Freedom of Speech in India

By Ajay Shah, on April 5th, 2010

Shekhar Gupta’s column in the Indian Express today is about the incipient threats faced by freedom of speech in India.

Authoritarianism vs. the Internet by Daniel Calingaert goes into the ways in which the Net increases freedom, and the way governments are fighting back. I got nervous when I read this description about some of the things that repressive regimes do:

Users are required to register with an ISP when they purchase internet access at home or at work, so that they cannot operate online anonymously. Customers at cybercafes have to present identification, and cybercafes install software to monitor and filter customers? web browsing. In Vietnam, cybercafe owners are required to keep a record for 30 days of all the websites their customers visit.

Do we do similar things in India?

The article by Calingaert led me on to this measurement of the freedom on the Internet in 15 countries by Freedom House. Their score shows:

Rank Country Measure of repression
1 Estonia 10
2 UK 20
3 South Africa 21
4 Brazil 26
5 Kenya 31
6 India 34
7 Georgia 40
8 Malaysia 40
9 Turkey 40
10 Egypt 45
11 Russia 51
12 Iran 74
13 China 78
14 Tunisia 78
15 Cuba 90

I’ve seen the following pattern again and again: In measures of governance quality, India looks good when compared with China and Russia. So two of the BRIC countries really have a system of governance which is not comparable with that found in India. Far more interesting are the BSST countries — Brazil, South Africa, South Korea and Taiwan — which are democracies much like India, and have a lot of things done right in governance which India should learn from.

Finally, see Donald Morrison on the Dreyfus Affair in the Financial Times. I often wonder whether India has the depth of commitment to human rights and liberal values to be able to achieve a similar outcome. At present, I’m not convinced.



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Relentless Advance Of Technology

By Trace Mayer, on October 30th, 2009

The first message to ever travel between two computers connected via the ARPANET, the computer network that would become the Internet, happened on 29 October 1969.  The Internet just turned 40.  And 40 is the new 20.  It is incredible that Al Gore, born 31 March 1948, was able to invent such an amazing series of tubes at the age of 21.  Technology is rapidly changing humans, life and relationships.  In fact, the homo sapien is about to become obsolete.  Perhaps 300 will become the new 20.

Forewarned is forearmed and this article is both objective and persuasive.  But while the baton, taser, assault rifle or stealth bomber may be used in lieu of conversation words will always retain their power.

As Ludwig von Mises wrote in Socialism on page 460, ‘Only ideas can overcome ideas.’ and in Omnipotent Government on page 210, ‘Both force and money are impotent against ideas.’

Words proffer the instruments to meaning.  Equity, freedom, justice, peace and prosperity.  These are not mere words; they are vantage points.

OPEN SOURCE SOFTWARE

One major trend with the Internet is the open source environment.  Open source software is where the original source code is made freely available and may be redistributed with or without modification.  There are many examples such as Linux, SourceForge or Wordpress.  The speed and adaptability of the open source environment cannot be ignored.

For example, in a memo from deputy CIO David Wennergren to top military officials he wrote,

To effectively achieve its missions, the Department of Defense must develop and update its software-based capabilities faster than ever, to anticipate new threats and respond to continuously changing requirements … The use of open source software can provide advantages in this regard.

The open source environment is the opposite of a classified environment.  The source code may be viewed by all.  Every single revision may be viewed by all.  Transparency is fundamental to the process much to the consternation of some parties.

For example, a researcher built at monitoring tool called Wikipedia Scanner for the online open source encyclopedia Wikipedia.

The BBC reports two examples:

An online tool that claims to reveal the identity of organisations that edit Wikipedia pages has revealed that the CIA was involved in editing entries.

Wikipedia Scanner allegedly shows that workers on the agency’s computers made edits to the page of Iran’s president. …

“The changes brand Mr Limbaugh as “idiotic,” a “racist”, and a “bigot”. An entry about his audience now reads: “Most of them are legally retarded.”  The IP address is registered in the name of the Democratic National Headquarters.

Once the taste of such freedom has been experienced it is difficult to extinguish the desire for more.  Additionally, the fundamental thinking process spreads over into other aspects of life.

