Sardine fishing in Kerala: Who benefits from mobile phones?

How govt rakes in taxes (DON'T hand them more!)

Worstall on Wednesday We're now 30 years into the mobile phone era here in Good Old Blighty, with that first call having been made back on New Year's Day. And it's worth asking who has really benefited from this technology: something which, when considered, will lead us to being able to tell big government fan Professor Mariana Mazzucato to take a seat.

(Apologies, but the prof's insistence that the sodding politicians really must get more out of the results of human ingenuity is really, really grating upon me.)

Sure, OK, we've the usual lifestyle pieces pointing out that we can now make a date without having to trudge down to the phone box with our sweaty coppers in hand (err, coins, not pigs). And we can now listen to North African music created on smartphones. These are both additions to human happiness, of course.

However, the classic paper about the effects of mobile phones covers the more needful aspects fulfilled by these wonder gadgets, and deals with the subject of sardine fishermen in Kerala (see here).

When information is limited or costly, agents are unable to engage in optimal arbitrage. Excess price dispersion across markets can arise, and goods may not be allocated efficiently. In this setting, information technologies may improve market performance and increase welfare. Between 1997 and 2001, mobile phone service was introduced throughout Kerala, a state in India with a large fishing industry. Using microlevel survey data, we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion, the complete elimination of waste, and near-perfect adherence to the Law of One Price. Both consumer and producer welfare increased.

An explanation of it is here at The Economist. The easy-to-read slides version is here (PDF).

A simple explanation is this: given that these fishermen cannot afford on boat radios, they've absolutely no sodding idea what's going on around them. They don't know how well others are fishing, who has found a huge shoal, which buyers on land have already taken their fill, which of the various markets along the coast are still short of requirements and so on. They thus have to launch upon the sea, get what they can and then hope like hell that there's still a buyer or two when they reach the shore. Mobile phones allow them to communicate: thus they can find out which markets have had good catches landed on them and which have not. They can call each other to tell of a big shoal. They can even find that all of the markets are replete and thus save on diesel by going home.

The net effect of this is:

This more efficient market benefited everyone. Fishermen's profits rose by 8 per cent on average and consumer prices fell by 4 per cent on average. Higher profits meant the phones typically paid for themselves within two months. And the benefits are enduring, rather than one-off. All of this, says Mr Jensen, shows the importance of the free flow of information to ensure that markets work efficiently. “Information makes markets work, and markets improve welfare,” he concludes.

For those of you not au fait with the usual sizes of numbers in this field, that is a huge, vast effect. A capital investment that pays off within two months has a total (ie, fishermen and consumers together) 10 per cent increase in welfare? This is the sort of thing that planners would give their eye teeth to be able to achieve.

Other research into the same general area tells us that having 10 per cent of the population with a mobile, in a country without an extant landline system, adds 0.5 per cent to GDP growth. Not 0.5 per cent to the two or three per cent or whatever GDP growth rate, but actually 0.5 per cent to GDP. And the mechanism is just as described in that sardine fisherman example. More information means that markets work more efficiently to the benefit of both producers and consumers – thus making everyone richer.

There's actually a school of thought that says that the recent fall in poverty globally, that biggest fall in absolute poverty in the history of our species (you know, that hundreds of millions rising up out of destitution into the petit bourgeois pleasures of three squares a day of the past 30 years), has in fact had bugger-all to do with any economic policy that has been adopted and is pretty much entirely down to this technology. Devout neoliberal globaliser that I am, I wouldn't go quite that far: the technology may well make markets more efficient but you still need that neoliberal globalisation for there to be space in which markets may flourish.

However, this result does illuminate a point I made a little while ago. It's not the innovators, the inventors, who get the vast majority of the benefits of an invention or an innovation. It is we, the consumers, using that invention or innovation to do things which benefit us. This is the consumer surplus that we all enjoy. That's why the innovators end up with three per cent or so of the total value of their own innovation. And this is the point at which we should tell Prof Mazzucato to bugger off.

Mazzucato is arguing that the State should get much more of the value created out of such innovations: golden shares, special taxes on people who market inventions that were originally government-funded. But in a modern economy, the State is already taking 30 to 50 per cent of whatever increase in GDP there is. Sure, it's rather lower in Kerala, but still: whatever the tax fraction is of GDP, that is going to be far larger than arguing over whether the State should take 30 or 40 per cent of that three per cent of the value creation that sticks with the innovators.

The mobile phone has been a vast boon to humanity and it is at least part of the explanation for the fall in absolute poverty in recent decades around the world.

As such, arguing about whether Mazzucato's “State” should have more of Steve Jobs' money is simply irrelevant. We just don't sodding care – given the value that innovation, however funded and whomever is made a billionaire by it, provides to the rest of us. This is especially the case when we think that said State usually ends up with a third to a half of whatever increase there is in GDP anyway. ®

Other stories you might like

  • Demand for PC and smartphone chips drops 'like a rock' says CEO of China’s top chipmaker
    Markets outside China are doing better, but at home vendors have huge component stockpiles

    Demand for chips needed to make smartphones and PCs has dropped "like a rock" – but mostly in China, according to Zhao Haijun, the CEO of China's largest chipmaker Semiconductor Manufacturing International Corporation (SMIC).

    Speaking on the company's Q1 2022 earnings call last Friday, Zhao said smartphone makers currently have five months inventory to hand, so are working through that stockpile before ordering new product. Sales of PCs, consumer electronics and appliances are also in trouble, the CEO said, leaving some markets oversupplied with product for now. But unmet demand remains for silicon used for Wi-Fi 6, power conversion, green energy products, and analog-to-digital conversion.

