Category Archives: Economics

Good reading for anyone wanting to be more energy efficient…

I am busily researching a series of articles on energy, and thought htis article deserved an immediate link…

Energy Explained in One Page

Ok, so we all want to be good to the environment. The first step to doing this, as is often the case – is to understand the main characters in the story – and possibly the biggest character in the story in Energy.

However, energy is such a very vague concept, so where do you go to learn more? Do you have to do a physics course?

I don’t think so, and to test my theory, I have tried to explain energy as briefly as I can in this post.

Energy 101

Energy is what makes the world go round. Literally. Every neuron that sparks in your brain, every electron that fires down a wire, every molecule burning in a fire, carries with it a sort of momentum that it passes on like a baton in a complex relay race. The batons are flooding in all directions all around us and across the universe – they are energy and we have learned how to harness them.

The actual word “Energy” is a much abused term nowadays – because energy is used to represent such a disparate range of phenomena from heat to light to speed to weight, and because it seems to be able to change forms so readily, it is cannon fodder for pseudo-scientific and spiritual interpretation. However, you will be pleased to hear that it actually has a very clear (and consistent) nature.

I like to think of energy being a bit like money – it is a sort of currency that can be traded. It takes on various forms (dollars/pounds/swiss francs) and can be eventually cashed in to achieve something. However, just like money, once spent, it does not vanish. It simply moves on a new chapter in its life and may be reused indefinitely.

§Energy currencies:{1}Matter is energy(see footnotes) {2} Radiation {3} Chemical energy {4} Thermal (heat) energy {5} Compression energy {6} Kinetic (movement) energy {7} Electrical energy

To illustrate the point, let’s follow a ‘unit of energy’ through a visit to planet Earth to see what I mean. The [number] shows every time it changes currency (see the key on the right).

The energy starts off tied up in hydrogen atoms in the sun [1]. Suddenly, due to the immense pressure and heat, the nuclei of several atoms react to form a brand new helium atom, and a burst of radiation[2] is released. The radiation smashes into other nearby atoms heating them up so hot [4] that they glow, sending light [2] off into space. Several minutes pass in silence before the light bursts through the atmosphere and plunges down to the rainforest hitting a leaf. In the leaf the burst of power smashes a molecule of carbon dioxide and helps free the carbon to make food for the plant [3]. The plant may be eaten (giving food ‘Calories’), or may fall to the ground and settle and age for millions of years turning perhaps to coal. That coal may be dug up and burned to give heat [4] in a power station, boiling water to supply compressed steam [5] that may drive a turbine [6] which may be used to generate electricity [7] which we may then use in our homes to heat/light/move/cook or perhaps to recharge our mobile phone [3]. That energy will then be used to transmit microwaves when you make a call [2] which will mostly dissipate into the environment heating it (very) slightly [4]. Eventually the warmed earth radiates [2] this excess of heat off into the void where perhaps it will have another life…

This short story is testament to an enormous quantity of learning by our species, but there are some clear exclusions to be read into the story:

  • Energy fields (auras) or the energy lines in the body that conduct the “chi” (or life force) of Asian medical tradition
  • Energy lines on the Earth (aka Ley lines)
  • Negative or positive energy (as in positive or negative “vibes”)

These energy currencies relate to theories and beliefs that science has been unable to verify and thus they have no known “exchange rate”. Asking how many light bulbs can you power with your Chi is thus a nonsensical question, whereas it would not be for any scientifically supported form of energy. And since energy flows account for all actions in the universe, not being exchangeable would be rather limiting.

Where exactly is Energy kept?

This may sound like s strange question, we know Energy is kept in batteries, petrol tanks and chocolate chip cookies. But the question is, where exactly is it stored in those things?

Energy is stored in several ways:

  • as movement – any mass moving has energy by virtue of the movement, which is called Kinetic Energy
  • as matter – Einstein figured out that matter is just a form of energy, and the exchange rate is amazing – 1g = 90,000,000,000,000,000 joules (from E=mc^2)
  • as tension in force fields

That last one sounds a bit cryptic, but actually most of the energy we use is in this form –  petrol, food, batteries and even a raised hammer all store energy in what are essentially compressed (or stretched springs).

