In economic theory, a moral hazard is a situation where the costs that could incur from a decision will not be felt by the party taking the risk. Knowing that the potential costs and/or burdens of taking such risk will be borne, in whole or in part, by others creates a moral hazard and invites high risk behavior.
For example, with respect to the originators of subprime loans, many may have suspected that the borrowers would not be able to maintain payments and that, for this reason, the loans were not, in the long run, going to be worth much. Still, because there were many buyers of these loans (or of pools of these loans) willing to take on that risk, the originators did not concern themselves with the potential long-term consequences of making these loans.
‘Too big to fail‘ describes financial institutions that are so large and so interconnected that their failure is widely held to be disastrous to the economy, and which therefore must be supported by government when they face difficulty. The term was popularized by Congressman Stewart McKinney in a 1984 hearing discussing the FDIC’s intervention with a failing bank, Continental Illinois. Proponents of this theory believe that the importance of some institutions means they should become recipients of beneficial financial and economic policies from governments or central banks. One of the problems that arises is moral hazard (where costs that could incur will not be felt by the party taking the risk), in this case companies insulated by protective policies will seek to profit by it, and take positions that are high-risk high-return, as they are able to leverage these risks based on the policy preference they receive. Some economists such as Nobel Laureate Paul Krugman hold that economy of scale in banks and in other businesses are worth preserving, so long as they are well regulated in proportion to their economic clout, and therefore that ‘too big to fail’ status can be acceptable. The global economic system must also deal with sovereign states being too big to fail.
Critics see the policy as counterproductive and that large banks or other institutions should be left to fail if their risk management is not effective. Some critics, such as Alan Greenspan, believe that such large organizations should be deliberately broken up: ‘If they’re too big to fail, they’re too big.’ Before 1950, U.S. federal bank regulators had essentially two options for resolving an insolvent institution: closure, with liquidation of assets and payouts for insured depositors, or purchase and assumption, encouraging the acquisition of assets and assumption of liabilities by another firm. A third option was made available by the Federal Deposit Insurance Act of 1950: providing assistance, the power to support an institution through loans or direct federal acquisition of assets, until it could recover from its distress. The statute limited the ‘assistance’ option to cases where ‘continued operation of the bank is essential to provide adequate banking service.’ Regulators shunned this third option for many years, fearing that if regionally or nationally important banks were thought to be generally immune to liquidation, markets in their shares would be distorted. Thus, the assistance option was never employed during the period 1950-1969, and very seldom thereafter. Research into historical banking trends suggests that the consumption loss associated with National Banking Era bank runs was far more costly than the consumption loss from stock market crashes.
Commodity money is money whose value comes from a commodity of which it is made (e.g. precious metals, cigarettes). Unlike representative money (a certificate or token which can be exchanged for the underlying commodity) or fiat currency (money backed only by an assurance from the issuing government), commodity money consists of objects that have value in themselves as well as value in their use as money. Examples of commodities that have been used as mediums of exchange include gold, silver, copper, peppercorns, Rai stones (large, circular stone disks carved out of limestone), decorated belts (wampum belts), shells, cigarettes, barley, laundry detergent, etc. A key feature of commodity money is that the value is directly perceived by the users of this money, who recognize the utility or beauty of the tokens as they would recognize the goods themselves. That is, the effect of holding a token for a barrel of oil must be the same economically as actually having the barrel at hand. This thinking guides the modern commodity markets, although they use a sophisticated range of financial instruments that are more than one-to-one representations of units of a given type of commodity.
Since payment by commodity generally provides a useful good, commodity money is similar to barter, but is distinguishable from it in having a single recognized unit of exchange. R.A. Radford described the establishment of commodity money and a black market while detained in a Nazi P.O.W. camp: ‘People left their surplus clothing, toilet requisites and food there until they were sold at a fixed price in cigarettes. Only sales in cigarettes were accepted – there was no barter […] Of food, the [underground] shop carried small stocks for convenience; the capital was provided by a loan from the bulk store of Red Cross cigarettes and repaid by a small commission taken on the first transactions. Thus the cigarette attained its fullest currency status, and the market was almost completely unified.’ Radford documented the way that this ‘cigarette currency’ was subject to Gresham’s law (‘bad money drives out good’), inflation, and especially deflation. Cigarettes and gasoline were used as a form of commodity money in some parts of Europe, including Germany, France and Belgium, in the immediate aftermath of WWII. Cigarettes are still used as a form of commodity money in U.S. prisons, although after smoking was banned in many in 2003, the commodity money switched to cans or foil pouches of mackerel fish fillets, which have a fairly standard cost and are easy to store. These may be exchanged for many services in prisons where personal possession of currency is prohibited.
