Apple, you little fruit! You had the world in the palm of your manipulative hand. You pulled the strings of the puppet we call technology. You had tech journalists adoring your every move, jealous business leaders envying you, and fan boys people showering you with love and compliments, willing to bash the competition without any deductive logic or reasonable causation. Un-rightfully and prudently so, you were walking on water, and your stockholders- walking away with cash. A utopia of clever advertising, marketing, and brand loyalty. If you were a grade 4 student, you’d have the most golden stars, the most smiley faces, you’d be the teachers pet. Heck, you wouldn’t even need a washroom pass.

So what in the world happened Apple!?

Developing a phone that can’t even do the most basic function that a phone is supposed to do is in fact the first of many mistakes on the behest of Apple. Going on to deny that there is a flaw with their new iPhone 4 really pushed most consumers and industry reporters over the edge. It was the final blow that was needed for this entire backlash. Bad move Apple, bad move. Steve Jobs is now a hated man, while Bill Gates is curing Malaria. Whoa! hang on tight, I think we just entered the twilight zone. And by twilight zone I mean kitchen. So get your spatula, a measuring cup, and your Apple inspired metallic, glossy, overly expensive iApron and lets get cooking! There’s probably an app for that.

How to make a bad Apple pie;

1 Ban all flash apps

2 Have no support for mobile flash players

3 Limit Adobe support

4 Have proprietary software

5 Have proprietary hardware

6 Close source everything

7 Have overly strict developer guidelines

8 Deny all submitted apps that don’t meet your criteria

9 Develop a phone with an inert fatal flaw and DENY that anything is wrong

10 Add a gallop of overinflated ego

Cook at 400°c for 30min or until hated, serve with cockiness and arrogance. Enjoy!

From an economic perspective you can view every dollar you spent as a “vote” as to which firm you prefer more. The more votes a firm gets, obviously the better off they will be. The more income they generate, the more potential they have to reinvest, secure capital, secure loans, and improve their business. This is EXACTLY the gist of democracy and extremely similar in structure. We “vote” for the MP we feel will do the best to properly represent our voices and concerns to Parliament. The more “votes” a party gets the more powerful and dominant they become, and vice versa. This logic is very applicable for businesses.

A typical high volume big box retailer

From a moral and rational perspective, everybody who has a decent heart will attest to the fact that, yes, of course we would like to see our local Mom and Pop shops down the road succeed. However, that’s a moral decision. Morally, people would like to support their local shops by “voting”; choosing the Mom and Pop shop over retail giants to purchase their goods and services. However, when we factor in our rationality– meaning that real life variables are factored into our minds- Important factors such as the amount of income your able to spend, your opportunity cost, and the well being of you and your family. Well then the story changes drastically.

When rationality is factored in, people are very quick to hit up the local retail giant to purchase their everyday necessities. Why!? Because economically it makes SENSE! Every person makes an intrinsic conscious decision based on their variables in life and most decisions end in you heading to your local big box stores.

The biggest retailer in the world- Walmart

We can conclude that, economically, people “vote” FOR giant retailers over our local stores! Right!? I mean they are “voting” like one would in a democracy. The only difference is, we vote with our wallets not a piece of paper and a check mark. Proof is in the pudding, ‘we the people’ vote for the success of giant retailers, even though we may be morally opposed to them.

Your typical "Mom and Pop" shop

So people need to realize that they themselves, on an individual level, are the ones choosing. Basing their decision on their self interest, and what is better for them and their family. Don’t feel bad that you yourself are the ones actually taking part in “feeding the devil”, it’s a natural characteristic of our innate drive to protect oneself and their family above all else. And if the incentive of saving money by purchasing at a giant retailer will help your family, you’ll do it each and every time. Guaranteed or your money back.