What is a force field? Why on earth did I have to bring that up?

All of space (even the interstellar vacuum) is permeated by force fields. The one we all know best is gravity – we know that if we lift a weight, we have to exert effort and that effort is then stored in that weight and can be recovered later by dropping it on your foot.

Gravity is only one of several force fields known to science. Magnetic fields are very similar – it takes energy to pull a magnet off the fridge , and so it is actually an energy store when kept away from the fridge.

The next force field is that created by electric charge (the electric field). For many years this was though to be a field all on its own, but a chap called Maxwell realised that electric fields and magnetic fields are in some senses two sides of the same coin, so physicists now talk of ‘electromagnetic’ fields. It turns out that electric energy (such as that stored in a capacitor) consists of tensions in this field, much like a raised weight is a tension in a gravity field. Perhaps surprisingly, light (as well as radio waves, microwaves and x-rays) are also energy stored in fluctuations of an energy field.

Much chemical energy is also stored in electric fields – for example, most atoms consist of positively charged nuclei and negatively charged electrons, and the further apart they are kept, the more energy they hold, just liked raised weights. As an electron is allowed to get closer to the nucleus, energy is released (generally as radiation, such as light – thus hot things glow).

The least well known force field is the strong ‘nuclear’ force. This is the forces that holds the subatomic particles (protons) together in the nucleus of atoms. Since the protons are all positively charged, they should want to repel each other, but something is keeping them at bay, and so physicists have inferred this force field must exist. It turns out their theory holds water, because if you can drag these protons a little bit apart, they will suddenly fly off with gusto. The strong nuclear force turns out to be bloody strong, but only works over a tiny distance. It rarely affects us as we rarely store energy with this energy field.

Now we understand force fields we can look at how molecules (petrol, oxygen, chocolate) store energy. All molecules are made of atoms connected to one other via various ‘bonds’ and these bonds are like springs. Different types of molecules have different amount of tension in these bonds – it turns out coal molecules, created millions of years ago with energy from the sun, are crammed full of tense bonds that are dying to re-arrnage to more relaxed configurations, which is exactly what happens when we apply oxygen and the little heat to start the reaction.

The complexity of the tensions in molecules are perhaps the most amazing in nature, as it is their re-arrangements that fuel life as we know it.

What exactly is Heat then?

You may have noticed that I did not include heat as a form of energy store above. But surely hot things are an energy store?

Yes, they are, but heat is actually just a sort of illusion. We use heat as a catch all term to describe the kinetic energy of the molecules and atoms. If you have a bottle of air, the temperature of the air is a direct consequence of the average speed of the molecules of gas jetting around bashing into one another.

As you heat the air, you are actually just increasing the speed of particles. If you compress the air, you may not increase their speed, but you will have more particles in the same volume, which also ‘feels’ hotter.

Solids are a little different – the atoms and molecules in solids do not have the freedom to fly around, so instead, they vibrate. It is like each molecule is constrained by elastic bands pulling in all directions. If the molecule is still, it is cold, but if it is bouncing around like a pinball, then it has kinetic energy, and feels hotter.

You can see from this viewpoint, that to talk of the temperature of an atom, or of a vacuum, is meaningless, because temperature is a macroscopic property of matter. On the other hand, you could technically argue that a flying bullet is red hot because it has so much kinetic energy…

Is Energy Reusable?

We as a species, have learned how to tap into flows of energy to get them to do our bidding. So big question: Will we use it all up?

Scientists have found that energy is pretty much indestructable – it is never “used-up”, it merely flows from one form into another. The problem is thus not that we will run out, but that we might foolishly convert it all into some unusable form.

Electricity is an example of really useful energy – we have machines that convert electricity into almost anything, whereas heat is only useful if you are cold, and light is only useful if you are in the dark.

Engineers also talk about the quality (or grade) of energy. An engineer would always prefer 1 litre of water 70 degrees warmer than room temperature, than 70 litres of water 1 degree warmer, even though these contain roughly the same embodied energy. You can use the hot water to boil an egg, or make tea, or you could mix it with 69 litres of room temperature water to heat it all by 1 degree. It is more flexible.

