Category: economics | 經濟學 | 경제학 | 経済

Economics or the dismal science was something I felt that I needed to include as it provides the context for business and consumption.

Prior to the 20th century, economics was the pursuit of gentleman scholars. The foundation of it is considered to be Adam Smith when he published is work An Inquiry into the Nature and Causes of the Wealth of Nations. Smith outlined one of the core tenets of classical economics: each individual is driven by self-interest and can exert only a negligible influence on prices. And it was the start of assumptions that economists model around that don’t mirror real life all the time.

What really is a rational decision maker? Do consumers always make rational decisions? Do they make decisions that maximise their economic benefit?

The problem is that they might do actions that are rational to them:

  • Reducing choice when they are overwhelmed
  • Looking for a little luxury to comfort them over time. Which was the sales of Cadbury chocolate and Revlon lipstick were known to rise in a recession
  • Luxury goods in general make little sense from a ration decision point of view until you realise the value of what they signal
  • Having a smartphone yet buying watches. Japanese consumers were known to still buy watches to show that they care about the time to employers when they could easily check their smartphone screen

All of which makes the subject area of high interest to me as a marketer. It also explains the amount of focus now being done by economists on the behavioural aspect of things.

  • Tyler Cowen on digital economy

    Interesting session with Marginal Revolution’s Tyler Cowen at the OECD. Tyler Cowen is an economics professor at George Washington University, author, blogger and media commentator. In this discussion Cowen addresses the challenge of Huawei and big tech. Cowen is broadly pro big business, anti-small business and pro big tech in his outlook.

    In his discussion in terms of big technology Tyler Cowen has an interesting position, though not something I would agree with. As it doesn’t allow for startups coming through in a winner-takes-all environment. Working agency side for clients as the dot com boom took off, you could see the impact of ‘Microsoft fear’ as it was shed in Silicon Valley. For instance, Yahoo! went out of their way to call themselves a media company rather than a technology company. Supporting big tech means supporting ‘just good enough’ bundled services, rather than a better product. It also reflects a very American-centric viewpoint.

    Cowen is very concerned about biometric recognition (facial recognition, finger print analysis and gait analysis). He doesn’t realise that his concerns are at odds with his neo liberal pro-

    Tyler Cowen is also very concerned about the dominance of Huawei in 5G network rollout. Whilst I understand his position, it lacks a certain amount of nuance in understanding network rollout and Huawei’s place in the networks (at least in western countries). It is also at odds with his general pro big tech stance.

    An interesting nugget from interviews that Cowen has done (in promotion of his books) newspaper journalists were upset about Facebook, all radio journalists are anti-Amazon.

    Tyler Cowen’s comments on trust are interesting. The key thrust is that online has allowed elites and their faults to be more available online.

    It is well worth giving this a listen over a lunch hour (its 77 minutes long). More from Tyler here. More economics related content here.

  • Immediacy as a problem

    Immediacy is a relatively recent phenomena for consumers. It has changed the work and personal lives of consumers. It has eroded the barrier between work life and home life. It has redefined our support networks and friendships.

    Before I wrote this post, I had conversation with a friend working on a project in Singapore who’d had an eventful few days. With zero thought I was able to see if he was online and reach out and see how things were going.

    I’ve worked with clients who seem to email or message around the clock. For a while Snapchat streaks of several days were a thing – highlighting extreme immediacy in consumer behaviour.

    What did life before immediacy look like?

    I can remember the start of a working life without the mobile phone, or email. Fax machines were not items generally found in homes. You could buy them in Argos or the Viking catalogue with cheap thermal printing technology.

    Sky had launched their analogue satellite business, but there also fanatics who had directed dishes. They were a very expensive version of radio hams and CB radios.

    Satellite and cable TV meant choice. Some channels specialised and CNN specialised in constant news from around the world. Its ability to report events in near real-time came into sharp focus during the first Gulf War. Like most Europeans to me CNN was an idea, I didn’t actually have it in my own home. But it gave a deceptive taster of what always-on connectedness actually meant.

