Why the Smart VCs Are Boarding their Jets
techcrunch.com
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I think this is a good thing for the world overall, the more people that come up to the middle class, the more people that will have disposable income to spend on products. I just think that there are plenty of promising ideas here to invest in as well if they start looking past Web 2.0 in favor of more concrete businesses.
And no amount of Internet innovation will solve the problem of diminishing clean water, oil, ocean fish, disappearing forests, soil erosion and increasingly bad air quality. Right now 1st world countries are basically "exporting" these problems to developing nations, eventually these issues will be averaged out: eventually China won't be so poor to accept our non-recyclable electronic garbage anymore, what then?
Historically that has not been the case. Historically quality of life improvements have come from technological discoveries (e.g. penicillin) and social evolution (e.g. of the middle class). Who loses if penicillin is discovered? Who loses if some former serfs decide to become artisans instead?
The single biggest improvement in quality of life for most humans over most of history has probably come from improved hygienic practices. How does that come at someone's else's expense?
I also disagree with your specific claim that "Internet innovation" can't improve physical world problems. Would you claim books don't help solve the problem of clean water? Not literally, obviously; you can't use books to make clean water, except by ripping out pages and using them as water filters. But think how much harder it would be to solve the problem if books didn't exist. And the Internet is an innovation on the scale of printing.
At the current rate of population growth we'll have a density of 10 people per square foot (!) before year 3000, and the population growth is what usually follows a country's increased economic output.
Most of the westernized world's population (US, Japan, Western Europe, Australia, etc) is either stagnant or decreasing - and almost every other country (China, India, Latin America) is moving towards that.
And the technology has more than made up for our population growth. Almost everyone would agree that the 7 Billion people we have today are far better off (on average) than the 1 Billion people we had 200 years ago.
You don't have to agree with me but why shut the conversation down? Am I offending anyone or posting fart jokes?
Meanwhile a lot of folks are debating either "technology and globalization" approach will work, and some of them aren't stupid. At least you downmodders could try to use some curiosity and open up a little to what they have to say.
That's a pity: while reading the book I was actually thinking about bringing this topic up for discussion on HN.
Epic fail.
Some graphs:
http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=mx... http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=in... http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=ch...
Look at nearly all European nations: they're much more populous now and have surplus of food, whereas they've been starving throughout mid-ages living off exact same lands.
Economic growth tends to reduce birthrates. European birthrates have dropped below replacement levels. The US is hovering around replacement, as is Japan and South Korea. Other developing countries are following this trend.
Technology does increase agricultural output, but within the 20'th century, rich people have fewer children.
There have been many societies on this planet, and some of them have collapsed after peaking precisely because of population explosion due to "good times". Isolated collapses of ancient polynesian peoples have been studied particularly well.
Bill G. explained that in the begining his foundation was focused on population control. But when they discovered that the single most important factor in population was health is when they started to focus in the most crucial sickness. His explanation is that parents simply try to optimize to have two children that can take care of them when they are old.
We have finite resources. By using resources we are either doing it at someone in the present times expense, or someone in the future. By keeping more people alive now, we are possibly reducing the longevity of the human race.
Just to play devils advocate :)
We have infinite creativity. By finding more productive and innovative uses for resources we can make the world a better place for everyone. By keeping more people alive now we have more creative minds working on the problems that we face.
I think you would do better by using books as kindling to boil water, killing any latent bacteria.
If I have I pay you $10 for a service that costs you $5 to provide, you've actually created $5 of wealth out of thin air. I end up with a service that I value more than $10 so I come out ahead, and you end up with money that you value more than the marginal cost of providing me that service so you come out ahead.
As a simple check, the average person (in the world) today is better off than the average person 50, 100, or 1,000 years ago. Even though are population has increased significantly, our wealth has increased even more.
To this end, capitalism is very much a zero-sum game. There are only so many resources to exploit, and once they're gone (or otherwise locked up), that's it for growth.
As a simple example, let's say I have a large bag of peanuts - but I'm allergic to peanuts. And you have a copy of Smith's 'The Wealth of Nations' (which you clearly have no interest in reading ;-)). By trading my peanuts for your book, we both come out ahead and no one is worse off - the trade itself creates value.
Every time any trade/purchase takes place, value is created. Both parties are better off than they were before the trade - otherwise they wouldn't have chosen to be involved in the transaction.
