Saturday, 25 February 2012

iPad revenue - where does it go?

A recent article in the Economist (January 21, 2012) indicates that the country in which an innovation is borne is indeed rewarded financially, which must be for the benefit of that country, even when the product is assembled cheaply abroad.  The country hosting the assembling in a low wage economy, like China, often gets only a small part of the retail price: most goes to the country in which the product is conceived and developed.

This is illustrated by the iPad (figures are from the Personal Industry Industry Centre), worldwide sales of which must by now (Feb 2012) be around 60 million units since launch.

  • 30% of the retail price goes to workers and shareholders in Apple in the USA
  • 17% goes to retailers, distributors and others in the USA

So 47% goes to the originating country on R&D, product design, software development and marketing. Of the rest:
  • 31% pays for materials
  • 9% goes to South Korean and Taiwanese companies who make the display and memory chips; e.g.  Samsung and LG
  • 11% is spent on factors of production in other countries, excluding China
  • 2% goes on Chinese labour

The Economist article states that even a 20% increase in the value of the Chinese currency, the yuan, would add only 1% to the price of an iPad. This percentage will not be so low for assembly in a higher wage economy; but even if it is 10% instead of 1% it suggests that the highest reward would go to the risk taking and innovating country.

This applies to both developing and developed economies.  Each individual nation needs to have a healthy mix of product origination and product assembly in order to contribute substantially towards tax revenue to finance its social services and defence and employ enough people to stimulate the local economies (satellite industries, shops and leisure facilities etc.). Healthy added-value businesses not only employ scientists and technologists but administrative, marketing and personnel staff. 

The scope for new value-creating enterprises is enormous, given the problems facing the world and requiring both products and services to solve them. In a previous posting I suggest some ideas for businesses in the robotics area and some of these (e.g. robotic ships for scavenging marine waste) would require heavy engineering in the same country that the innovation occurred, thereby increasing the benefit of the invented technology to that country.

Author, 2077 AD

Tuesday, 21 February 2012

Jean Paul Sartre: not the way to Peace on Earth

This article has disappeared into cyberspace.  I will try to recover it!


I've recopied it into the blog system and republished it in April. Click below.

Sunday, 12 February 2012

The Four Freedoms are spreading

The four freedoms stem from 2000 years of spiritual evolution. They are engraved in stone at the Franklin D Roosevelt memorial in Washington DC:

1. Freedom of speech and expression: essential for thought and creativity, enabling problems to be solved in all walks of life.

2. Freedom of worship: public and private worship to remind us to be humble before our Creator and to serve God through the serving of people.

3. Freedom from want: nobody should want for food or drink or shelter or medical help or education or a means of earning a living.

4. Freedom from fear: no person or element of society can be permitted to kill or threaten or terrorise or rob or cheat or defraud others.

 These freedoms are under attack from within my own country (UK) by religious and atheist fundamentalists and, ironically, even by a vocal minority of human rights activists who interpret ‘freedom from want’ in such an absurd way that the very principal is devalued (e.g. freedom from being made to feel uncomfortable by people who believe in God by banning public worship). The freedoms need to be guarded as precious gifts. Even criminals recognise their importance. Any society without them cannot, in the long term, prosper. These are what democracy is founded on. Do I think our democracy is perfect? No. Any society which considers itself perfect is deluded and dangerous. The same applies to individuals. The values we aspire to are ideals but people, unfortunately, are not ideal.  Yet aspiring to those ideals is what drives society forward.

Suffering, deprivation, violence, tyranny, widespread corruption and lack of access to education could be reduced drastically by spreading these freedoms to countries which currently do not have them, i.e. countries outside the Western world which in less politically correct times was known as Christendom.  Please note: I am not saying these dark aspects of life don’t occur in the West, or that parliamentary democracy is the whole guarantor of freedom,  but infringing forces are more widely recognised and fought against.

 Fortunately, this diffusion of the Four Freedoms is, I maintain, already happening by osmosis in a natural way:

1. State owned enterprises (SOEs)

SOEs have a major global presence. The Chinese companies  Sinopec, China National Petroleum Corporation and State Grid, have a combined annual revenue of $0.739 trillion, which is slightly more than the combined total for Royal Dutch Shell ($0.378 tn) and Exxon Mobil ($0.355 tn); and China's international trade has been doubling in volume every 3 years. The SOEs operate largely abroad and the tens of thousands of employees involved are in frequent contact with the west, often actively copying or absorbing the culture and ideas which have arisen over the 400 years of the Enlightenment.  Moreover, influential members of the Communist Party work for the SOEs and this will lead to cultural infusion at the highest levels.