According to Anders Borg, Sweden’s Chief Economic Advisor Sweden’s strong economic success has been due to “the country’s well-managed, export-driven, high-tech companies and its well educated workforce”. Sweden’s social structure of accumulation is known as the “Swedish Model”, with important foundation features such as an interventionist welfare state, high tax high spend model, a strong central union organization, and a relatively equal distribution of income. This model has long been loathed, respected, and distinguished as the premier example of a social democracy. Borg argues that these structures lead to a regulated market economy and provides a wealthy, educated, efficient, and productive workforce which creates an environment in which the Swedes could achieve a long period of rapid economic development.

The quest to restore lost profits is the main incentive for firms to put tremendous pressure on government for structural changes

Conversely, North America was in a profound recession after the disintegration of their regulated capitalist system. The collapse was due to several factors; the labour accord which piloted stronger union bargaining power thus higher wages, job stability and long-term security. The introduction of the welfare state which helped relieve pressure off of the unemployed, and an increase in safety regulations which constrained the firm’s productive efficiency. These factors along with global competition ultimately cut into profitability and lead to slowdowns in productivity growth and an eventual collapse.

Sweden’s intense economic recession during the latter part of the 20^th century was due to similar reasons that lead to the downfall of regulated capitalism. The very institutions they put in place that helped grow their economy eventually undermines their capitalist system. Both economic crises reinforce the idea that fluctuations in the SSA cycles depend on their variables put in place, these variables lead to economic growth as well as to their demise.

Over the course of the last two or three decades Sweden has faced significant economic crises. According to Jason Coronel, “…the past 25 years, the Swedish model has seemed to be headed along a path of slow disintegration, culminating in the disastrous economic recession of the early 1990s”. The core problem with Sweden’s SSA that led to their crisis was that it was never sustainable in the long run. An immensely large government which was needed to maintain the “Swedish Model,” powerful unions, and increased expenditure for the welfare system lead to entrepreneurship levels crashing. These policies are beneficial for workers, but are devastating to firms. Firms were heavily regulated in forms of health, safety, and environmental laws which made it harder to earn profits. Firms faced increases in the cost of labour, as well as increased work benefit costs as a result from the welfare state. Smaller privately held firms were more heavily taxed and had to compete against international manufacturing industries.

 

When the Nixon party announced it would no longer peg its US dollar with gold, it effectively caused the collapse of Bretton Woods

The end result was that firms over the long run were not able to maintain profits due to unfavourable conditions set forth by the institutions. Thus Sweden experienced declining productivity that inevitably led to a decline in profits. Productivity growth slowed without a corresponding hold-up in the rate of wage/benefit increases and that had inflated prices. With lower profit and higher inflation it reduced investor’s confidence in the economy which deterred foreign direct investment and led to stagnant economic growth. More specifically decreases in investment and inflation appeared to be the major cause of the deep recession of the 90s.

Another important cause leading to the recession was the failure of the Bretton Woods fixed exchange rate policy in the 70s, which was designed by the IMF (International Monetary Fund) and World Bank in order to stabilize exchange rates and thereby, encouraging free trade and global investment confidence without the drawbacks of a floating exchange. When the Nixon party announced it would no longer peg its US dollar with gold, it effectively caused the collapse of Bretton Woods. Stability was lost and Sweden’s desperate attempt at establishing an alternative fixed exchange rate proved unsuccessful. As a result of a floating exchange rate, currency fluctuated and Sweden experienced a series of devaluations which lead to widespread financial uncertainty. As a result investors lost confidence in the economy and reduced their investments. These reductions in investment lead to a decrease in Sweden’s productivity and lower economic growth. The recurrent devaluations caused by the collapse of Bretton Woods were accentuated by wage formation; a problem discussed earlier wherein the natural structure of the “Swedish Model” lead to formations of strong unions which kept wages high however the increased labour costs kept firms profits down this hindered investment and productivity.

