Business & Economics: December 2009 Archives
So you think International Community isn't doing enough to police the seas and prevent piracy? Then put your booty where your mouth is and buy shares in a pirate gang!
In Somalia's main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate. ..."Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said.
"The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity."
There isn't a prospectus, but here's some testimony from an current investor!
Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel."I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony.
"I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."
Past performance is no guarantee of future results, etc.
(HT: Tyler Cowen and Eric Crampton.)
This "Awesomeness Manifesto" by Umair Haque hinges on a rather narrow definition for "innovation" so as to draw a contrast, but lets undermine the whole thing by highlighting the most glaring weakness.
Innovation relies on obsolescence. Innovation was a concept pioneered by the great Joseph Schumpeter. And to subscribe to it requires us to accept his theory of creative destruction. Gales of innovation make yesterday's goods and services obsolete. Yet, that, in turn, means that the price of innovation is recession and depression. The business cycle might never be vanquished — but it is getting more vicious with every decade. In an interdependent world, obsolescence is what's obsolete.Innovation dries up our seedcorn. Innovation in its purest Schumpeterian sense is undertaken by entrepreneurs. And so today, we've got an economy where everything's for sale. Yet, little fundamentally new is being created. Businesses focus obsessively on the entrepreneurial aspects of commerce: we are focused still on selling the same old toxic, industrial era junk in slightly better ways. Yet, the challenge of the 21st century isn't entrepreneurial as much as it is creative: learning to create fundamentally better stuff in the first place.
"Obsolescence is what's obsolete" means what? For nothing to ever be made obsolete, nothing new and better may be created. Haque appears to dislike the concept of creative destruction becomes some peoples' wealth is destroyed in the process of making new people wealthy... but what's the alternative? Those who are presently rich and powerful must be allowed to stay that way? Societal calcification. Stagnation. Creative destruction isn't perfect, but generally, over time, what is destroyed is less valuable than what is created. That's not a waste of our seed-corn, that's how it's supposed to be used. Seeds are consumed when you plant them, but the resulting crops are worth more than the seed. Then you collect more seed and start the next round.
Should I kick Haque while he's down by pointing out that his definition for "innovation" is so narrow as to be useless?
What is innovative often fails to delight, inspire, and enlighten — because, as we've discussed, innovation is less concerned with raw creativity. Awesomeness puts creativity front and center. Awesome stuff evokes an emotive reaction because it's fundamentally new, unexpected, and 1000x better. Just ask Steve Jobs. The iPhone and iPod were pooh-poohed by analysts, who questioned how innovative they really were — but the Steve has turned multiple industries upside down through the power of awesomeness. ...It's the most hackneyed phrase in the corporate lexicon: adding value. Let's face it: most value is an illusion. Nokia, Motorola, and Sony tried for a decade to "add value" to their phones — yet not a single feature did.
Except that, you know, the iPhone basically copied many of these features and then repackaged them in an innovative "awesome" style.
Innovation is creativity plus business purpose. The gripes Haque has with the term seem to be based on examples where those two ingredients are missing, so it's no wonder he's disenchanted. Instead of coining a new term, however, I suggest that we simple adopt a broader and more useful understanding of "innovation".
