by June, 2008

'Inflation in China is the number one policy concern,' said David Mann, currency strategist at Standard Chartered Bank. 'At the moment, the priority is to lower inflation over growth.'

The Chinese government earlier today revised its gross domestic product growth for 2007 to 11.9 percent from 11.4 percent. It was the fifth straight year that GDP expanded at more than 10 percent.

The yuan will probably appreciate to 6.45 to the dollar by the end of June and to 6.10 to a dollar next year, said Mann.


If David Mann were correct then the projection below would have China with Hong Kong and Macau passing the United States economy on a exchange rate basis in 2017.

Updated projection for slightly faster appreciation, US recession and China slowdown this year and next.

Year GDP(yuan) GDP growth Yuan per USD Yuan+ % China GDP China/w HK/Ma US GDP
2006 20.94 7.8 2.7 13.2
2007 23.6 11.5% 7.3 3.24 13.8
2008 26.2 9% 6.35 15% 4.1 4.4 13.9
2009 28.8 9% 5.62 13% 5.1 5.4 14.2
2010 31.6 9.5% 5.11 10 5.9 6.4 14.6
2011 34.4 9.5% 4.64 10 7.1 7.6 15.0
2012 37.5 9.5% 4.26 8.0 8.4 9.0 15.4
2013 40.9 9.0% 3.91 7.0 10.4 10.7 15.9
2014 44.6 9.0% 3.72 5.0 11.9 12.3 16.4
2015 48.2 8.0% 3.54 5.0 13.5 14.0 16.9
2016 52.0 8.0% 3.53 5.0 15.3 15.8 17.4
2017 55.9 7.5% 3.38 5.0 17.2 17.8 17.9
2018 59.8 7.0% 3.20 2.0 19.2 19.8 18.4
2019 64.0 7.0% 3.09 2.0 21.4 21.8 19.0
2020 68.5 7.0% 3.0 2 23.4 23.8 20.1
2021 72.6 6.0% 2.9 2 25.3 25.7 20.7
2022 77.0 6.0% 2.9 2 27.3 27.7 21.3
2023 80.8 5.0% 2.8 2 29.3 29.7 22
2024 84.8 5.0% 2.8 2 31.4 31.8 22.6
2025 89.1 5.0% 2.7 2 33.6 34.0 23.3

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April 08, 2008

Elite individual power : who has it and what does it take ?

Many people who discess the enlightenment and social discuss the power of the masses versus the power of the lite. The supporters of the Enlightenment do not want "the elite" to roll back society to a more fuedal looking power structure. Who are the elite and where does real power reside ? Newsweek has a relevant article.

The Fed brought together the leaders of the world's 14 major financial firms, from five countries, representing 95 percent of all the activity in global markets. The Swiss were there, the Germans were there, the British were there. Interestingly, no Asians were there, not even the Japanese. Goldman Sachs chairman and CEO Lloyd Blankfein "jokingly called them 'the 14 families,' like in 'The Godfather'," says Geithner. "And we said to them, "You guys have got to fix this problem. Tell us how you are going to fix it and we will work out some basic regime to make sure there are no free riders to give you comfort; you know that if you move individually everybody else will move with you."



The people on the recent calls like those described by Geithner, plus a few thousand more like them, not only in business and finance, but also politics, the arts, the nonprofit world and other realms, are part of a new global elite that has emerged over the past several decades. I call it the "superclass." They have vastly more power than any other group on the planet. Each of the members is set apart by his ability to regularly influence the lives of millions of people in multiple countries worldwide. Each actively exercises this power, and often amplifies it through the development of relationships with other superclass members. This new class of elites is both more permeable, and more transient, than elites of the past. The age of inherent lifelong power is largely behind us—to be a member of this superclass one has to hold on to power just long enough to make an impact, be it by leading a revolution or launching a revolutionary Web site.

That such a group exists is indisputable. It includes the heads of the biggest financial institutions, the 14 families Blankfein joked about, and then some; the top 50 control almost $50 trillion in assets. The heads of the world's biggest corporations are also members; the top 2,000 support perhaps 500 million people, generate almost $30 trillion in sales and have well over $100 trillion in assets. The list also includes top government officials with real cross-border influence: heads of state, of course, leading diplomats and military chiefs, but also central bankers like Geithner and Bernanke, and their counterparts like Chinese Central Bank Gov. Zhou Xiaochuan, reappointed this week, and the other top economic officials responsible for the world's fastest-growing economy and its nearly $1.5 trillion in reserves.

