Tech Giants Should Pay Users

A user’s content and browsing history are monetizable assets.

Rather than tax, regulate or break up Facebook and Google, we should ask that they pay for the monetizable assets that they have so far mined for free. These assets are a user’s content and browsing history.

As with all types of mining, the tech giants have developed an innovative technology that they combine with an exogenous asset (an asset obtained from someone else) in order to make money. In their case, it is information and data. In the case of a traditional miner or oil company, it was copper or zinc or oil, or other resources.

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Mining before data mining. (Photo: Reinhard Jahn CC BY-SA 2.0 de, Wikimedia Commons).

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The Cure for Inequality is More Laissez-Faire

That means less cronyism and more competition.

“Inequality is not necessarily bad in itself: the key question is to decide whether it is justified.”____ Thomas Piketty in Capital in the Twenty-First Century.

Piketty’s words read like a premise that is only half right, followed by a problematic corollary. Reasonable people will agree that some inequality is not only “not necessarily bad” but also very desirable and very necessary in order to stimulate the economy’s entrepreneurial and innovative spirits. Further, if some inequality is desirable, how much is enough and how much is too much? And who gets to decide?

Clearly, there will never be a consensus on this. And it is not a satisfactory solution that the majority party would decide for the next four or eight or twelve years. The back and forth dominance of one party over the other would mean that any measures enacted to combat extreme inequality would at best amount to a feeble and erratic effort instead of a long-term cure, while the underlying problem gets larger with every electoral cycle.

To make things worse, both of the major parties in the United States are mistaken to ascribe inequality to an excess of capitalism. Democrats claim that growing inequality is the result of unbridled ‘wild west’ capitalism. And Republicans argue that it is a mostly acceptable byproduct of capitalism. But extreme inequality is in fact caused by insufficient competition. Given  that competition is the lifeblood of capitalism, it follows that inequality is the result, not of capitalism, but of a lack of capitalism.

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Purity or Universalism?

This article first appeared at Quillette.

A few days after his recent passing, the Manhattan Institute reposted a speech by V. S. Naipaul from October 1990. The title, “Our Universal Civilization,” captured the triumphal and optimistic spirit of that moment, nearly one year after the fall of the Berlin Wall. In order to render this universal civilization in greater relief, Naipaul related the following about his travels in Asia [emphasis added]:

Traveling among non-Arab Muslims, I found myself among a colonized people who had been stripped by their faith of all that expanding intellectual life, all the varied life of the mind and senses, the expanding cultural and historical knowledge of the world, that I had been growing into on the other side of the world. I was among people whose identity was more or less contained in the faith. I was among people who wished to be pure.

If we had read this paragraph without knowing its date or the subjects’ actual geography, religion, and history (in this case colonized non-Arab Muslims), we might have surmised that Naipaul was talking about parts of America and Europe that he had perhaps visited in the months preceding his death. “People whose identity was more or less contained in the faith” could easily apply to certain constituencies in the West today, the more so if one allows some latitude in the definition of the word ‘faith.’

Nearly 30 years after he delivered this speech, Naipaul’s assumption that this was primarily a religious or Muslim phenomenon seems quaint. Today, we can see that the wish to be pure has emerged in opposition to universalism in many parts of the world including our own. We can no longer claim that it is just Islam that has grown resistant to the universal civilization envisioned by the West in the late twentieth century. Some groups within the West itself have also rediscovered their own craving for purity. Continue reading at Quillette >>>

Soccer for Americans

Three rule changes to turn American soccer into a big money maker.

The experience of watching a soccer game rarely lives up to the anticipation. You go in hoping for a 4-3 cliff-hanger (as with Argentina vs. France recently) but too often you end up with 1-0 or worse, a draw, or much worse, a draw that is resolved through a penalty shootout. This chronic letdown explains why Americans prefer watching other sports.

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Photo by Torsten Bolten.

Except for anxiety-ridden upper middle-class moms trying to steer their teenage sons away from (American) football practice, most Americans don’t really care about watching soccer. If this is changing, at about the pace of a glacier inching down an Alaskan ravine, it is mainly because the percentage of immigrants in the US population has been on the rise in recent decades. These immigrants or their parents often come from countries where soccer is the leading spectator sport. It follows then that with the current crackdown on immigration, the future of American soccer is looking as frail as ever. NFL bosses need not lose much sleep.
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Fertility and Literacy in India’s States

Higher female literacy is a reliable predictor of lower fertility and improved prosperity.