While the collapse of Bretton Woods which had encouraged trends of market openness and internationalism had repercussions for social structures such as the welfare state, for instance alteration to the welfare state’s system became necessary for coping with globalisation. Sweden continually argues that pressures from inter-governmental organizations like the IMF and World Bank for deregulation, privatization, and open trade threaten to change and restructure their social systems.

Professor Ramesh Mishra says that with the emergence of globalisation, Sweden’s progress in the public finance sector has been thwarted. According to Mishra, “the welfare states were constructed to structurally emphasize independence in a closed economy; with the emergence of the open financial market it hindered the ability to formulate key policy initiatives”.  Full employment is never fully achieved in an open economy, since capital now has the option of reallocating to more business friendly environments. Globalisation has improved the bargaining power for capital in opposition to government and labour. Therefore government policy decisions determining wage and benefits are directly influenced by the threat of the relative ease to reallocate and re-locate capital. This increase in capital bargaining power sways government policy decisions towards more business friendly policies such has a reduction in employee benefits. Thus, workers are left with lower working conditions as well as reduced healthcare, sick, and parental benefits. The labour market faced lower wages and benefits since labour unions were weakened by the lop-sided bargaining power ratio. This undermines the welfare states strong unions, high wages and generous work benefits. Again, we see that pressure to open up economies presents implications to the structure of the welfare state, especially in undermining government policy decisions.

The increase in globalisation in the 90s meant Sweden’s full employment policies failed.

Social structures of accumulations go through boom and bust cycles which typically last a few decades each, wherein the institutions that make up the social structure ignite the causes for economic trouble. These structural problems eventually reach its way to firms, constraining their ability to make profit. The quest to restore lost profits is the main incentive for firms to put tremendous pressure on government for structural changes. Through this continuous cycle the capitalist environment becomes dynamic in order to find favorable institutions for capital growth, thus becoming immune to long term structural problems. Already half-way through this cycle Sweden has since dug itself out of severe recession from the 90s and has undergone structural transformation which has started an expansion and a new boom cycle. After Sweden’s system restructuring, economic growth has risen immensely.

Sweden’s strong technology based export market, along with the recent emergence of the IT, communication, and service markets in the late 90s have lead to increases in mergers, acquisitions, and foreign direct investment in Sweden. In other words, Sweden exhibits an increasing economic growth for the future. Reports of these activities strengthen my belief that Sweden is becoming a strong, stable economic environment. As technological progression increases, firms are able to take advantage of more efficient business provisions like higher capacity utilisation for example. This would lead to increased economic productivity. The move of uniting with the European Union in the 90s meant Sweden had to keep inflation low as per EU regulations. A stabilized inflation rate will limit inflationary pressures against the market thereby increasing investing confidence and prolonging the expansion of the market. Global market competition would keep wages in check as well as drive the technological change through research and development which further increases this expansion. Sweden’s economic future is looking bright via their strong export market, increases in their capacity utilisation rate, and their transformation of institutional structures in favour of capital accumulation.

In 1988, an initiative was made at a world conference held in Toronto. This conference consisted of hundreds of leading biologists, climatologists, and engineers. Leading experts were called upon to address the rising concerns regarding to the increase in global temperatures. Changes in global temperatures is believed to be caused by such factors as chlorofluorocarbons (CFC’s) which are found in items such as paint sprays and refrigerators, the burning of fossil fuels, land abuse such as deforestation, and methane gas. As of November 2007, a collaborative global effort consisting of 175 nations agreed to initiate a pact to fight changing temperatures. The Kyoto Protocol is the agreement made between these nations to commit to reducing their emissions of carbon dioxide and other greenhouse gases by 5.2% from their 1990 emissions level. The main objective is to accomplish a stabilized set level of greenhouse gas concentrations in the atmosphere which would not affect the global climate system.

