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Mark Cuban, billionaire entrepreneur and owner of the Dallas Mavericks, makes the case for Pro sports franchises to support their local newspapers on his blog. He argues that ultimately it would cost them more in marketing than the effect that well written local news has on allowing “fans to connect and stay connected to our teams”. You can read the article on his blog here.

US sport is a very different beast to the UK market, however, I wonder if there is anything for our local newspapers, football, rugby, cricket and other sports clubs to learn from this.

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This morning three of the top ten posts on techme are predicting more pain for the newspaper industry. The Guardian interviews Clay Shirky here, Slate has a piece on “How newspapers tried to invent the web” and the Atlantic predicts that offline papers, notably the New York Times, will disappear sooner rather than later here.

The industry certainly faces an enormous challenge. In the US and the UK much of this pain has come directly from the sudden drop in advertising revenue from the property sector. In 2009 estate agents will focus their budgets on the web. The issue will be that by the time the economy and the housing market recovers they will have adopted new ways of doing things and I doubt that they will start to redirect more money off line. Newspapers have to radically change. I doubt they will physically disappear, as people enjoy reading a physical paper, but they will have to drastically change the way they operate.

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Tim O’Reilly has just written a piece on his blog discussing the current state of the world economy, calling it “the biggest Ponzi Scheme of them all”. He argues that much of world growth has been pure inflated paper wealth, and that economic growth, much like the earth’s resources, is limited. He quotes from Former World Bank economist Herman Daly as follows:

“Growth in US real wealth is restrained by increasing scarcity of natural resources, both at the source end (oil depletion), and the sink end (absorptive capacity of the atmosphere for CO2). Further, spatial displacement of old stuff to make room for new stuff is increasingly costly as the world becomes more full, and increasing inequality of distribution of income prevents most people from buying much of the new stuff—except on credit (more debt). Marginal costs of growth now likely exceed marginal benefits, so that real physical growth makes us poorer, not richer (the cost of feeding and caring for the extra pigs is greater than the extra benefit). To keep up the illusion that growth is making us richer we deferred costs by issuing financial assets almost without limit, conveniently forgetting that these so‐called assets are, for society as a whole, debts to be paid back out of future real growth. That future real growth is very doubtful and consequently claims on it are devalued, regardless of liquidity.”

I can not disagree with the view that much of the growth over the past 10 years has been inflated by a paper wealth bubble, however, I do not think I could cope with accepting that there are few productivity gains to be had. If “the world was full” what would be the point in trying to improve the way we do things?

UPDATE – Tim O’Reilly replied to my comment on his blog:

Tim O’Reilly [01.06.09 09:30 AM]

Henry Yates: I think you misread “the world is full” argument. Daly explicitly calls out the kind of growth that consists of “qualitative improvement.” And I do agree that he perhaps misses the point that certain types of qualitative improvement can be quantitative improvement as well.

Take agriculture for instance. There’s no question that domesticated grains are both a qualitative and a quantitative improvement over the food carrying capacity of the natural environment. Sustainable agriculture of all kinds is an improvement over hunter-gathering. But at some point, you start borrowing from the future. As Wendell Berry pointed out in the article that Chris Ryland links to in his comment above, current farming practices destroy topsoil, while other practices preserve it. At what point do we realize that the version that borrows from the future by stripping the soil and adding petrochemical fertilizer is NOT actually more productive than sustainable agriculture?

Or, more importantly for the argument I hinted at in my conclusion, I believe that there’s a wonderful economy of innovation to be found in qualitative improvement. Is the web not a wonderful demonstration of that fact? We’ve all got the same personal computers we had 20 years ago but we’re getting more out of them not because they are faster but because they are connected (and in fact the rise of netbooks shows that the idea held by the computer industry for so long that faster chips was the only way to grow the industry is wrong.) We hit the wall on certain aspects of quantitative improvement, and qualitative improvement took over.

Or take my own industry: publishing. It’s not been growing much for years. But Amazon has certainly made a great business by creating a qualitative improvement in the way people can find and buy books. So I think you miss the point when you say that there’s no room for entrepreneurship in a steady state economy. If anything, there’s more room, because you really have to innovate if you can’t rely on the free ride given by unconstrained growth.