David Rees (b. 1972) is a cartoonist and humorist whose best-known work combines bland clip art with outrageous ‘trash talk’ to incongruous effect. The comic strips have achieved wide popularity and some controversy. Rees grew up in Chapel Hill, North Carolina and was an avid reader of ‘Rex Morgan, M.D.’ comics. He is a graduate of Oberlin College, and drew comics for the school’s newspaper. His office-cubicle humor is partly inspired by his experience working in a basement for Citicorp; he was later a part time fact-checker for ‘Maxim’ magazine and ‘Martha Stewart Weddings’ magazine, until he was laid off. Rees’s best-known and most controversial comic is ‘Get Your War On.’ He is also the author of the comic strips ‘My New Fighting Technique is Unstoppable,’ ‘My New Filing Technique is Unstoppable,’ and ‘Adventures of Confessions of Saint Augustine Bear.’ Since 2005 he has been a contributing blogger at ‘The Huffington Post.’ In 2010, Rees announced his Artisanal Pencil Sharpening service, where for $12.50 plus $2.50 S&H, people can mail in their own pencils to be sharpened by him, or receive a sharpened pencil provided by the craftsman. According to the site, ‘…craftsman David Rees still practices the age-old art of manual pencil sharpening. His artisanal service is perfect for artists, writers, and standardized test takers. Shipped with their shavings and a ‘certificate of sharpening’, these extra-sharp pencils make wonderful gifts.’
The South Butt, LLC was a clothing and accessories company founded in 2007 by Jimmy Winkelmann, a then 16-year-old student at Chaminade College Preparatory School. The company dissolved in 2011. Winkelmann claimed the company was a parody of the The North Face, an American outdoor product company. In 2008, The North Face sent a cease and desist letter to Winkelmann. According to The North Face, his ‘use of the South Butt & design mark and the ‘Never Stop Relaxing’ tagline [was] not defensible as a parody.’ The North Face sought an amicable resolution of the matter, his voluntary abandonment of the pending trademark application, and his immediate discontinuance of his company’s name, mark, and tagline.
In response, Winkelmann offered to sell his company to The North Face for $1 million, an offer that was later rescinded by Winkelmann as The South Butt grew. The North Face filed a lawsuit in the United States District Court for the Eastern District of Missouri against Winkelmann, The South Butt, and Williams Pharmacy, a company which handled the products’ marketing and manufacturing details. The court ordered mediation in the case, and in 2010, the parties reached a closed settlement agreement. In 2012, Winkelmann and his father admitted in court that they violated the settlement agreement with The North Face and agreed to pay $65,000, an amount that will be reduced by $1,000 for every month of compliance.
The tragedy of the anticommons is a type of coordination breakdown, in which a single resource has numerous rightsholders who prevent others from using it, frustrating what would be a socially desirable outcome. It is a mirror-image of the older concept of tragedy of the commons, in which numerous rightsholders’ combined use exceeds the capacity of a resource and depletes or destroys it. The concept covers a range of coordination failures including patent thickets, submarine patents, and nail houses. Overcoming these breakdowns can be difficult, but there are assorted means, including eminent domain, laches, patent pools, or other licensing organizations.
To construct roads, railroads, and similar transportation arteries, eminent domain has long been considered necessary. Although the benefit to society from the transportation route may be substantial, without eminent domain, every single property owner along the way must agree for the route to be built. This provides conditions for the tragedy of the anticommons, as even if hundreds agree, a single landowner can stop the road or railroad. The ability for one person to veto the construction drastically increases the transaction costs for such projects.read more »
In economics, the tragedy of the commons is the depletion of a shared resource by individuals, acting independently and rationally according to each one’s self-interest, despite their understanding that depleting the common resource is contrary to their long-term best interests. In 1968, ecologist Garrett Hardin explored this social dilemma in ‘The Tragedy of the Commons,’ published in the journal ‘Science.’ Central to Hardin’s article is an example (first sketched in an 1833 pamphlet by William Forster Lloyd) involving medieval land tenure in Europe, of herders sharing a common parcel of land, on which they are each entitled to let their cows graze. In Hardin’s example, it is in each herder’s interest to put the next (and succeeding) cows he acquires onto the land, even if the quality of the common is damaged for all as a result, through overgrazing. The herder receives all of the benefits from an additional cow, while the damage to the common is shared by the entire group. If all herders make this individually rational economic decision, the common will be depleted or even destroyed, to the detriment of all. Hardin also cites modern examples, including the overfishing of the world’s oceans and ranchers who graze their cattle on government lands in the American West.
A similar dilemma of the commons had been discussed by agrarian reformers since the 18th century. Hardin’s predecessors used the alleged tragedy, as well as a variety of examples from the Greek Classics, to justify the enclosure movement (division or consolidation of communal lands in Western Europe into the carefully delineated and individually owned farm plots of modern times). German historian Joachim Radkau sees Garrett Hardin’s writings as having a different aim in that Hardin asks for a strict management of common goods via increased government involvement or/and international regulation. While Hardin recommended that the tragedy of the commons could be prevented by either more government or privatizing the commons property, subsequent Nobel Prize-winning work by political economist Elinor Ostrom suggests that handing control of local areas to national and international regulators can create further problems. Ostrom argues that the tragedy of the commons may not be as prevalent or as difficult to solve as Hardin implies, since locals have often come up with solutions to the commons problem themselves.
