Charles Dickens’ A Christmas Carol was an attack on some of the then big minds of the “political economy” movement (now called Behavioural Economics). So ya, it was an economics novella. How cool is that!? Planet Money covers the economic history behind the famous yearly tradition.
Instead of a trade-war which impacts the global economy and hurts everybody, why not just use anti-currency manipulation to address the trade deficit? As explained by Planet Money’s “indicator” podcast it’s practically free. What it doesn’t do is buy politicians votes… The world economy just might be suffering in order for a politician to get re-elected…
Visit dollar street to find how income affects how people live. Also startling… everyone in a 1st world nation is considered RICH! And unfortunately we take a lot for granted; like having a toothbrush. Bill Gates introduces the Dollar Street site here. Explore Dollar Street in full here.
(11Sep2018 edit) The book Factfulness: Ten Reasons We’re Wrong About the World—and Why Things Are Better Than You Think by Hans Rosling describes the 4 levels of income groups and explains the kind of life these people have (similar to Dollar Street). Explore these income groups (which replaces the concept of developing vs developed world): https://www.gatesnotes.com/Books/Factfulness
What’s to blame for slower growth and rising inequality? Regulatory capture. And who practices Regulatory Capture? EVERYONE “Regulatory capture is a form of government failure which occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating. When regulatory capture occurs, the interests of firms or political groups are prioritized over the interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called “captured agencies””. This is an issue that is a “bipartisan blind spot” and affects politicians from any political view.
“…[I]t’s ultimately the duty of the governors to make sure that the rules are in the public interest, rather than in the narrow interests of the various clamoring claimants who come before them.” The first step to eliminating regulatory capture is to recognize that it happens.
One of the reasons the public tolerates regulatory capture is that special interest groups use a positive policy image which creates a natural blind spot in the public’s eyes. An example used by Planet Money is teeth whitening and North Carolina’s Dental Board. The public feels that dentists help people so when the NC Dental Board lobbied to get a regulation to stop non-dentists from offering simple tooth whitening services the dentists initially won. Teeth whitening is more like a pedicure for your teeth rather than a dental procedure and anyone can do one. In fact, these days, people can buy teeth whitening kits at the grocery store. It had to go to the supreme court for the regulation to be removed. While waiting for all the legal trials to settle the issue stifled competition (natural market forces): teeth whitening service costs were artificially inflated (bad for consumers) and non-dentists were put out of business. Planet Money explains a few more examples and including one where homeowners practice regulatory capture.
Planet Money’s story called “Rigging The Economy” https://www.npr.org/templates/transcript/transcript.php?storyId=592376568
It’s #copyrightweek. Here’s some interesting material to help you decide:
Planet Money podcast “…bring[s] you an economist who set out to test a core political conviction. [Talks] to a novelist who came face-to-face with the shaky foundations of his ideas about copyright. ”
And an insightful email from OpenMedia:
Since the 1700s, a form of copyright law has ensured creators could profit from their original work before it passed into the public domain. In the 20th century that began to change, as ‘rights holders’ more aggressively expanded the scope of these laws, profiting handsomely – often at the expense of the creators – and turning aggressive litigation, with tenuous connection to original work, into just another revenue stream.
Copyright law has now been captured by major media interests all over the world. That’s why digital rights organisations in Brazil, Pakistan, Canada and Austria all fight to make it better for everyone: accessible and open, not just owned by a few huge corporations.
Every year we see the absurd lengths corporate giants will go to to maintain this power:
A video of 5 hours of white noise has 5 different copyright take-down claims under YouTube’s ContentID system.1(that’s the system European decision makers want to expand to all user generated sites.)
Tractor owners have a black market in manuals because John Deere forbids farmers from fixing or tinkering with the expensive machinery that they have actually paid for.2
The European Commission buried research that proved links are actually good for the spread of news and information, because that was not what they wanted to hear when trying to sell their Link Tax.3
This week is Copyright Week, a global event bringing these groups together to plan what we will do to overhaul copyright laws, so they have a positive impact on our rights and on creativity once more rather than more of the stories we see above.
