Wednesday, October 25, 2006

Middle class crimes

Fascinating criminological/economic research with a Ballardian tinge, suggesting that the 'respectable middle section' of society is actively and widely involved in deviant activity as a response to their perceived unfairness of market practices.

The inevitable press release notes:
Professor Susanne Karstedt and Dr. Stephen Farrall [of Keele University] analysed survey results from nearly 4,500 people aged 25-65 living in England and Wales, the former Western Germany, and former Eastern Germany in 2002. In this economically active group of respectable citizens they found what they described as ‘crimes of everyday life’ to be commonplace. They argue that such illegal and immoral activity is so easily engaged in and widely accepted that the idea of the law-abiding majority needs to be challenged. Indeed they suggest it is a chimera. What they instead found to be widespread are cynical attitudes towards rules and laws, and the endorsement of selfishness.

Karstedt and Farrall examined middle class subjects' perceptions of 'victimisation' stemming from neo-liberal economic reform, and participation in various white-collar crimes, frauds and naughtiness. They found two broad connections -
The first is what consumers and citizens perceive to be unrestrained and unfair commercial practices that ‘rip-off’ people, with the perpetrators unpunished by law or even encouraged by government policies. The unrestrained pursuit of profit in these market economies is perceived as being unacceptable by citizens. Simultaneously they are urged to look after their own self-interest in all realms of life. As a result, citizens feel perfectly justified in behaving in a similar fashion, and pursuing their own self-interest even with illegal and morally dubious strategies. The second is the impact of market anomie on traditionally restraining influences such as belief in the law, trust in one’s fellow citizen and business, and a sense of security in the market place that one will get a fair deal.

The authors conclude:
‘Markets are not in permanent state of anomie per se, and neither is the moral economy immoral by definition. However, permanent encouragement of entrepreneurial comportment and pursuit of self-interest has its price in terms of market anomie which shows itself in the centre of society, not at its margins. The law abiding majority which politicians like to address is a chimera.’

PDF of the full paper from The British Journal of Criminology here.


Tuesday, October 24, 2006

All mouth and trousers

Like any journalist, I'm generally concerned with words, phrases, and their meanings. Generally, I write what I mean to say. If an editor or sub-editor tries to change what I wrote into something that I didn't mean, I get annoyed.

One minor but deeply aggravating example is if I use the delightful expression 'all mouth and trousers' (as I did in this feature for Real Deals on the Northern private equity market a few years ago) only to have some gormless sub in London try and change it to 'all mouth and no trousers'.

The 'no trousers' version, I have found, is a much more recent bastardisation of the original, which has become predominant in London and the South of England. It loses the precise eloquence of the original. I assume it's by confusion with phrases such as 'all talk and no action' (or, another favourite, 'fur coat and no knickers'), but such confusion only seems to demonstrate the failings that the original phrase mocks. 'Talk' and 'mouth' may be metonyms, but 'action' and 'trousers' certainly ain't - and if you think they are, that might say something about you.

Nevertheless, the bastardised form continues to crop up in the London-based mass media, causing me no small degree of irritation and chuntering at each occasion. In a perhaps quixotic attempt to reverse this trend, I've launched a new campaigning blog to promote and preserve the original.

It might seem a rather minor concern to some, but it is an issue that has inspired deeply-felt and loudly-expressed exchanges of opinion in the past. I hope that all who read this blog, and my work elsewhere, will support this cause by using the expression in its traditional and more eloquent form as often as possible.

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Monday, October 16, 2006

Hype 2.0 in the UK

There's more blowing and poking of the emerging Bubble 2.0 in the Guardian today, with a YouTube-referencing feature on "British web entrepreneurs [who] are trying to catch the wave, while avoiding another dotcom disaster".

It's a fair general-interest article, though focusing on the "potential for deals worth millions, or billions, of pounds" rather than creating much of actual economic value. A lot of these 'Web 2.0' businesses are just enabling forums for fickle consumers, who could abandon them in an instant if they're subjected to conspicuous efforts to monetise them (a large part of the reason why YouTube proved more successful than Google's own video-sharing offering).