Game Boy Micro is a handheld game console developed and manufactured by Nintendo. It was first released in 2005. The system is the last console of the Game Boy line. The Game Boy Micro is the size of a typical Nintendo Entertainment System controller and a typical Famicom controller. The console retains some of the functionality of the Game Boy Advance SP, but with an updated form factor. It is unable to play original Game Boy and Game Boy Color games due to design changes. Even though it still has the required Z80 processor and graphics hardware necessary to run the old games, it is missing other circuitry necessary to be compatible with the old Game Boy cartridges. It is officially incompatible with the Nintendo e-Reader and some other peripherals due to design issues. Additionally, it features a backlit screen with the ability to adjust the brightness so as to adapt to lighting. The Game Boy Micro features a removable face plate that allows consumers to purchase alternative designs. This device can play MP3 and digital video files from SD cards. The system retailed for US$99, compared to US$79 for the Game Boy Advance SP. Generally, the Game Boy Micro did not sell well, and failed to reach the company’s aim of units sold.
Plex is a partially open-source freeware media player software with a 10-foot user interface (optimized for use with a TV), with a matching closed source media server (Plex Media Server) software, which is available for Windows, Mac, and Linux. Its media player source code was initially forked from XBMC, a free media player, in 2008. Plex’s front end media player, Plex Media Center, allows the user to manage and playback video, photos, music, and podcasts from a local or remote computer running Plex Media Server. In addition, the integrated Plex Online service provides the user with a growing list of community-driven plugins for online content including Hulu, Netflix, and CNN video. Plex began as a freeware hobby project but since 2010 has evolved into a commercial software business that is owned and developed by a single for-profit startup company, (Plex, Inc.).
Plex supports a wide range of multimedia formats and includes features such as playlists, audio visualizations, slideshows, weather forecasts reporting, and an expanding array of third-party plugins. As a media center, Plex can play most audio and video file formats, as well as display images from many sources, including CD/DVD-ROM drive, USB flash drives, the Internet, and local area network shares. DVD playback is not yet fully integrated and requires the use of helper applications like Apple’s DVD Player. Plex is able to decode high-definition video up to 1080p. With the appropriate hardware, Plex supports hardware decoding of H.264 video. The Video Library, one of the Plex metadata databases, is a key feature of Plex. It allows for the automatic organization of your video content by information associated with the video files (movies and recorded TV Shows) themselves. Plex can automatically fetch meta data information and artwork from sites including IMDb, TheMovieDB, TheTVDB, freedb and Allmusic using built-in web scraping functionality. The Library Mode view in Plex allows you to browse your video content by categories such as Genre, Title, Year, Actors and Directors. Unlike the desktop versions of Plex, mobile apps are not freeware; the official apps for iOS, Android, and Windows Phone are all $4.99.
SIGGRAPH (short for Special Interest Group on GRAPHics and Interactive Techniques) is the name of the annual conference on computer graphics started in 1974. The conference is attended by tens of thousands of computer professionals. Some highlights of the conference are its Animation Theater and Electronic Theater presentations, where recently created CG films are played. There is a large exhibition floor, where several hundred companies set up elaborate booths and compete for attention and recruits. Most of the companies are in the engineering, graphics, motion picture, or video game industries. There are also many booths for schools which specialize in computer graphics or interactivity. Dozens of research papers are presented each year, and SIGGRAPH is widely considered the most prestigious forum for the publication of computer graphics research. In 1984, under LucasFilm Computer Group, John Lasseter’s first computer animated short, ‘The Adventures of André & Wally B.,’ premiered at SIGGRAPH. Pixar’s first computer animated short, ‘Luxo, Jr.’ debuted in 1986, and Pixar has debuted numerous shorts at the conference since. Since 2008, a second yearly SIGGRAPH conference has been held in Asia. The first SIGGRAPH Asia conference was held in Singapore; the second one in Yokohama, Japan in the period in 2009; and the third in Seoul, Korea in 2010.
A portaledge is a deployable hanging tent system designed for rock climbers who spend multiple days and nights on a big wall climb. An assembled portaledge is a fabric-covered platform surrounded by a metal frame that hangs from a single point and has adjustable suspension straps. A separate cover, called a ‘stormfly,’ covers the entire system in the event of bad weather.
The first portaledges used in Yosemite were non-collapsible cots purloined from Housekeeping Camp, a Yosemite Valley campground that featured primitive metal framed bunks for the campers. These heavy cots were used on multi-day climbs on granite monoliths like El Capitan, and then sometimes tossed off the summit for later retrieval.read more »
In Karl Marx’s critique of capitalism, commodity fetishism is theory that objects are imagined to dictate the social activities that produce them. When the social relationships among people are expressed with objectified economic relationships, the subjective, abstract aspects of economic value are transformed into objective, real things that people believe have intrinsic value (reification).
In a capitalist society, social relations between people—who makes what, who works for whom, the production-time for a commodity, et cetera—are perceived as economic relations among objects, that is, how valuable a given commodity is when compared to another commodity. Therefore, the market exchange of commodities masks the true economic character of the human relations of production, between the worker and the capitalist.