Just like us at OpenMedia, these organisations depend on their communities to make a difference.
You can share the ways you’ve made a difference on these issues using #copyrightweek.
I know our global community has had some great victories, like when Canadians spoke up to make sure that the dangerous Intellectual Property chapter from the Trans Pacific Partnership was dropped. The secretive trade agreement would have introduced strict punishments for infringement, even longer copyright terms and a global ‘notice and takedown’, leading to vast amounts of lost content online.
The most inspirational moment of last year for me was watching hundreds of people calling their MEPs about the Link Tax and against Censorship Machines, huge changes to how the web works that would limit free expression in the name of copyright enforcement for media giants. Key decision makers have heard those calls and put the upcoming vote on hold to come up with a better version, one that we hope won’t undermine our freedom of expression.
Copyright is currently used to deny people Internet access,4 to demand take-downs of original content,5 to deny people access to content based on where they live,6 and to silence the very fan communities that make or break pop culture.7 You can share your stories and read more about how these issues impact libraries, engineers, schools, universities, and artists by following #copyrightweek.
 White noise take down video. Source: BoingBoing
 Why American Farmers Are Hacking Their Tractors With Ukrainian Firmware: MotherBoard
 Commission to scientists: Stop ruining our copyright plans with your facts and your research! Source: Julia Reda
 ‘Radical and overreaching’: Bell wants Canadians blocked from piracy websites: CBC News
 When I want to teach, but can’t thanks to Universal Music Group. Source: Adam Neely
 The reasons why geo-blocking must be stopped. Source: TechRadar
 Despite the certainty of takedowns, fan developers still pursue Nintendo’s works: Polygon
Jan 24, 2018 – Update
As you may have seen, yesterday Canada joined 10 other countries in signing onto a reworked version of the Trans-Pacific Partnership (TPP), now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).1,2
In a big win for the Internet, the new agreement suspends many of the controversial provisions included in previous versions, including the Intellectual Property (IP) chapter and ISDS (Investor-State Dispute Settlement) rules.3 These suspensions are not a coincidence — these were among the top concerns raised in over 18,000 emails sent to the government on behalf of concerned Canadians.4
This is all because of you, our community! The overwhelming majority of these submissions came from the OpenMedia community, using our Let’s Talk TPP tool.5 The Minister of International Trade, François-Philippe Champagne noted the influence of public feedback with regards to the IP chapter in the new version of the TPP.6
The improvements in the new TPP are a testament to all these years of pressure and relentless work. We never backed down, kept up the pressure, and finally the government listened.
However, even with these improvements, the CPTPP — and especially the process through which it was negotiated — is still deeply flawed. Discussions continue to be held behind closed doors, with little information available to the public.
Despite how far we’ve come, there’s still much to do. This week marks the 6th round of negotiations in NAFTA — yet another trade agreement where our digital rights are still at risk, and our government continues to negotiate in secret without the transparency we were promised.7
So we’ll still be here, working to make sure that the government is held accountable to its citizens, and does not ignore our digital rights. We need you to stand with us as we continue to demand transparency and accountability from the government, in the final stages of the TPP, the upcoming NAFTA agreement, and all ongoing trade negotiations.
These negotiations are supposed to benefit us all, and thanks to your efforts, we are much closer to that than we might have expected.
Everything you’ve done so far has led us here, so I want to say thank you, Trevor. It’s a big win in what has been a long and notoriously closed process.
Marie, on behalf of the OpenMedia team
P.S.: Our advocacy work against closed-door agreements like the TPP and NAFTA is kept alive with donations from supporters like you. If you can chip in $5 today, we would greatly appreciate your support!