OPEN SOURCE VOTING

The Wall Street Journal reported 9 September 2009 that Diebold (DBD) Election Services which provides proprietary non-publicly viewable voting software is selling their unit to Election Systems and Software.  Senator Schumer is concerned about the sale because it gives about 75% of the market share to a single company.

But Diebold Election Services, which has since changed their name to Premier Election Services, has been caught tinkering around with Wikipedia.  John Borland at Wired reports,

On November 17th, 2005, an anonymous Wikipedia user deleted 15 paragraphs from an article on e-voting machine-vendor Diebold, excising an entire section critical of the company’s machines. While anonymous, such changes typically leave behind digital fingerprints offering hints about the contributor, such as the location of the computer used to make the edits.

In this case, the changes came from an IP address reserved for the corporate offices of Diebold itself.

What could possibly be at issue?  Well, in 2003, Walden O’Dell, CEO and chairman of Diebold, was a top fundraiser for George W. Bush’s Presidential campaign. As Hacking Democracy’s documentary revealed a letter sent by O’Dell to Ohio Republicans stating that he is “committed to helping Ohio deliver its electoral votes to the president next year.“

Of course, this situation would be too funny,  if not so sad, for The Onion to leave it alone.

With the available technology and open source software why is voting not completely transparent and accountable?  Why is proprietary software, owned by private companies and not available for public review, used?

GOLD AND FIAT CURRENCIES

Fiat currencies are like the common stock of nations.  All fiat currencies are in long-term bear markets when compared against gold.  This portends civil unrest which has already broken out in Iceland, Greece, China, Iran, the United States and others.

Governments may have had a role and been able to function earlier.  When the economy was not very complex a thug could tell someone how much they could charge for a cow.  But in our current extremely complex society that is riddled with chaotic fingers of instability the distortions that come from government are extremely disrupted to a civil society.  At all times and in all circumstances gold remains money.  Thus, during this age of turbulence you will know that unlike Bear Stears, Fannie Mae or Washington Mutual stock or Zimbabwe Dollars; gold can never become worthless.

Remember, governments only consume wealth.  They are parasitic and produce nothing.  The only way they gain and maintain market share is through the threat or use of violence against innocent individuals.  For matters of morality is a robber’s costume material?  But governments, particularly the large Welfare States, are archaic and barbarous institutions that are no longer needed with our more advanced and civil society.  Statism is an ineffectual excuse for immoral behavior.  Statism is merely a human livestock management practice.

GOVERNMENTS LOSING THEIR WHUFFIE

Whuffie is the ephemeral reputation-based currency of Cory Doctorow’s science fiction novel Down and Out in the Magic Kingdom and current application to the Internet is explained in the fascinating The Whuffie Factor.

The primary goods and services that governments sell are theft, corruption, famine, pestilence and war.  Sure, the costumed criminal gangs strut around lying about how they are protecting markets through regulation but who can seriously believe them?  The smart kids in school go off and start business while the dumb kids become the regulators because it is the path of least resistance for the immoral.  Seriously, the dumb kids are going to regulate the smart kids?  After all, the dumb kids think they know how the series of tubes works.

As a result, the smart kids often just purchase the dumb kids through bribes, extortion, etc.  Is this deep capture any more plain than with Goldman Sachs (GS) and JP Morgan (JPM)?  There is a plethora of whistle-blowing that shows up on the open source Wikileaks.

Citizens, human livestock, are more productive for their farmers, the elite Wall Street bankers, when they believe the illusion that they are free.  Thus statecraft has evolved to be ‘of, by and for the people’.  But now the human livestock is realizing their true relationship to the State; they are good only for milk on April 15th and meat in Iraq, Afghanistan or H1N1.  They realize that if voting made any difference it would be illegal.  They begin to see governments more like an acne infection on the earth’s face that needs to be cleansed.

LIVESTOCK RUMBLINGS

And so the livestock, awaking to the reality of their being owned, are grumbling and mumbling.  Millions have marched on Washington DC.  The ideavirus is spreading from hive to hive.  What ideavirus?

