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:>
Rarely have presidential nominees declared, without qualification, that it’s a woman’s right to choose.
Even in a presidential campaign that has become so intensely focused on gender, there was something surreal about watching Hillary Clinton’s response to a question about abortion in Wednesday night’s debate.
Here was the first woman nominated by a major party for the United States presidency, standing on the debate stage in “suffragette white,” and talking in no uncertain terms about her strong commitment to protecting a woman’s right to “make the most intimate, most difficult in many cases, decisions about her health care that one can imagine.”
Democrats are expected to support abortion rights, of course, but that support is often couched with carefully hedged language. This is an understandable impulse, given how divisive the issue of abortion remains.
With two and a half weeks to go, the debate phase of the competition is at last at its end. In real time last night I did an endless tweet-storm commentary whose beginning you can find here and that wound up this way:
Most of what I thought, I said at the time. But to summarize:
1) Predictability. To my relief, most of the expert forecasts I quoted in my debate preview piece matched what actually occurred.
The match-up really did turn out to be an extreme contrast at every level—intellectual and rhetorical styles, bearing on stage, what each candidate talked about and didn’t. The things Jane Goodall foresaw about Trump’s primate-dominance moves actually took place, when he was free to roam the stage in debate #2. As his fallen rivals from the Republican primaries had predicted, Trump faced much greater challenges in these head-to-head debates than he had in the crowded-podium prelims. Back then, he could chime in with an insult whenever he wanted and otherwise just stay quiet and roll his eyes. In the head-to-head round, especially the last debate, he struggled to fill his allotted time with details on any topic and fell back on slogans from his stump speech. Also predictably, Hillary Clinton was as prepared as she could be and barely put a foot wrong.
Science says lasting relationships come down to—you guessed it—kindness and generosity.
Every day in June, the most popular wedding month of the year, about 13,000 American couples will say “I do,” committing to a lifelong relationship that will be full of friendship, joy, and love that will carry them forward to their final days on this earth.
Except, of course, it doesn’t work out that way for most people. The majority of marriages fail, either ending in divorce and separation or devolving into bitterness and dysfunction. Of all the people who get married, only three in ten remain in healthy, happy marriages, as psychologist Ty Tashiro points out in his book The Science of Happily Ever After, which was published earlier this year.
Social scientists first started studying marriages by observing them in action in the 1970s in response to a crisis: Married couples were divorcing at unprecedented rates. Worried about the impact these divorces would have on the children of the broken marriages, psychologists decided to cast their scientific net on couples, bringing them into the lab to observe them and determine what the ingredients of a healthy, lasting relationship were. Was each unhappy family unhappy in its own way, as Tolstoy claimed, or did the miserable marriages all share something toxic in common?
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.
As the group sheds territory, its propaganda wing has been forced to come up with a new storyline.
On the morning of October 17, Iraqi Prime Minister Haider al-Abadi announced the launch of the operation to recapture the Iraqi city of Mosul from the Islamic State. In the hours that followed, Kurdish Peshmerga claimed to have seized no fewer than nine villages and 200 square kilometers of territory. By lunchtime on day two, the spokesman for the U.S.-led coalition went as far as to say that the offensive was “on or ahead of schedule.”
Unsurprisingly, the Islamic State’s version of events read very differently. While its official media team conceded that the group had faced a large attack near Mosul on Monday morning, that was about all its propaganda shared with the mainstream news narrative. Indeed, while the peshmerga were counting up their captured kilometers at the end of the first day, the Islamic State’s Amaq News Agency was claiming that the reports were all false, and that it had, contrary to the lies peddled by the “crusader” media, managed to “absorb the momentum” of the encroaching forces before subsequently “repelling” them.
The conservative thinker’s work is a reminder of how intellectually self-satisfied politicians and cable-news have become.