 Consolidated TPP Text: Government of Canada
 Canada reaches deal on revised Trans-Pacific Partnership: CBC
 Annex II – List of Suspended Provisions: Australian Government Department of Foreign Affairs and Trade
 When Consultations Count: Why the TPP is a Reminder of the Value of Speaking Out: Michael Geist
 Let’s Talk TPP: OpenMedia
 Statement by Minister of International Trade on successful conclusion of Comprehensive and Progressive Agreement for Trans-Pacific Partnership: Global Affairs Canada
 Trade secrets damage the credibility of NAFTA negotiations: The Globe and Mail
And the economics of vaccines – 20% IRR and 2 million deaths averted for the Global Alliance for Vaccines and Immunisation (GAVI) – a multi-organizational collaboration lasting 15-years worth $13B:
Vaccinations are a case study of “The Tragedy of the Commons” – where anti-vaxxers become free-riders putting their self-interest over the common good. The Hastings Center explains this problem very well:
“…To understand why, think of vaccination and the quest for herd immunity as a collective action problem. Garrett Hardin’s “tragedy of the commons” illustrates the basic logic of collective action problems. Imagine that 50 farmers share common land (“the commons”) upon which they graze their sheep. The commons are lush, and so each farmer can easily allow four sheep to graze at a given time without depleting the resource. But imagine that each farmer seeks to maximize his own good (what economic theory refers to as “rational” behavior) and it is better for him to graze more sheep than fewer. The farmers will, in effect, be “free-riding” – in this case, taking more than their fair share of the common resource while benefitting from the restraint of others. The trouble is that, while adding one more sheep to the commons does not deplete the resource, adding 50 does. The combined actions of each farmer, acting rationally, leads to an outcome that is worse for all.
The tragedy of the commons reveals that what is good for the individual is at odds with what is good for all. This is the basic logic of collective action problems. We see a similar logic in the case of vaccines. If most get vaccinated, then everyone will be better off. But it would be best for any particular individual if all others got vaccinated and he or she did not. That way, the individual could enjoy the benefits of the common good (herd immunity) without bearing any of the costs (e.g., risk of possible side effects or complications associated with vaccine). This, again, is a free-rider temptation. The trouble is that if everyone thought that way, no one would become vaccinated and everyone would be at risk of falling ill.
From this perspective, anti-vaxxers are not ill-informed parents with distorted views of what is in their child’s best interest. They are acting perfectly rationally. The trouble is that there are enough of them to generate the tragedy of the commons. Hence, vaccination levels drop and measles rates rise. …”
Let’s boil this down quickly – if you’re a Canadian and you do what everyone else does with your savings and investments you will never get ahead. As I explain why let’s look at what is happening in the USA. The USA is moving to execute a fiduciary duty on its financial advisors that includes a “conflict of interest” rule. The “conflict of interest” referred to is the fact that any financial advisor that is not fee-only receives a commission on what they advise their clients to do. In Canada, this is most advisors encountered by Canadians.
As Barrie McKenna writes, commissions put enormous pressure on the advisor to make sales volume targets and even discovers that because of this “…[j]ust to break even, investors typically must generate annual returns of 5 to 8 per cent to cover fees, commissions, trading costs and inflation…” an estimate from Victor Therrien, a mutual fund industry veteran and former executive vice-president of Brandes Investment Partners.
On a similar “conflict of interest” rule move in Canada there is silence. Indeed David Di Paolo and Kara Beitel, partners of Borden Ladner Gervais LLP counsel against it saying “A blanket imposition of a fiduciary standard would ignore the realities of many advisor-client relationships.” In their article they almost completely ignore the “conflict of interest” elephant in the room.
Consumers Union, maker of Consumer Reports magazine, has been advocating for such a rule for some time and further educates us by explaining what a Fiduciary Rule means: http://www.consumerreports.org/money/what-the-heck-is-a-fiduciary/
If you don’t want to wait for this issue to resolve in the public good’s favor, I write about a simple method to grow your investments here: https://textor.ca/2016/08/avoiding-the-doomed-retirement-feeling-how-to-correct-your-investments-in-your-favor/
As one of the Canada Post unions moves to disrupt the Canadian Postal system, I think now is a great time to discuss Defined Benefit (DB) Pensions which is the main issue for the union. Most private companies have moved to a Defined Contribution (DC) system; why? DB pensions are eerily similar to Ponzi schemes moving some to call DB pensions “legalized Ponzi schemes” (where the taxpayer bails out the “last in” pensioner and the company offering the DB pension goes into bankruptcy). FiduciaryNews.com published an enlightening article on Aug 28, 2014 that dives deeper into this question:
What do you think? Do you think it’s fair for a small group of people’s lifestyle to be funded by the Canadian Taxpayer?
