The American Nightmare: How the American Dream has tainted American society.

"The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement."

James Truslow Adams, The Epic of America

One of the things that have defined the relatively young nation of the United States of America has been the sense of hope, the optimism and self-belief that is encapsulated in the notion of 'The American Dream'. 

The American Dream is founded upon the idea of the USA being a perfect meritocracy- that is a place where success is purely based on merit, on one's own efforts, regardless of their socio-economic background. So long as an individual worked hard, he could achieve his dreams.
So what are the 'rewards' of achieving the American Dream? Wealth? Social Status? Not exactly. Above all, happiness is probably the goal most associated with the Dream. After all, happiness is what every person seeks, regardless of whether they are subscribed to the American Dream or not.
But how does one achieve happiness? A popular belief that has existed throughout time and perhaps was never stronger than in the America of the Roaring Twenties, is that money=material=happiness. Put simply, it is the belief that money can buy you happiness.
Of course, money is indeed often a route to comfort (it's easier to cry in a Ferrari than in a tent), but happiness is a concept that does not equate to comfort but builds upon it. Comfort is just one of the many things that has potential to bring you happiness; many people can claim to be 'comfortable', but not truly happy.

The shallow belief in money and the power it brings being the only means to happiness is what links the 'American Dream' to the modern diseases of superficiality, materialism and consumerism. People see material as their end goal; taking it for granted that happiness will follow. It won't: just see any of the large selection of celebrity crises, they are pretty good examples of how money, power and fame does not guarantee happiness- in fact they can sometimes work to its detriment.

Further issues arise from the concept of the 'American Dream'. Society has little role to play in the Dream other than simply facilitating the rise of certain individuals. The 'every man for himself' attitude encouraged by this idea, that you can and should work hard for yourself to achieve your Dream has created selfish individuals who use their talents not to benefit society as a whole by contributing real value to society- be it by selling products that will better peoples' lives, or by alleviating poverty- but use their talents simply to their own gains- at most the gains of their close family and friends.

It's certainly true that like chocolate (yes, hang on with me here), money, after a certain point, is subject to the notion of marginal value. Some economists believe it is good to have massively wealthy individuals in a nation- see the earlier article on trickle-down economics- but more often than not, after a certain point wealth becomes of little value to an individual. 
It's like chocolate because one bar of chocolate is often very tasty. Maybe even the second. But after the third or fourth it becomes sickly- to the point that where you might have paid for the first, you might actually pay someone else to take the tenth. The value of the chocolate declines after a certain point- money does the very same, simply because the toys that the rich can purchase only go up to a certain value before they simply become ridiculous investments.
Take Bill Gates, the second wealthiest person in the world, with a fortune of over $80 billion dollars.
In an interview with The Telegraph last year, Bill clearly told the reporter: "Money has no utility to me beyond a certain point."- and it shows in how the wealthy are collecting money on an outstanding scale. 
This can be seen in how the collective wealth of households with more than $1m in investible wealth rose by 66% since 2008- despite global economic output rising only 16% in this time.
The wealthiest individuals of society have no actual use for much of their money- this isn't something too crazy to imagine. Bill Gates already has a home worth $150m, and most probably every material possession he could desire- so what else is he going to spend his $80b on? Interestingly enough, it is for something to benefit society at large- Gates has given over $8b in charity to improve global health, most notably fighting for the eradication of diseases such as polio. 

I digress. Back to the point, the American Dream harbours a sense of individualism that is detrimental to society at large. Bill Gates is relatively unique in his spending- the increase in wealth of the richest in society shows that most are pretty much hoarding cash for a rainy day that may or may not come. 
And the Dream also gives society an excuse to neglect the poor and unfortunate. Yes, of course there are poor people in every country who will be there largely because of their own deficiencies- usually attributed to their own lack of effort- but the belief in America being this perfect meritocracy has simply boosted the ego of much of the wealthy and given them an excuse not to contribute even a tiny part of their wealth to the unfortunate in society. It promotes the often incorrect belief that every poor person is their exclusively due to their own shortcomings. 

A prominent example of the corrupt side of the individualism encouraged by the Dream include the behaviour of bankers in the various financial crises of the past century. Acting out of self-interest purely, they gave away cheap, risky credit that ultimately they benefited from, at the massive cost of almost every customer they dealt with. 

