Simultaneous buying and selling makes the economy extremely efficient. But in our overconnected world, it may also force us into a race to the bottom.
If you want to succeed in an Internet-driven, overconnected world, you must arbitrage.
If you don't, you will become prey to those who do. But in an Internet-driven,
overconnected world, arbitrage may also force us into a race to the bottom.
makes the economy extremely efficient. In the commodity world, arbitrage can be
a miraculous transaction, yielding an infinite rate of return. The arbitrager
buys a commodity in one market and sells it instantly at a higher price in
another. In a perfect arbitrage, the arbitrager collects the money from the
sale before paying for the original purchase. For example, sell a bushel of
wheat for $7.00 and collect the money instantly; buy the bushel in another
market for $6.75 and pay later.
Of course, perfect arbitrage seldom exists. Speculators quickly root out opportunities,
and prices converge. The sale price, for example, drops to $6.85 and the
purchase price rises to $6.84. Of course, the sale price could drop below the
purchase price to, say, $6.75, and the arbitrager would lose 9 cents on every sale.
In the past, the term "arbitrage" was used in conjunction with financial and
commodity transactions, but now it is used more broadly. For instance, people
talk about arbitraging labor costs, referring to using cheap labor in a distant
location to substitute for more expensive local labor.
Successful arbitrage depends on strong and efficient connections. You have to be able to move products from where you buy them to where you sell them. Transaction costs
and other logistics must be kept to a minimum. And in order to find the best
arbitrage opportunities, you have to have good information about markets.
This is where the Internet comes in. Not only does it reduce the cost of
finding opportunities, but it greatly increases the efficiency of doing so. As
a result, the universe of arbitrage opportunities has expanded. Name something
that can be bought or sold, and there may a way to arbitrage it: stocks, bonds,
commodities, precious metals, labor costs, taxes, regulatory environments,
credit card debt, retail shopping experiences.
In 2004, commenting on slow job growth in the U.S., Stephen Roach of Morgan Stanley cited "global labor arbitrage" as the main
reason growth had slowed. Roach predicted that global labor arbitrage was
likely to be an enduring feature of the economy. Our experiences over the past
seven years have certainly proven him right.
Most people might think Roach was referring to factory workers and customer
support workers in India who answer calls in heavily accented English. But
because of the power of the Internet, information-intensive jobs of almost any
type are subject to labor arbitrage. Teleradiology Solutions, a company located in Bangalore, reads X-rays for patients in the U.S. and Singapore. Jobs we thought
were safe are safe no longer. More and more companies are employing engineers
and programmers in India, Russia, and the Balkans. Businesses must either
arbitrage and succumb to the unrelenting pressure to cut costs or face the
prospect of becoming uncompetitive.
Non-traditional arbitrage lurks in some surprising places. Consider retailing. Physical retailers add value by providing a retail experience. Some people enjoy shopping. One of the most important services retailers provide is the opportunity to experience the merchandise. Test drive a Ferrari. Try on a pair of jeans. Then go to an online retailer and arbitrage out the added value and the local taxes as well. Many of us do this without giving it a second thought. We find what we want at the shopping center and then rush home to buy it on Amazon. If we're shameless, we do our online shopping on our smart phone a few seconds after leaving the store.
In financial markets, arbitrage has run rampant. Transaction costs facilitated by
the Internet have plummeted. It has become possible to collect massive amounts
of information inexpensively. As computation power has increased and data sets
have grown, computers can now uncover more and more arbitrage opportunities.
traders use computers to scan the market to scout out the tiniest mispricings. If
a computer can discover an index made up of a few hundred stocks that is priced
too high, traders sell the index short and buy the stocks, making pennies per
share on billions of shares--pennies that add up to hundreds of millions in
profits. Is it any wonder that high-frequency trading now accounts for nearly two
thirds of the trading volume?
arbitrage adventures aren't just for the big guys. I was amazed to learn about
credit card arbitrage. Get a low-interest introductory loan for signing up for
a new credit card, invest that money in a high-interest account, and pray.
The Internet makes it easier to get around financial regulations and circumvent jurisdictions. If regulators in the UK or USA get too tough, the Internet can help: when data flows so efficiently, it's a lot easier to move the regulated entity from London or Wall Street to a more understanding jurisdiction.
If I can arbitrage a growing number of financial transactions, both low-skilled
and high-skilled jobs, and then throw in retailing, what's left? A lot, as it
turns out. Ask people in Hollywood about movies and recordings. Talk to the
newspapers. As bandwidth increases, opportunities to arbitrage will continue to
grow as well. Maybe the only things that will be safe are meals in restaurants
and trips to the hair salon.
Arbitrage is an economist's dream. It squeezes out inefficiency. It creates an intensely price-competitive world. Consumers benefit big time, because they have access to high quality goods at low prices.