One way the Kyoto Protocol can achieve this is through an emissions trading proposal with ‘carbon trading’ being the most common of all emissions schemes, as carbon dioxide makes up the bulk of the worlds pollution (Stiglitz, Vol 3). This cap and trade program is an approach that can be used to control the amount of total pollution expelled by a nation. A central government body sets a “cap” on the total amount of emissions that are allowed to be released by a nation. Firms receive a “permit” which equals to a set amount of credits, this in turn allows them to pollute to an extent to which their credits allow. If a firm needs to pollute more by the amount allowed from their credits, then they are allowed to buy more credits from firms who have not used up all their allowances. Therefore, even if a firm pollutes excessively the total “cap” for a nation will still be abided by.

This system provides economic incentives for firms as well as the positive externality of reducing greenhouse gases. As firms who are not willing to reduce their emissions will pay a charge for the additional “x” amount of credits, while firms who are able to reduce their pollution will do so as they can sell their excess credits to other firms. The end result is that firms who are able to reduce emissions now have an incentive to do so which in turn reduces greenhouse gases, and firms who pollute more will be paying for the privilege to do so.

Cap and Trade Economic Benefits

By implementing a global cap and trade system such as a carbon trading scheme, both parties involved in the transaction of purchasing and selling “credits” stand to gain economic and financial benefits. This is because the marginal cost of abatement (MAC), the cost of reducing one more unit of pollution varies between different nations. By allowing the open market to set “credit” prices, a trading scheme alleviates the differentiation in abatement costs between countries.  Let us consider two countries involved in an emissions trading system, Canada and the United States for example, where both these countries are required to meet a set limit on emissions. Our assumptions are that; external forces like the Kyoto ratifying nations have set the emissions limit for Canada and the U.S at E limit, both countries starting emissions rates are at E*. The price of “credits” is P*, and is determined through the market. As well, we’ll assume Canada can reduce its carbon emissions at a cheaper rate than that of the U.S, which means that Canada’s MAC has a more elastic or horizontal slope then that of the United States.

Click to enlarge

Click to enlarge

The opposite scenario is true for the U.S. The United States are polluting more than they are allowed since E*>E limit. Therefore the U.S faces two options to reduce emissions rates to the required amount, they can a) reduce emissions internally through the use of proper disposal/recycling technologies, or b) buy “credits” from other nations to allow them to continue polluting at E*. They will choose both options because it is the most cost effective. They will reduce emissions internally up until their E* hits P* at point A, after that they will buy “credits” from Canada to meet the rest of their required rates. The reason is that below point A their abatement costs (MAC US) is lower than the market price P*, it is then cheaper to internally reduce emissions rather than buy credits. However once past point A, the abatement costs (MAC US) is more expensive than buying credits at P*, therefore the U.S will choose to buy credits instead.

The end result is that the shaded area of A, B, and C are the additional expense that the U.S would have incurred if it had not bought “credits” and instead internally reduced emissions. They forego this cost by purchasing credits to reach their required emissions rate. By using a cap and trade system, both countries are able to gain benefits from the transaction of “credits”, while maintaining the required level of emissions.

#2) It will bring labour/capital/jobs to Canada directly/indirectly, help correlated business, act as an incentive for old firms to reinvest $ to compete.

#3) However, we have no control over foreign ownership, capital and profit transference, so our economic health will rest in their hands.

Android O/S –  The 1337 operating system. If you don’t know what that means, you’re not nerdy enough to use this operating system. Go wait in line for the next iPhone. These people code linux in their sleep and get a boner when Google releases the newest development kit. The bargaining of money for sex is a reality with these geeks.

