The Tangled Web — Part 7

Expectation Matters

George Akerlof’s seminal contribution to economic theory is in the area of information imperfection and how it affects markets. His paper, “The Market for Lemons”, is brilliant and an easy read. Information asymmetry between the buyers and sellers of used cars (very poor quality used cars are the lemons that Akerlof talks about) leads to that specific market failure. The role of expectations is critical in that specific case. In fact, I am persuaded that expectations play a very important role in how human systems behave dynamically.
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Hi-tech Puzzle

I am a big fan of using technology in education. Information and communications technology (ICT) is tailor-made for application in education. What I don’t understand is why some people are going on about the use of “wireless, low-orbiting satellite, fiber-optic” communications in the context of education. Those hi-tech channels are clearly required when the information is dynamic and real-time, such as in the case of market information and sports events. But what does one gain by beaming down static information — say, history or physics content — as opposed to delivering it as a book (if the information is purely text and pictures), as a DVD if it is audio-video-text, or as content on a hard drive (if the content is rich as well as interactive)?
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I Heart Costco

I have been shopping at warehouse retail stores for over 20 years, starting at the Price Club in Sunnyvale. In those days, you had to have some union membership to have access to those stores. I was a member of the HP Credit Union and felt privileged to shop at Price Club. Costco later entered the market as a competitor to Price Club and as it happened Costco bought Price Club to become Price-Costo and then it was simply Costco. I have had a Costco membership since forever.
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RadioEconomics Interview of Jeffrey Sachs

Dr James Reese informs me that he has republished his interview of Jeffrey Sachs.

“Recorded November 2005: Dr. Jeffrey Sachs, listed as one of “World’s Top 100 Public Intellectuals,” “the world’s best known economist,” and “among the 100 most influential people in the world,” was interviewed by Dr. James Reese.” (43 mins.)

Right-click and save-as on this link to download the mp3.

The Tangled Web — Part 6

The Lumpy Universe

One of the puzzles that cosmologists grapple with is the question of why the universe is lumpy. The universe has structure today – from super clusters of galaxies, to galaxies, stars and all sorts of other objects down to planets and asteroids. But the universe was much simpler earlier in its history. How did all these clumps of matter evolve from an undifferentiated soup of elementary particles and forces that existed in the early universe following the Big Bang?

A lot of very clever people have been doing a lot of hard sums for many years and have been partially successful in explaining why the universe is the way it is. There are inflationary models and there are string theories which attempt explanations. We just don’t know for sure. But the fact remains that the universe is lumpy. And we should be really grateful that it is so because its lumpiness is what makes the universe interesting. Not just interesting, it also makes us possible so that we can marvel at the nature of the universe. We should pause to consider that if the universe were uniform, it would have been sterile and we would not be here. The non-uniformity of the universe which arose for who knows what reasons is what makes for an interesting universe.
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Drugs and their Protection

A cyber-friend wrote to me asking what was “the rationale behind giving monopoly rights to big-global-drug-companies in India (by the way of patent protection).” He said that this was “leading to prohibitively expensive life saving cancer drugs (Rituximab at 1.3 lakhs/dose is actually daylight robbery and murder) … India is an insignificantly small (revenue % wise) part of global drug market … the unrealistic pricing shows that drug firms are not even bothered about us. India would be much better off if it produces (at fair prices) some of the life saving drugs and tries to save/elongate lives of some of its 5 lakh people who die of cancer every year.”
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