I personally do not believe this is fair, and in 1999 when I was offered the choice between DB or DC pension (the last year DB was offered at the company I worked at), I chose a DC pension. In all honesty, I would rather no pension* as I have since learned of a way to not depend on any pension system which I talk about here:
This above mentioned method is both responsible to other people (tax payers) and has the upside benefit of enabling more money to people in retirement than an equivalent DB pension (assuming the person starts the strategy when they enter the workforce and let it run for 25+ years like a DB pension would do). The method has been stress tested by people who have lived on the poverty line and still were able to use the strategy successfully.
* Pensions in the truest sense are government legislated rules to force people to save for retirement; the underlying assumption is that people are not capable of being responsible for their own future. Therefore, the government needs to step in with rules so people don’t blow their own foot off and leave the government and other people with a huge liability as people age.
You know that feeling, “I’m not saving enough. If I could only win the lottery…” That pressure we put on ourselves is unnecessary and in fact, the system is rigged against us. The financial system itself is intent first on accumulating money, second (or even third) is to make a profit for you.
Long-time investment advisor Adam O’Dell spills the beans on his former employers in an article entitled “Why I quit My job as a Financial Advisor” with “…I was expected to toe the company line and only recommend strategies and investments that were “pre-approved,”… Most of the time, that advice centered on “traditional” investment tenets: dollar-cost averaging (read: buying a little more each month), buy-and-hold (err, more like “buy-and-hope!”), asset allocation (but just long stocks and bonds). The odd thing, to me, was that our recommendations in 2008 [, a year of financial crisis,] weren’t all that different from all the years prior. The state of the market seemed to make no difference.”
We spend a lot of money on advisors and money managers. The trick is that they hide the cost in a low sounding management expense ratio (MER) of typically 1-2.5%. So how much is that really? I sat down and figured it out. Because it’s a percentage, we need to consider large sums of money, since the traditional retirement strategy everyone expects is big pot of gold and then taking a few coins out each month to live on. So I started with $100,000 but a more likely figure is several million. Drumroll please!! It costs us around $400-1400/hr (or more!) to pay for these funds and the time it takes to manage the money for you. Most people think twice about paying a professional this much money. Here is a spreadsheet which you can play with yourself. Try changing the number from $100,000 to $1,000,000 or whatever suits your fancy. Click here to access the spreadsheet. This then is why the universal recommendation is to only use a fee-only financial planner. One that doesn’t make commissions or is motivated to put you in funds that charge an MER.
Further digging into the spreadsheet mentioned, it tells us why that Mutual Fund or Exchange Traded Fund (ETF) basically treads water. Take that traditional retirement model; the big pot of gold. How many coins can we take out of it each year? Called “a safe withdrawal rate” my research indicates a reasonable amount is 2%. Remember, the fund is charging you the MER in retirement and also in situations where the fund loses money. So add the MER and the safe withdrawal rate together and you have a significant negative trend against building wealth.
There is a better way…. Something I stumbled on to. It has a significant history of success dating right back to the start of the stock exchange in 1602. Mr. Lowell Miller introduced the concept to me in his book, now a free PDF online, called “The Single Best Investment: Creating Wealth with Dividend Growth.” (It is also on amazon if you want to pay for the e-book or buy an old paper copy. Also, there are copies at most public libraries.)
Single Best Investment has also been called the “dividend achievers” strategy and is one of the few (only?) proven long term buy and hold strategies that work. What is it? Basically it is an investment in stocks that have raised their dividend every year. Meaning the investment is not for the dividend itself but the dividend growth rate. Click here for more on “dividend achievers”.