    Home computers were distinct and separate platforms from business computing. Dragon, Sinclair Research, the Commodore 64 and Amiga. Atari moved into computing and saw success with the ST. Windows and Mac had only started to weave its way into European households.

    The cassette was starting to be challenged by the CD in terms of personal media. The CD burner would arrive in mainstream homes a little bit after the Mac and the PC; right around the time of consumer dial-up internet access.

    Personal communications meant:

    • A phone card that worked in telephone boxes
    • A telephone extension fitted with a nod and a wink by friend who’d worked at the phone company

    There was no free local calling so the American gen-X behaviour of spending the evening on the phone to your friends didn’t happen so much in the UK and Europe.

    Do-it-yourself culture meant:

    • Fanzines created on a photocopier
    • Setting up an independent record label
    • Running a club night

    For medium and large companies there was an internal mail system. Mail would be exchanged between sites via a courier service overnight. The package would be opened and then distributed by an internal mail room.

    I worked in the oil industry at the time, so we could do international communications through telex. Telex was a legal document. The best analogy I had for it would be if your office had a collective email address. When a message came in, these would be printed and then distributed by the internal post system.

    Communications was a batch process for workers. In terms of importance as a task; communications was something that happened alongside the rest of your job. You might open your post mid-morning. You’d drop off any internal mail to a wire basket by reception by mid afternoon.

    Immediacy in communications started first with PBXs (private branch exchanges). The office phone on every desk and at each point on a production line changed things. Direct dial out changed things up, you could phone suppliers directly. You could arrange for information to be sent to the office or work site fax machine. Receiving a fax would be a big event in your day. You’d wait by the fax machine to receive it. Later on as fax traffic increased; you’d get a call from reception to pick up your fax.

    Now, many modern workspaces don’t have office phones, or if they do – they aren’t well maintained and on the way out.

    Bigger companies had office phones paired with a voice mail system and ‘while you were out’ Post-It notes were a thing.

    While you were out

    Mobile phones changed everything. My first mobile phone was a luggable phone that looked more like a piece of military equipment. It was used when I would be driving away from the office in a company car. The phone was strapped into the passenger seat.

    Smaller models changed the game for sales people, plumbers and mobile locksmiths. I bought my first pager whilst at college. It was a text messenger where people would leave a message with an operator and this would be then sent on to me. Occasionally I didn’t get a message, it wasn’t as reliable as SMS is now.

    In enterprises, internal email came along with the use of mini-computers. The first email account that I used, communicated internally. It ran on a DEC VAX mini-computer and I accessed it via VT100 terminal emulator running on a Mac Classic.

    Very few people used email in the company. It was easier to get things in and out of the fax machine. Memos went on bulletin boards, people called each other or walked around the site.

    In the US, free local calls, saw the rise of dial up services like AOL, Prodigy and CompuServe as a mass consumer service. Chat rooms might have been the reason why people signed up. Computer-based email and messaging quickly became the killer application.

    In Europe the rise of 2G or GSM phones and SMS played a similar roles. My first personal mobile phone, came with SMS. At first it wasn’t much use, but when I moved down to London and started working in agencies I could message colleagues.

    Businesses got on the internet. Companies used pre-internet protocols to exchange stock and financial information between sites. Often it was creative businesses first. ISDN lines offered a way of sending artwork directly to printers in a secure manner. It was a small perceptual jump to move from ISDN exchange to internet usage.

    These businesses usually had a single email account for the business that was checked twice a day if that.

    At college I got a glimpse of the future. We had internet over the JANET system. Liverpool had its first cyber cafe with a decent expresso machine and homemade carrot cake. I signed up for a Yahoo! account prior to leaving college. I wrote my emails as text documents on a Mac and took them to Liverpool on a Saturday. I would spend an hour sending my emails, keeping in touch with friends and applying to jobs I’d read about. I’d find out about jobs in The Guardian newspaper or marketing magazines. It was around about this time that I started buying the US edition of Wired magazine. It’s neon typography promised a cyber-utopian future.

