In a previous post, I talked about the tragedy of foreign inventors being granted more patents that American residents for the first time in history. While those who claim that it is only natural that emerging economies gain ground in the US, things seem to be more troublesome. In another study, numbers show that in 2009 the US owns a lower percentage of international patents than what it did in 2005. However, this trend wasn’t observed for other advanced countries such as Japan, Germany, France and Britain. All these other countries have advanced their share of international patents. Therefore, saying that emerging countries are advancing as they should and that it is the main reason for foreigners being granted more patents doesn’t hold anymore.
Even more frightening, if it is true that other economies are emerging, then it is more important for American firms to go out there and get international patents, so they can own global markets who are now more attractive because of the said emerging economies. But what we observe here is the complete opposite and we see that America’s international position is weakening.
Now, like if all this wasn’t enough, American state universities will see their budgets shrink for around $3 billion. This is added to another $3 billion that was removed from budget last year. In other words, US administration is expecting a miracle since it is hoping that cutting costs will actually lead to more productivity from scientists. Now, taking into account that knowledge is created and transferred to firms from universities, investing less in universities will most likely lead to worse results in terms of innovation. Therefore, the only logical explanation to US administration’s cut in university endowment could come from it’s intention to offshore eve more of it’s innovative capabilities. Maybe the idea is to fight it’s own lack of innovation by bringing-in innovators from outside the country.
Dude, where is your American dream?
My heart broke when I read about American public opinion shifting towards pessimism when i comes to getting rich. Seven Americans out of ten believe it is harder to get rich. Compared to 1999, there are eight times more people that have lost faith in the American dream.
One thing is sure: American aren’t trying their best to have better financial situation. If you doubt this, take a quick look at the best selling books on Amazon.com. Most of them are going to be either about self help, personal finance, investment, entrepreneurship and career or business management. In other words, if there is anything on American mind, it is money for sure.
So how come, despite all their effort, Americans just came to the conclusion that the American dream is no attainable? My opinion is that plain economic reality has hit most Americans in the face. By economic reality, I’m not talking about the current recession. What I mean by economic reality is the fact that there just seems to be less money in the hands of average Americans and that they start being aware of it.
Low income plus high debt is killing everybody
When asked about the biggest obstacle to getting rich, more than half believe it due to low income. Of course, the cost of living never diminishes. Again, we can’t really blame Americans for their misfortune by saying that they don’t work hard enough. If you are skeptical about this, take a look at productivity growth vs wage growth for the last 15 years. It is obvious that wages haven’t grown as much as productivity does. In fact, Americans have been penalized for their good productivity by seeing their jobs being shifted aboard for less competitive salaries.
Basically, the only thing we can blame Americans for is to not work for the same wage Chinese or Indians work for. But then, if Americans decided to work for the same low wages as in Asian countries, how many of them would be able to buy new plasma TVs, iPhones, laptops, iPad, etc? The answer is they won’t be able in the long run. Of course, they can always do their spending on credit. But sooner or later, when incomes decrease and that expenses stay steady or increase, something bad is going to happen. And this is exactly what happened with the current economic crisis that started with a credit (mortgage) crisis. With decreasing income, Americans will have to learn frugality which means that they will have to find a way to explain to their kids that they won’t be able to have the next iPad.
My opinion is that American dream is attainable if there is balance between productivity and wage growth. If this issue gets fixed, then people will see an increase in their income, people will rely less on credit and might believe that they will, one day, get rich.
Corporations aren't evil on their own.
People often wonder why corporations turn into anti-social entities that end-up doing more harm than good to the customers. My view is that all corporation end up acting in accordance to shareholder interests which can be in conflict with public interest. This is the tyranny of shareholders on a social level.
The concept of tyranny of shareholders initially expressed the contradiction between what is good for a corporation and what is good for the shareholders. For example, laying off talented employees could be bad for the corporation but good for the shareholders who will increase profits.
In this post, I call the tyranny of shareholders the contradiction between shareholder interests and society’s interests. Indeed sometimes, something can be good for shareholders but bad for society as a whole. For example, offshoring research and development activities could be good for shareholder who will again increase profits but bad for a society because it loses innovative capabilities.
My view is that society must protect itself from powerful agents who could have conflicting interests with the public. In other words, governments should prevent big players from performing things that will end up harming society under the justification that it’s in the shareholders right to make a profit.
Google can't be trusted with our personal data.
Google claims that Google Dashboard gives complete privacy choice and control. I guess this is good news for those who advocate for privacy on the Internet. The truth is that it is very much no news at all. The reason is simple: who says that what we see on Google Dashboard is all that data Google has on us?
It is only Google’s own claim that the dashboard is a direct access to its analytics infrastructure. Knowing how information is vital to Google who mainly lives out of information retrieval, I just have the feeling that it cannot be trusted with such claims.
Google is a big data center. Nothing more, nothing less. What makes the difference between Google and any other search engine that decides one day to imitate and compete with it is the big inimitable data center. If it flushes user’s personal data, it is gradually loosing competitive edge over other players (like Bing) who decide to keep information and can provide more personalized services.
Unless governments step in and impose regulations and audits concerning privacy, claims such as the one with Google Dashboard are going to be nothing more than marketing campaigns aiming at giving a more humane face to an increasingly feared corporation.
Why not consult a real economist...
I came across an article stating a view that the financial crisis is nothing but the result of aggressive foreign investment in the American economy. What I find absurd in this article is in claiming that the economy failed because it was too good! According to this view the economy was so good that it attracted the wrong kind of investors who wanted a piece of the action. Then, what happened was that the economy wasn’t able to live up the expectation.