Ultimately, the belief in America (or any country in the world, for that matter) being a perfectly plutocratic 'land of opportunity' is far from the truth. After all, a pure plutocracy would be one without the tradition of family inheritance, the sort that fed with a silver spoon the wealths of individuals such as Donald Trump and Mitt Romney. 

America has in many senses stayed true to the American Dream- and while many have gleamed success from it, one could argue that it has tainted society with an individual-centred spirit that has boosted certain individuals at the cost of numerous others.

SOURCES (and recommended reads):

Telegraph interview with Bill Gates http://www.telegraph.co.uk/technology/bill-gates/9812672/Bill-Gates-interview-I-have-no-use-for-money.-This-is-Gods-work.html

The Ultra Rich Are Hoarding Cash As Inequality Anger Simmers http://www.businessinsider.com/r-cash-stash-may-reflect-fear-of-wealth-going-out-of-fashion-2014-25

The World's Richest People are Sitting on Gigantic Piles of Cash that aren't Earning Them Anything http://business.financialpost.com/2014/06/11/the-worlds-richest-people-are-sitting-on-gigantic-piles-of-cash-that-arent-earning-them-anything/

Brian Miller, Mike Lapham The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed (Berrett-Koehler Publishers, 2012)

The Bill and Melinda Gates Foundation http://www.gatesfoundation.org/ 

Why Tesla Motors Could Be the Most Important Car Company in the World.

Tesla Motors founder Elon Musk- often dubbed 'the
real life Tony Stark'.

One of the hottest new companies to come out of the golden hills of Silicon Valley is not another computer-based company, but, for the first time, a car company. 

Tesla Motors, the brainchild of a founder of PayPal, Space X and numerous other ventures Elon Musk have set out to revolutionise the car industry.

Although it's not overly apparent at the moment, much of the conventional car industry today is broken. Yes, cars are being innovated, crammed with more technology in the shape of screens, cameras and whatnot, and they are becoming more comfortable and so on but fundamental environmental problems still exist (yes, despite the increasing MPGs we are seeing). 

First and most important is the issue of the environmental impact that cars today hold. In 2011 the number of cars worldwide surpassed 1 billion, with newly boosted economies such as China and India in particular seeing huge increases in car usage. And the growth is not expected to stop any time soon; in the same year, the OECD's International Transport Forum claimed we could see up to 2.5 billion cars on the roads by 2050.

Now there are two major environmental issues with such a large number of cars- firstly, the large majority of cars on the road (particularly in newer economic giants such as those in Asia) pollute huge amounts of harmful gases- mixtures of various hydrocarbons, carbon monoxide and dioxide, which all contribute to a polluted air that with it carries increased risk of cardiovascular disease and cancer to humans, poor nutrition for plants and ominously it is a major cause of global warming, which, causing the melting of polar caps, could in future lead to huge natural disasters. 

Cars are certainly dangerous to the environment- according to the US Environmental Protection Agency, transportation (most of which is in the form of cars) contributes 27% of the greenhouse gas emissions in the USA.

Smog, one of the many unpleasant effects of pollution,
shrouds Paris.

Another key issues relies in the scarcity of the resources required to continue our dependency on automobiles. According to the World Bank, for every 1000 citizens of the USA there exists 786 cars in the country- when you consider the large chunk of people unable to drive, this makes for over a car per person, and the 300 million population of the US makes these statistics even worse. The US, while a prominent example, is not alone in this obsession with cars- the UK's figure lay at 516, still a large amount.

So we are so dependent on cars- but the large majority (over 95%) of cars sold in the US are conventional petrol/diesel affairs. Considering this, the seemingly endless growth of car ownership and the fact that BP claimed there to be only 53.3 years of oil left on the earth, it really does seem we can't afford to continue depending on these vehicles because one day in the near future, we will not be able to run them (one can state that, as has often been the case, new oil reserves will be found in the future, but can we really afford to rely on that anymore).

So, back to Tesla. Basically, they want to circumvent all these issues associated with conventional fossil fuel cars. So how do you do that? Make hybrid cars, of course.

But that's not enough; hybrid cars are hybrid, remember- a mixture of petrol/diesel and electric power. They still require these preciously damaging commodities to be used to work, and above a certain speed they still pollute.