They are joined by media barons like Rupert Murdoch, whose global network of newspapers, Web products, movie studios and TV stations reach hundreds of millions of people every day, or tech entrepreneurs like Facebook wunderkind, 23-year-old Mark Zuckerberg, whose company is redefining what global community means. Alongside them you'll also find those who have different forms of power: religious leaders from the pope to Iran's Ayatollah Khamenei, perhaps the most powerful man in the Middle East today; clerics who have taken to a media pulpit and reach millions around the world daily like Latin America's Luis Palau or the Egyptian "tele-Muslim," former accountant turned religious TV star Amr Khaled. Cultural icons who use their celebrity platforms for activism like Bono and Angelina Jolie would certainly make the list, as would terrorist leaders and others who form a kind of shadow elite, like Osama bin Laden or the recently arrested arms dealer, Russia's Viktor Bout. A growing number of tycoons from emerging markets make the cut: Indian industrialist Ratan Tata, Russian oligarch Roman Abramovich, Saudi oil investor Prince Alwaleed bin Talal, and Chinese real-estate billionaire Yang Huiyan, among others.

One can debate who is in and who is out endlessly. Indeed, given that so much power today is institutional or job related (and thus fleeting), any ranked list is out of date almost as soon as it's finished.

A core group of somewhere between 6,000 and 7,000 people—meaning that each one is "one in a million"

Says Stephen Schwarzman, CEO of Wall Street's Blackstone Group, "The world is pretty small. In almost every one of the areas in which I am dealing or in which we at Blackstone are looking at deals, you find it is just 20, 30 or 50 people worldwide who drive the industry or the sector."


For media access and influence for individuals one really needs to have weekly audiences of 3 million+ to have not elite power but some semblance of somewhat significant influence. Although this can be greater if the influence over a smaller group is stronger. 10,000 in a fanatical army willing to die for you versus 10 million casual listeners (ditto heads).

For elite media power, moguls own multiple major newspapers, radio stations, internet outlets and television stations in multiple countries. The collective audience should exceed 200 million and be around 500 million to one billion.

Media power is just one possible venue to achieve power. There is political, military, wealth, corporate power etc...

FURTHER READING
Where do people get there news

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April 06, 2008

Disruptions from small recessions to extinction events

I am presenting disruption events for humans and also for biospheres and planets and correlating them with historical frequency and scale.

There has been previous work on categorizing and classifying extinction events. There is Bostroms paper and there is also the work by Jamais Cascio and Michael Anissimov on classification and identifying risks (presented below).

A recent article discusses the inevtiable "end of societies" (it refers to civilizations but it seems to be referring more to things like the end of the roman empire, which still ends up later with Italy, Austria Hungary etc... emerging)

The theories around complexity seem me that to be that core developments along connected S curves of technology and societal processes cap out (around key areas of energy, transportation, governing efficiency, agriculture, production) and then a society falls back (soft or hard dark age, reconstitutes and starts back up again).

Here is a wider range of disruption. Which can also be correlated to frequency that they have occurred historically.


High growth drop to Low growth (short business cycles)
Recession (soft or deep) Every five to fifteen years.
Depression

List of recessions for the USA (includes depressions)

Differences recession/depression

Good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe. By this yardstick, the last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent. Great Depression of the 1930s can be seen as two separate events: an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38. (Depressions every 50-100 years. Were more frequent in the past).

Dark age (period of societal collapse, soft/light or regular)
I would say the difference between a long recession and a dark age has to do with breakdown of societal order and some level of population decline / dieback, loss of knowledge/education breakdown. (Once per thousand years.)

I would say that a soft dark age is also something like what China had from the 1400's to 1970.
Basically a series of really bad societal choices. Maybe something between depressions and dark age or something that does not categorize as neatly but an underperformance by twenty times versus competing groups. Perhaps there should be some kind of societal disorder, levels and categories of major society wide screw ups - historic level mistakes. The Chinese experience I think was triggered by the renunciation of the ocean going fleet, outside ideas and tech, and a lot of other follow on screw ups.

Plagues played a part in weakening the Roman and Han empires.

Societal collapse talk which includes the previously mentioned Toynbee
http://en.wikipedia.org/wiki/Societal_collapse

Toynbee argues that the breakdown of civilizations is not caused by loss of control over the environment, over the human environment, or attacks from outside. Rather, it comes from the deterioration of the "Creative Minority," which eventually ceases to be creative and degenerates into merely a "Dominant Minority" (who forces the majority to obey without meriting obedience). He argues that creative minorities deteriorate due to a worship of their "former self," by which they become prideful, and fail to adequately address the next challenge they face.

==Thus the Enlightenment would be requiring a creative majority. where everyone has a stake and capability to creatively advance society.

Many now argue about how dark the dark ages were not as completely bad as commonly believed.
The dark ages is also called the Middle Ages

Population during the middle ages

Between dark age/social collapse and extinction. There are levels of decimation/devastation. (use orders of magnitude 90+%, 99%, 99.9%, 99.99%)

Level 1 decimation = 90% population loss
Level 2 decimation = 99% population loss
Level 3 decimation = 99.9% population loss

Level 9 population loss (would pretty much be extinction for current human civilization). Only 6-7 people left or less which would not be a viable population.

