Too old to rock'n'roll, too young to die.

Last week, Led Zeppelin reformed to play a single gig at London’s O2 Arena (formerly known as the Millennium Dome). The BBC covered the story (see article), which also includes some footage of the gig. I recall seeing the band in 1976 in London, and, according to those who attended the concert, the band hadn’t lost any of their verve.

There are a number of interesting points in here that provide a signpost into the future. The demand for tickets was colossal – over 1,000,000 applications for just 9,000 pairs of tickets. The face value for the cheapest seats was £200 per pair, and one fan is reported to have paid £83,000 (yes, nearly $200,000 USD) for a pair of tickets. We have to ask: Why?

I am told that, as we grow older, we seek the comfort and reassurance of things that are associated with earlier parts of our lives. It is quite natural that, as the Boomer generation moves into the early stages of old age (Led Zeppelin are in their late 50s and early 60s), that fashion swings back to the late 1960s and early 1970s. We can expect, for the next ten years or so, ‘Retro’ to be ‘in’. The Boomers are growing old disgracefully and are funding it with the kid’s inheritance.

One possible side effect of this will be that experience may come to trump youth. For years, the fashion industry has celebrated youth. Models are getting ever younger and thinner. There has recently been a groundswell against this trend (e.g. the campaign against Size 0 models in London Fashion Week), but the Retro movement could give some momentum to the countertrend.

As the Led Zeppelin concert shows, the ageing Boomers still have plenty of cash and are prepared to spend it. A modest estimate of the gate for the concert would be between £2.5mn and £3mn, plus merchandise sales, plus additional music sales generated from the concert and the surrounding media interest. Not a bad pension nest-egg for a group of ageing rockers!

As we move into the future, we can expect to see more of this.

The Road To Bali- Follow Up

Just to follow up our earlier post on climate change (see post), we now have the results of the Predictify survey.

The question asked was:

"Will all of the Annexe I countries ratify a successor deal to the Kyoto Protocol of the United Nations Framework Convention on Climate Change by the end of the Conference of Parties in Copenhagen in December of 2009?"

We then clarified matters by stating:

"The Annex I countries are: Australia, Austria, Belarus, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, United States of America (40 countries and separately the European Union)."

In response, 52% of respondents said 'Yes', 44% said 'No', and 4% said 'Uncertain result'. It would appear, at this moment in time, that the majority of respondents do not share my pessimism. As we go through the two year negotiation period, we shall revisit this to see if there are any changes in attitude.

HK Edgerton: The Black Confederate

HK Edgerton: The Black Confederate, originally uploaded by Jacob Krejci.

Jacob Krejci (Flickr id) writes:

"Over a year ago on a chance encounter I snapped this picture. After some research I found that the man in the picture was the enigmatic HK Edgerton. The former head of the Asheville chapter of the NAACP who has made it his personal mission to defend the confederate flag marching from NC to Texas in order to spread his gospel.

And an extremly controversial gospel it is: Edgerton claims that slavery wasn't the horrible institiution that there was a harmonious relationship between slave and slaveowner. He likens his work to that of Martin Luther King, but civil rights leaders refer to him as a white supremist.

I most certainly do not agree with his viewpoint, but I fully recognize him as a remarkeable charcter and a living legend of the South. I have been quite fascinated and curious about him."

This picture is so interesting. It contains so much about identity confusion and self appreciation.

The Many And The FEW

One of the ideas that I can take away from 2007 is that many of our future problems are likely to be caused by the FEW – Food, Energy, and Water issues. Thanks to David Harries for giving me this idea at the WFS Conference in Minneapolis. Over recent months, I have been pondering upon this a lot. However, it is in recent weeks that the whole matter has come into sharp focus.

The Economist recently ran a briefing on the end of cheap food (see briefing). The argument has it that one solution to our current energy woes is bio-ethanol derived from corn. However, the tightening of the corn market is pushing up food prices around the world, which is, in turn, stretching global water resources to grow the corn. Interestingly, the theme was taken up in the US. For example, the Washington Post took up the review from The Economist to develop the argument (see article).

I see this as interesting at two levels. First, the level of public debate is starting to become joined up. We are starting to acknowledge that solutions in one area (the need for diversification from fossil fuels) can have an adverse effect in other areas (global hunger from rising food prices and falling aquifers from excessive water extraction). There is plenty of scope for the law of unintended consequences to come into play here.

The second point of interest is that we are now seeing exchange rates (rates of equivalence) being established. For example, the use of an SUV on corn derived ethanol in the US for a month uses the same amount of corn that it would take to feed a family in Africa for a year. Additionally, at current prices, every gallon of corn derived biodiesel bought at the pumps in the US is being subsidised by the US taxpayer to the tune of $1.98 (the cost to the consumer is $3.20). To make things completely ironic, US citizens are then being asked to contribute 1% of GDP to combat world poverty, which the subsidies helped to create in the first place.

