Satellite images of negative externalities caused by Globalization

I always keep track of the images from space taken by NASA.  They usually have impressive “natural hazards” photographed with the highest technology available.  However, sometimes the natural hazards to humanity are not caused by the natural cycles of Earth.  In those cases, it is humans who have created hazards for themselves and people die.  Now, why would we create things that harm us so much? Why would we support and contribute to such terrible things?  A good explanation is the one given by economists with the complex and difficult term negative externalities.

A negative externality is a spillover of an economic transaction that negatively impacts a party that is not directly involved in the transaction. The first party bears no costs for their impact on society while the second party receives no benefits from being impacted. This occurs when marginal social cost is greater than marginal private cost (MSC > MPC).

The case of pollution in China elucidates very well how the market-driven approach to correcting externalities by “internalizing” third party costs and benefits fails to work in a globalized economy.  For example, by requiring a polluter to repair any damage caused. But, in many cases internalizing costs or benefits is not feasible, especially if the true monetary values cannot be determined.  In fact, our technological gadgets and thousands of products imported from China are the cause of the hazardous health conditions in that country.  We as consumers are part of this chain by buying the products. How can we do something?

I would suggest that the best way to participate in a positive way is to continue creating awareness of the failure of the government of China to protect the lives of the Chinese people.  It is at the end of the day the responsibility of that government to protect the life and property of its citizens, not ours.  We as consumers can only morally sanction them and stop consuming their products whenever possible.

This is a good (and very unfortunate) example of how globalization without an objective code of values becomes a zero sum game.  I share with you the information regarding how dangerous has become the air in the surroundings of Beijing and Tianjin,

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Air Quality Suffering in China

acquired January 14, 2013download large image (7 MB, JPEG, 5000×6400)
acquired January 14, 2013download GeoTIFF file (47 MB, TIFF)
Air Quality Suffering in China

acquired January 3, 2013download large image (8 MB, JPEG, 5000×6400)
acquired January 3, 2013download GeoTIFF file (51 MB, TIFF)
acquired January 3 – 14, 2013download Google Earth file (KMZ)

Residents of Beijing and many other cities in China were warned to stay inside in mid-January 2013 as the nation faced one of the worst periods of air quality in recent history. The Chinese government ordered factories to scale back emissions, while hospitals saw spikes of more than 20 to 30 percent in patients complaining of respiratory issues, according to news reports.

The Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite acquired these natural-color images of northeastern China on January 14 (top) and January 3, 2013. The top image shows extensive haze, low clouds, and fog over the region. The brightest areas tend to be clouds or fog, which have a tinge of gray or yellow from the air pollution. Other cloud-free areas have a pall of gray and brown smog that mostly blots out the cities below. In areas where the ground is visible, some of the landscape is covered with lingering snow from storms in recent weeks. (Snow is more prominent in the January 3 image.)

At the time that the January 14 image was taken by satellite, ground-based sensors at the U.S. Embassy in Beijingreported PM2.5 measurements of 291 micrograms per cubic meter of air. Fine, airborne particulate matter (PM) that is smaller than 2.5 microns (about one thirtieth the width of a human hair) is considered dangerous because it is small enough to enter the passages of the human lungs. Most PM2.5 aerosol particles come from the burning of fossil fuels and biomass (wood fires and agricultural burning). The World Health Organization considers PM2.5to be safe when it is below 25.

Also at the time of the image, the air quality index (AQI) in Beijing was 341. An AQI above 300 is considered hazardous to all humans, not just those with heart or lung ailments. AQI below 50 is considered good. On January 12, the peak of the current air crisis, AQI was 775 the U.S Embassy Beijing Air Quality Monitor—off the U.S. Environmental Protection Agency scale—and PM2.5 was 886 micrograms per cubic meter.