That governments are costumed criminal gangs hired by bankers that are engaged in purely immoral and unethical behavior to lie, steal, cheat, defraud and murder.  That their little paper tickets issued by the unaccountable and close-source Federal Reserve are the primary way they fund these nefarious activities.  That the psychopathic bankers are able to privatize the gains and socialize the losses.  The best possible way to deal with these parastic vampire squids was enacted by the Founding Fathers in Section 19 of the 1792 Coinage Act that provided for ‘any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, * * * every such officer or person who shall be guilty of any * * * of the said offenses, shall be deemed guilty of felony, and shall suffer death.’

As Bloomberg reported on 15 September 2009,

James McDonald, chief executive officer of New York investment firm Rockefeller & Co., died Sunday from a single gunshot wound that was probably self- inflicted, officials in Massachusetts said.

CONCLUSION

Technology is rapidly moving forward.  It has enabled ideas to spread at rapid speeds.  The spread of these ideas is undermining the current power structures and revealing things are they really are.  The FRN$ and all other fiat currencies are evaporating before the heat of gold and the rise of digital commodity currency.

But all of the current machinations are nearly insignificant compared to the larger picture that soon a whole new level of species is likely to develop called the Homo Evolutis.  Governments have been a constant retardation for evolution and advancements as life struggles from the swamps to the stars.  Try to escape from being collateral damage as life will be what it was born to be:  FREE AND INDEPENDENT.

DISCLOSURES:  Long physical gold and silver and no position in DBD, JPM, GS or the problematic SLV or GLD ETFs.

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Improving Wireless Bandwidth

By Ajay Shah, on August 11th, 2009

Peter Wayner has a story about a WiMax rollout in Baltimore in the US. They seem to be getting 6 Mb/s download and 1 Mb/s upload. This is termed a `4G’ network (which might just be marketing speak).

In India, Thomas K. Thomas has an article on price cuts by Airtel. My sense is that we’re in for a big crash in prices of bandwidth through a combination of improvements in prices of wired services and the rollout of 3G which is now a credible alternative to land lines.

The exciting new development on mobile bandwidth is the CDMA EVDO devices being sold by Reliance and Tata Indicom. Last night I did a bulky upload and it worked at 350 kb/s without interruptions. Naman Pugalia and Alok Parekh are measuring the performance of Reliance and Tata Indicom at locations all over India. The picture so far is that EVDO is a lot better than dialup (or CDMA 1.x) but it ain’t really fast.

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Three Technologies That Don’t Impress Me Much

By David Barr, on July 15th, 2009

I am something of a technophobe. When some new technology is hyped as the latest greatest thing, nine times out of ten I am unimpressed.

1. Cell Phone Features: I want to be able to do three things with my phone; talk, text and store numbers. Beyond that I value battery life over every other damn thing that can be put on my phone. I don’t need to check email, take photos, look up restaurant reviews or play scrabble 24 hours a day. The best phone I have ever had was the first one I got for free with service in high school .

2. Kindle: I like reading books. Removed from electronic connections it allows the reader to spend hours immersed in the authors world experiencing the content as the author envisioned it. When reading from electronic content people want to customize the view, follow links, look up unfamiliar concepts etc. I just feel no desire to fold books into the broader spectrum of electronic media.

3. Twitter: Seriously, I don’t get it. Has anything so useless ever been so hyped. Have any of the throngs of reporters breathlessly declaring twitter the second coming of language ever actually read a twitter. We all have a stream of random thoughts running through our heads, but until now no one expected everyone they have ever met to care.



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Digital Companies In A Physical World

By Trace Mayer, on April 13th, 2009

Technology keeps thrusting forward at an ever increasing rate as the Information Age transforms the world at a rapid pace.  Business is happening at the speed of thought as companies are beginning to morph into digital entities in a physical world.  Fortunes have already been made in supply chain management and product distribution as evidenced with Toyota and WalMart.  With top lines under constant pressure as the credit contraction grinds on increased efficiency is being eked out of every possible source.

Man’s financial progress is a function of effort times tools.  Business has, is and will be the primary tool to generate wealth.  The ‘job’, a relic of the Industrial Age, is rapidly being replaced with outsourced freelancers.  Millions of Americans have lost their jobs in recent months.