The 2.0 market is also throwing up a familiar complaint about the behaviour of VCs -
Sam Sethi, editor of technology news website Techcrunch UK, says the atmosphere has changed markedly. "We have seen in the last 12 months the big venture capitalists coming over to the UK to invest." Mr Sethi, a veteran of the first dotcom bubble, believes investors could endanger potential success stories by pushing for too much profit. "The trouble is that it's a bit like Dragon's Den. The minute there's a half-decent idea the venture capitalists want 100% of the company for very little money."

Compare with the sentiments in this Venturedome piece I wrote in the dying days of the dotcom bubble six years ago -
The most enthusiastic reception was reserved for Atari founder and serial entrepreneur Nolan Bushnell, who declared that a deal with a VC was a deal with the devil - and a particularly dumb devil at that.
Many of the entrepreneurial attendees shared Bushnell's lack of faith in venture capitalists - although some were also complaining that there weren't as many VCs available for pitching to as they expected.

The Guardian piece again notes how This Time It's Different -
The crazy days when heavy spending was not allied to profits are gone. "We're not at the level of 1999 or 2000, there's a lot more rationality," says Paul Lee, director of research in Deloitte's technology, media and telecoms team. "But there is quite a bit of money around at the moment. At times like this you get bigger winners but also more losers."

For an entrepreneur's introduction to tech VC, see the recent article I wrote for Real Business earlier this year.

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Wednesday, October 11, 2006

RB goes manbag

The latest edition of Real Business just arrived through the letterbox with a somewhat smaller thud than usual. This is actually the second edition of the mag since its overhaul, though for some reason I didn't get the first - that featured the glamourous David Cameron as cover star, while this one has the scarcely less ubiquitous Stelios (no second name required).

First impression - it's so wee! The new format is an innovative one for a business mag, being slightly shorter and wider than a US comic book - very noticeably smaller than the usual A4-ish size, but larger than the 'handbag-sized' women's titles like Glamour. I can only call it 'manbag-sized'.

The content's still great, though. I particularly enjoyed the article by Rebecca Burn-Callender and Philip Blyghton on 'secret entrepreneurs' who do their best to stay out of the spotlight (and well away from journalists in particular). I've had dealings (or rather, tried to) with a few like that.

There's also another Deals article by myself, this time on development capital. The smaller format means this covers six pages rather than the four of previous articles, which makes it seem pleasingly chunky. On the other hand, the layout seems rather messy, with box-outs and case studies competing with half-page ads for space - newspapers such as the Guardian which have switched to a smaller format have also had teething troubles with adapting design and layout.

But on the whole, a successful transformation by editor Adam Leyland - who's now transformed himself with a move to the editorship of The Grocer, one of the top jobs in B2B journalism. Best wishes to him.


Monday, October 09, 2006

Psychophysics, according to Hoyle

Intriguing letter in last week's Nature on how an aside in the great Fred Hoyle's early SF novel The Black Cloud proved hugely influential in perceptual research -

The characters in the book discover an ominous black cloud that appears to be heading towards Earth. Will the cloud hit Earth and, if so, when? The first question is solved when the characters examine the relative speed at which the cloud is translating across the night sky to the rate at which it is looming, or seeming to get larger. The second question is tackled with a bit of impromptu algebra in which the time until impact is calculated from the ratio of the current size of the cloud to its rate of change. A mathematical derivation of the formula is provided.
A footballer wishing to head an approaching ball needs to know where the ball is going relative to the head, and when it will hit or pass the head. The player could estimate the trajectory of the ball from knowledge of its position and velocity. However, David Lee realized in the 1970s that the brain can use the ratio of size to its rate of change, previously identified by Hoyle, to estimate the imminence of arrival. David Regan realized soon afterwards that the brain can use the ratio of lateral speed to looming rate to calculate where an object is travelling. [...]
Since the early work of Lee and Regan, a considerable amount of research in areas including psychophysics, motor action, neurophysiology and computational modelling has followed. The whole body of work that exists today can be traced back to a casual footnote and a couple of sketches in a science-fiction novel.