It works because it does two critical things:
- eliminates financial fees
- focuses money in companies that stay healthy with very low risk of long term downside
Because it is based on a growth rate for dividends, there is a “hockey stick” compounding growth graph. That also means it takes time and is not a “get rich quick” (GRQ) scheme. Other characteristics of this strategy are:
- Simple, minimal maintenance strategy
- Focuses on key factors important to personal financial situations: cash flow, safety
- Still grows if cash flow not reinvested
- Cash flow increases through retirement
- Can eliminate the need to continuously save for retirement
- Supports “rewirement”
- Qualifies for debt interest deductibility (an advanced tax strategy)
If you made it the bottom of this article, congratulations. You are one of the few people who cares that your money makes money. Not many people do. North American society has all sorts of funny money myths, and collectively we subconsciously do not think we deserve it. Have you ever tried to talk to a fellow North American about money? You’ll see.
So what do I do? I have documented my experience and tools to help bootstrap people. Most people tell me they “don’t have the skills to invest themselves” but most people already do tasks many times more complex than investing. To list the required skills a person needs to know how to read, multiply, divide and handle percentages.
I offer a 2 hour introductory course and pay as you go coaching for people not inclined to read the book and do-it-themselves. To date, no one has ever needed more than 3 hours total. It is that easy. The strategy requires some time to setup, but then it’s “set it and (mostly) forget it”; just like buy and hold should be. For those who do not have much seed money and want to know what tools are available to help accelerate their progress, I offer an additional advanced course. If you think investing and saving is way beyond your lifestyle, consider that people making poverty line incomes have successfully used this strategy. That’s one of the many money myths.
About my involvement as a coach: I don’t make enough money from this for it to be anything but a hobby that makes a little money. The other reason I charge is because we can’t have a contract that places the responsibility for investing on the investor without doing so. The reason I coach is because I believe it benefits people. What I don’t do is provide motivation for conducting the strategy although I do discuss the psychological hurdles as part of the course. The psychology and the motivation are the hard part and finding tools for overcoming that comes from countless motivational materials available at any book store or library.
Did you know that accountants were hesitant to adopt spreadsheet programs like excel? Or that it took us decades to fully adopt trains, automobiles and computers? Do you think these things changed our lives? Of course! How could we conceive where we are today without them? But it took a while for them to gain “steam” (pun intended).
The situation with the Digital Oilfield in North America follows these familiar lines. It is a transformation that I cannot adequately explain since I only know how to build the enabling technology. How it’s going to be used is up to each person acting individually and resulting in a collective connected effect. Sure, I can give some examples or find people who have done this or that. But that’s the tip of the iceberg. The “killer example” is going to be different for every team in an energy company.
The enabling technology for the Digital Oilfield is called a “Connected Field”. It takes the Oilfield improvement areas listed below and binds them together. It’s the enablement of seamless intercommunication and coordination that truly leverages a Digital Oilfield. Without it, it’s an Oilfield that uses new Oilfield technology – not the exciting “Digital Oilfield” that truly propels the energy business to the next level.
There are so many ways to get a Connected Field wrong for a Digital Oilfield. Even with the right telecom vendors, it’s so easy to say “we don’t need QoS (Quality of Service)” – simply because the decision maker doesn’t know what it is. The fallacy is that there is a belief we already have a Digital Oilfield. There are already real world examples of a true Digital Oilfield using a Connected Field. And they are all in the Middle East; lowering their costs and increasing their supply. I cover a real world example later, so it will be easy to see the difference.
But let’s go back to the beginning. What is a “Digital Oilfield”? The concept was first presented in the seminal study: “The Digital Oilfield of the Future: Enabling Next Generation Reservoir Performance”, IHS Cambridge Energy Research Associates, Inc., 2003.
A Digital Oilfield makes the following improvements to the Oil & Gas business – and a Connected Field enables most of them; that is, you need a connected field to truly leverage the benefit to the full extent.