Well, how about admitting that the whole market hype was a bubble like the current rise of the stock market is a bubble? Why try to put the blame on the whole world instead of admitting that it doesn’t make sense to take risks without backup? Oh I forgot, there was backup: the money-printer!
It appears that Apple and Microsoft are discussing about the possibility of offering Bing as the iPhone’s default search engine. For those who are familiar with Microsoft’s bribing strategy and the recent News Corp. saga, it isn’t really big news. It is only natural for a company that pretty much paid the whole PC manufacturing industry to ship Windows to try the same thing with other products.
The cloud
With today’s industry focus on the cloud and web-based applications, it is important for big players to have a product-line that offers a whole set of tools for everyday Internet users. In other words, the search engine as a single product will not be enough to give a competitive edge to anybody, let it be Google. For example, Google search engine users have access to Maps, Gmail, Reader, Docs, Calendar and a whole bunch of applications that will answer day-to-day needs. Microsoft is trying something similar with Bing Maps as a competition to Google’s.
Mobile computing platform
Today, a third of Internet users come from mobile phones. This trend will only keep on growing in the future as better products will be released for the mobile market. It is only a matter of time before the mainstream Internet completely switches to the mobile platform. With forecasts showing Android as potentially surpassing iPhone sales by 2012, both Apple and Microsoft have no other choice than to put their efforts together in a fight for their life.
What it means to the iPhone users
Well, this is good news and bad news for the iPhone consumer. On one hand they will be exposed to a potentially worse and less mature product. On the other hand, it will bring more balance to the search engine market, forcing Google to work on it’s competitive edge by releasing better products. Of course, things could balance towards a bipolar market where both Bing and Google will be better of with what they have rather than trying to take away market share from the other player.
Kodak has decided to take legal action against Apple and RIM for infringing patents that covers technology related to a method for previewing images. According to Kodak’s Chief Intellectual Property Officer, their primary interest is in receiving compensation for it’s intellectual property. This is going to be much different that what happened to Microsoft when it had to remove Office 2003 & 2007 from the shelf. The good news is that Apple and RIM will keep on selling iPhone and Blackberry mobile phones; but the bad news is that their prices will go up if Kodak wins its case in court. Since patent licensing is not the most expensive thing in a product, my guess is that it will not be such a bi rise in price.
The number of blog posts that praise the possibility of making money by blogging and using AdSense is just outstanding. It looks like all you need is to do ten things to make a lot of money on the Internet. Well, here is something to think of when considering to buy that big lie: Google says AdWords click-through rate is around 2%.
What is the CTR?
Click-through rate is defined as the percentage of clicks per impression of an ad. This means that, in average, people will click twice on AdSense ads for every 100 impressions. My opinion is that Google’s announcement is not really accurate and that average CTR is somewhere around 1%. But for the purpose of this post, I will stick to the official Google answer to CTR.
How much traffic is needed to make a living?
Now that we know how many clicks to expect from users, lets suppose that every ad click will bring in 25 cents. Let’s also suppose that the website owner needs $3K per month for a living. This means that the website needs 12k ad clicks per month for the owner to pay his bills. Since data shows that CPM is lower on social media, it isn’t wrong to say that new visitors will have higher CTR than returning visitors as the chance for the former to accidentally click on ads is higher. Let’s take the 20-80 rule and suppose that new visitors will represent 80% of ad clicks. In other words, new visitors will generate 9600 clicks that represents 480k ad impressions at 2% CTR. Finally, if we suppose that new visitors view 1.5 pages per visit, 320k new visitors are needed for the website every month.
How to get 320k visitors per month?
New visitors will most likely come from the search engine. Again, we can use the 20-80 rule to expect 256k organic visits. Let’s say the blog is targeting long tail keyword. Every blog post targets one keyword that will bring 10 visits per day. This means that the blog post needs to have around 853 blog posts to generate 256k organic visits per month.
To generate a blog post that can reach 10 visitors per day, the blog owner needs to perform 4 hours of reading, keyword search and writing. To reach the 853 number of posts, it will take more than 20 months of full time searching, reading and writing!
The German government seems to be in intervention mode in everything concerning technology. A couple of days ago, German justice ministry has compared Google’s position to that of Microsoft and recommends that some kind of action be taken against it. Also, the German Office for Security of Information asked all Internet Explorer users to switch to an alternative browser because of unfixed vulnerabilities.
Taking into account that Germany was until last year world’s number one exporter, this kind of attitude towards Google/Microsoft is very alarming. German administrations have a strong record for balanced view of economic affairs and their economic prowess is a sign of good economic management. Their position against certain corporations or products is most likely going to be justified by rational analysis rather than political motivation.
The bad news is the Google taking over the search engine market is going to be as bad as Microsoft’s dominance of the desktop market. I would agree with the conclusions of the German justice ministry since not forcing Google to have competitive behavior will end-up as being very costly for the search engine and maybe the Internet industry.
In case you haven’t noticed, the Nexus One is everywhere. But what I enjoyed most was this post where someone was clearly having a bad time dealing with Nexus One ads. Of course, when you live out of AdSense and that you do in your power to have relevant ads shown on your website’s page in order to have better earning per click and click-through rate, it is very frustrating to still find out that ads that have nothing to do with your content show up on your website.
So what happens here is that Google is using not only using it’s influence to get content producers and bloggers of all kind to write about the Nexus One, but it is using it’s huge network of AdSense partners for the purpose of pushing for more ads. And guess what, all this extra traffic is free!
Of course, Google still has to pay when people click on those Nexus One AdSense links. However, when these ads it shows on irrelevant pages, chances of people clicking on them are lower. However, people are still exposed to the ad. Meaning that people are heavily exposed to the message of ‘Nexus One is out there, buy one!’ for a fraction of the price if Google paid for had it dealt with high traffic websites.