    Immediacy – the problem

    At the time we didn’t see immediacy as the issue.

    The problem was time keeping. Before the mobile phone, you would show up on time to a pub or a bar. But with SMS you could let people know if you were running late.

    The second bug bear was information overload. It took as little effort to copy in 20 people on an email as it did to send it to one person. The web was still frustratingly slow. The speed that pages would load would grind to a halt when America woke up.

    Yahoo Office Attachments Screengrab

    There were no social norms and ettiquette. Memes came around as attachments to emails, clogging up your account. Yahoo! used to have a section of meme-worthy videos and images on its site called ‘Office Attachments’ in a nod to this habit. Everything would be shared; a watershed moment was the Claire Swire email.

    It was around about this time that people started to question the impact of communications had on productivity. It was certainly more convenient, but you lost a corresponding amount of time wading through your email inbox.

    There was also a corresponding expectation in a faster response because of the convenience. So what did we lose? We lost time. If we think about CNN and other 24 hour news channels, it is easy to see what was lost through immediacy:

    • Editorial space to make sense of things
    • Analysis rather than talking heads
    • A bigger perspective rather than just ‘the now’, all the time

    In agencies, the situation was rather similar. I was chatting to a senior person in client services at a major advertising agency. To paraphrase that they said: client service was better without email. Why? Because:

    • It gave them time to get things done
    • To make things happen
    • To investigate the best options
    • To craft an appropriate considered response that would be to the benefit of all parties
    • It allowed emotional reactions on all side to subside
    • To get the bigger picture in a way that isn’t possible to the same extent now

    Instead things get escalated to senior executives so they can be talked about in-person or over the phone.

    Technological snake oil

    Having started my agency career working in the technology sector, I have a good idea of how the sales cycle works. Each new generation vendor finds ways to deal with unintended consequences of the past. The rationales have generally stayed the same.

    • Productivity – but they often mistake productivity for the illusion of immediacy. Something happening now! It doesn’t matter what it is, but the feeling that something’s moving
    • Speed (or agility) – the idea that immediacy engenders some sort of superior performance in a reinvention of Taylorism for bureaucracy
    • Scalability – that it will cater with no growing pains for any size of organisation
    • Reliability – it will work regardless of whatever happens… until it doesn’t. It creates the illusion that it isn’t the system thats wrong, but the individuals. The reality is that the process design in the application usually doesn’t capture all scenarios

    In communications there has been a plethora of systems.

    • Digital All-In-One
    • WordPerfect Office
    • Microsoft Office
    • Novell NetWare and GroupWise
    • Microsoft Exchange and Office
    • Lotus Notes
    • Oracle BeeHive

    Slack is the latest in a long line of collaborative tools. But it spreads the communications like peanut butter rather than reducing to an optimal level of information. This is not Slack’s problem. For what it is, its a well designed application. The problem is that we still think immediacy is cardinal.

  • Spy craft disruption + more

    The Spy craft Revolution – Foreign Policy – really interesting to read from a privacy perspective, spy craft affected as much as general public. Intelligence agencies are apparently just like the rest of us and spy craft reflects this. More security related posts here.

    Algocurios – this is what happens when you plug Matt Muir into a machine learning algorithm. I’m just thankful SkyNet didn’t evolve. It doesn’t capture the desperation, profane language and ennui prevalent in Matt’s real posts

    Vodafone Found Hidden Backdoors in Huawei Equipment – Bloomberg – lots of reasons why this might be mostly dilute to poor software engineering practices but it doesn’t help Huawei reputation

    Opinion | Is China the World’s Loan Shark? – The New York Times – academics who have studied China’s practices in detail have found scant evidence of a pattern indicating that Chinese banks, acting at the government’s behest, are deliberately over-lending or funding loss-making projects to secure strategic advantages for China.