But arbitrage has its downside as well. I used to love to travel. I even looked
forward to the flight. I could sit in peace and quiet and catch up on my
reading. Today I can fly for less money, but I also fly less. The qualitative
experience is so poor that it has reduced my interest in traveling.
Price is one of the most powerful motivators known to humankind. Nobody wants to pay
more. When the focus is exclusively on price, qualitative aspects often suffer,
and in many situations that is too high a price to pay. If only arbitragers could find a way to squeeze out
costs while maintaining quality. Now that
would be the perfect arbitrage.="http:>
Yet nearly half of all married couples are likely to divorce, and many couples report feeling unhappy in their relationships. Instructors of Northwestern University’s Marriage 101 class want to change that. The goal of their course is to help students have more fulfilling love relationships during their lives. In Marriage 101 popular books such as Mating in Captivity and For Better: The Science of a Good Marriage are interspersed with meaty academic studies. Students attend one lecture a week and then meet in smaller breakout groups to discuss the weekly topics, which range from infidelity to addiction, childrearing to sexuality in long-term relationships.
The virtues that Hillary Clinton identified in Tim Kaine are also the ones that have led her astray in the past.
In 2008, Barack Obama famously wanted a “team of rivals” in his administration. He began with his running mate, who was utterly unlike him. Obama was a political newcomer; Joe Biden was a Beltway veteran. Obama appealed to African Americans and upscale liberals; Biden appealed to blue collar whites. Obama was disciplined; Biden was unruly. Obama was cool; Biden was warm.
Hillary Clinton, by contrast, has chosen a male version of herself. Like Clinton, Tim Kaine is a culturally conservative liberal. He’s a devout Catholic who personally opposes abortion despite believing it should be legal. For her part, Clinton is a devout Methodist—she’s taught Sunday school, lectured on Methodist theology and participated in various prayer groups—who is personally skeptical of abortion, too. In 2005, she called it “a sad, even tragic choice to many, many women” and looked forward to the day when “the choice guaranteed under our Constitution either does not ever have to be exercised or only in very rare circumstances.”
Biology textbooks tell us that lichens are alliances between two organisms—a fungus and an alga. They are wrong.
In 1995, if you had told Toby Spribille that he’d eventually overthrow a scientific idea that’s been the stuff of textbooks for 150 years, he would have laughed at you. Back then, his life seemed constrained to a very different path. He was raised in a Montana trailer park, and home-schooled by what he now describes as a “fundamentalist cult.” At a young age, he fell in love with science, but had no way of feeding that love. He longed to break away from his roots and get a proper education.
At 19, he got a job at a local forestry service. Within a few years, he had earned enough to leave home. His meager savings and non-existent grades meant that no American university would take him, so Spribille looked to Europe.
It’s known as a modern-day hub of progressivism, but its past is one of exclusion.
PORTLAND, Ore.— Victor Pierce has worked on the assembly line of a Daimler Trucks North America plant here since 1994. But he says that in recent years he’s experienced things that seem straight out of another time. White co-workers have challenged him to fights, mounted “hangman’s nooses” around the factory, referred to him as “boy” on a daily basis, sabotaged his work station by hiding his tools, carved swastikas in the bathroom, and written the word “nigger” on walls in the factory, according to allegations filed in a complaint to the Multnomah County Circuit Court in February of 2015.
Pierce is one of six African Americans working in the Portland plant whom the lawyer Mark Morrell is representing in a series of lawsuits against Daimler Trucks North America. The cases have been combined and a trial is scheduled for January of 2017.
Why Millennials aren’t buying cars or houses, and what that means for the economy
In 2009, Ford brought its new supermini, the Fiesta, over from Europe in a brave attempt to attract the attention of young Americans. It passed out 100 of the cars to influential bloggers for a free six-month test-drive, with just one condition: document your experience online, whether you love the Fiesta or hate it.
Young bloggers loved the car. Young drivers? Not so much. After a brief burst of excitement, in which Ford sold more than 90,000 units over 18 months, Fiesta sales plummeted. As of April 2012, they were down 30 percent from 2011.
Don’t blame Ford. The company is trying to solve a puzzle that’s bewildering every automaker in America: How do you sell cars to Millennials (a k a Generation Y)? The fact is, today’s young people simply don’t drive like their predecessors did. In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985. Miles driven are down, too. Even the proportion of teenagers with a license fell, by 28 percent, between 1998 and 2008.
Delegates in Cleveland answer a nightmare question: Would they take four more years of Barack Obama over a Hillary Clinton presidency?
CLEVELAND—It was a question no Republican here wanted to contemplate.
