Outside Edge: Pay up for the glory that was Greece

In the FT, bit amusing, what the Greeks can do to earn some money. Mind you, carrying this argument forward, I think we can do much from India's perspective by asking people to pay royalty on Zero, the numbers, chess, loads of astronomy and astrology (every horoscope will get an Indian royalty cheque), medicine, metallurgy, town planning and sewage (how about asking for a royalty from every pipe and bog manufacturer? or asking for a penny every time you visit the loo?), so on and so forth. Or from the Brits, they can charge for every tennis racket, or cricket ball or seat, or how about the game of golf or the joint stock company and and and, should promise to be much fun :)

 

As Greece faces up to the agony of its financial crisis, there can be only one way out. The country must look to the wisdom of its ancestors; not to learn from it, but to sell it.

Greece’s problem is that it has borrowed more than it can afford to pay back. Yet as the cradle of western civilisation, it has an enormous store of riches, perhaps the greatest the world has ever seen. All it needs to do is work out how to monetise those assets.

Much of the best physical capital of Ancient Greece has, unfortunately, already left the country. The Elgin Marbles are in London; the Venus de Milo in Paris. What is left is often not particularly marketable. Renting out the Parthenon to Germany to use as an ammunition dump, as the Turks did in the 1860s, might strain the already tense relations between the two countries just a little too far.

Happily, however, Greece’s stock of intellectual capital is vast, and just waiting for a smart enough lawyer to exploit it. Ancient Greece is a treasure trove of patents and brands, from sportswear to movies.

After recent precedents set in intellectual property cases in Europe and the US, it should not take a Socrates to establish Greece’s right to profit from those ideas. The rest of the world has been living rent-free off the innovations of the ancient Greeks for too long. They have been giving us gifts for centuries; now it is time to give something back.

All Greece needs to do is levy a small royalty on every comedy and tragedy, on every Pythagorean triangle, and on every piece of rhetoric and sophistry. (This article might be liable for a few cents).

If you were to describe this source of revenue as a cornucopia, you could be pursued by copyright lawyers seeking payment for another Greek concept. Attempts to put a tax on every pair of parallel lines would risk a legal tangle; Egypt can also lay a claim to Euclid of Alexandria.

However, there could be no defence for Nike against a demand for compensation for its theft of the brand equity of the goddess of victory. The company might also be forced to include some educational materials in every box of shoes, to inform ignorant teenagers about the debt they owe to Greek culture.

A special punitive rate might be charged for egregiously punning newspaper headlines such as “Acropolis now”.

Admittedly, some of the details may be a little complex, and careful, painstaking public administration has not been one of Greece’s greatest strengths, back to the days of Pericles and Cleon.

Still, those clever people at Goldman Sachs were a great help in coming up with ingenious financial solutions for Greece, and they will no doubt have the perfect plan to get it out of its current mess.

Now that’s my kind of God

I know this is going to piss off people. But they see gods being used for advertising strange things, showing gods in strange positions and then they show Jesus having a beer and a fag. Just watch people go up in smoke.

The government in the Indian state of Meghalaya has confiscated textbooks showing pictures of Jesus Christ holding a cigarette and a can of beer.

The book has been used for primary classes and has caused a furore in the north-eastern state, where more than 70% of the population are Christians.

Demographic Time Bomb in Greece

From here.

ouch.

Are rest of the OECD countries listening? they need to attract the young and upcoming lot…As the blog says, the young and mobile are going to move off even more and that will mean that the future tax take is going to suffer until and unless immigration helps. Like hell it will. And if you think that the birth rate is going to help, then think again. Since 2003, the birth rate was 9.79 births per 1000 and it has fallen to 9.45 in 2009. That is a serious drop. In terms of comparison, its 205 on the list of nations. To make matters worse, the old chaps are dying faster, 9.86 in 2003 to now 10.51 in 2009 as the old chaps reach life expectancy and start dying. The country is going to empty out…

Transatlantic corruption probes to increase

GOOD. It is clear that the British Government simply refuses to touch corruption in any shape or form, just look at how it treated BAe. I quote:

British companies suspected of corruption will face more co-ordinated transatlantic probes such as the landmark investigation that led to the UK arms maker BAE Systems paying a near-record fine, the head of the Serious Fraud Office has warned.

Richard Alderman defended the contentious deal and said the SFO expected to strike similar “global settlements” in coming cases in which it was working with the US Department of Justice and other agencies.

