The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for.
via Economic Scene – In Greece, a Reflection of U.S. Debt Problems – NYTimes.com.
But, according to the Congressional Budget Office, annual debt payments — currently about $200 billion — are set to skyrocket. CBO estimates that interest payments on the federal debt will total $916 billion by the year 2020.”Interest rates are going to rise and at the same time, were going to have a substantial increase in the size of the debt,” says Roberton Williams, a senior fellow with the Urban-Brookings Tax Policy Center. “Well be paying five times as much in dollar terms by 2020 than we did last year.”
How Big A Number?How much is $916 billion? Its more than we currently spend on Social Security. And it will represent 18 percent of federal spending in 2020 — nearly as large a share as defense spending.
Having to pay close to $1 trillion a year just on debt will necessarily crowd out other parts of the federal budget. Roads, parks, education — pick any priority you like, theyll all come under pressure.”In 20 years, if you look at combined debt service, Social Security and health care, those are going to cost us more than the current tax system is capable of raising,” says David Wyss, chief economist for Standard & Poors.
Confusion over the names of two similar-sounding African countries may have helped boosted oil prices to near $80 a barrel this week as traders rushed to buy oil after reports of a military coup.
A Reuters reporter received a flustered phone call from a hedge fund partner who had heard animated discussion in the market about an incident in Nigeria, only to realise that traders had muddled up Africa’s biggest oil producer with its neighbour Niger.
“Markets took off at around the same time a Reuters story came out about gunfire erupting in the Niger capital in an apparent coup bid, mistaken by many as being Nigeria,” said Tom Bentz, analyst at BNP Paribas Commodities.
via Buy on the Nigeria rumour, sell on the Niger fact | Analysis & Opinion | Reuters.
Income is becoming more distributed around the world. A comparison on 1970 to 2006 shows vast improvements in income distribution. According to this report – the income distribution trend is great. (Note, this income not wealth, which may be a different matter – but income is a start.)
I would guess this would be caused by more countries becoming more free. In a free country, I would think that we would see a bell curve in income distribution. This is because intelligence is distributed “normally”- and I would expect other characteristics like interests, passion, and work ethic to be characteristics that are probably normally distributed as well. And, in a society that is free – income would probably more closely match these characteristics than in a more centrally planned economy.
74% of apps listed in the app store are paid. Average listed price of an app (including free): 3.63 x .74 = 2.70 (with rounding)
The bizarre world of centralized planning.
“The road to hell is paved with good intentions.”
Innovation creates change. That is pretty obvious. Innovation is all about changing things for the better. But, taking a narrow view of innovation by designing solutions and products solely focused on the customer – or “human centered” innovation that is just focused on the end user – can sometimes work out to a non-optimal solution.
This is because focusing narrowly on the end user can sometimes ignore the larger macro system. This is where an economically oriented methodology of looking at actors and systems can help the new product design process.
Tatyana Mamut, who is an economic anthropologist had an interesting story and model to use to vet larger implications of products that have good human-focused intentions:
During a recent project that took us to Ethiopia, we interviewed a local treadle-pump manufacturer who noted that the era of NGO and government interventions created expectations among their small-farmer customers that many agricultural products and services should be provided free of charge or at heavily subsidized prices. While the NGOs and government officials were certainly well-meaning in their work and support of farmers, their actions lowered the value of agricultural goods and services so much that local businesses closed shop or were forced to seek subsidies from the NGOs themselves in order to remain profitable.
Some quick back of the napkin economic thinking could have helped design a more optimal economically/ system-based solution.
Tatyana, working at IDEO, is working with a framework to analyze the impact to several actors in the system. It consists of 4 actors:
Constituents: Identify the primary constituents and their relationships. Who are the primary people the solution intends to affect? Who are the people, organizations, and other actors that are related and linked to the primary constituents?
Funders: Delineate the funders and investors. Who is bringing value in terms of money and other resources to the system? Who else—foundations, investors, shareholders, governments—are related to primary funders and have stakes in the funding?
Society: Determine the stakeholders in society who may be touched by the innovation. Beyond the primary constituents and those who are directly related to them, who else may be affected or have a stake in the intervention? What actors—such as schools, businesses, different social classes—may experience a value gain or loss as a result?
Nature: Articulate the aspects of the natural environment that may be affected. What areas of the natural environment need to be considered? Where will resources be extracted and how will they be allocated? Who—people, organizations, or public authorities—speak for these aspects of nature and the environment?
Next, posit where you might look within the framework to track the actors who will gain value through the innovation as well as those who might experience a loss of value.
Link: How Can We Zoom Out to Evaluating With a Systemic View? | GOOD
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