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Sunday, October 08, 2006

Hardcastle light

An autumnal day at Hardcastle Crags in the Calder valley.

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Saturday, October 07, 2006

Bubble 2.0

It's front page news in at least one mainstream paper that Google is lining up to buy YouTube for up to $1.6 billlion

And yesterday, the news came through that MySpace founder Brad Greenspan is having a hissy fit about having sold his company to the Murdoch empire for only $580 million, as it's clearly going to be worth $20 billion in a year or two.

The signs are becoming ever clearer that we're already some way into a second internet bubble. Like last time, all the justifying blether is of targeted advertising and eyeballs. The sense of deja vu is further heightened by the fact that MySpace, say, resembles nothing so much as the web circa 1994, with lots of horribly designed personal sites linking to and copying content off each other. The market might be bigger, but it's still crap.

It's not just the valuations being paid for these nebulous businesses. It's that the deals are being judged as front page news (on a Saturday too). Fingers will be burned, once more.

UPDATE, 10/10/06 - here's a feature from BBC News explaining how This Time It's Different.

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Wednesday, October 04, 2006

Damned Stiglitz

Good interview with noted economist Joseph Stiglitz in the current Management Today. It covers a good range of topics, including Stiglitz's experiences of the dominant orthodoxy at the IMF -
As he explains in Globalisation and its Discontents, Stiglitz discovered that it was going to be difficult for him to work in the way he wanted to. There was a crucial discussion to be had about the direction of global economic policy, but the IMF did not seem interested in having it. 'It was very difficult to generate an open, public debate with the IMF,' he says. 'They would say: "We can have a debate, but it has to be closed".
'In 1997 the IMF decided to change its charter to push capital market liberalisation. And I said, where is the evidence this is going to be good for developing countries? Why haven't you produced some research showing it was going to be good? They said: we don't need research; we know it's true. They didn't say it in precisely those words, but clearly they took it as religion.'

And what happens if you challenge such orthodoxy? You get damned -
When the IMF finally consented to debate these issues in the summer of 2002, Stiglitz was bushwhacked. The meeting was off the record, but the IMF immediately released its statement to the press - the Rogoff 'snake oil' slur quoted above. 'They had clearly planned this as an ambush,' Stiglitz says. 'It clearly backfired.'
Had he been expecting such a violent, ad hominem attack? There is a pause, a sheepish grin. 'No, no, I wasn't,' he says. 'I probably should have been. My wife warned me to expect it, but I didn't.'
Has this made him cynical about politics and what happens to academics who get involved? The question provokes another long pause, the longest in our time together. 'It obviously made me think a great deal about what was going on,' Stiglitz says. 'But they couldn't discredit the arguments. The arguments were correct - there was evidence and analysis.
'What do you do when you can't win an argument? Well, in the Middle Ages you had the Inquisition, you executed the person - but we can't do that. So what you do is you try and discredit the person.
'And it was clearly an attempt. There was a mantra. They'd say: "Oh well, he's a very bright person" - it always begins with that - "but he has a political agenda, he doesn't understand policy, he should have stuck with academia..." It is an attempt to discredit, to say that academia has nothing to do with the policy, and the policy is flawed, or that the policy is motivated by a personal agenda or a political agenda. The interesting thing is that it became almost a ritual. A recent New York Times book review had nothing to do with the book at all...
'What they didn't realise was that the policy positions I took were very strongly based on my academic work. I view the work as seamless. Predictions about why the policies in East Asia failed were based on my theoretical papers. So in a way they were a vindication of the theories, and that the old theories of perfect information were flawed. I had talked about this effect.
'There is now a rearguard action from a lot of economists who still want to believe in unfettered markets. And because they can't attack the economics, they have become political scientists, in a way. Their answer is not that markets work perfectly, but that government works more imperfectly. So, yes, markets don't work, but trying to do anything about it is likely to be worse.'

I've not read Stiglitz's latest pop-econ book, Making Globalisation Work, yet, but his earlier Globalisation and its Discontents and The Roaring Nineties (along with his hugely important papers on information asymmetry, of course) are highly recommended.