Unfortunately, most of the machines we use, turn good energy (electricity, petrol, light) into bad energy (usually “low grade heat”).

Why is low grade heat so bad? It turns out we have no decent machine to convert low grade heat into other forms of energy. In fact we cannot technically convert any forms of heat into energy unless we have something cold to hand which we are also willing to warm up; our machines can thus only extract energy by using hot an cold things together. A steam engine relies just as much on the environment that cools and condenses water vapour as it does on the coal its belly. Power stations rely on their cooling towers as much as their furnaces. It turns out that all our heat machines are stuck in this trap.

So, in summary, heat itself is not useful – it is temperature differences that we know how to harness, and the bigger the better.

This picture of energy lets us think differently about how we interact with energy. We have learned a few key facts:

  1. Energy is not destroyed, and cannot be totally used up – this should give us hope
  2. Energy is harnessed to do our dirty work, but tends to end up stuck in some ‘hard to use’ form

So all we need to do to save ourselves is:

  1. Re-use the same energy over and over
  2. by finding some way to extract energy from low grade heat

Alas, this is a harder nut to crack than fission power, so I am not holding my breath. It turns out that there is another annoying universal law that says that every time energy flows, it will somehow become less useful, like water running downhill. This is because energy can only flow one way: from something hot to something cold – thus once something hot and something cold meet and the temperature evens out, you have forever lost the useful energy you had.

It is as if we had a mountain range and were using avalanches to drive our engines. Not only will our mountains get shorter over time but our valleys will fill up too, and soon we will live on a flat plane and our engines will be silent.

The Big Picture

So the useful energy in the universe is being used up. Should we worry?

Yes and no.

Yes, you should worry because locally we are running out of easy sources of energy and will now have to start using sustainable ones. If we do not ramp up fast enough we will have catastrophic shortages.

No, should should no worry that we will run out, because there are sustainable sources – the sun pumps out so much more than we use, it is virtually limitless.

Oh, and yes again – because burning everything is messing up the chemistry of the atmosphere, which is also likely to cause catastrophe. Good news is that the solution to this is the same – most renewable energy sources do not have this unhappy side effect.

Oh, and in the really long term, yes we should worry again. All the energy in the universe will eventually convert to heat, and the heat will probably spread evenly throughout the universe, and even though all the energy will still be present and accounted for, it would be impossible to use and the universe would basically stop. Pretty dismal, but this is what many physicists believe: we all exist in the eddy currents of heat flows as the universe gradually heads for a luke-warm, and dead, equilibrium.


Ok, so it was longer than a page, so sue me. If you liked this article, my first in a series on energy conservation, you might like my series on efficient motoring.

Please leave a comment, I seem to have very clued-up readers and always love know what you think!


§ Footnotes:

[1] Matter is energy according the Einstein and the quantity relates to mass according to E=mc^2 (c is a constant equal to the speed of light).

[2] Radiation (like sunlight) is a flow of energy, and energy content relates the frequency according to E=hf (h is the Planck constant).

[3] Chemical energy – the most complex energy, a mixture of different tensions in nuclear and electromagnetic force fields.

[4] Thermal (heat) energy- this is really just a sneaky form of kinetic energy [6 below] – small particles moving and vibrating fast are sensed by us as heat.

[5] Compression (or tension) energy – while compressed air is again a sneaky form of kinetic energy [6], a compressed spring is different – it’s energy is more like chemical energy and is stored by creating tension in the force fields present in nature (gravity, electromagnetism and nuclear forces).

[6] Kinetic (movement) energy

[7] Electrical energy – this energy, like a compressed spring, is stored as stress in force fields, in this case electromagnetic force-fields.

Communicating across cultures – how to be understood!

If beauty is in the eye of the beholder, then the message is in the ear of the listener.

Thus, when we communicate, a key challenge is to make the intended message match the received message as closely as possible. Thus effective communicators are very good at getting into the mind of the audience and seeing or hearing the message from their perspective.

Of course, not everyone can do this. One way this is resolved is by taking advantage of two way communication – if the listener can paraphrase what you are telling them, as a sort of parity check on the message, then any misunderstandings can be revealed and dealt with. But this requires a good listener.