Just because the debate has become joined up does not mean that the system has become any more sensible. We are also in danger of being unfair to the US. The EU system of farm subsidies has exactly the same impact on global poverty as the US system. What is important is that we are now able to chart the linkages in a rudimentary model.

As a reality check, we sampled the Predictify web site on food and oil price movements over 2008. We asked which commodity would have the greatest price inflation in 2008, food or oil (see results). 59% of the respondents said that food would see the fastest price growth; whilst 38% of the respondents said that oil would see the fastest price growth (3% said that they would be the same). This is interesting, as both commodities are now at historic highs. If the price level of one or the other rises significantly in the coming year, then we are entering previously uncharted territory.

How is that likely to affect our behaviour?

Life at Steung Meanchey

Life at Steung Meanchey, originally uploaded by james helmer.

James Helmer (Flickr id) writes:

"STEUNG MEANCHEY, CAMBODIA. A refuse worker strolls across a mountain of garbage on his way to a recycling plant in the background. © james helmer"

It's interesting to think about what happens to our rubbish in the west. Much of our landfill is exported, where it is then trawled and recycled. I wonder how long it will be before our full landfill sites cease being 'contaminated land' and start to become 'mineral deposits'?

This is a trend that we covered in a previous post (see post).

The Road To Bali

The subject of Climate Change has come to some prominence over the past couple of weeks. Of course, the focus of much of the discussion has been the UN Convention on Climate Change in Bali, which is a nice place to have a mid-winter convention just before Christmas. The purpose of the convention is to start the process of negotiating a successor deal to the Kyoto Protocol when it expires in 2012. The focus of the discussion is to draft a framework deal that can be ratified at the UN Convention on Climate Change in Copenhagen in 2009.

We covered a couple of lectures prior to the Bali meeting that acted as briefings on the issue for us. The first lecture was given by Michael Mainelli at Gresham’s College in London (see meeting report). It was entitled ‘Stealing the family silver’, and it was about inter-generational wealth transfers. The lecture left two thoughts prominent in my mind. First, that climate change represents a very large wealth transfer from future generations (who will bear the cost of climate change) to present generations (who reap the benefits of the activities that lead to global warming). Second, that climate change also represents a large wealth transfer from the poor (whose development will be retarded if we are to act on climate change) to the rich (who have been able to develop irrespective of the environmental degradation that has been caused by their enrichment).

With these thoughts fresh in my mind, I attended a lecture by Sir Nicholas Stern (soon to be Lord Stern) on the results of the Review Panel on Climate Change (see meeting report). This lecture gave me three points to take away. The first was that the effects of climate change are felt through the water cycle – more intense droughts (and desertification), floods (then epidemics of water borne diseases such as cholera), more violent storms (such as Katrina), and a greater incidence of fires (the corollary of drought). Second, the problem of climate change has arisen due to the failure of the market mechanism to adequately price the environmental externalities of our actions. In plain speak – not ‘economist speak’ – this is a classical market failure that is best corrected by collective action. ‘Socialism’, as some will call it. Third, reflecting the point made by Michael Mainelli, that we can mitigate the effects of climate change if we are prepared to make a sacrifice now on behalf of the future.

It was when we looked at how mitigation could occur and how much it would cost to do so that I became quite pessimistic. To mitigate climate change would require an unprecedented degree of international co-operation between nations that are normally hostile towards each other. It would also require the developed economies to sacrifice their further development (i.e. accept a lower standard of living) in order to moderate the pace of development of the developing nations. It would require magnanimity between nations, in a world that often appears small minded and selfish. The whole prospect, when we reviewed it, seemed beyond our reach.

Since then, the pendulum has started to move in the opposite direction. Encouragingly, the political class in the US appears to have discovered climate change as an issue. For example, our attention was recently drawn to the Presidential Climate Action Project (see web site). From a European perspective, this is an interesting development as it appears to be re-inventing the wheel. There is already an international cap-and-trade scheme in place (see web site). Alternatively, the Pop!Tech Carbon Initiative has just been launched (see web site), where we can buy carbon offsets via e-Bay.

Whilst these initiatives are to be welcomed, I rather feel that they understate the effort that is required. For example, if we are to achieve the reductions in emissions agreed at the G8 conference in Heiligendamm, Europe would have to reduce its emissions by 80% in 2050 and the US by 90%. In the absence of any improvements in energy efficiency, this would mean that only 1 in 5 Britons would be able to use their cars in 2050, compared with 1990. If fuel efficiency were to be doubled (from 35 mpg to 70 mpg), only 2 in 5 Britons could use their cars in 2050, compared with 1990. The numbers are even higher in the US, which is now half a generation (two Presidential terms) behind Europe on this issue. For this reason, I think that I remain pessimistic on this issue.

What do you think?

As a point of interest, we have linked up with Predictify to sample your opinion on whether or not a deal can be reached by 2009. Click here to vote on whether a replacement for Kyoto can be negotiated.

Nanga Parbat South Side

May Trip 2007 - Nanga Parbat South Side - Enroute 68, originally uploaded by Rizwan Quraishi.