This vast pool of usually skilled workers are now navigating a brave new world.  While hundreds apply for a single job; an exponentially expanding web invites the adventurous and rewards the productive.  Never in the history of the world has there been such powerful Internet marketing tools available to the lone entrepreneur to leverage their productivity.

THE OLD ORDER

Creative destruction is taking place in almost every aspect of the the economy from the exciting realm of newspapers and journalism to the mundane of postal and package delivery.  The United States Postal Service enjoys a substantial monopoly imposed by Federal law.  Predictably this system has catered to special interests with their army of lobbyists.  That is the reason most receive tons of dirty and annoying advertising SPAM in the mailboxes that waste their time and like most governmental policies harm the environment.

Bloomberg reports that “The U.S. Postal Service said it will offer early retirement to about 150,000 workers … In the past year the service has taken ‘very aggressive cost-cutting actions,’ including a nationwide hiring freeze and halting construction of new postal facilities, according to the statement.  Potter [Postmaster General] asked Congress in January to let the Postal Service reduce its six-days-a-week delivery schedule by one day to save money.”

Why does postal mail, the vast majority of it SPAM, need to be physically delivered even once a week?  Why does an address in north Alaska cost the same to deliver to as one in Los Angeles?  Legislative interferences in the marketplace to prop up failing institutions lead to expensive moral hazard, inefficient systems, poor customer service and a lower quality of product.  Is the use of violence to perpetuate this failing system moral?

THE NEW ORDER

With the advent of the Internet the delivery of postal mail and packages can be accomplished with greater efficiency.  Through innovative Internet-powered CMRAs (Commercial Mail Receiving Agency), customers can view images of their envelopes in email or online and have their mail securely scanned into a PDF, recycled, shredded, or forwarded.  For the privacy minded, like victims of spousal abuse, etc. the ability to vanish using this type of ghost address is extremely valuable.

As the Center on Budget and Policy Priorities reports, “States are facing a great fiscal crisis.  At least 47 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well.  Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion.”

Many individuals have their own budget with policy priorities and given all the Tea Parties, I highly doubt it involves paying more taxes than legally required.  For example, customers can easily have the ability to receive packages in states like Oregon where there is no sales tax, forward the package using Fedex or the United Postal Service (UPS), and the savings would likely be greater than the cost of an entire year of the service.  This may slightly perturb some States, which are breaking into safety deposit boxes and auctioning the contents on Ebay, resulting in greater enforcement of sales and use tax laws but that will likely be very difficult.

Ebay and Amazon are simply digital flea markets and the digital nomad can finish all their work at a Fedex Office.  The Internet entrepreneur relies on package tracking to ensure their products and sold on the digital flea markets are delivered.  And so it happens that business goes offline to online and online to offline.

DIGITAL BEHEMOTHS

Most people think of Ebay, Amazon and Google as the digital behemoths.  But Fedex CEO Frederick Smith understood the future with his long-held mantra that “The information about a package is as important as the package itself.”  Fedex and UPS are as much information management companies as they are shipping companies.  They have large, deep and formidable moats that will prevent competitors from siphoning market share.

Their charts are likewise similar:

While Fedex has recently laid off 1,000 of its 223,400 employees both it and UPS, which is expanding door-to-door service in Mexico, will be around generating profits for a long time.  But the current administration is exacerbating the greater depression which will drag down their earnings.  So when will UPS and Fedex shares be a good value? Gold is the most reliable instrument for calculating value and is being re-enthroned as a currency in ordinary daily transactions.

gg = gold gram FEDEX UPS
Share Price $51 or 1.786gg $53.50 or 1.852gg
Market Capitalization $16B $53B
EPS $2.35 $2.94
Target Price 1.100gg 1.250gg

CONCLUSION

Creative destruction is taking place at a rapid pace during the Information Age.  Many Internet marketing tools are available for the entrepreneur.  Services like Earth Class Mail, which exist through voluntary relationships, will rise.  The old State sponsored monopolies enforced through violence will fall.  Fedex and UPS are digital behemoths which will play a critical role in the new online to offline and offline to online economy.