    A Conversation With Christopher Wray | Council on Foreign Relations – China poses multi-level threat to US (and the rest of the world if we’re honest about it)

    KaiOS takes on the Apple-Android mobile duopoly – Wizard of OS – given Google’s investment in KaiOS it could still be considered a duopoly of wireless OS’ – also shows what Nokia left on the table

    Brit spy chief: We need trust or we won’t have a ‘licence to operate in cyberspace’ • The Register – “must have the legal, ethical and regulatory regimes to foster public trust, without which we just don’t have a licence to operate in cyberspace”.

    Ralph Lauren Unveils The Super Woke Polo Shirt | Luxury Insidera debut line of polo shirts made from recycled plastic bottles and dyed using a waterless production process. Besides being environmentally woke, the initiative has the noble aim of eradicating 170 million plastic bottles from landfills and oceans by 2025

    How the Kleiner Perkins Empire Fell | Fortune – just wow

    INTERVIEW: China seeking win with information warfare: professor – Taipei Times – interesting if depressing interview

    UK High Court confirms the way GSM gateways were banned was illegal • The Register – interesting reading

    Spotify Premium Adds 3 Million US Members | Consumer Intelligence Research Partners – keeping churn stable and improving conversion from free to paid (PDF)

    Malaysia’s sovereign wealth fund Khazanah closes London office: Report – probably a mix of 1MDB and Brexit

    A Specter Is Haunting Xi’s China: ‘Mr. Democracy’ | The New York Review of Books – interesting if very optimistic reading for the papers quoted

    Baidu is reportedly incubating a music app to defend itself against ByteDance – KrASIA – Tencent already has a number of music apps in China

  • Robots demoralise coworkers

    Faster Robots Demoralise Coworkers | Careers | Communications of the ACM – If you get the pace wrong would the effect of robots demoralise coworkers limit productivity? Is the future not robots augmenting coworkers, but replacing coworkers a more productive alternative. A Cornell-led team has found that when robots are beating humans in contests for cash prizes, people consider themselves less competent and expend slightly less effort—and they tend to dislike the robots – to be fair I’d expect to see something similar if the same person kept winning employee of the week. I know that workers on the line at Vauxhall in Ellesmere Port used to sabotage the robots on the line on a regular basis. This might phenomenon of robots demoralise coworkers be part of their motivation (along with laziness and malice)

    Flickr Cofounder Questions Tech’s Impact on Humans – WIRED – it’s easier to ask the big questions when you’ve made it and can reflect in the tech industry. These weren’t questions that we asked back in the day. More on Caterina Fake here.

    Marbridge Consulting – China’s February 2019 Domestic Handset Shipments Down 20% YoY14.51 mln mobile handsets were shipped in China in February 2019, down 19.9% YoY and 57.4% MoM, according to new figures released by the China Academy of Information and Communications Technology (CAICT), a department of China’s Ministry of Industry and Information Technology (MIIT). The significant month-on-month drop can be explained in part by the week-long Chinese Lunar New Year holiday towards the beginning of February. Of total shipments in February, 13.98 mln were 4G handsets, down 20.2% YoY, 37,000 were 3G handsets, and 0.49 mln were 2G handsets

    A Witch-Hunt on Instagram | Quilette – western PC culture seems to have more and more cases of it eating their own

    Aging Millennials Soothe Themselves With Childlike Fashions – WWD – to try and hang on to youth. The attenuation of youthfulness is a cross generational phenomenon. For instance middle aged dads the still buy streetwear rather than Superdry, skate and go to gigs.