BlackBerry O/S -  Ahh yes, the Blackberry O/S. People who use blackberries are either affluent businessmen, hard working middle management, or complete tools that are addicted to BBM like its crack cocaine wrapped in bacon, laced in more crack cocaine wrapped in bacon with a side of bacon wrapped in crack cocaine. Must… BBM……*twitch*

iPhone O/S – I’ll use these words; asshole, tool, sheep, douche bag, granny panties, Kanye West. Those words have nothing to do with anything. Your welcome, as I just wasted 4 seconds of your life. Yes, iHerders are people who drink way too much $8 Starbuck lattes, don’t know the first step on how to setup a router or open up a port yet want to seem like they be in the now with technology, word up. They are a strong breed of hipsters, sheep, and liberals… and are willing to die for their leader Steve Jobs, metaphorically at least, in the game of Angry Birds, that isn’t there save profile. You can find iHerder working on a amateur script or a book in your local douchebag shop. I mean coffee shop…

Palm’s Web O/S- Had promise, it did things that no other OS did, kinda like that Las Vegas stripper you partied with last year. They don’t have the market share nor the strategic savy nor the capital to generate a strong product line to really compete against the big boys. It is/was the little train that could… except this little train is running out of coal and will be coming to a stop at the nearest  iPhone and Android beat down station. Not to worry, our health care system is wonderful.

Symbian O/S- No not the sex toy, it’s an actual O/S albeit an extremely outdated O/S. It’s also THE most common operating system in almost all ‘dumbphones’. You know, those phones that can only play Snake and make a call. It’s the kid you knew in elementary school who had been dropped one too many times on his head as a baby. He now wears velcro shoes full time. People call him Timmy. Say hi Timmy!

Microsoft Mobile 6.5- Remember when Travis took Old Yeller into the backyard and shot him dead. That was sad, but not nearly as sad as Windows Mobile 6.5. Just imagine being shot in the face, the pain and suffering you would go through, sadly that wouldn’t even be close to the pain Windows Mobile has given its customers. S&M pervs even revolt in disgust. Now that’s bad.

Intel and Nokia’s joint venture, MeeGo O/S – They thought they could team up and combine both the Maemo and Moblin operating systems together, but its like combining a monkey with a human; you’ll end up with human monkey boy.  According to my pokemon index, human monkey boy is half monkey and half retarded, and he’s named MeeGo ironically.

Linux and Unix- The founding fathers of mobile O/S. Nuff said. Oh, and they liked little boys. That is all.

Japanese style flip phones

Since the explosion of social media in the last few years, a lot of public figures, attention seekers, scare lobbyist groups, and so-called  ”professionals” have been taking stances on whether or not the excessive use of technology is really damaging our society. They argue that the recent and excessive use of technology has created social problems that are becoming more widespread overtime. Social problems such as lower grades, decrease in work productivity, hindered vocabulary and grammar.

Some of these problems are in fact laudable concerns; I’ve noticed particularly, the alarming lack of proper grammar and the limited vocabulary in formal writing. However, we should look at other possible variables that could play an integral role in the causation of these problems. Music, particularly rap music and its exemplified use of slang terminology could have a role in our youth’s weakening grammar and vocabulary skills. The increased use of slang is now unfortunately common place in North America, with many websites developed solely created to define slang; a dictionary for slang per say.

So my concern is, can one really attribute all of these problems directly to technology, or is it a natural necessary evolutionary by-product formed strictly due to the future we’re headed into; a more technology reliant world. The use of technology has increased our productivity tenfold, in every area of business, manufacturing, electronics, communications, schools, and everyday life. We NEED technology to continue moving forward.

Cellphones in a landfill

In the 50′s we saw a breakthrough that changed the world and the way we lived life, the creation of the automated assembly line and the boom in economic growth we saw thereafter directly as a result of our ingenuity, a period which we now call the golden age. Efficiency skyrocketed, efficacy rates soared, production increased, profits rose, and our economy boomed. The excess of material goods like the V-8 Chevys, fridges, microwaves, the colour television, phones, and even frozen dinners were all made possible by the ingenious idea of the automated assembly line. The assembly line in the 50′s is to the electronic device in the twenty 10′s, in terms of the magnitude to which it has and will help the world, the only question is; in 30 years when we look back at the twenty 10’s, will the twenty 10’s be viewed as another period of economic boom OR the turning point of where it all went wrong?

