Articles for a Halloween

Here are some articles I read in the last few months that you may find interesting...

• (Recommended) "The second economy" (McKinsey Quarterly; free reg required): An insightful article on, what the author calls, the second economy. This is the largely invisible, rapidly expanding, economy that underlies the physical economy. Information technology, particularly digitization and automation, drives this second economy and the author suggests it may be as large as the physical economy in 20 or 30 years. The emergence of this second economy can potentially increase wealth on par with what the Industrial Revolution did, while also causing large unemployment due to its nature (i.e. automation of jobs). The author almost suggests that the biggest problem in the near future will not be creating wealth but distributing it. Very Peter-Drucker-like article that is worth reading. If you are interested in economic changes to societies, it's worth checking out.
• The Technology Battle of 2012 (Fast Company): A little over the top—these companies don't necessarily compete directly against each other—and missing some key players but, nevertheless, a good recap of the battle between Apple, Amazon, Facebook, and Google.
• (entrepreneurship) Interview with Facebook founder, Mark Zuckerberg (Startup School via TechCrunch): Interesting thoughts from Mark Zuckerberg on entrepreneurship and the evolution of Facebook.
• The state of farming in Canada (The Walrus): Interesting and insightful article on how small farmers are facing the challenges in farming.
• (Recommended for contrarians) "How did Yellow Media's stock go from $17 to 17 cents?" (Report on Business magazine): Yellow Media was the distributor of phone directories in Canada. I actually looked at the stock around 4 or 5 years ago and wondered how this company could survive in the Internet age. Several years later, it looks like the final act of its life is playing out. This is a well-written story and I think contrarians and deep-value investors should read it to get a feel for how distressed companies could fall apart.
• "Alaska’s Billion Dollar Mountain" (Bloomberg Businessweek): Good story of rare earth minerals and the big potential in Alaska, of all places. I personally think rare earths are a fad—substitution with more common materials is a big threat—but whatever you think, this is a great article.
• Shai Agassi's Better Place attempts to conquer electric cars (Smithsonian): An article from late 2010 profiling the founder of Better Place, a company that is trying to deploy charging stations and battery swap technology for electric cars. The business looks uneconomic and has huge hurdles in North America, where gasoline is cheaper than most of the world, but it'll be an interesting story to watch.
• "Economics has met the enemy, and it is economics" (The Globe & Mail): Interesting essay on the evolution of economics and the flaws it can't shake off.
• What if USA paid off its debt? (NPR): Seems like a ludicrous view right now but back in 2000, the US government was thinking that the debt would be paid off by 2011 or so. Many of you may recall how Alan Greenspan was fretting that there may be adverse consequences if US government stopped issuing so many bods. Needless to say, the situation is opposite what it was a decade ago.
• (opinion) "Where's today's Dorothea Lange?" (Los Angeles Times): "Economists and politicians told us that the recession was over, though some of them now worry about it taking a double dip. For those of us living farther from the ledger sheets and closer to the reality of what's happening in our towns and on our streets, this has been and remains a depression. It's hard to make the word stick, however, because we haven't developed the iconography yet. We don't have bread lines, dance marathons, guys selling apples on street corners or men jumping from high buildings because they've been wiped out in the stock market."
• (Recommended) "Rise of the machines: America’s jobs challenge" (Reuters via The Globe & Mail): "Since 1999, business investment in equipment and software has surged 33 per cent while the total number of people employed by private firms has changed little. The gap between man and machine widened even further after the 2008-09 recession, helping explain why the United States is struggling to bring down an unemployment rate stuck above 9 per cent." This situation reminds of the 1930's and it remains to be seen what new industries will emerge to create jobs.
• (Recommended) "California and Bust" (Vanity Fair): Latest article from Michael Lewis, tackling California this time around. As usual, Lewis paints with broad brushes and borderline stereotypes but retains his flair for writing entertaining pieces. What is happening in California may be a precursor what other states, as well as my province, Ontario, in Canada may face soon.
• Book review — Money and Power: How Goldman Sachs Came to Rule the World by William D. Cohan; Wall Street and the Financial Crisis: Anatomy of a Financial Collapse by the US Senate; Report of the Business Standards Committee by Goldman Sachs (New York Review of Books): In this essay reviewing a book and two government reports, the author attempts to answer the controversial question, "Should some bankers be prosecuted?" My view is that the financial calamity wasn't a crime per se—although some criminal acts were committed by some small players and there was clearly unethical behaviour by some—but a failure of capitalism. The main "crime" I see is that of greed but beyond that, people and institutions were just wrong! The masses want to hang someone but the reality is that, if it were a crime, how come almost every major bank in America, as well as respected investors/financiers lost their shirt?
• Book review — Deng Xiaoping and the Transformation of China by Ezra F. Vogel (New York Review of Books): Arguably, the person who had the greatest influence on China in the last 40 years is Deng Xiaoping. I don't think anyone else even comes close. He is known as the man who re-oriented China from a so-called Communist economy to a capitalist country. When it comes to darker events, he is also known as the man who ordered the massacre that came to be known as the Tiananmen Massacre. It remains to be seen how history will treat Deng Xiaoping.
• The emergence of a supercity: Shanghai (Smithsonian): We may be entering the era of supercities. Science-fiction has always imagined massive cities but the 21st century may end up being the era of New-York-sized cities. This is certainly the case in China, where there numerous cities housing more than 5 million people. Perhaps the one that has ascended the most in recent decades, with more than 200 skyscrapers, is Shanghai. The linked article profiles the history of Shanghai and its current state (do check out the pictures that accompany the article to get a feel for the city).
• "All the Single Ladies" (The Atlantic): Often large economic shifts also result in the change of social structures and norms. One just needs to think of the Roaring 20's to the decades afterwards. America and many other developed nations are going through something similar now and I believe it will become blatantly obvious how the pre-2000 period is quite different from the post. This article is on the topic of relationships and marriage. "Recent years have seen an explosion of male joblessness and a steep decline in men’s life prospects that have disrupted the “romantic market” in ways that narrow a marriage-minded woman’s options: increasingly, her choice is between deadbeats (whose numbers are rising) and playboys (whose power is growing). But this strange state of affairs also presents an opportunity: as the economy evolves, it’s time to embrace new ideas about romance and family—and to acknowledge the end of “traditional” marriage as society’s highest ideal."
• (non-investing) Slideshow - Boutique coffee brewers in America (Fortune): I'm not into coffee but coffee brewers have become a popular thing in America over the last decade. Starbucks popularized good-quality coffee for the masses, while some are drifting to niche high-end brewers. One thing about coffee is that it is cheap compared to many other pleasures in life :)
• (non-investing) "Adrift on the Nile" (The Walrus): A detailed account of the revolution the Egyptian revolution, and what it may mean for the future.
• (non-investing) Review of the film, "Margin Call" (The New Yorker): This might be one of the best Wall Street movies in recent years. I haven't seen it but hope to check it out soon.