  1. Resources

  2. Air Pollution in China: Real-time Air Quality Index Visual Map. Accessed January 14, 2013.
  3. China Air Daily. Accessed January 14, 2013.
  4. U.S Embassy Beijing Air Quality Monitor. Accessed January 14, 2013.
  1. References

  2. Associated Press, via Yahoo News (2013, January 14) Beijing warns residents after off-the-charts smog . Accessed January 14, 2013.
  3. NASA (2010, September 22) New Map Offers a Global View of Health-Sapping Air Pollution.Accessed January 14, 2013.
  4. NASA Earth Observatory (2012, March 23) Satellites Map Fine Aerosol Pollution Over China.
  5. The New York Times (2013, January 14) China allows media to report alarming air pollution crisis. Accessed January 14, 2013.
  6. Yahoo News (2013, January 14) China’s air pollution problem slideshow. Accessed January 14, 2013.

NASA image courtesy Jeff Schmaltz, LANCE MODIS Rapid Response. Caption by Mike Carlowicz.

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Interesting! After Democrats in New York rammed a sweeping assault on the right to keep and bear arms through the legislature that failed to exempt police officers from the draconian restrictions, gun owners and even some lawmakers are planning what has been dubbed potentially the largest act of civil disobedience in state history.

Boudica BPI Weblog

Via SHTF Plan - When The Shit Hits the Fan, Don't Say We Didn't Warn You - Preparedness, Planning, News, and Commentary

One upstate Republican AKA RINO voted with Cuomo and all upstate dwmocraps. Split NY into 2 states. Mid Hudson, Upstate NY vs. NYC, downstate on NY Gun Control Law

Resistance Begins

With emotions running high in the aftermath of the Newtown Sandy Hook shooting, politicians on the State and Federal level have begun introducing legislative actions to curtail access to firearms protected by the Second Amendment. In Missouri, parents may soon be forced to register firearms with their child’s school under threat of criminal penalties. In Massachusetts, another proposal would require storage of semi-automatic rifles at government approved storage depots. And, in the State of New York, congressional representatives have already passed legislation that requires registration of every semi-automatic rifle and reduces maximum magazine capacity to 7 rounds of ammunition, and Governor Cuomo has floated the idea of gun confiscation.

Now, in what is sure to be a growing…

View original post 460 more words

Two historical references for a discussion on the right to keep and bear arms

Battle  of Courcelette
Battle of Courcelette
Like the observer in the tree in the right foreground, painter Louis Weirter witnessed this Somme battle as a soldier. His painting depicts the chaos and complexity of fighting on the Western Front, and the use of combined arms tactics. The capture of the ruined town of Courcelette, France on 15 September 1916 was a significant Canadian victory. It was also the first time tanks (left foreground) were used in battle.
Painted by Louis Alexander Weirter
Beaverbrook Collection of War Art

One of the most controversial discussions in the last few weeks has been the one around guns, its regulation and controls, its production, on the rights to use guns, on private gun ownership and the arguments of those in favor/against the Right to keep and bear arms in the United States of America.  The right to keep and bear arms in that country has a historical significance rooted in a long standing common law, prior even to the existence of their Constitution.  In England, a similar legal wording can be found in the Bill of Rights 1689 which states “Subjects which are Protestants may have Arms for their Defense”.

The historical significance of this argument is long standing and varies from country to country (specially those with a common law system).  The principle behind this topic is the relation of the private ownership (historically contextualized of course) of the “means of force” versus the monopoly of the use of force by government.  Today I have two recommendations on this topic for those of you looking for essays and books to read:

tilly-diagram

The monopoly of the use of force is claimed to be the reason behind why some kings in Europe succeed in wining wars and enriching their countries; and also the reason why others were subjugated and conquered (see the work of War Making and State Making as Organized Crime by Charles Tilly for a complete picture on this topic (online pdf) a Chapter from Bringing the State Back In (1985), edited by Peter Evans, Dietrich Rueschemeyer, and Theda Skocpol).  But also, in a longer historical perspective it has been the monopoly of the use of force by specific authorities which for other authors built/destroyed entire civilizations (see the work of The Shield of Achilles: War, Peace and the Course of History (2002) by Philip Bobbitt).

Have a happy reading!

I don’t want a cheaper and weaker iPhone!

I read today’s article”A Low-Priced iPhone Awaits” in the Wall Street Journal with disappointment.  For some reason, it has become widespread for people to think that “successful products = low price” and that “happy costumers = low price“.