2. Western companies in developing countries

Complementing the SOEs is the growing number of western companies with a large presence in China and other countries. They bring with them western values and ways of doing things which have allowed Europe, the UK and North America to grow rapidly. The fusion of western and eastern ideas or business cultures will no doubt lead to totally new approaches to management and doing business in both the developing and the developed world but more important could be the infusion of the Four Freedoms into the latter.

3. Overseas students

Any major university or polytechnic in the USA, Europe or UK will tell you that foreign students from the developing nations form a large proportion of their intake. This is especially apparent in science and engineering. Science and technology students not only learn the power of peer-reviewed academic research and freedom to question authority, which arose out of Protestantism, but also encounter western culture in general. As outsiders they can see what is good and bad about our society, which often we, being immersed in it, cannot. They can teach us the importance of diligence and resolution and show how powerful is the combination of these with creative thought, but above all they interact with their relatives, friends and contacts, both domestic and in their universities at home, imparting to them what is good about the democratic way of life (and criticising the negative aspects, hopefully).


4. Migrating workforces and tourism

The general widespread ebb and flow of workers and their families, and of tourists, between the developing and developed world could again benefit both. Above all, any family which has experienced the liberating nature of life in a society with the Four Freedoms is bound to want it in its home country. Institutions such as the UK’s National Health Service, e.g., must make quite an impression. The bottom-up pressure on the leaders of such countries to reform their societies to enable the Four Freedoms can only keep growing.

5. Protestant Communities in China

In another posting I refer to the vigorously growing Protestant business community south of Shanghai. This has a minimum of corruption and is tolerated by the Communist Party for pragmatic reasons. E.g. it shows how elderly people can be cared for in residential institutions as lifespan increase, how corruption is reduced by spiritual beliefs and how the encouragement of morally guided enterprise can lead to growth and prosperity. See also an article in the Economist.

6. Internet

Despite the best efforts of the oligarchic regimes the internet is allowing increasing contact between their citizens and those in the developing world. Again, once people get a taste of the four freedoms and what they can lead to there is no stopping them. In the case of the Arab Spring it is unfortunate that the young people desiring a society based on them are in danger of being mired in conflict with those who also want to topple a regime but to whom freedom is anathema. This conflict could cause misery and death to many but in the end freedom will prevail – it always does because freedom favours creativity, ingenuity and problem solving. In other parts of the world (China, North Korea, Russia etc.) the transition to a free society could be largley peaceful, because there do not appear to be determined minorities spiritually dedicated to quashing it.

These five modes of cultural dissemination mean that a rapidly growing number of people in developing countries are getting a taste for the mental liberation that the incorporation of the Four Freedoms into legislation brings. With it should come a better quality of life for their citizens and a capacity to deal with problems like poverty, malnourishment, starvation, violence, disease, and lack of education as well as the ability to generate wealth without corruption or fraud and to distribute it justly.

 Once freed each society would go its own way but each needs to be on guard against those who seek to destroy it. Germany was a secular democracy that fell prey to evil and became a rampant, fascist, racist paganist power in the 1930s that at one time appeared to be threatening both the free world and Stalinist Russia. But the Four Freedoms (and as a Christian I would say the power of our Lord Jesus Christ) won in the end.

See also The Appollo astronauts and Madalyn O'Hair

Author, 2077 AD.

Friday, 10 February 2012

Media science: good and not-so-good

There were two life science programmes on BBC TV this week, each designed for a large, non-specialist audience.

An excellent BBC1 programme called Super Smart Animals (Thursday 9 Feb 2012) was spoilt at the end by the predictably metaphysical neo-Darwinist statement by its presenter Liz Bonnin that intelligence, emotion and empathy in an animal are good for its survival.

There appears to be an unfounded assumption that the whole of the natural world is the result of some kind of arms race, and that the growing information content of the biosphere is, in contradiction to basic physics, all generated by chance and the battle for survival.   These mental attributes of the living world are indeed useful for any creature, but not just for competing against others of the same or other species. In fact it is these properties of the natural world which enable the cooperation needed for any living system to be produced in the first place, before it gets involved in competing with others.