The phone from the past woooo

When I was just a young lad (pause for cliche moment) I remember my parents having one of those old rotary phones. I was fascinated with the device because dialing was so fun to do. Yet in awe, because I couldn’t imagine a time when rotary phone were in. In awe of how much longer it took to dial a number. Fast forward 20 years later and it all but seems landlines are going the way of the dinosaur (pause for cliche number 2) well over 3/4 of new young households are foregoing the landlines option and instead opting for the cellular phone counterpart. So just think the generation growing up right now will look back in 20 years time and say, “geez I can’t believe people used these huge bulky phones, mom what are these things called?…l-a-n-d-l-i-n-e-s? Uh, ok. I’mma go play on my Playstation 7 now.”

The analogy of not to put all your eggs in one basket relates heavily to the concept of diversification. Positive stock are anything that have some relationship with each other, both can be affected by externalities in similar ways. So for example, Intel processors and HP computers might be positively correlated. If demand falls for HP Computers and HP computers use Intel processors, than Intel stock could be directly affected by the fall in demand for HP computer. Uncorrelated is just that, Hp computers and Boat engines for example.

Negative correlated stock could be Apple and Microsoft. Both compete for roughly the same market share and both are trying to appeal to the same youth generation, especially since the release of Windows phone 7 series. When one gains traction by releasing a blockbuster gadget or new software, the other company will be negatively affected. So why is it good to diversify by broadening your negative stock? Because it helps offset variance or in other words helps decrease your risk in these stocks.

If you buy both Apple and Microsoft shares, and Apple releases a product that gets underwhelming responses by the public, the shares of Apple might decrease. To help offset that loss, your Microsoft shares might increase because investors will be looking at competing firms with similar or better products and invest in Microsoft. Microsoft might use that opportunity to release promising devices/software to dampen Apple even further. By diversifying your portfolio with negative or uncorrelated investments you are cushioning your fall if one of your investments has a negative return. The positive performance of some of your other investments can dampen the effects of a negative return investment.

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Here is an mathematical example, don’t get turned away because its math and math is scary, its relatively straightforward

To show algebraically how diversification using negative correlated stock can reduce risk, consider this 2 Asset example:

Assume total shares are divided between these two stocks. Assume given variance. Assume expected return is known.

Your portfolio is made up of 2 stocks, X1 and X2.

Asset X1= .6

Asset X2= .4      where X1+X2= 1

Your variance for both stocks are; V1= 100, V2= 100  so with that, we know the standard deviation which is the square root (S) of variance, so S1=10 and s2=10.

Your expectations of your rate of return for both stocks are:

E1= 30%

E2= 20%

Therefore, we know the expected yield of your portfolio using the following equation:

Ep= X1E1+X2E2

Ep= .6(30) + .4(20)

=26%

So you expect a 26% return.

Did you get all that? If not, that’s OK. Just know that basically in the above, we’re just setting up the equation with information we need to calculate the variance (aka risk associated with a positive, negative, and uncorrelated stocks).  Lets continue to whats important…

The portfolio risk equation is: Vp = X1²V1 + X2²V2 + 2X1X2√V1√V2P12

The equation above will tell us have much risk would be associated with a positive, negative, or uncorrelated stocks. The P12 at the end of the equation for portfolio variance will be replaced with either 1 (positive), 0 (uncorrelated), -1 (negative). Here are the equations below:

Thus a portfolio with 2 assets that are uncorrelated (0) and/or negatively (-1) correlated can reduce the overall risk moreover than a positively correlated (1) and/ or individual asset.

The uncorrelated and negative investments lower the standard deviation from 10 (risk) to 7.211 and 2 respectively. The positively correlated and individual assets remain at standard deviation 10. This interestingly shows that by investing in different assets that have a positive correlation is ineffective at reducing risk, and one would be just as well off by investing into an individual asset. So even if your anti-Microsoft, it would be beneficial in buying Microsoft stock to offset the potential loss in value from Apple stock.