While those affirmations are truth I consider them to be only partially truth.

I want to bring into consideration the fact that it is not only “low-price” products what makes customers happy.  As a owner of stores that sell electronic accessories and as a user of cellphones I can tell you this:

  • No matter how expensive a telephone is, the owner of those products is going to be willing to take care of it without caring much for the original price paid for their phone. So, no matter if the phone is a $500 iPhone or a $50 Samsung S 1st Generation.  Both of the owners would consider paying from as little as $10.00 to as much as $75.00 in extra accessories to PROTECT and personalize their phones.
  • The owners of more expensive phones are always willing to invest a little bit extra to protect their phones.  However, the owners of cheaper phones are also going to be willing to pay a little bit extra to “improve” their phones quality and DURABILITY by adding other electronic accessories or gadgets.

That being said, while companies may continue offering lower-price products the overall quality of these items continues decreasing.  It is IMPRESSIVE the amount of customers I used to received in my store with broken screens in their iPhone’s, Samsung’s, and other Smartphone devices.  Those companies are REALLY making a profit by selling products that can be damaged very easily while forcing costumers to buy new ones.

  • When did design became more important than functionality and durability?
  • Why do big screens are so easily to get broken and they are not made with better products?
  • The best example for this is the iPhone that has also what seems to be some type of glass cover in the back! It was impressive to see many of those covers broken and hearing the stories of sad costumers who want to replace it! The behind glass has no functional use rather than just making the product being overall weaker and less resistant…

While the Wall Street Journal article says that “Apple is working on a lower-end iPhone” the only thing I read is “Apple is working on an EVEN LESS DURABLE, WORSE QUALITY and lower-end iPhone”.  This is unfortunate… specially because I still have many of the old generation “black bean” phones that I used to own 10 years ago that are in perfect shape and resistant very hard falls from my pockets when I was younger.

Lets fight this wave of “lower-end products”!  As consumers we should receive the best we can get for our money! Not the worse we can get for it!

A GPE perspective: World’s richest woman makes case for $2-a-day pay

The top 10 most competitive economies in the world. By: The World Economic Forum’s Global Competitiveness Report 2012-2013

Reaction to article: Lazarus, David. 2012. She’s back: World’s richest woman makes case for $2-a-day pay. Los Angeles Times, 5. September, sec. Money.

A month ago the world’s richest woman made a comment that got everyone’s attention.  Major sensationalist papers in the globe elaborated different arguments on Gina Rinehart case for a $2-a-day pay.  But putting emotions aside, what was she really talking about?  Well, she was explaining in very rough terms what globalization is about and what is the role of competition in the global political economy.

In order to understand what Ms. Rinehart referred to, it is necessary first to briefly evaluate the history of the word competitiveness. The term is historically rooted in the writings of classical economics. Its core is the theory of comparative advantage expressed by David Ricardo in 1819, in which he underlined how countries should/do compete.  Later on, the term was used by Marxist economists starting with Marx’s “Capital: A Critique of Political Economy” where he emphasized the impact of the sociopolitical environment on economic development in a global perspective, and therefore the communist idea that changing the political context should precede economic performance. Later, in 1942 the term was integrated to the role played by capitalists and entrepreneurs in the writings of Joseph Schumpeter, who stressed their creative and economic (“economic” here refers to capital as a mean of production) role as a factor of competitiveness by underlining that progress is the result of disequilibrium, which favors innovation and technological improvement.  Further, Israel Kirzner’s emphasis on the redefinition of entrepreneurship by highlighting how global competitiveness is more about the capitalist’s innovative abilities rather than just the capital accumulated and how he/she invests it.

Ms. Rinehart’s comment reflects both the impact she plays as an actor in the global sociopolitical environment and her role as a capitalist and entrepreneur capable of generating innovation and of inciting creative destruction.

A $2-a-day pay in Africa means that many capitalists and entrepreneurs as Gina Rinehart are considering the possibility of moving their investments from less competitive continents to places in which competitiveness allow them to produce at lower costs.