Can be regional or global, some number of species (for decimation)

Categorizations of Extinctions, end of world categories

Can be regional or global, some number of species (for extinctions)

== The Mass extinction events have occurred in the past (to other species. For each species there can only be one extinction event). Dinosaurs, and many others.

Unfortunately Michael's accelerating future blog is having some issues so here is a cached link.

Michael was identifying manmade risks
The Easier-to-Explain Existential Risks (remember an existential risk
is something that can set humanity way back, not necessarily killing
everyone):

1. neoviruses
2. neobacteria
3. cybernetic biota
4. Drexlerian nanoweapons

The hardest to explain is probably #4. My proposal here is that, if
someone has never heard of the concept of existential risk, it's
easier to focus on these first four before even daring to mention the
latter ones. But here they are anyway:

5. runaway self-replicating machines ("grey goo" not recommended
because this is too narrow of a term)
6. destructive takeoff initiated by intelligence-amplified human
7. destructive takeoff initiated by mind upload
8. destructive takeoff initiated by artificial intelligence

Another classification scheme: the eschatological taxonomy by Jamais
Cascio on Open the Future. His classification scheme has seven
categories, one with two sub-categories. These are:

0:Regional Catastrophe (examples: moderate-case global warming,
minor asteroid impact, local thermonuclear war)
1: Human Die-Back (examples: extreme-case global warming,
moderate asteroid impact, global thermonuclear war)
2: Civilization Extinction (examples: worst-case global warming,
significant asteroid impact, early-era molecular nanotech warfare)
3a: Human Extinction-Engineered (examples: targeted nano-plague,
engineered sterility absent radical life extension)
3b: Human Extinction-Natural (examples: major asteroid impact,
methane clathrates melt)
4: Biosphere Extinction (examples: massive asteroid impact,
"iceball Earth" reemergence, late-era molecular nanotech warfare)
5: Planetary Extinction (examples: dwarf-planet-scale asteroid
impact, nearby gamma-ray burst)
X: Planetary Elimination (example: post-Singularity beings
disassemble planet to make computronium)

A couple of interesting posts about historical threats to civilization and life by Howard Bloom.

Natural climate shifts and from space (not asteroids but interstellar gases).

Humans are not the most successful life, bacteria is the most successful. Bacteria has survived for 3.85 billion years. Humans for 100,000 years. All other kinds of life lasted no more than 160 million years. [Other species have only managed to hang in there for anywhere from 1.6 million years to 160 million. We humans are one of the shortest-lived natural experiments around. We’ve been here in one form or another for a paltry two and a half million years.] If your numbers are not big enough and you are not diverse enough then something in nature eventually wipes you out.

Following the bacteria survival model could mean using transhumanism as a survival strategy. Creating more diversity to allow for better survival. Humans adapted to living under the sea, deep in the earth, in various niches in space, more radiation resistance,non-biological forms etc... It would also mean spreading into space (panspermia). Individually using technology we could become very successful at life extension, but it will take more than that for a good plan for human (civilization, society, species) long term survival planning.

Other periodic challenges:
142 mass extinctions, 80 glaciations in the last two million years, a planet that may have once been a frozen iceball, and a klatch of global warmings in which the temperature has soared by 18 degrees in ten years or less.

In the last 120,000 years there were 20 interludes in which the temperature of the planet shot up 10 to 18 degrees within a decade. Until just 10,000 years ago, the Gulf Stream shifted its route every 1,500 years or so. This would melt mega-islands of ice, put out our coastal cities beneath the surface of the sea, and strip our farmlands of the conditions they need to produce the food that feeds us.

The solar system has a 240-million-year-long-orbit around the center of our galaxy, an orbit that takes us through interstellar gas clusters called local fluff, interstellar clusters that strip our planet of its protective heliosphere, interstellar clusters that bombard the earth with cosmic radiation and interstellar clusters that trigger giant climate change.

Read More...

March 25, 2008

Oil prices dipped below $100 a barrel

The Peak Oil sites had plenty of articles when oil popped above $100 intraday and then articles about oil above $100 and then articles about double digit oil being history Will they be as active if oil goes back below $100 a barrel for an extended period ?

FURTHER READING
Nymex light crude charts

Nymex Brent Crude charts

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March 22, 2008

Ma of the KMT wins the Taiwan Presidency - better relations with China ahead


As I had been predicting for nearly a year, Ma of the KMT won the Presidential election. He won by 58 to 41 over Frank Hsieh of the DPP


Ma's vote total topped the 7 million mark, a point at which it would be mathematically impossible for him to lose, the commission said.

The commission estimated that 75 percent of Taiwan's eligible voters cast ballots in the presidential race.



People want a clean a government instead of a corrupt one," Ma, also a former justice minister, told The Associated Press.