The Tesla Model S, Musk's first major entry into the electric
car market.

So Tesla set its sights to popularise the fully electric car, with their first stab at the premium saloon market coming in the very easy on the eye Model S, and a forthcoming more affordable 'Model 3'. The aim is to bring electric cars (which require absolutely no fossil fuels to be inserted, nor burns any harmful gases) into the mainstream, but a certainly interesting move by Tesla has been that, unlike most companies, they seek not to monopolise this new industry by innovating internally and patenting endlessly to block out competitors. 

No, they are, spectacularly, doing quite the opposite: in a bold move earlier this June, Tesla opened up its collection of 249 patents to use by any competitor 'in good faith', something Elon Musk claimed to be part of the 'open source movement' with the intent of sparking genuine market development and competition in the bare area of electric cars.

In normal business terms, this is a ludicrous move- patents, after all, have been the focus of this mega conflict between two technology giants, Apple and Samsung. Conflict over patents cost these sides over a billion dollars- so why are Tesla just letting go of all of them?

It's a textbook example of what economist Umair Haque calls a development of 'market resilience' in his book The New Capitalist Manifesto. Tesla could have kept tight hold of the revolutionary patents they possessed, and with their incredibly 'cool' brand they could have dominated the electric car market for the next decade via their exclusive technologies. But no- Musk and co. opening up these patents has the effect of opening up the market to fair and vibrant competition. Tesla perhaps a year or two ago would have easily been crushed by huge competitors- but now it can stand on its two feet it wants to kick of the stabilisers and compete. 

BMW have already made their entrances into
Tesla's market with their i3 and i8 electric cars.

Opening up the patents shows a desire to see development in the market, and is actually a dangerous move for Tesla. BMW could tomorrow launch a Model S competitor in a fully electric 5-Series- the huge marketing and already existing prestige of the brand could possibly reduce Tesla to just a minor 

player in the market. Mercedes, Audi, Toyota, Ford, all these brands and more could do the same.

This is where the 'Resilience' mentioned by Haque comes into play; Tesla, by opening itself up to market competition, will have to fight to grow, fight via innovation, genuine development of technology, and so will its competitors if they want to grab a share of this growing market. Tesla won't have the security of a cocoon of patents- but neither will they have the temptation of laziness that comes with market security- just ask Microsoft about what complacency brought by monopoly did for them in the noughties (cough, Vista, cough).

Tesla opening up their patents was a bold move indeed, especially by a relatively new entrant into the automotive market. But it is a truly innovative, progressive move that will hopefully boost the automotive industry as a whole, and help us escape from the tyranny of conventional gas-guzzlers by providing a cleaner, affordable and most importantly more sustainable alternative.

It will be a long, hard battle for Musk and Co.- but we wish them the best of luck.

Long live Tesla. 

SOURCES (and recommended reads):

The Capitalist Manifesto by Umair Haque is a real eye opener to the next generation of corporation- the Googles, the Teslas, the Nikes and the Wal-Marts (yes, really, you'll have to read the book to find out why). It's definitely worth a read: http://www.amazon.co.uk/The-New-Capitalist-Manifesto-Disruptively/dp/1422158586

Space X, Elon Musk's latest venture into the stars: http://www.spacex.com/

Number of Cars in the World surpass 1 Billion: http://www.huffingtonpost.ca/2011/08/23/car-population_n_934291.html

We Could See 2.5 Billion Cars on the Road by 2050: http://www.ipsnews.net/news.asp?idnews=55943

Global Warming and Natural Disasters: 

http://www.theguardian.com/environment/2009/sep/06/global-warming-natural-disasters-conference

Transport responsible for 27% of US Greenhouse Gas Emissions: http://auto.howstuffworks.com/air-pollution-from-cars.htm

World Bank Global Car Ownership Stats: http://data.worldbank.org/indicator/IS.VEH.NVEH.P3

BP: Not much Oil left in the world: http://gas2.org/2014/07/03/bp-estimates-world-just-53-3-years-oil-left/

Elon Musk Announcing Release of All Tesla Patents: http://www.teslamotors.com/blog/all-our-patent-are-belong-you 

List of current 2014 Tesla Motors Patents (as of 5/10/14): http://stks.freshpatents.com/Tesla-Motors-Inc-nm1.php

Overview of Apple-Samsung Patent Conflict: http://www.cnet.com/news/apple-v-samsung-patent-trial-recap-how-it-all-turned-out-faq/

Tesla Official Website: http://www.teslamotors.com

BMW Official Website: http://www.bmw.com

Are Humans Rational?