It is also important that if the message has a ‘thread’ (like a storyline) that the listener does not lose that thread due to some short lived issue – missed words due to accent, background noise or indeed the use of unfamiliar words and jargon.

Thus, when telling a story there needs to be redundancy in the message (just like in electronic communication protocols) such that if the thread is dropped it may be picked up again.


I recently moved to the USA from the UK and am currently learning how to communicate across a cultural divide.

Anyone would think that Americans would speak English and perhaps they do, but ‘English’ is such a broad church that it allows for different groups to live their entire lives using only slightly overlapping subsets of the language. Observing these vocabulary differences I have noticed a sort of one-way breakdown that occurs in this case…

Diodes only allow electons to flow one way...

Just like a diode can allow electric current to flow one way and not another, it seems that poor vocabulary matching can have a similar effect on a message. It turns out that when Americans talk at me, I can easily recognize the words I don’t know, but when I talk I cannot recognize (or predict) the words they won’t know.

This may seem like a statement of the blindingly obvious, but it is the same effect as the card trick when the magician shows you a bunch of cards, say ten, and asks you to pick one and remember it. He will then shuffle the cards and show them to you again and tell you that your card has been removed. Lo and behold, your card is gone. Amazing, how did they know which one to remove, what are the chances!?

Well the trick is simple, the magician changed ALL the cards with sleight of hand, and relied on the fact that you didn’t bother to memorize the ‘other’ cards.

It is similar to the issue with speaking to foreigners – it is very hard to know which of your words are missing from their vocab. You can spend weeks or months living with them and you will pick up their vocab but you will find it hard to notice the words they don’t use. Thus after a while, a foreigner will understand pretty much all he or she hears, but when they talk, will still be poorly understood as they will persist in using unknown words.

Thus the flow of information is retarded in one direction only. I think this is a neat observation. That is to say, it is cool and clever, not clean and tidy 🙂

Evolution in the toilet bowl

No, this blog is not about how evolution theory is going down the toilet, crushed in the cold grip of reason by The Discovery Institute.

This blog is about how toilet bowls can be used to show speciation forces at work [speciation – the birth of new species].

You see, I have just recently moved to the US, and have noticed the toilets here exhibit characteristics different to their UK and European cousins. Most specifically, US toilets are filled far higher with water and the water surface is greatly increased in diameter. Furthermore, the flush-handles in the US are more often on the left, rather than on the right as they are in the UK.

How can it be in such a small and networked world, such a speciation could occur and indeed survive?


A short stroll on the ‘net does not reveal much about how Americans came to prefer deep water, so I will have a guess. Presumably some big brand (like American Standard) was strongly dominant and the flagship model offered deeper water –  perhaps to prevent skid-marks, or maybe to ensure ‘complete submersion’. As this brand was so strong it was copied, and became the standard. Time passed, and now the average american might turn their nose up at the European low-level option (or indeed the interesting Asian options).

Question: When a European sees an American toilet, are they amazed at its superiority?

No. People don’t like change – and the deep American version is probably not actually any better. For example, the chance of urine splashing on the seat (or on one’s rear for those sitting) is increased, and so therefore, if anything, I would say the ‘deep dish’ is inferior.

So what does this say about evolution? It shows how a contraption, in different environments, will evolve to become different. But more interesting (to me at least) is that Americans and Europeans are not really significantly different and thus the pressures at play were really rather random. It is not as it American toilets have evolved to be stronger because Americans are larger (that would be no surprise) –  this ‘depth’ evolution is different – and very real, but the result of an almost random mutation (of the water depth) that is perhaps not any fitter, just different, and it has survived, despite its weaknesses, due to its isolation across the pond.

What I am saying is that in replicating systems, things will drift apart (there is a natural divergence) on a fast time scale, and the survival of a trait is on a longer time scale. Perhaps in 200 years time we will see no more deep toilets, but right now we have a new species.

Thus I propose you may actually get speciation from drift alone without fitness actually being tested.


So will a device that gently catches one’s emissions and silently whisks them away, instantly, with no splashing, odour, mess or need to flush will supplant the lot? No, because it will probably be expensive, and this cost pressure will always ensure room in the ‘ecosystem’ for multiple solutions – the “two planks over a ditch’ option will always be around because it is so cheap and simple.