"They want a good economy, not a sluggish one. They don't want political feuding. They want peace across the Taiwan Strait. No war."

Hsieh, a former premier, conceded defeat in front of unhappy supporters, AP reported.


Ma is looking to make peace with China and open a common market with them.

Early moves are to open up many direct flights and transporation. Open up tourism from and to China from 270,000 visitor to Taiwan in 2007 up to 3.6 million by 2009. Those extra 3.3 million tourists could bring in a few billion in economic activity. Causing a boom in hotel building and bumping Taiwan GDP by 1%.

UPDATE: Some such as a Businessweek blog Eye on Asia has theorized that Cathay Pacific and Hong kong would be a loser from the Taiwan election. Because direct filghts would occur and the 270,000 visitors (more soon with the changes) would not need to fly through Hong Kong or use Cathay Pacific. I would disagree. Cathay Pacific and Dragon may not be big winners, but if the number of visitors between China and Taiwan shoots up by ten or twenty times, there could still not be a drop in the total number that pass through Hong Kong. 100% may have had to pass through Hong Kong before, but if 10% of a far larger number still choose to make a Hong Kong stopover then Cathay Pacific and Hong Kong do not lose.

China invading Taiwan over independence is pretty much off the table. [Although I never really believed it was seriously on the table. It was an occasional disruptive threat though. Missile launches into the Ocean and posturing and unproductive threats. Plus it was used as an excuse by the US military for more buildup.] Would Germany invade Austria now that they are part of the European Union ?

FURTHER READING
Another source with a more negative view of the result but a lot of details about taiwan. [Taiwan matters] and Michael Turtons other Blog, the View from Taiwan. Lots of interesting pictures

Taiwan and China

Chinas future economy and a prediction fom May, 2007 of the Ma victory

All of my Taiwan related articles

Read More...

March 21, 2008

China and Taiwan

Angus Maddison provides an update view of China's Economic Future in the "Chinese Economic Performance in the Long Run" tome written for the OECD.

Angus Maddison now predicts: China should overtake the United States as the world’s biggest economy before 2015 [PPP] and by 2030 account for about a quarter of world GDP. [This is faster than his 1998 predictions] It would have a per capita income like that of western Europe in 1990. Its per capita income would be only one third of that in the United States, but its role in the world economy and its geopolitical leverage would certainly be much greater.

I had projected China to pass the US economy on an exchange rate basis by 2020 but updated that to 2018 plus or minus three years.

Taiwan's election - likely good for Taiwan and China's future economies
Taiwan's presidential election starts tonight. I have predicted for many months that I think Ma Ying-jeou will win.

The Wall street journal talks about the developments up to this point and the prospects for Taiwan-China relations.

Taiwan investment in China had been falling for the last 6 years, that trend should be reversed when a new president is installed. More strongly with Ma but even with Hsieh.

Frank Hsieh, says Tibet shows the need for a strong ruler who can defend Taiwan's interests. But he advocates ending the travel ban and lifting the 40% rule. Though the party still officially seeks independence, Mr. Hsieh says his priority is better relations.

The more likely victor, according to polls, is Ma Ying-jeou of the Nationalist Party, who wants to go further. Despite his party's historical hostility toward the Communists, who defeated the Nationalists in China's civil war nearly 60 years ago, Mr. Ma now is floating the idea of a common market.

In final pre-election polls taken March 8 -- before the violence in Tibet and Mr. Hsieh's warnings -- Mr. Ma led by about 10 percentage points


Bloomberg news talks about the thaw in Chinese and Taiwanese relations that will unfold over the next few years.

Reuters talks about how the Taiwanese election will be good for Taiwan's economy

The International Herald Tribune talks about the likely better relations that will result.

Marketwatch talks about the expected improved economic climate.

Peter Sutton, analyst with CLSA Asia-Pacific Market, said the country's [Taiwan's] "attractiveness increases in proportion to the expansion of its links with China."


Asia Times online has more personal stories on this issue.

Back to details of China's future growth
The Policy problems of China's rapid growth are changing. Ten years ago the problems were reducing the role of inefficient state enterprise, weakness of the financial system, and the weak fiscal position of central government. However, those problems have been greatly reduced in the last ten years.

The problem of energy supply and the environment has emerged as a significant new challenge to China’s future development. Electricity supply rose ten–fold between 1978 and 2005 and its availability at rather low prices transformed living conditions in many urban households. Car ownership has also risen and is likely to become the most dynamic element in private consumption. In 2006 there were about 19 million passenger cars in circulation, (one for every 70 persons). This compared with 140 million and one for every 2 persons in the United States. Judging by the average west European relationship of car ownership to per capita income, it seems likely there will be 300 million passenger cars in China (one for every 5 persons) in 2030.

There has been a surprisingly large improvement in the efficiency with which energ