Economics is a fascinating subject to learn from; it deals with an endless range of topics, from the markets and businesses of the world we live in to poverty and social welfare, from how best Nike could produce shoes to how you are affected by your government's policy. This is really just the tip of the iceberg, but for everything that happens in the world it could be argued that there is an economic explanation behind it. No, really- economics can explain things ranging from health phenomenons like obesity (largely due to the flooding of cheap fast food onto the streets), to why BMWs are often so good (apologies for the shameless self promotion). Just read the brilliantly accessible Freakonomics books and you'll get the idea- economics is everywhere.

However it's important to remember that many of the conclusions economics produces is reliant on us, as humans acting rationally- that is, simply put, in a way where we evaluate the pros and cons of a decision we are faced with, and take the decision should we see the pros outweigh the cons. 

Economics relies often on this notion of rationality with its modelling- a basic example is how economics predicts we as consumers may react to a sale. Take a very basic economic model, one that concludes that consumers are more likely to buy a box of Quality Street chocolates from Tesco, if the same box in every other supermarket is more expensive. This is a perfectly rational decision to make- why would you pay more for the chocolate and buy it from Sainsbury's when you can get the same one from Tesco? This economic model relies upon the axiom that all human actors in an economy are rational- they will always choose the option that benefits them most. 

But questions recently have been raised over this reliance on belief in rationality in economic modelling; the major argument against this is simply that not all humans act rationally. This argument may seem a bit strange in essence but there are two levels to this that we must consider first:

1) We may not act rationally with regards to the economic modelling we are subject to 

Taking the example of the Quality Streets in the supermarkets, the rational choice according to the economic modellers will be that people will take the cheapest option (Tesco); but almost certainly people will fall outside of this category. People almost definitely will buy Quality Streets from Asda even if they have knowledge that the chocolates are cheaper in Tesco, and this is likely to be not due to their lack of judgement but a whole host of potential factors- convenience, for example. 

Even if Quality Streets in Tesco are cheaper than Asda, if I live next door to an Asda and the Tesco is a 10 minute drive away, the overall rational decision would be to walk to Asda (and save fuel money), yet people who behave rationally and take such actions, in the economic model will not be considered so, giving potentially inaccurate impressions of factors such as price that are being tested.

Or, I may have a lack of information- buying the chocolates from Morrison's, ignorant of the cheaper prices in Tesco is still a rational decision as I am still taking the best decision as far as I know.

So factors other than price play important roles in our decision making- the use of rationality as a leveller does little to emphasise a certain factor in economic modelling.

2) What is rational? 

There's arguably no single measure of rationality- what I mean in saying this is that there is a concept of individual rationality but there can be further complications to this- such as being part of a larger group. Let's look at an example: say you need to buy your Quality Streets but this time it's on behalf of your boss, who will use company finances to pay you back for your purchase. The money-saving side of you tells you to go to Tesco, but your laziness tells you to go to the Waitrose nearby, where the Quality Streets are more expensive. Some people would go to Waitrose, (it's not their money after all), acting for their own rationale of convenience, whereas others would find it rational to go to Tesco and save money. In both cases, the person will be acting rationally- but both of them will have separate reasons and thus their rationales are different!

3) Humans are often irrational.

A failure of the claim to total human rationality is that, simply put, humans are often irrational. Our judgements are often clouded by emotion- to our benefit and detriment. A real life example of this could be behind one of the main causes of the recent economic crisis- as the bubble of borrowing grew larger and thrived, bankers got caught in the wave of optimism, willingly giving loans to people who in reality had a low chance of being able to return the money (though there is a conflicting reasoning for their actions). Emotion inevitably plays a large role in a lot of our decisions; think of every time you hear someone 'going with their gut', or 'taking a punt'-  these are examples of relatively irrational decision-making.

IBM's Watson supercomputer: an example of the pure, cold
rationality that no human can possess? 