Anyway,  next time you go, think about what the toilet might teach us about the subtler aspects of evolution by selection. It’s valuable thinking time after all!  🙂


Epilogue: an aside on valves…

There are obviously several competing technologies for the flush valve, and none has proven clearly superior; so the fact that the US does not (in my short experience) have a very high penetration of the siphon valve (‘claimed’ by Thomas Crapper), does not surprise me. It is indeed much more leak-proof than the popular ‘flapper’ valve, but more complex and thus prone to breakdown. However, the newly popular half-flush siphon valve, which can be easily retrofitted looks to be a clear leap in its evolution. Competition is hot though, and heading to the US, we will wait with bated breath to see which technology wins out 😉

Some references: – some history – the famous inventor of certain improvements

Environmental pressures are a new force in the future evolution of the toilet. First we had the dual flush, now we have the “No Mix” toilet that keeps 1’s and 2’s apart for tailored treatment!

The Apple Mac: It’s a religion…

It has been explained by writers better than I how our minds are wired in a way that makes them vulnerable to religion.

Whether it is our desire to feel secure or have simple and complete explanations for natural phenomena or simply because we enjoy the social scene at church, there is no doubting the power of the effect. Even in modern times, entire lives, indeed entire civilizations are devoted to the superstitious concept of supernatural Gods.

Although L. Ron Hubbard may have started a religion while knowing it was all a sham, most religions did not need such deliberate action. Our innate need to have faith in things has allowed religious concepts to emerge and evolve freely in our communities as far back as records go.

So why do I bring that up?

It occurred to me today while pondering why people are so defensive about Apple Mac computers – I realised that their behaviour had much in common with religious ‘zeal’.

Then it occurred to me how much the success of Apple relies on perception and conception. If it was just about getting the fastest computer, you would not buy a Mac. If it was about buying something that has wide compatibility, you would not buy a Mac. If it was about cost, you certainly would not buy a Mac.

Some might argue that Macs are more intuitive and ‘easy to use’. These are people whose idea of computing is buying a shiny box, plugging it in and doing exactly what they are expected to do. They are people who just accept it when they are told they need to buy a new printer. Or worse, they blame the printer – what a crappy printer, not compatible! These are people who do not need to set up a complex network, or run a database server.

Anyone who has a Powerbook G4 that cost several grand and is not actually compatible with the latest OSX release, yet needs that OSX release in order to actually work, and still hugs and caresses the machine as it it were a newborn baby while defending its honour and wanting to spend another several grand on a newer shinier one, is, in my opinion, dabbling in a cult.

OK, before you write me off as some sort of anti-mac fanatic, I will admit they are beautiful.

Moving swiftly on, I think it is worth analysing Apple’s success.

How does a company that controls the details of their products so completely compete with a product (the PC) that is made by hundreds of companies all constantly competing, innovating, coming and going, rising and falling? The modular design of the PC allows almost anyone to buy all the bits and assemble the machine themselves; with so many companies making monitors and keyboards and hard drives, some will make bad (fatal) decisions and die, some will make good decisions and thrive and if there are enough upstarts to keep up the supply, the consumer will only ever see the winners, even if their victory was a flook, it was a victory none the less.

You could say that PC is the computer you get from natural selection (survival of the fittest), the Mac is the the computer you get when you try to control the evolution (unnatural selection).

Now a company that tries to make everything itself can capture the value chain, sure, but as it is only one company, it cannot make even one fatal decision, and thus needs to be a little more cautious. This means it is doomed to always lag slightly on the performance vs value curve – so what does it do?

Easy, get the consumer to accept poor value. Make up for performance by buying in high quality technologies (lcd screens, hard disks, etc), and make the customer pay the premium. Then focus on marketing.

Marketing is the art of making people want something. It is unnecessary for products people need.

So what happened at Apple?

Apple, perhaps by good luck, became perceived as a David vs the Goliaths of IBM and Microsoft. For some reason (was it deliberate?) Apple computers gained traction in music recording and graphic design, and gained a sort of bohemian chic that is rather impressive considering that it is essentially “Big Business” and, like most companies, designed to make money.