So what is a “connected field”? It is a data communications system that has these characteristics:
- Completely and seamlessly covers the area of interest (like cellular data might cover all of the downtown of a city). This allows users to just turn on a device (sensor, video, etc.) reducing or eliminating the need to involve IT to justify a business case to obtain capital to expand the network. It just works. Technicians are not required to tune antennas at the user level. A rig can just move itself and still have full connectivity to all its services while it is moving and when it reaches its destination.
- It is a committed That is, it is not a “best effort” network, shared with other companies and people in the area (like cellular data).
- It allows full control – that is, it has quality of service (QoS) capabilities to prioritize business critical applications or applications requiring better service to function correctly (voice, video).
Let’s examine what is not a connected field:
- Cellular data from any major telco. The reason why it is not is that it has no QoS and is best effort (no committed bandwidth) and may not cover the entire field without boosters (which are technically illegal according to the Telecommunications Act).
- MPLS networks – in themselves, they would help if the purchaser buys QoS. If the cost of buying the right networks with QoS was used to price the rent option, it is likely that the system could be built from scratch less expensively. That is, a Digital Oilfield should consider the “rent vs buy” options like any procurement decision.
- Satellite – the price per Mbps with QoS and dedicated bandwidth is horrendously expensive. Unless the company (including all teams and phases that work in the area) only expects to operate in the area for 6 months or less, it’s frequently the case that it is cheaper to build.
- SCADA (legacy 450 & 900Mhz) – really this is only for “tin can on a string” SCADA data – that is monitoring / telemetry. There are now new SCADA radios that can supply QoS and bandwidth rates at 18Mbps or above but most Oil & Gas companies, especially in North America are not using them. Most of the SCADA radios in use today use technology that was developed during World War II and they have not been updated. We’re talking punch card era technology.
And of course, I hear all the skeptics. So what does a Digital Oilfield do in practice? Here’s an example:
Petroleum Development Oman (PDO)
- Connected field coverage: 45,000 sq. km (17,000 sq. miles)
- Increased a mature (brownfield) oilfield’s production by 100K barrels/day. At $90/barrel this is $3.2 Billion/year in additional revenue within one year. (Ok, yes, price of oil… but this was done in 2012 – even at $30 that’s $1 Billion)
- Reduced drilling & completion days to online from 39 days to 14 days ($1M per drill saved). Including completions, saved $5M per well.
- 10 month payback.
What does the Connected Field network look like for PDO?
As of the end of 2013, Petroleum Development Oman field has:
- 6600 broadband connection points
- 52 base stations
- 13 Gbps total capacity, the equivalent of 500 connected homes or the bandwidth provided to a 4000 person office building
- 130,000 end devices
Compare this to a field of that size in North America; there are maybe 10 cellular base stations covering the entire thing. Everything overloaded to the point that it does not work that well (e.g. “worse than dialup” is what I frequently hear).
Together the Connected Field collects 36 times more data enabling more accurate and improved decisions. It delivers 4 Mbps anywhere within the field of coverage (compared to less than 300kbps in some fields available today). You can drive around in a truck all day long and everything just works.
No messing with devices, changing networks, etc. Need to talk to the engineer in head office and start a video chat about a valve to show him/her the valve? Done! No problems. Want to implement an intelligent video system to monitor the flare stack, look for pipeline leaks, identify personnel not wearing PPE, etc.? Want a “mobile worker”? (Please do not confuse it with a “mobile OS” which is simply an operating system built to enable mobile workers that have a network.) With a Connected Field, you just do it! No need to price in a brand new network to enable the business case.
The cost of all this? Less than 1% of the total injected capital into a greenfield area. And if a true connected field is implemented that is multi-use and multi-team capable, the expenditure is less than what they spend today.
Despite the impressive track record how many Digital Oilfields are there in North America? None. Some are close with partial implementations but it’s localised and not well championed at the executive and board levels. How many in the Middle East? Quite a few. Middle East operations have the direct support of the board of directors/families and executives. Would this situation have any bearing on the current supply / demand and geopolitical climate? Hmm….