In other words, you're really stretching to use his notion of "wealth" as an argument that trade creates more wealth. Wealth generation does not occur when an item is traded -- it occurs when an item is created, using labor. Smith goes out of his way to say this:
"The value of any commodity, ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities" (Wealth of Nations, Book 1, chapter V)
The peanuts in your example didn't gain or lose value when they were traded for a paperback. Nor did the paperback gain or lose value. We merely created a market that defined their values as equivalent. Confusing this process for wealth creation is a big reason why we're in the economic mess that we're in today.
That (the labor theory of value) is exactly what all the classical economists (Adam Smith, David Ricardo, Karl Marx) got wrong.
I've got to defer to the guy who said that internet geeks don't know what they're talking about when it comes to economics.
The "marginal revolution" is one of the major events in the history of economics.
EDIT - here's some useful wikipedia links:
http://en.wikipedia.org/wiki/Labor_theory_of_value
http://en.wikipedia.org/wiki/Marginal_utility
EDIT #2 - paragraph 3 from wikipedia:
Different labor theories of value prevailed amongst classical economists through to the mid-19th century. It is especially associated with Adam Smith and David Ricardo. Since that time, it is most often associated with Marxian economics; while modern mainstream economics replaces it by the marginal utility approach.
I will have to do a research on this. It's a very interesting claim and you didn't provide any sources. I'm not convinced. I think we've been heavily "borrowing from the future" i.e. even current rates of consumption/household growth are not sustainable, again - I got these conclusions and trends from Diamond.
Also forget for a second about words like "wealth" and "dollars" and look at basic resources instead: fish, meat, oil, wood and minerals. Currently we're consuming them at the rate faster than they can regenerate, I hope we can agree here. To me, that's an indication that technology isn't keeping up. Look up the rising numbers of meat and fish consumption in China and compare them to agricultural output of the world (all these facts are googlable).
Obvious data that supports my claim (that life is better for the average person today than it was 100 years ago) is that the average worldwide life expectancy has increased from 31 years in 1900 to over 65 years in 2006 (http://www.who.int/global_health_histories/seminars/presenta...). If memory serves, child mortality rates, homicide rates, and per capita energy production all paint a similar picture.
Even though there are some limited basic resources (land, water, etc), we are always learning to use them more efficiently. Our yield for most crops, per acre, has increased over ten fold in the last 100 years. Look into Norman Borlaug's Dwarf Wheat and the Green Revolution for proof.
Yes, it would help some large groups of people if the US were gone, but this is not because US profits from them. If anything, US loses wealth roughly in proportion to its brutality. Besides the obvious example of Iraq, there is also the "war on drugs" and its effect on the Latin American nations. Actually if everyone was 1st-world, I suspect there would be less of this pointless aggression, because US citizens aren't as able to dehumanize people who aren't poor.
Angus Maddison is the man with the data.
The US has more forested land, more wood, than it did 100 years ago. Yes, it has fewer 1000 year-old trees than it did 100 years ago but it's unclear which direction that trend is going.
The US also has more meat than it did 100 years ago.
That's because meat and wood, unlike fish, are both farmed. However, farmed fish will take care of that.
As far as minerals go, there's a pretty obvious place to look for large amounts of them when the current natural caches become expensive. And, in many cases, we don't actually care about the "minerals", we care about what we can get from the mineral, such as iron. We're pretty good and getting better at reclaiming such materials when it makes economic sense (and we shouldn't try when it doesn't, even if we're pretty sure that it will later).
Like Mint? Angry that you missed the boat? Good news! Invest overseas in the same type of company, and watch it grow to become a market leader by having a monopoly. And you have a guaranteed exit lined up, when Mint enters your market and decides to buy you out.
Sure the core innovation will still come from the states, but the first innovator is rarely the guy who profits from the idea.
Don't forget though, that the cultural gap between the US and Asia is much bigger than between the US and europe. It's quite likely that a successful US product can be made successful in europe by the same people. It's a different story when you move from US/Europe to India, Japan or even China.
The japanese Facebook (mixi.jp) looks quite different to the US and european variants. Not only in terms of aesthetics but also in many subtile usability and feature aspects.
This goes to support the point that, for the next while at least, "me too" business models WILL work in developing nations.