Clever partnerships, and particularly the inspired partnership with Adobe (think Acrobat PDF’s, think PhotoShop) strengthened their position with journalists, publishers and illustrators establishing the Mac as the creative profession’s computer of choice.

This turned out to be a good thing, as the naughties have been the most art friendly decade yet, as popular culture has come to resent things like ‘work’ and ‘industry’, and a certain sections of society have come to view activities like sport as trivial and meaningless when compared to the value and depth in culture, poetry, good food, yoga, spiritualism and so on.

In other words, the artists have moved up in the world.

Some of the more switched on folk will realise that brands like Gucci/Armani/Christian Dior or Ferrari/Porche/Aston Martin  or Rolex/Michel Herbelin/Patek Philippe are based entirely on massaging the egos of their customers, and in the last case, they probably don’t even keep better time than a black plastic Casio.

But not many of the arty crowd have realised that Apple is using their independent nature against them. The Mac user seems to be infected with the idea that in using a Mac they are somehow being beneficent to the world, will somehow be more creative, they they are part of some loving brotherhood that has exclusive access to the truth and the light.

This is because, by accident or design, the Apple brand has been developed to find that part of our mind that wants to believe and wants to belong, and is easily dazzled; the brand is acting like a religion.


Apple’s alliance with artists continues with U2 and the Black Eyes Peas, both highly credible symbols of free-thinking modernism. But I want you to ask yourself: what is free thinking about this computer company? I’m not sure, but I suspect the only free-thinking thing about Apple is its association with icons of the free-thinking world. It is just an electronics company for Pete’s sake. Like Sony, like Samsung, like Nokia.

If you believe there is any more to it than that, then you are welcome to pay for it.


PS: Besides the defunct G4 in the drawer, there is also an iPod classic in my home. I like it. I like to hold it. Mmm.

Climate change solutions: mass behaviour simulation

Saving our planet from catastrophic climate change might require an unprecedented mass co-ordination of all the people on our lonely little planet.

However, it requires co-ordinated sacrifice, the west are living unsustainably, the east have not had their fair share yet, Africa is unmanageable… how will we pull it off?

Pondering this issue, I am sure none of the experts will have any good prediction of how people will behave – when will the zeitgeist be strong enough to allow governments take the massive steps required? When will china be satisfied that they have pulled up their living standards enough such that it would be fair for them to sacrifice too?

With such imponderables, it seems to me, we might gain some insight if we can create on on-line simulation, a ‘game’ if you like, with a large number of participants, each with their own minds, their own priorities, their own feeling of what constitutes justice.

In this game, some would be wealthy, those that had benefited from the industrial revolution, the slave trade, etc, etc, and fiercely protective of their way of life, many more would represent the 3rd world, the developing nations, the disenfranchised, the war-torn…

These people would thus all live in a 2nd-life style world in which carbon emissions are sure to cause catastrophe (no-one knows when!) but carbon emissions are associated with the luxuries used by the people. Will people be able to co-ordinate themselves to reduce overall emissions? Or will they each take the ‘every man for himself’ route, ensuring that the fit survive, but perhaps with a lower total survival rate?

Could such a game be set up?

It would require a committed community of computer experts (which exist) and a committed community of environmentalists (which also exist) – but do they overlap?

How could we go about trying to make this happen?

The Economics of Advertising Warfare

Picture the scene. Acme Corp’s toothpaste business AcmeDent is a profitable enterprise; and so is that of their biggest rival Ace.

One day, however, they hire a new marketing and sales manager, let’s call him Bob. He is ambitious and full of ideas – ready to shatter preconceptions, break the mold, think outside of the box, etc, etc.

After a few days in the office he realises that the market is saturated. People are just not going to start brushing at lunchtime. The only thing for it is to increase market share. He calls a team meeting.

“We either have to increase sales or increase our margins. We have already cut ourselves to the bone cost-wise, and increasing price will lose market share. If we cut prices, we lose market share – so it looks like stale-mate.” But Bob, being new, felt this was old fashioned reasoning. Surely we could do something to get market share? “Any ideas?”, he asks.

The room is quiet. No one wants to say anything risky in front of the new boss. Looking around at his team, his eyes settle on Sheila, the head of brand management. “What are you doing to get market share?”

