May 2012

Curt Schilling is a hero to Boston sports fans. In 2004, at the relatively advanced age of 38, he valiantly pitched and won two critical post-season games while suffering from an ankle injury so severe that his sock was soaked with blood, propelling the Red Sox to its first World Series championship in 86 years. But Schilling’s career outside of baseball, especially since his retirement in 2008, has been less than stellar.

In 2006 Schilling founded a company, Green Monster Games – subsequently renamed 38 Studios – to develop and market MMORPGs – Massively Multiplayer Online Role Playing Games – for which he has a longstanding passion. Earlier this week, barely three months after release of its first product, 38 Studios laid off all of its 400-odd employees and closed its doors for good. How and why this happened is a cautionary tale for those who think it a proper function of government to provide financing to private companies. [click to continue…]

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The global bank HSBC, in its Business Without Borders newsletter,  tells us that while the past decade was all about the BRIC countries – Brazil, Russia, India, China – we are now in the decade of what it has dubbed the CIVETS, which stands for Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa, a set of countries “whose rising middle class, young populations and rapid growth rates make the BRICs look dull in comparison.” I have previously made the point – that BRIC, while a useful shorthand for a set of big emerging economies, makes no sense as an actual group, even as BRIC summits have taken place (in which South Africa was invited to join, adding the “s” to make up BRICS) and BRICS investment funds have been established. There is little, if anything in the way of common features or shared interests to unite the BRICs countries. Russia and China are authoritarian states, while Brazil and India are noisy democracies. Brazil and South Africa, both big agricultural exporters seeking freer trade, have little in common with India, which protects its farmers with high tariff barriers. Russia, whose economy is based largely on energy exports, has little in common with China, a net oil importer. China, with over 1.3 billion people, is more than 25 times bigger than South Africa, population 50 million.  But the BRICS are a model of solidarity when compared to the CIVETS.

Organizing the CIVETS into a coherent group could be as difficult as, well, herding cats. Not inappropriate, since the word civet is also used to refer imprecisely to a number of cat-like creatures of different genii and species. The more fundamental problem is that CIVETS by necessity excludes certain countries that should merit inclusion but which don’t fit the linguistic straitjacket. According to the HSBC article, “the six countries in the group are posting growth rates higher than 5% — with the exception of Egypt and South Africa – and are trending upwards.  Lacking the size and heft of the BRICs, these upstarts nevertheless offer a more dynamic population base, with the average age being 27, soaring domestic consumption and more diverse opportunities for businesses seeking international expansion.” So why is Thailand (population 69 million, forecast 2012 GDP growth of more than 6.0 percent, median age 34) excluded? Egypt’s poor economic performance can be considered temporary fallout from the Arab Spring upheavals, but what about South Africa, which in the nearly 18 years since the advent of majority rule has chalked up an average annual GDP growth of 3.3 percent? For that matter, why exclude Bangladesh (150 million people, median age 23, GDP growth averaging 6.0 to 8.0 percent)? Or Nigeria (140 million people, average 6.9 percent GDP growth since 2005, median age 19)?

One problem with the CIVETS designation, which almost guarantees that it will never catch on, is that it’s hard to add new countries or eliminate laggards from the group without ruining the catchy acronym. This is why over a year ago I suggested replacing BRICS, CIVETS, and other similar groupings with a more flexible term, which allows for countries to be added or taken out as they fall behind or graduate, namely, BEEs, for Big Emerging Economies. The real standouts in that group could be called Killer BEEs. I’m still waiting for it to catch on.

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I have just seen a graph prepared by technology consultant Chetan Sharma of Issaquah, Washington, which purports to show that a greater number of Earth’s inhabitants – six billion, if the data are correct – have mobile phone subscriptions than have electricity or safe drinking water. The data aren’t correct. For one thing, these six billion people, according to Mr. Sharma’s chart, constitute 80 percent of the world’s population, which would put world population at 7.5 billion, when the World Bank tells us it is only 6.84 billion. Also, in most of the world outside Europe, Japan, and North America, the overwhelming majority of mobile phone usage is via prepaid cards rather than contract subscriptions. And to add to that, if a substantial number of people have cell phones but not electricity, how do they recharge their phones? Still, the basic message conveyed by this chart – that mobile phone penetration is becoming nearly universal among people at all income levels – stands. [click to continue…]

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