Why Silicon Valley would be impossible in France.

France is about to approve the "Anti-Amazon Law"

Book prices in France are hard to understand from a foreigner’s perspective. Back in 1981, French Minister of Culture Jack Lang established a fixed price for books sold in France. Since then, publishers have been fixing the price, printing it on the back of the book.
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Today’s French Minister of Culture Aurélie Filippetti says that she has nothing against Amazon despite the law’s informal name — but free shipping has to stop.

With France’s ‘anti-Amazon’ law, the government is going in the opposite direction and reiterating the long-standing tradition of protecting independent bookstores and publishers.

The idea that authors write books to benefit bookstores and publishers instead of the reader is preposterous. The French government is taking a deliberate action to stop innovation, so that an 18th century business model for delivering books from authors to people could live a little bit longer.

US healthcare reform disaster: California edition

The state of California set up and trademarked(!!!) its own website to handle the healthcare reform, Covered California (TM). There's also a new program for small businesses called SHOP:

Covered California’s™ SHOP is a new, online health insurance marketplace developed for small businesses with one to 50 eligible* employees.

 When you click through the SHOP links you eventually get a message that the program will be available in mid-November:

OK, the program was supposed to start on Oct 1, but the message says it's being delayed for 1.5 months. Well, today is November 15, which is mathematically speaking is mid-November, but the program is still not available. Instead of shopping online for plans, Covered California (TM) advises you to talk to your health insurance broker or visit websites of individual insurance companies. WTF! After 3+ years in the making, the state of California, including Silicon Valley, can't deliver a website on time. Unbelievable.

Deficit-Financed Economic Growth: Infrastructure vs Entitlements

The Financial Times has a blog post by John H. Makin and Daniel Hanson about sustainability of trillion dollar US government deficits. Their general conclusion is that the deficits are ok for now because of the current extremely low borrowing costs. One of their statements piqued my interest:

Eventually, the Federal Reserve’s QE programme of large government debt purchases at a current rate of $800bn per year, largely aimed at sustaining the growth of outlays on entitlements that do not support economic growth, will cause inflation to rise.

With regard to future growth, the current deficit spending differs significantly from the time of the Great Depression. In the 1930s, the US government borrowed money to build modern infrastructure, which during and after the World War II helped rapid industrial growth. At the time, entitlements were tiny and (self-)financed by the new Social Security tax. In contrast, today's infrastructure investments are small while entitlement payments are quite large. The only area of large-scale infrastructure build-up seems to be shale oil and gas pipelines. Will this be enough?


tags: economics, distribution, government, problem

Lunch Talk: (TED) How state budgets are breaking US schools.

America's school systems are funded by the 50 states. In this fiery talk, Bill Gates says that state budgets are riddled with accounting tricks that disguise the true cost of health care and pensions and weighted with worsening deficits -- with the financing of education at the losing end.

tags: lunchtalk, education, health, care, government

Invention of the Day: Permanent Loan.

From A History of Money: From Ancient Times to the Present Day, by Glyn Davies:

The Bank of England came into being by the Ways and Means Act of June 1694 and was confirmed by a Royal Charter of Incorporation (27 July 1694). The Act makes it clear that its real purpose was to raise money for the War of the League of Augsburg by taxation and by the novel device of a permanent loan, the bank being very much a secondary matter.

The £1,500,000 was to come from two unequal sources; £300,000 from annuities, and the major sum of £1,200,000 from the total original capital subscriptions to the ‘Governor and Company of the Bank of England’. In return the Bank was to be paid 8 per cent interest plus an annual management fee of £4,000. Thus for just £100,000 a year, and some vague privileges to a bank, and with no capital repayment burden to worry about, the government received £1,200,000 almost immediately.

This was an astonishing success given the abject failure of a number of rival banking-type institutions, but not so surprising given the speculative boom in other kinds of companies being formed around the same time. From the government’s point of view it was an object lesson of the advantages of borrowing as compared with taxation to meet sudden emergencies.

Over time, what was invented as an emergency measure had become a norm. Governments borrow, assuming that the loans are permanent and get surprised (remember Greece?) when lenders ask for their money back. Oops. Nobody thought of this scenario.
Moreover, since the old emergency measure is no longer available, the only other option remaining is creating new money from scratch. 

 

tags: money, control, invention, economics, government

Energy news links

- April 17 (Bloomberg) -- House Energy and Commerce Committee Chairman Henry Waxman said he won’t compromise on his proposed 20 percent reduction in greenhouse gases over the next decade...
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- The $3.375 billion Energy Department grant program will give out grants ranging from $500,000 to $20 million for smart-grid technology deployments. It will also give out grants of $100,000 to $5 million for the deployment of grid monitoring devices.
The $615 million for demonstration projects will specifically fund exhibitions that verify technology viability and examine new business models, give energy storage demonstrations, or exhibitions that demonstrate grid monitoring devices that allow system operators to manipulate electric flows in real time.

- CoaLogix a unique company that specializes in filtering out harmful agents from coal-fired plant emissions, has secured $11.5 million to deploy its technology for more electric utilities. Offering a combination of chemical processes and equipment, the Acorn Energy subsidiary says it can substantially reduce environmental footprints for plants that might otherwise continue to pump harmful fumes into the atmosphere.