Now Sheila wanted Bob’s job. She’s not is a good mood, but knows to be cautious. “Well Bob, as you will know from the report I prepared for you, our advertising budget is tight; your predecessor seemed to think we just needed to match Ace’s spend.”

“What? Why?!” Bob sits up. He can smell an opportunity.

“Don’t ask me, I asked for more. He was very conservative.” There’s a murmur around the table. They all know Sheila is being polite. Before being headhunted, Bob’s predecessor had a reputation for being tighter than duck’s arse.

A few weeks later, the new ad campaign cranks into life. Bob is surprised by how much it cost, but he knows 10% more market share will make it more than worth while. He starts to study his sales figures with care. Will it work?

The end of the quarter looms. What will the results show? Bob reads the business news – Ace’s chairman has made some comments. They are very critical and accuse Acme of “destroying the market”.

“Ha!” Bob exclaims out loud. Excellent, they are hurting.

The results roll in. They are good. 12% additional market share, mostly taken from Ace. No wonder they’re moaning.

That night, he sees the new TV ad from Ace. He has to admit it’s good.

“Why didn’t we think of that?” he booms to Sheila the next morning. “It’s a great idea.”

Sheila is unruffled. “We did think of it; we just thought it would be too expensive.”

“Hell!”, Bob is on a roll with the benefit of hindsight, “we’ve seen that advertising can gain us market share – of course it’s worth it. What you can do if I double your budget?”


Ace’s campaign works and Acme loses most of their new-found market share. The next month brings Acme’s bigger and better campaign – tying together TV, print, competitions, star endorsements, the whole shebang. Again is works like a charm. Market share is back up.

Freshly sun-tanned from two weeks on the Keys, Bob is feeling pretty pleased with himself at the AGM. The CEO will surely make a point of congratulating him on a job well done. He is getting on too, and will surely be eyeing up replacements.

The meeting starts well and soon enough they came to the the financial performance of AcmeDent toothpaste.

“Bob,” the CEO starts, “what the hell is going on here?”

Bob is taken aback by the look of displeasure on the CEO’s face. Oh, well he has a reputation for being grumpy, maybe this is him having a joke. “Well, you see, we have increased market share by 10% this year, our revenues are at an all time high…”. He searched the CEO’s still stony face.

“But what about profits? What are they?”

“Well, you see, this year we made significant investments, so it doesn’t look great, but rest assured, next year…”


“Yes, we invested in major advertising campaigns…”

The CEO is shaking his head slowly.

Bob is suddenly feeling a nervous. “Well, we had to spend money to get the market share, but now we’ve got it, we will see a profit next year.” That should calm him down.

“But what about Ace’s latest trick? While you were away, they’ve started a new fad amongst teenagers for luminous teeth or something.”

“Well sir, it is a bit of an arms race…”

“A race to where exactly?”, the CEO looks very serious now.


“Bob, can’t you see, they have to match our advertising spend to protect their business. All you’ve done is pissed both company’s profits down the plughole.”

The CEO leans over to his assistant, “How much to get the other guy back?” he whispers.

A house price prediction…

House prices, like the stock market, are tricky to predict. 

As with the stock market, there are two classes of parameters that affect the prices – the so-called ‘fundamentals’, like supply and demand, the price-to-earnings ratio on the one hand, and the more transient effects like the economic climate and the ever-slippery ‘confidence’.

There has been feverish speculation for years in the UK, and the prices rose for 15 consecutive years, and are at last dropping.

So why did the prices get so high? Many economists would argue it was a classic “bubble”, a self-perpetuating cycle of confidence building more confidence; in other words the fundamentals were being ignored.

Of course, the people found fundamentals they claimed justified the prices; in particular increased demand. Folks living longer, divorce, folks marrying later, immigration, and the breakdown of the family unit; all these things mean we need more houses.

But if these fundamentals were the whole reason, the prices wouldn’t be dropping as they are now. OK, so now most will admit it got out of hand and this is a correction. But how far has it got to correct?

The bubble, it seems to be agreed, was really helped by two factors:

Firstly there was a throttle on the supply – planning permission is notoriously hard to get and the government probably knew it and were happy with prices rising, it made everyone feel prosperous. On a more sinister front, housing developers may have sitting on prime real estate to deliberately keep prices high.