Interestingly, this is often seen as an advantage that computers and technology as a whole has over humans; for example, this rationality and lack of emotion in judgement has been highlighted as a positive of IBM's Watson supercomputer, especially regarding its ability to perform medical diagnosis.

Of course there is another side to the argument- a common economist's response to these claims of human irrationality is that, when we observe a large group or population as a whole, these individual irrationalities are likely to balance each other out, as people may take different decisions irrationally. Perhaps a better way to put the assumption would be to phrase it as assuming humans are rational actors as a population, as a whole, rather than as individuals.

This is certainly a fair point, however doubt remains over smaller groups of people, where an individual's irrationality will hold more weight.

So, can economics afford to rely on this assumption that humans are rational? And in any case, is there anything that can replace it as a leveller of the population in economic modelling?

What makes Apple so special?

This is an adaptation of a previous article on the iPhone 6 and Apple Watch.

So, just a few days ago the iPhone 6 and iPhone 6 Plus went on sale worldwide, to much fanfare, and, as with many Apple products, the traditional queuing outside Apple Stores in anticipation.

The traditional iPhone queue outside Covent Garden Apple
Store, London [Luke Westaway, CNET]

No other technology product (or any product in fact) receives this much attention. Why is it that Apple have become so desirable a brand?

Their products alone can be argued to be not that revolutionary.
The iPhone's larger displays? The Samsung Galaxy S5 currently on sale worldwide already has a 5.1 inch display, bigger than the expected 4.7 inch iPhone. The HTC One Max has a whopping 5.9 inch display, larger than the 5.5 iPhone.

NFC on the iPhone? Not a big deal. The Google Nexus 7 had that two years ago, and via Google Wallet you can already perform touch and pay payments.

Heard of this before? Don't blame you...

The Apple Watch- the first digital watch companion? Wrong again Bob- the past year has been chock full of watch announcements, from Samsung, from Motorola, and various other tech companies. They can relay notifications, they can monitor your heart rate, and they've been out for ages- heck, Samsung has already released two iterations of its Samsung Galaxy Gear.

A few weeks ago, if you didn't follow tech closely, you may not have heard of Samsung's Gear (which was first announced a year ago), or Motorola's 360 smartwatch, yet you probably would have heard of Apple's mystical 'iWatch', whose existence we were not even certain of.
Isn't this weird? Why is this?

There are numerous reasons. Many indeed. A key reason is of course the quality and consistency of Apple's product environment, and the products themselves- but Apple's business strategy also has been hugely successful.

Apple has built for itself a truly iconic brand. An Apple logo, be it on an iPod nano, an iPhone or a 27-inch iMac, carries with it connotations of high quality materials (note how commonly that silver aluminium material is used in Apple products), luxury (take a look at some of Apple's prices) and reliability (most Apple product owners would agree on this one).

A large part of this has been thanks to consistency- a key factor in a business' success, but only if it is done right- of course no company should be creating consistently poor products (*cough*Blackberry*cough*).

Apple has created consistency at every corner of its business. Take a look at the two screenshots from Apple's webpage below, and the event invite at the top of the article. The same font (Helvetica Light I am led to believe) is used consistently, the same white-grey colours, the same minimalist design in general is consistent throughout most of Apple's site.
Of course certain products are given their own display style reflective of the product's character, but in general Apple's design (be it the design of the site, the design of the advertisements or the design of the products themselves) are all cohesive. They are certainly decisively minimalist- Apple doesn't make use of any cheesy patterns or frilly designs, it just selects one or two colours and sticks with it throughout the product. And this is throughout Apple's whole product line.
The Mac line is a particularly good example of such consistency- the distinctive aluminium material used as the outer shell for the devices act as a cohesive for all Macs- it links them all together, it lets you know that an iMac is from the same family as a Mac Mini. Not only is this beneficial from a design standpoint, but it creates a subtle familiarity in product users, one that makes people more comfortable in purchasing a second or third or fourth Mac computer.

Consistency spreads further than just the design of Apple products- Apple's retail stores are among the most valuable in the world, thanks largely to their design. Apple makes use of the same materials for all the tables, the walls to give customers familiarity and comfort in their environment- while still allowing for stores to have their own individual appeal (such as the Regent Street store in London).