    Zhao partly attributed sales slumps to the Ukraine war which has made the Russian market off limits to many vendors and effectively taken Ukraine's 44 million citizens out of the global market for non-essential purchases.

    Continue reading
  • Colocation consolidation: Analysts look at what's driving the feeding frenzy
    Sometimes a half-sized shipping container at the base of a cell tower is all you need

    Analysis Colocation facilities aren't just a place to drop a couple of servers anymore. Many are quickly becoming full-fledged infrastructure-as-a-service providers as they embrace new consumption-based models and place a stronger emphasis on networking and edge connectivity.

    But supporting the growing menagerie of value-added services takes a substantial footprint and an even larger customer base, a dynamic that's driven a wave of consolidation throughout the industry, analysts from Forrester Research and Gartner told The Register.

    "You can only provide those value-added services if you're big enough," Forrester research director Glenn O'Donnell said.

    Continue reading
  • D-Wave deploys first US-based Advantage quantum system
    For those that want to keep their data in the homeland

    Quantum computing outfit D-Wave Systems has announced availability of an Advantage quantum computer accessible via the cloud but physically located in the US, a key move for selling quantum services to American customers.

    D-Wave reported that the newly deployed system is the first of its Advantage line of quantum computers available via its Leap quantum cloud service that is physically located in the US, rather than operating out of D-Wave’s facilities in British Columbia.

    The new system is based at the University of Southern California, as part of the USC-Lockheed Martin Quantum Computing Center hosted at USC’s Information Sciences Institute, a factor that may encourage US organizations interested in evaluating quantum computing that are likely to want the assurance of accessing facilities based in the same country.

    Continue reading
  • Bosses using AI to hire candidates risk discriminating against disabled applicants
    US publishes technical guide to help organizations avoid violating Americans with Disabilities Act

    The Biden administration and Department of Justice have warned employers using AI software for recruitment purposes to take extra steps to support disabled job applicants or they risk violating the Americans with Disabilities Act (ADA).

    Under the ADA, employers must provide adequate accommodations to all qualified disabled job seekers so they can fairly take part in the application process. But the increasing rollout of machine learning algorithms by companies in their hiring processes opens new possibilities that can disadvantage candidates with disabilities. 

    The Equal Employment Opportunity Commission (EEOC) and the DoJ published a new document this week, providing technical guidance to ensure companies don't violate ADA when using AI technology for recruitment purposes.

    Continue reading
  • How ICE became a $2.8b domestic surveillance agency
    Your US tax dollars at work

    The US Immigration and Customs Enforcement (ICE) agency has spent about $2.8 billion over the past 14 years on a massive surveillance "dragnet" that uses big data and facial-recognition technology to secretly spy on most Americans, according to a report from Georgetown Law's Center on Privacy and Technology.

    The research took two years and included "hundreds" of Freedom of Information Act requests, along with reviews of ICE's contracting and procurement records. It details how ICE surveillance spending jumped from about $71 million annually in 2008 to about $388 million per year as of 2021. The network it has purchased with this $2.8 billion means that "ICE now operates as a domestic surveillance agency" and its methods cross "legal and ethical lines," the report concludes.

    ICE did not respond to The Register's request for comment.

    Continue reading
  • Fully automated AI networks less than 5 years away, reckons Juniper CEO
    You robot kids, get off my LAN

    AI will completely automate the network within five years, Juniper CEO Rami Rahim boasted during the company’s Global Summit this week.

    “I truly believe that just as there is this need today for a self-driving automobile, the future is around a self-driving network where humans literally have to do nothing,” he said. “It's probably weird for people to hear the CEO of a networking company say that… but that's exactly what we should be wishing for.”

    Rahim believes AI-driven automation is the latest phase in computer networking’s evolution, which began with the rise of TCP/IP and the internet, was accelerated by faster and more efficient silicon, and then made manageable by advances in software.

    Continue reading
  • Pictured: Sagittarius A*, the supermassive black hole at the center of the Milky Way
    We speak to scientists involved in historic first snap – and no, this isn't the M87*

    Astronomers have captured a clear image of the gigantic supermassive black hole at the center of our galaxy for the first time.

    Sagittarius A*, or Sgr A* for short, is 27,000 light-years from Earth. Scientists knew for a while there was a mysterious object in the constellation of Sagittarius emitting strong radio waves, though it wasn't really discovered until the 1970s. Although astronomers managed to characterize some of the object's properties, experts weren't quite sure what exactly they were looking at.

    Years later, in 2020, the Nobel Prize in physics was awarded to a pair of scientists, who mathematically proved the object must be a supermassive black hole. Now, their work has been experimentally verified in the form of the first-ever snap of Sgr A*, captured by more than 300 researchers working across 80 institutions in the Event Horizon Telescope Collaboration. 

    Continue reading
  • Shopping for malware: $260 gets you a password stealer. $90 for a crypto-miner...
    We take a look at low, low subscription prices – not that we want to give anyone any ideas

    A Tor-hidden website dubbed the Eternity Project is offering a toolkit of malware, including ransomware, worms, and – coming soon – distributed denial-of-service programs, at low prices.

    According to researchers at cyber-intelligence outfit Cyble, the Eternity site's operators also have a channel on Telegram, where they provide videos detailing features and functions of the Windows malware. Once bought, it's up to the buyer how victims' computers are infected; we'll leave that to your imagination.

    The Telegram channel has about 500 subscribers, Team Cyble documented this week. Once someone decides to purchase of one or more of Eternity's malware components, they have the option to customize the final binary executable for whatever crimes they want to commit.

    Continue reading

Biting the hand that feeds IT © 1998–2022