As I said above, I do think that it’s not a binary choice of qualitative vs. quantitative. But it’s a useful tool for thinking about how “growth” and innovation can continue even in a steady state economy.

I would agree that growth or productivity gain is usually overstated. Qualitative vs. quantitative is an interesting way of looking at things. You could argue that GDP growth is a crude way of measuring progress anyway and that more of a “balanced score card” quality of life metric would be more useful.

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Over at the The Onion they have a great piece from the annual Macworld conference. They report on Apple‘s new keyboardless laptop. It might take 45 minutes to type an email, but it will append ‘Sent from my Apple Wheel’ to your signature so that everyone will know you have one…

You can see the video here.

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It should relieve the pain…

http://www.youtube.com/watch?v=vbIGbZ6gq_Y

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After reading Anatole Kaletsky‘s piece in the Times newspaper today I felt I needed to pick up some of my old economics books and do some revision. I have to admit, even after a second reading I am not sure I fully grasp the mechanics of implementing what he was suggesting.

I will try to summarise his article. He believes there is every chance that the current package of government aid will not be enough to stimulate the economy. He therefore suggests that the government borrow more, but do so at zero cost from the Bank of England. Apparently, Britain’s proportion of cash circulating in the economy as a percentage of all deposits is the lowest in Europe, leaving the economy and banks dangerously exposed to a liquidity crisis. He therefore suggests that the banks are made to deposit 10% of their monetary liabilities with the Bank of England. The catch is that they will be paid zero interest on these deposits (an effective windfall tax) which would enable the Bank of England to lend the money to the government at zero cost increasing the government’s war chest to kick start the economy.

Sounds like a good idea. I think.

Anyway, it got me thinking about economics and our/the electorates understanding of government policy. Implementing economic policy and managing the economy is such a large part of how we evaluate the performance of political parties, yet our understanding of the subject matter is, on average, very limited. When it comes to election time will we be able to judge for ourselves how Gordon has steered us through the crunch? Is he the saviour of the Western world or has he squandered billions of tax payers money?

How can our democracy operate effectively when we can not evaluate the performance of our politicians? Should economics become a compulsory subject along with English and Maths?

The other day I was doing my daily trawl of news using my trusty netvibes when I came across one of those Google killer articles. My initial reaction was to ignore it as I do not need a new search engine. However, for some reason I had a quick read.

The article was about Kosmix. Kosmix is in fact not a search engine, it is a “topic guide”. What it does is group together lots of sources of information from Google, Wikipedia, YouTube etc about something you want to know more about. I would say it is more of a Wikipedia killer…

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I posted in October that we would be setting up a philanthropic arm to estatecreate.com (not so originally called estatecreate.org). estatecreate.org’s objective will be to get involved with social innovation projects where we can make a difference by providing expertise and resources to help bring new social innovation projects to fruition.

Active Free Media (AFM) is an initiative started by Colin Mutchler. AFM aims to enable people to be able to create more awareness for social campaigns and initiatives that they believe in that do not have the financial backing to get their share of voice.

I met Colin for breakfast this morning. We had a excellent session and came away with a clear vision of how he will get an initial prototype launched. What a great way to start the day.

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I just can’t see that it will. Robert Peston has been out and about getting feedback from retailers who have been very negative about it. See his post here.

I am no great economist, however, if I had to make the call I would treat the challenge like a marketing campaign.

When you launch a new product, the key is to get momentum. If your budget is limited, which they always are, you usually focus all of your marketing around a tightly defined target audience which will get the most benefit from the product and talk about it the most. The aim is then to get that group to tell their friends/colleagues/family and, possibly, pass on the benefit to them.

A 2.5% reduction in VAT looks like the opposite strategy. Targeting everyone, nobody benefits much, little passed on and no momentum. I am sure there could have been a more effective approach. Very frustrating.

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The Courvoisier Future 500 was published in yesterday’s Observer magazine. estatecreate.com made it into the 500 and has got me an invite to the launch party this Thursday. I can’t say I have ever tried Courvoisier, but I am looking forward to trying it…