The closer involvement of the US – with its wider international reach, tougher powers and harsher punishments – heightens the threat to companies but may be seen by some as an admission that big business still feels it has little to fear from British prosecutors.

…..

But lawyers specialising in fraud cases say that, for all the joint US-British cases coming through, London still needs to do much more to demonstrate it can work independently of Washington in tackling big companies and individual executives

Shameful on us Brits that we cant even clean up after ourselves. And for these guys who are defending their dealing of the BAe case, let me ask one thing, do they think invisible men did the corrupt dealings that they think a fine will be enough. WHO WAS RESPONSIBLE FOR THESE DEALS? NAME THEM, CHARGE THEM, CONVICT THEM AND CHUCK THEM INTO JAIL.

they are criminals and we let them off. May they rot in hell. Hate these corrupt bastards.

IT Outsourcing actually increases a firm’s IT Spend

I have learnt the hard way that trying to outsource on the basis of “manage my mess for less” is a sure fire way of crashing and burning at worst and being more expensive at best. Anything that is crucial to your firm’s success, you do not outsource. In other words, only outsource which is a commodity and it is easy to switch suppliers such as perhaps storage management, electricity supplies, sewage, catering, cleaning, etc.

Lo and Behold, here’s a paper which provides some more data to back up the idea that outsourcing actually pushes up your costs. The data used is crucial and I quote:

ITOS and IT spending data were obtained from InformationWeek magazine, a weekly print magazine aimed at business technology professionals. Since 1991, InformationWeek has conducted annual surveys to gather current year IT budgets from a variety of the largest US public and private firms and government entities that use IT. It has supplemented this with firms demonstrating innovative use of IT. In 1999, InformationWeek began asking firms what percentage of their IT spending is outsourced. InformationWeek recently provided the additional firm-level data for the 1998 to 2005 time period for this study with strict disclosure restrictions on the authors precluding the sharing of specific firm responses. Data are used from respondents who provided both IT spending and ITOS information for one or more years between 1999 and 2005. Observations for non-public firms were eliminated and merged with corresponding Compustat financial data to calculate the various control variables shown to affect IT budget levels in Kobelsky et al. (2008b). This reduced the overall sample to 1959 firm-year observations for 647 firms in the period 1999 to 2005

The model comprises of variables:

• itb/sls = firm IT budget for each year per InformationWeek data divided by sales for that year (Compustat data12);

• itos dummy = 1 if IT outsourcing percentage per InformationWeek data is positive in Current Year, 0 if not;

• size = log of Current Year sales;

• ind_conc_ratio = four-firm concentration ratio for four-digit SIC;

• uncertainty = standard deviation of earnings before extraordinary items for previous 5 years scaled by sales;

• rel_divers = related diversification (within 2 digit SICs);

• unrel_divers = unrelated diversification (across 2 digit SICs);

• op_ros = operating return on sales, before depreciation (compustat data13/data12);

• debt_ratio = debt ratio (Compustat data9/data6);

• ave_sales_growth = average sales growth for last two years;

• automate = 1 for firms in automate industries, 0 otherwise;

• transform = 1 for firms in transform industries, 0 otherwise;

• hi_tech = 1 if high-tech firm, 0 otherwise;

• lo_tech = 1 if low-tech firm, 0 otherwise.

• year = 1 for each year 2000-2005, 0 otherwise.

90% of the sample companies partake of outsourcing some or all of their IT activities. The authors find that while on a project level, they might see a reduction in the IT costs and spend, on an aggregate firm level, the IT spend actually goes up. Note that they do control for scope and volume changes by looking at the sales growth. Within two years of outsourcing, the IT cost level of firms who have outsourced is correspondingly higher than firms which have not outsourced. While the authors suggest that this is because of capabilities are enhanced, I have my doubts. One cannot improve IT capabilities in 2 years, it is simply not possible to evolve the business and IT side so quickly that a statistically significant improvement in productivity and quality can be observed. It is, in my opinion, clearly aimed at the fact that the business case is frankly wrongly specified and outsourcing doesnt really help as far as cost control is concerned.

Business cases are rarely expressed in terms of ratio’s, in other words, you will very rarely find that the managers concerned or the IT outsourcing firm are quoting you IT costs as a ratio to say the sales revenue or operating costs or profits of the firm. This is why I am very nervous whenever I hear that outsourcing is happening which is going to drive down costs.

There is a good argument to outsource to improve efficiencies, drive a centre of excellence, to improve productivity, but for cost purposes, the figures do not bear out the benefits.