In a previous article, we highlighted a clear connection in sub-Saharan Africa between a country’s total fertility rate (TFR = average number of children per woman) and its young female literacy rate. The data showed that higher literacy may set off a chain reaction that results progressively in lower infant mortality, improved health for women, and lower fertility. While literacy rises to 90%, fertility falls gradually. Above 90%, it falls precipitously.

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End of the year exams in Mahatma Gandhi Seva Ashram, Jaura, India. © Yann Forget / Wikimedia Commons.

In turn, this lower fertility can, under the right conditions, open a window of opportunity for the economy to realize a demographic dividend. Read more

Future Hubs of Africa and Asia

On UN projections between 2015 and 2050, the world population will grow by nearly 2.38 billion people, from 7.35 billion to 9.73 billion. Although this 32% growth is a big increase, it marks a slowdown from the 66% growth rate recorded in the preceding 35 years (1980-2015). Total Fertility Rates (TFRs) have come down all over the world and are expected to continue falling.
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About half of the 2.38 billion increase will take place in sub-Saharan Africa and nearly 40% in Asia. India is the biggest contributor with a net addition of 394 million, followed by Nigeria (216m), Pakistan (120m), DR Congo (118m) and Ethiopia (89m). By 2050, all of these countries will feature in the top 10 populations by size, a list that will include the United States (expected to rank fourth) but not one European country. Outside of Africa and Asia ex-China, regional populations will be growing slowly (the Americas), stagnating (China, Europe), or receding (Japan, Eastern Europe). Read more

Cronyism and its Scapegoats

Cronyism destroys trust and assigns the blame to scapegoats of its own creation.

Only a fiercely committed left or right-winger would fail to recognize that there is today a social and political divide that does not easily fit within the traditional mold of left vs. right. If, loosely speaking, the left leans socialist and the right leans capitalist, there is a third branch, cronyism, that is characterized by the rising power and wealth of rent-seeking industries and individuals. In the past, this branch was dominant mainly in poorer countries with weaker institutions. But today it has also gained significant strength in a number of developed countries, including the United States.

In fact, if the Republican Party has been hijacked by Trumpism, as some allege, then we could say that capitalism has been similarly hijacked by cronyism. In our view, this parallel is nearly seamless, given that the GOP is traditionally pro-capitalism – in words if not always in deeds – and that the incumbent administration is largely populated with captains of rent-seeking industries. Read more

Immigration and Trust

Do we only really trust people who are like us? And if so, is that a mistake?

Distrust of the unfamiliar and the foreign is a natural survival mechanism for most species, including the human species. But, if empirical evidence is worth anything, a reflexive distrust of the foreigner cannot be said to be equally benign. Distrust sows fear. And fear plays in the hands of demagogues and can turn into a contagious pathology with numerous undesirable consequences.

One of these consequences is an excess of caution. Safety is important but an obsession with safety is counterproductive. Locking your door at night is prudent, but fear of ever leaving your house can lead to atrophy and other physical and mental degradations. As in most things, a fine calibration between the desire for safety and the need to accept minimal risks is likely to yield the best outcome. Read more

Cronyism Damaged Venezuela before Chavez

Venezuela is bankrupt, having just defaulted on three interest payments. And much of the world is pointing fingers at the socialist policies of Hugo Chavez and those of his successor, the incumbent Nicolás Maduro. This laying of the blame is not wrong but it is incomplete.

The kindest thing you could say about Mr. Chavez is that he was a talented demagogue who brilliantly identified his opportunity and judiciously seized his moment. But, as previously argued by Fred McMahon of the Fraser Institute, Chavez did not start Venezuela’s downward spiral. He was instead one of the final acts in the country’s decades-long devolution from laissez-faire capitalism to cronyism and finally to socialism. Cronies undermined Venezuela’s economy for decades and opened the door to Chavez’s socialism. Read more

Notes from the Wharton Africa Business Forum

The Wharton Africa Business Forum took place in Philadelphia on November 3-5, 2017. Present were the Finance Minister of Nigeria, the CEO of Ethiopian Airlines and other business leaders (notably from lead sponsors McKinsey & Company and the Boston Consulting Group) and educators. The event was attended by hundreds of participants including Wharton faculty, students and alumni, African investors and entrepreneurs, members of the African diaspora and many others who have an interest in Africa.

These are our notes from the event. They are not intended to be comprehensive.

First, there was a tremendous amount of energy and optimism surrounding Africa developments. There were a palpable sense that Africa’s moment is coming and an urgency that it should not be squandered. These sentiments are validated by our analysis of African demographics that show a coming decline in the dependency ratio and an accompanying increase in the odds of realizing some demographic dividend. However, fertility rates remain too elevated and are not falling fast enough to deliver the massive dividend that was seen in China, the US and Europe in recent decades. Read more