As the great credit contraction continues the top lines of firms will be under extreme pressure and will most likely affect Fedex and UPS while the FRN$ will continue its wild fluctuations in purchasing power.  Therefore, while Fedex and UPS are solid companies with a bright future they should get materially cheaper, at 1.1gg and 1.25gg per share respectively, before they become a good value.  They will most likely be back there again.

Disclosures:  Long physical gold and silver with no position in UPS, FDX, or the other firms mentioned.



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The Economy of Cyberspace

By Cheryl Grey, on August 9th, 2008

U.S. retail Internet sales are expected to reach $146 billion in 2008, a 14.3% rise from 2007—and yes, that reckoning takes into account the economic downturn, which has actually boosted online sales because of high gas prices and reduced driving. While U.S. retail sales rose by 2.8% between the first quarter of 2007 and the first quarter of 2008, online sales rose by 13.6% during the same period. As for the shoppers who insist on buying from a brick-and-mortar establishment, eight out of ten first kick tires online.

In France, e-commerce is expected to reach US$32.4 billion this year, a 30% jump. In Brazil, the online retail market expanded by 43% in 2007, and 79% of all Brazilian Internet users have shopped online. In the UK, grocery shopping has moved online and 44% of the country’s Internet users have given it a go. In China, online shopping surged to US$8.2 billion in 2007, up 90% on the previous year.

If You’re Not Online . . .

These are staggering (and for retailers, mouthwatering) statistics. An even more astonishing one, however, comes from a January 2008 press release from The Nielsen Company: of the world’s population with Internet access, more than 85% have shopped online—approximately 40% of the total global population—and more than half of those online shoppers have made a purchase within the last month.

The fastest-growing segment of the global online marketplace is clothing, accessories and shoes with 36% of sales, but the most popular online purchase remains books with 41%. Other common purchases are movies, games, music, airline tickets and electronic equipment. Merchant trustworthiness is important to online shoppers, and many seek recommendations from friends or rating services or find a few sellers they trust and stick with them. The most popular payment method is a credit card (60%), with Visa the most often utilized, although 25% of buyers prefer Paypal, which may effect payment through a credit or debit card or through a direct bank transfer.

Many new buyers live within developing nations such as India, Brazil, Egypt and China and have such online payment services to thank for opening these new shopping horizons before them. When the goods these shoppers want can’t be found on the shelves of their local stores, they turn to the Internet and its international marketplace to fill that gap, and they’re often willing to pay a little more to a reliable seller or for shipment tracking.

The largest online retailer in 2007 wasn’t actually a single retailer but eBay, with a membership of over 83 million active buyers and sellers moving $60 billion worth of merchandise on website platforms in 28 countries around the world. As a comparison, Amazon.com had sales of $14.8 billion (both figures from 2007 annual reports). Because eBay sales are generally from individual to individual, international shipments are often marked as gifts to avoid customs duties, and the collection of state sales taxes on the Internet is notoriously difficult, leaving open the issue of lost governmental revenues worldwide. So are such individual purchases tracked as part of a nation’s balance of trade? If so, how?

. . . You’re Nowhere

A largely misunderstood aspect of the virtual marketplace is the foreign exchange, called the forex trading market. Although many people are only familiar with foreign exchange from traveling (or those money-making schemes advertised everywhere), the fact remains that sales across international borders generally involve crossing currencies as well. While credit cards and Paypal will exchange currencies for individuals for a fee, larger transactions must change through brokerages, which buy and sell currencies against each other on the open market.

The forex trading market is therefore comparable to those for stocks or commodities with one catch: it’s utterly virtual. There is no centralized exchange where brokers meet and bid against each other. Historically these deals were arranged via telephone, but often now they’re executed online with dedicated software trading platforms that track the prices of various currencies against each other to the fourth decimal place and graph the changes on a real-time basis. This increased efficiency has caused, well, a virtual explosion in forex trading, which by April 2007 had surged to an average daily turnover of $3.2 trillion dollars as tracked by the Bank for International Settlements.

There is much not yet understood about the economy of cyberspace, but it’s clear this is no longer a niche market, and retailers—and governments—will ignore it at their peril.



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