The query alone elicited winces, scoffs, and more than a couple threats of suicide. “I would choose to shoot myself,” one delegate from Texas replied. “You want cancer or a heart attack?” cracked another from North Carolina.
Hillary Clinton and Barack Obama have each been objects of near histrionic derision from Republicans for years (decades in Clinton’s case), but never more so than during the four days of the GOP’s national convention. Republicans onstage at Quicken Loans Arena and in the dozens of accompanying events have accused President Obama of literally destroying the country in his eight years in the White House. Speakers and delegates subjected Clinton to even harsher rhetoric, charging her with complicity in death and mayhem and then repeatedly chanting, “Lock her up!” from the convention floor.
A crop of books by disillusioned physicians reveals a corrosive doctor-patient relationship at the heart of our health-care crisis.
For someone in her 30s, I’ve spent a lot of time in doctors’ offices and hospitals, shivering on exam tables in my open-to-the-front gown, recording my medical history on multiple forms, having enough blood drawn in little glass tubes to satisfy a thirsty vampire. In my early 20s, I contracted a disease that doctors were unable to identify for years—in fact, for about a decade they thought nothing was wrong with me—but that nonetheless led to multiple complications, requiring a succession of surgeries, emergency-room visits, and ultimately (when tests finally showed something was wrong) trips to specialists for MRIs and lots more testing. During the time I was ill and undiagnosed, I was also in and out of the hospital with my mother, who was being treated for metastatic cancer and was admitted twice in her final weeks.
Narcissism, disagreeableness, grandiosity—a psychologist investigates how Trump’s extraordinary personality might shape his possible presidency.
In 2006, Donald Trump made plans to purchase the Menie Estate, near Aberdeen, Scotland, aiming to convert the dunes and grassland into a luxury golf resort. He and the estate’s owner, Tom Griffin, sat down to discuss the transaction at the Cock & Bull restaurant. Griffin recalls that Trump was a hard-nosed negotiator, reluctant to give in on even the tiniest details. But, as Michael D’Antonio writes in his recent biography of Trump, Never Enough, Griffin’s most vivid recollection of the evening pertains to the theatrics. It was as if the golden-haired guest sitting across the table were an actor playing a part on the London stage.
“It was Donald Trump playing Donald Trump,” Griffin observed. There was something unreal about it.
Fulfilling what might be the Russian autocrat’s dearest wish, Trump has openly questioned whether the U.S. should keep its commitments to NATO.
The Republican nominee for president, Donald J. Trump, has chosen this week to unmask himself as a de facto agent of Russian President Vladimir Putin, a KGB-trained dictator who seeks to rebuild the Soviet empire by undermining the free nations of Europe, marginalizing NATO, and ending America’s reign as the world’s sole superpower.
I am not suggesting that Donald Trump is employed by Putin—though his campaign manager, Paul Manafort, was for many years on the payroll of the Putin-backed former president of Ukraine, Viktor Yanukovych. I am arguing that Trump’s understanding of America’s role in the world aligns with Russia’s geostrategic interests; that his critique of American democracy is in accord with the Kremlin’s critique of American democracy; and that he shares numerous ideological and dispositional proclivities with Putin—for one thing, an obsession with the sort of “strength” often associated with dictators. Trump is making it clear that, as president, he would allow Russia to advance its hegemonic interests across Europe and the Middle East. His election would immediately trigger a wave of global instability—much worse than anything we are seeing today—because America’s allies understand that Trump would likely dismantle the post-World War II U.S.-created international order. Many of these countries, feeling abandoned, would likely pursue nuclear weapons programs on their own, leading to a nightmare of proliferation.
Our telephone habits have changed, but so have the infrastructure and design of the handset.
One of the ironies of modern life is that everyone is glued to their phones, but nobody uses them as phones anymore. Not by choice, anyway. Phone calls—you know, where you put the thing up to your ear and speak to someone in real time—are becoming relics of a bygone era, the “phone” part of a smartphone turning vestigial as communication evolves, willingly or not, into data-oriented formats like text messaging and chat apps.
The distaste for telephony is especially acute among Millennials, who have come of age in a world of AIM and texting, then gchat and iMessage, but it’s hardly limited to young people. Whenasked, people with a distaste for phone calls argue that they are presumptuous and intrusive, especially given alternative methods of contact that don’t make unbidden demands for someone’s undivided attention. In response, some havediagnosed a kind of telephoniphobia among this set. When even initiating phone calls is a problem—and even innocuous ones, like phoning the local Thai place to order takeout—then anxiety rather than habit may be to blame: When asynchronous, textual media like email or WhatsApp allow you to intricately craft every exchange, the improvisational nature of ordinary, live conversation can feel like an unfamiliar burden. Those in powersometimes think that this unease is a defect in need of remediation, while those supposedly afflicted by it say they areactually just fine, thanks very much.