Rizwan Quraishi (Flickr id) writes:

"Towards Shigrin Campsite, Nanga Parbat Southside, Northern Areas, Pakistan.
LUMS Adventure Society (LAS)"

Why is it that we need to go to the other end of the world in order to find self-fulfillment? What is it that is lacking in our lives that this sort of adventure fills? I liked this photo because it captures something essential in the lifestyles of the young today.

Annakin Skywalker

Annakin Skywalker, originally uploaded by SierPinskiA.

I liked this photo because it has so much to say about how uncomfortable we are with ourselves in our present time.

Some of us - such as the young man in the photo - project ourselves into a time that never was, the imaginary world of Star Wars. Others project themselves back into a romanticised world that never was, which is what 'The Victorian Image' is all about. This photo rather nicely juxtaposes the two.

Aren't we lucky that we have the time and wealth to be able to be uncomfortable about the time in which we are living.

Climate Change, Ethics, And The Economics Of The Global Deal

A Lecture Organised By The Royal Economic Society

Logan Hall, Institute of Education, London, UK
30th November 2007

Speaker:

SIR NICHOLAS STERN, London School of Economics

(Sir Nicholas will be ennobled on 11th December 2007, after which he will be known as Lord Stern).

I was invited to this lecture as a member of the Royal Economic Society. I accepted the invitation because I thought that it would be interesting to listen to one of the more influential thinkers on the subject of climate change. The Stern Review of Climate Change has become something of a landmark in terms of policy development in Europe, but has hardly registered as a policy document in North America. I relished the prospect of finding out why this might be so.

Sir Nicholas delivered a fairly standard economic review of climate change. It is an externality that stands out from other externalities in that it is global in scope, it has implications in a time frame much longer than most planning horizons allow for, the causes and effects of climate change are still uncertain, and the consequences of climate change are potentially large and potentially irreversible.

Whilst I had to admire the technical aspects of the presentation, the logic of the model, and the smooth way in which it was presented, I was unconvinced by the argument. I wasn’t convinced by the suggested use of the price mechanism to correct a market failure. I cannot foresee the US Government adopting Pigovian taxes on fuel consumption in the near future. And I cannot foresee multi-lateral agreement on the reduction of carbon emissions prior to COP 15 in Copenhagen in 2009. All in all, I came away from the presentation rather down in the dumps. Perhaps we ought to start preparing for a world in which there are 750 ppm of CO2e?

READ the full report.

You can now register your views through the Predictify web site.

Click here to vote on whether I am being unduly pessimistic ablout Climate Change.

Big Brother Parking Enforcement

Big Brother Parking Enforcement, originally uploaded by R4vi.

This struck me as amusing. A little Smart Car operated by the City of Westminster in itsw parking enforcement. It contains a CCTV to record illegal parking and speeding.

Stealing The Silver

A Meeting Organised By Gresham College

Gresham College, London, UK
12th November 2007

Speaker:

MICHAEL MAINELLI, Mercers’ Professor of Commerce, Gresham College

I was first attracted to the talk by the concept which it advances – that investment represents an intergenerational wealth transfer, and, implicit in all wealth transfers, is a value judgement upon the equity of such transfers. This has become one of the great issues of our time, particularly if we subscribe to the view that one of the most pressing problems facing humanity is that of climate change - which represents an intergenerational wealth transfer from the future to the present, a great disinvestment, you might say.

There were two central themes to the evening – the question of the appropriate discount rate between generations and the issue of wealth transfers. The presentation looked at the latter before moving on to the former. On the issue of wealth transfers, there are two principal approaches – the bottom up approach, where wealth is transferred from the poor to the rich, mainly through the tax and benefits system. This approach underpins most of the social welfare systems in Europe. The second approach is the top-down approach, where the rich appropriate from the poor and seek their own advancement through this approach. We might stylise the bottom up approach as that used by Robin Hood, and the top down approach as that used by the Sheriff of Nottingham. The evening contented itself with a review of the approach of the Sheriff of Nottingham.

I really enjoyed the evening. It was both stimulating and provocative. Although the issues were complex and the subject matter potentially dull - it is difficult to get excited about discounted future cash flows – Professor Mainelli expounded his views in such an entertaining way that the audience was captivated. As an act of theatre it was extremely enjoyable. I would recommend the lecture series as both informative and enjoyable.

READ the full report.

St Pancras Station

St Pancras Station, originally uploaded by EUFO Views.

This is billed as Europe's longest Champagne Bar. When I went through St Pancras, it was very busy because it was the only place that I could find to sit down in the station. The purchase of an over-priced glass of fizzy wine early in the day isn't exactly my idea of a good start to a trip to Paris.

The commentators at Trendwatching caught this as well as part of a 'Premiumization' trend. In their December issue they say:

"Basically, with more wealth burning holes in (saturated and experienced) consumers' pockets than ever before, quick status fixes derived from premium products and premium experiences will continue in full force next year."

Interestingly enough, in their photo, very few people are actually drinking fizzy wine - they look as if they have visited the bar just to sit down! (See full reference)