Secondly, there was easy credit – anyone and their dog could get the cash so people who really shouldn’t have been in the game got in and are now out of their league.

But there is a third factor I’ve not seem discussed in the media: the baby-boom generation.

Hasn’t this bubble coincided with the baby-boomer’s ‘rich’ phase – the age from 45-60 when the kids are off and 25 years of mortgage payments have built up the asset list? Surely this is the age-group that is most likely to own big houses, or multiple houses for that matter?

So what will happen now? The bubble has burst, the correction is in full swing, but what will happen in the next 10 years as the baby boomers start retiring, downsizing, and dying? Will this coincide with the next bubble-burst? Will the industry and government look at the population age profile during planning?

I personally hope this is why the market is cock-eyed – why it is that a professional engineer in his mid-thirties with a internationally comparable salary can’t afford more than a mid-terrace house with a 5×5-metre garden…

So I predict (well pray really, if that’s possible for athiests) that we will get into an oversupply situation and that house prices should correct from this ‘second-order’ bubble.

Of course, even if I am right, it may be that the prices are kept up by nasty developers identifying whole towns to ‘let go to ruin’ just to keep the prices high in the next town along…

Celebrity Dynamics

Celebrity Dynamics. 

The list of people we all ‘know’ isn’t that long, yes, it probably thousands – politicians, actors, singers, historical figures, sports stars – but in a country like the UK, it is still a remarkably small fraction of the populace.

Of course, there are ‘spheres’ – people interested in politics know more politicians, sports fans have more sporting heroes – we here in Cornwall have our local ‘Cornish’ celebrities.

However, if we remembered every celebrity, we would soon run out of space in the public ‘memory’, so we have to be selective.

The media know this – they constantly face choices of which story to follow, and the decisions will often be arbitrary; two minor celebrities did two things today, and we only have 45 seconds of time to fill in our variety news programme – which shall we choose?

This decision process is simple – the editor will pick the celebrity who has more recent ‘hits’ in the news.

Why? Because they know that the audience is more likely to recognise the name – and they know that if the audience hear that name twice it reinforces the memory.

This simple logic creates a very interesting system in which the rise to fame becomes ‘autocatalytic’ – a self-perpetuating, accelerating process. All you need to do is pass some ‘critical point’ of news coverage and you may be in for a ride!

However, we can only hold so many names in the list, so anyone who is out of the news for a time drops off the radar pretty fast, even if they did once enjoy high exposure.

If you are like me, you’ll be thinking of exceptions – folks who just stay famous regardless – do they buck this logic? I don’t think so.

Such people most likely still get exposure, even if its not them in the news – perhaps we see their CD on our shelf, or we talk about their ‘field’ (Thatcherism, Darwinism, Keynesian economics,), and this may be accentuated if their field gets in the news – as has recently been the case for Keynes.

So what value does this theory have?

I think it explains:

  • why so many great deeds don’t lead to fame
  • why often only one person from a high achieving team is ‘selected’ for fame
  • why there’s no such thing as bad publicity
  • local fame does not easily turn to national fame

It also suggests that if you want to be famous, you should:

  • a series of newsworthy events in succession is probably better than a single highly newsworthy achievement
  • if you are in a group/team/band, you need to be the leader or public face of the group
  • you should associate yourself with a newsworthy field, ideally become the posterboy/girl for the field, always dragged out when the field is in the news

And if you want to stay famous once you are you should keep in the public eye:

  • associate yourself with newsworthy events
  • differentiate yourself from other celebrities in your ‘space’ or
  • gang together with other celebrities to create newsworthy events
  • become the posterboy/girl for a newsworthy field/subject, the one dragged out when the field is in the news

Aside:  There seems to be another way to maintain fame:- create mystique, the image of privilege, of some higher plain of existence away from the mundanity of everyday life. People say they like down-to-earth celebrities – that’s because they are very rare – you have to be ‘proper’ famous to stay famous without this tactic! 

Of course, this all assumes you want to be famous! You can equally use the theory to keep a low profile 😉

Good luck either way!