Unfortunately, the region Ms. Rinehart was referring to has disincentives to competitiveness and innovation.  Competitiveness is more than just lower wages and a cheap offer of labor.  By following Ricardo, Marx, Schumpeter and Kirzner in order for Africa to become competitive in global terms the regions will require also to achieve what Stéphane Garelli in the “IMD World Competitiveness Yearbook 2012” explains as the need to also A.) Create a stable and predictable legislative and administrative environment. B.) Ensure speed, transparency and accountability in the administration, as well as the ease of doing business. C.) Invest continually in developing and maintaining infrastructure both economic (road, air, telecom, etc.) and social (health, education, pension, etc.). And finally, D.) Strengthen the middle class: a key source of prosperity and long-term stability.

Ms. Rinehart’s comments were not a call for Australians to lower their wages to a $2-a-day pay since they have already achieved other of Garelli’s requirements for competitiveness. Her comments are a very clear example on how global economy works.  If African governments manage to improve the rule of law in their territories, develop infrastructure and allow for a stronger middle class then the chances that investment will move to Africa are going to be higher.  As such, economies as Australia’s should continue producing at the same efficiency rates or improve and innovate in order to avoid losing investors. Ms. Rinehart’s comment on how “her country’s mining industry couldn’t compete with nations that are willing to pay workers less than $2 a day for their sweat and labor” is as such partially truth. Australia’s economy has many other competitive assets to offer and as such do not require to compete by offering lower wages.  The country has many other competitive assets to offer for investors.  However, as time has passed since Australia’s boom in the last decades many other countries are also trying to spur competitiveness.

There is much more to be said about this topic and on how global competitiveness allows for rising standards of life and prosperity. Also there is much more to be said on how competitiveness in other regions of the world can destroy (remember Schumpeter’s work) the not-so efficient economies of other countries that have not managed to cope with a changing global economy.

The Water We Eat: Scroll-Down Infographic Story on Water Usage

This made me think of all the readings I have done on Privatization of Water,

Vía information aesthetics

 virtual_water.jpg

The Water We Eat [angelamorelli.com] by information designer Angela Morelli is an infographic story that unfolds by the act of scrolling down the page.

It features various animated visual elements that move, appear, rotate, zoom or fall, to convey the meaning behind data retrieved from the Water Footprint Network as well as some of the reasoning explained in the book “Virtual Water: Tackling the Threat to Our Planet’s Most Precious Resource“.

More information about this piece can be found here. Via @JanWillemTulp.

Course on Human Action starts tomorrow!!!

Starting Tomorrow:

Human Action, Part 1

Instructor: David Gordon
Cost: $79 (50% off!)
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It is perhaps the most important and profound book ever written. Yet how many, in their attempts to read it, have been stopped in their tracks by Part I? In those 7 chapters, Mises lays out the philosophical underpinnings of economics and social philosophy. So they are crucial for understanding the rest of the treatise. Yet, for the reader not versed in philosophy, the technical terminology and references can be daunting.

In this course, David Gordon will clearly explain everything you need to know to make sense of the concepts presented in these chapters. He will define the terms, provide background for the references, and make clear exactly what it is that Mises is saying in these passages.

If this classic has been sitting on your shelf or in your Kindle, just waiting for you to tackle it, there is no better way to start than with this course, which will be followed by subsequent courses taught by Mises Academy faculty, covering the rest of Human Action.

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About David Gordon

David Gordon is a senior fellow at the Ludwig von Mises Institute. He was educated at UCLA, where he earned his PhD in intellectual history. He is the author ofResurrecting Marx: The Analytical Marxists on Exploitation, Freedom, and JusticeThe Philosophical Origins of Austrian EconomicsAn Introduction to Economic Reasoning, and Critics of Marx. He is also editor of Secession, State, and Liberty and co-editor of H.B. Acton’s Morals of Markets and Other Essays.

Dr. Gordon is the editor of The Mises Review, and a contributor to such journals as AnalysisThe International Philosophic Quarterly,The Journal of Libertarian Studies, and The Quarterly Journal of Austrian Economics.