    SXSW 2019: Virtual Cinema – JWT Intelligence – culture is still trying to adapt AR and VR. Whilst it has the energy of an early SIGGRAPH demo reel, I still think the storytelling aspect of things is struggling to find its legs

    Patrick Pruniaux: “There Truly is an E-commerce Potential for Horology” | Luxury Society – Kering haven’t been particularly good at using Ulysse Nardin as a brand in China, but they are rectifying it now. Kering are looking to tap into ‘new’ watch consumers who can’t spend Rolex money on a watch, this position now looks more tenable since Apple has stopped going for the luxury sector with the Apple Watch

    How to Create an Authentic Luxury Experience for Millennials | Jing Dailyif a luxury brand wants to entice today’s consumers, whether it’s in China or beyond, it needs to underscore its authenticity and relevancy. Powerful words, to be sure, but what does it mean to be authentic and relevant? For the moment, let’s start with the opposite. During many of my brand strategy sessions, I often hear the expression “they feel staged” when people describe brands that they would never buy. Needless to say, when brand feels staged, it is neither authentic nor relevant. The synonyms unnatural, deceived, cheated, and faked come to mind. In other words, a staged brand is bullshitt*ng their consumers.

    Louis Vuitton Has a Michael Jackson Problem | Intelligence | BoF – LVMH invested significantly in Virgil Abloh to elevate its menswear line. However, the potential failure of Abloh’s Michael Jackson-inspired collection—whether due to pulled items or lack of consumer interest—is unlikely to significantly impact Louis Vuitton’s overall revenue, as men’s ready-to-wear is a small part of their business. The real concern for Louis Vuitton is protecting its brand reputation, which remains strong unlike some competitors who have faced recent social media backlash. This is especially crucial now, as consumers are quick to criticize any perceived missteps.

    How What Goes Around Comes Around Is Attracting Millennials To Buy Vintage – US chain channels aesthetic of Japanese vintage shops

    You May Have Forgotten Foursquare, but It Didn’t Forget You | WIRED – interesting how Foursquare went from being useful (I use it as spatial bookmarking, so that I can return to new places that I like) to where 2.0 middleware with a bit of ad tech creepiness thrown in for good measure (paywall)

    Pinterest Files for an IPO: What Investors Need to Know | The Motley Fool – interesting for intent driven visual search if they can monetise it effectively on a global scale

    Great video of a Black Hat conference presentation on biometric identifiers.

  • Zara model controversy & things I made last week

    Chinese netizens on Zara model controversy. I love Asian Boss’ qualitative interviews. The Zara model controversy happened only because its in China. Chinese netizens over react to anything they perceive as a slight. Fashion isn’t about ‘beauty’, but that subtlety sailed past Chinese netizens. Freckles indicate age and peasantry in Chinese culture. Beauty is porcelain flawless skin.

    Anand Giridharadas on the modern gilded age and how we should be skeptical of plutocrat philanthropy.

    New Balance China tends to march to the beat of its own drum. But even I was surprised by these sweatshirts with new romantic type detailing. China is unique in terms of its faux Korean aesthetic. I just don’t get the sportswear versus flamenco dancer look, I am just speechless at it.

    New Balance does New Romantic

    Samsung’s facial recognition is surprisingly easy to defeat. This is particularly bad for Samsung. Samsung’s other biometric authentication finger print ID isn’t as good as Apple’s. Samsung isn’t even as good legacy finger print scanners found on the back of Android handsets. Users have no reasonably secure option beyond PINs. I knew of siblings (not twins): a sister unlocking her younger brother’s phone at a glance.

    The moral of this story is that physical security of your phone is required to prevent unauthorised access to your device. Regardless of whether its made by Samsung or any other vendor.

    Goldman Sachs have a great (if terrifying) video on the use of biometrics in public places like airports and stadiums. This is really disturbing, nay, dystopian viewing if you care about your privacy at all. The human factors issue of the laptop loss at Clear affected the brand reputation. What’s impressive is the fact that the Clear brand survived disaster. It is rare for lightning to strike twice, even more so in technology.