William F. Buckley Jr. could have made Donald Trump quiver with impotent rage. This is a guy who sent Ayn Rand postcards in liturgical Latin just to make her mad, and then bragged about it in her obituary. In part because of his trollish panache, the founder of National Review and longtime host of the television show Firing Line was a conservative mascot in life, and he has become mythologized in death. The 2016 election has made it clear that no one quite like Buckley is working in media today: Republicans are hurting for a cocksure slayer of pseudo-conservative invaders.
No wonder two Buckley retrospectives have come out this October. Open to Debate, by the Massachusetts Institute of Technology media-studies professor Heather Hendershot, examines Buckley’s tenure on Firing Line and the diverse ideologies represented on the show. A Torch Kept Lit, edited by the Fox News correspondent James Rosen, chronicles notable obituaries written by WFB, as Buckley’s fans often call him. Both indulge nostalgia in their own way, but their yearning points to something real: In American politics, and specifically in political media, quality debate has seemingly withered. The presidential election has been an 18-month-long series of lows for civil discourse, culminating in the insult-laden, nearly-impossible-to-follow presidential debates.
On Wednesday, Trump employed the adjective to insult his opponent. What he didn’t realize was that the word has long been a rallying cry.
After Donald Trump referred to Hillary Clinton, during Wednesday’s final presidential debate, as “a nasty woman,” many of Clinton’s fellow ladies took it upon themselves to make an announcement: They were nasty, too. Just as nasty—maybe even more nasty—than the woman Trump had attempted to denigrate, via a weaponized mutter, before a live audience of millions of people.
Soon, the hashtags #nastywomen and #IAmANastyWoman trended on Twitter. The website nastywomengetshitdone.com got passed around, mostly by people delighted by the fact that the URL, via some hasty behind-the-scenes maneuvering, now leads to Hillary Clinton’s campaign website. The Huffington Post asked its readers, with only a trace of irony, “Are you a nasty woman? Let us know.”
Donald Trump refuses to accept the legitimacy of the election he’s trying to win.
With his campaign flailing in the final stretch of the race, Donald Trump refused to endorse the legitimacy of the presidential election during Wednesday night’s presidential date, telling moderator Chris Wallace that he could not commit to recognizing its results.
“I will look at it at the time,” the Republican nominee said, adding, “I’ll keep you in suspense.”
Blaming the media for slanted coverage and saying that his Democratic opponent, Hillary Clinton, should not have been allowed to run for president, Trump refused to commit to a peaceful transition, even as Wallace tried to explain to him that it was a bedrock principle of American government.
“This is how Donald Trump thinks,” Clinton said. “It is funny, but it is also really troubling. This is not how our democracy works. We have been around for 240 years. We have had free and fair elections. We have accepted the outcomes when we may not have liked them, and that is what must be expected of anyone standing on a debate stage during a general election.”
The candidates are back on the campaign trail, following the third, and final, debate on Wednesday night.
It’s Thursday, October 20—the election is now less than three weeks away. Donald Trump and Hillary Clinton are returning to the campaign trail to deliver their final pitch to voters, ahead of Election Day. We’ll bring you the latest updates from the trail, as events unfold. Also see our continuing coverage:
It’s the issue many conservatives care about most—but when Clinton blew an answer at the debate, the Republican nominee didn’t even seem to notice.
"The Supreme Court: It's what it's all about," said Donald Trump, the Republican nominee for president, in his own awkward fashion during last night's debate with his Democratic opponent Hillary Clinton in Las Vegas.
He's not wrong. Justice Antonin Scalia's death in February placed the Court's future front and center in the presidential race. Commentators frequently note the next president will likely appoint two or three justices—a morbid but accurate statement, especially if he or she is re-elected. What’s rarely appreciated is how historic that shift will be.
Consider this: Because Jimmy Carter's term saw no vacancies on the high court, Republican presidents were able to shape the Court's bench for most of the late 20th century. Between Lyndon B. Johnson’s nomination of Thurgood Marshall in 1967 and Bill Clinton’s choice of Ruth Bader Ginsburg in 1993, Republican presidents appointed 10 justices to the Supreme Court.