Consistency goes into the use of the products, too- Apple is well known for its lack of device software fragmentation (basically most Apple users are always running the same latest software on their devices, as opposed to say Android where people are spread across numerous iterations of the software, or Windows where many people are still running XP), its iCloud service allows people to access photos and videos across all of their devices without having to transfer anything manually, and features of the upcoming Mac OSX computer operating system will allow Mac users to send and receive phone calls and text messages on their computers- provided there is an iPhone connected to the same wifi network.
This feature, named Continuity, is another genius move from Apple. Creating this greater connection between the Mac and iPhone is a very effective way of attracting customers to purchase both- as items that complement each other rather than separate items completely. This could easily sway an iPhone user to purchase a Mac, and vice versa.

Through design, brand and functioning consistency Apple is successfully crafting not just a line of products but more an environment of products, all related and cooperative with one another.

We know this, perhaps unawarely, but this expectation of consistency that many people have come to associate with Apple is perhaps the greatest reason why we are so interested in the Apple Watch and the iPhone 6s, despite the competence of these products' already existent competitors.

Consistency is key in a business- and clearly for Apple, when combined with quality products, it has paid dividends, big time.

SOURCES (and recommended reads):
apple.com/iphone
http://www.techradar.com/reviews/phones/mobile-phones/samsung-galaxy-s5-1226990/review 
http://www.htc.com/uk/smartphones/htc-one-max/
http://techcrunch.com/2014/09/06/apple-iphone-6-event-predictions/
http://www.engadget.com/2014/09/05/what-to-expect-when-youre-expecting-an-iphone-6-or-iwatch/
http://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/
http://www.cnet.com/uk/news/apple-iphone-6-goes-on-sale-around-the-world/

Scottish Independence: INFLATION INCOMING?

So today's the day- the final installation of our short series on Scottish Independence is here.
Oh, and it's the Scottish referendum today.

If Scotland are to become independent a great argument of the 'No' campaign is that Scottish consumers would be hit by increased prices, for everyday goods and luxury items alike.

This could have pretty bad consequences, and it is certainly possible that these increases will come in the event of independence. Recently the Chairman of the John Lewis Partnership (John Lewis and Waitrose) Charlie Mayfield claimed a Yes vote would have consequences because of the apparently higher cost of trading in some parts of Scotland, causing prices to rise in their stores.

Supermarkets Sainsbury's and Asda have also claimed they would raise their prices, citing potential increase in costs that would occur, as technically they would have to adjust to trading in a foreign country, without being at the cost of the rest of the UK. Morrisons have also stated similar claims; though apparently they have kept open the possibility of even lowering prices if possible.
Many supermarkets claim to already have lower profit margins in Scotland due to its more spread out, rural nature- transport costs are presumably higher due to how far Scottish cities such as Aberdeen are from distribution centres.

Tesco have remained impartial on any potential consequences of the referendum on prices; though perhaps this is partly due to their unwillingness to risk backlash after their recent profit troubles rather than a commitment to not increase prices.

This seems to be a clear warning from some major businesses to the Scottish 'Yes' party, but will they really follow through?

It is certainly a possibility that this is part of the large scare policy being used by the 'Better Together' campaign- rumours are abound that these statements have been made upon special request by PM David Cameron, whose job would be in huge jeopardy in the event of a Scottish Independence.

Nevertheless, could the aforementioned businesses really raise their prices after Independence?

Inflation from the major supermarkets could serve to the benefit
of the likes of Aldi and Lidl.

Take the supermarkets- already we have seen in recent years the rise of the value-driven Aldi and Lidl , and supermarket price inflation could really make a field day for the bosses of these countries.
Aldi has steadfastly refuted any claims that they would raise prices after Independence: they cited their existence in 18 markets and how they are already adaptive enough to adjust to an Independent Scotland with no price increases.
So what will happen if Sainsburys and Co. increase their prices? Well it seems natural that even better value would drive customers to the budget supermarkets Aldi and Lidl, certainly bad news for the big supermarkets.

So what we are hearing from the supermarkets could certainly be simple another scare tactic from the 'No' campaign. If they are to follow through on their claim to inflate prices, it could really cost them even more customers to the already threatening value-driven competitors such as Aldi and Lidl.

Sources for this article can be found linked within.