 The whole biosphere is a model of balance and staggering complexity. How do neo-Darwinists imagine this came about from rocks and obnoxious gases 4 billion years ago? To believe this happened solely as a struggle to survive, without intelligence and cooperation at some deep level, must surely be the result of indoctrination by peers and professors. I would be delighted to be proved wrong about this, since if it is true it is a serious self-destructive flaw in the heart of the science establishment. See The five-fold threat to science.

Incidentally, how do neo-Darwinists explain the evolution of the universe before life?  Did the rocks, planets, stars and galaxies fight each other for supremacy?

More enlightened and inspiring, in my view, was Ian Stewart’s BBC2 programme How to grow a planet Part 1 (Tuesday 7 February, 2012).  This showed a long neglected aspect of science, which is how life evolved not only life but, ultimately, the entire biosphere we know today, starting from rocks and a virtually oxygen-free atmosphere. He did not try to gloss over the startling improbability of this, leaving the viewer to draw his or her own conclusions.

It was also clear that the Earth is an exceedingly unusual place, another fact which is rarely mentioned in media science programmes. He could have said much more on this, although in fairness this was only the first of three parts.

I will certainly be watching the remaining two parts of Professor Stewart’s series. Hopefully, as she matures, Ms Bonnin, a fine presenter, will  either recognise the flaws in neo-Darwinism or avoid irritating the viewer by taking away the wonder of nature by pressing on him or her a depressingly sterile view of the world.

Just stick to the facts, please, or at least reveal that many believe that there is much more to evolution than a fight for survival.

See also  Reweaving the rainbow


Author, 2077 AD

Tuesday, 7 February 2012

Progress towards sustainable fishing

Depletion of fish stocks is important because 1 billion people rely on them for their main protein intake. 32% of stocks are depleted or recovering from depletion; but this is not solely a  food problem. Fishing is a major source of  employment, especially in the developing world,  and hundreds of millions of people are in communities which depend, directly or indirectly, on fisheries for their livelihood.

The International Sustainabilty Unit (ISU), instigated by Prince Charles of the UK, recently conducted 50 case studies around the world and reports the findings in Towards global sustainable fisheries (February 2012). The results are encouraging. They show that when a fishery which is declining through over fishing is restructured for sustainabilty it not only secures fish stocks but improves the lot of all the stakeholders:
  • The employees get a higher and more secure income as well as safer working conditions.
  • The fishing community, often a poor one, prospers from the flow of money into it.
  • The world economy benefits (especially the developing world).
  • The sea ecology becomes more diverse and stable.
  • There is more fish to eat.
The World Bank estimates that by managing fisheries differently they could contribute an extra $50 billion p.a. to world GDP. At present they contribute to the  tune of about $275 billion (US) p.a. (0.4% of world GDP), so this would bring its contribution up to about $325 billion (0.5 %  of GDP). And fishing is important in preventing and reducing poverty in developing countries. For example, the Ben Tre Clam fishery in Vietnam after transition to sustainability supports 13,000 households, compared to 9,000 in 2007.

The ISU’s aim was to put together a tool kit of ways to achieve sustainabilty in any given fishery, recognising that each one is unique and that no one solution fits all. The economic benefits emerge from the move towards sustainabilty. Pragmatic regulation can reduce the catch, get the support of the fishing industry, increase profit margins and require individual fishermen to work less hard and more safely.

One finding which stood out was the importance of the quota system. In the past much conflict and chaos has resulted from issuing a group with a quota for a particular marine species and expecting each trawler, say, to take its chances on what share of the quota it could catch. There was a mad scramble to make sure that your boat got as much out of the sea as possible before the others used up the overall weight quota. If instead each fishing team gets a guaranteed income the tendency towards destructive competition is greatly reduced. Introducing such a system to the Pacific halibut fishery lengthened the fishing season and increased the value of the fish sold from $1 to $7 per pound.

Prince Charles refers to a debilitating fatalism. Because of marine pollution problems and the selfish nature of some individuals within the fishing industry (as in any field of human activity) some observers seem to regard the situation as hopeless. It is true that rising temperature and acidity of the sea, ever-increasing run-off from industrial farming and the global dispersion of ingestible but undigestible microplastics are serious factors when added to the stress of over-fishing; but progress in arresting and reversing fish stock decline is being made.

 The ISU study has shown how it can be done at a practical level and since all the stake holders benefit there is every likelihood of getting the necessary legislation and enforcement worldwide within a decade or less. Momentum on this front, I believe, will help raise the morale and strengthen the resolution of those fighting on the anti-pollution front.

author 2077 AD (being revised)