back to article Sardine fishing in Kerala: Who benefits from mobile phones?

We're now 30 years into the mobile phone era here in Good Old Blighty, with that first call having been made back on New Year's Day. And it's worth asking who has really benefited from this technology: something which, when considered, will lead us to being able to tell big government fan Professor Mariana Mazzucato to take a …

  1. This post has been deleted by its author

    1. solo

      Re: mobile phones in poor countries

      Although you might have been correct, I can safely say the risk period has passed.

      By the standards of 1997, India (the country of Kerala) was not as big economy as it's today. See how it's encashed on the telecommunication technology. And unlike US (not sure about Europe), The mobile market here is all about contract-free phones where a new phone can be purchased for about $10 without any obligation and connection from a carrier can be kept active (for in-coming calls) by recharging for $1 in 6 months.

      Ironically, India has seen all this because of multiple carriers and their greed.

      PS: the $10 phone:

      http://www.flipkart.com/k-a1300-lb-1300/p/itme3g5agttf8fdc?pid=MOBEFH68GCA5H7UR&srno=b_1&ref=2e239d51-e697-4b6d-b11b-44416b4eefdd

      1. tony2heads

        Re: mobile phones in poor countries

        Similar in South Africa

        Only the well-off have contract phones; many poorer people have prepaid contract-free phones. There are several to choose from at less that ZAR200 (about $17).

    2. Gordon 10
      WTF?

      Re: Unwanted side effects @Arnaut

      "Worsthall fails to consider that mobile phones in poor countries will not work well if there are multiple carriers - too much dispersion - which, in the absence of government regulation, would result in monopoly carriers"

      How on earth do you justify that cobblers? With a real life example please. Why is too much dispersion a problem, and why would it occur in the first place?

      The government has a regulatory role to play to ensure that spectrum is allocated reasonably and to dissuade cartel behaviours, Im not sure they should be more rewarded for that than they already are through pre-existing channels such as tax, and spectrum regulation. If a Government makes the right regulatory decisions they are "rewarded" by economic growth and a booming tax take. It they try to over-reward themselves they close down market opportunities and create stagnation and lack of growth.

    3. Anonymous Coward
      Anonymous Coward

      Re: Never been the case on the ground

      I spent a total of three months in Mumbai, across 2001 and depended on taxis to get around. On my first visit, no taxi driver had a mobile phone. By the end off the year, most taxi drivers had a mobile phone. Of course, they were careful. At the time, if you were on Orange, for example, you paid to receive calls from other providers, so everyone knew how to spot an Orange prefix. The drivers I spoke to thought the whole thing improved business enormously.

      I got to see the same happening in Kenya, a year later. Africans were quick on the uptake when it came to cross network calls, and many had multiple SIMs already (and whenever one of the networks had a free or cheap SIM offer, mobile phone thefts went through the roof in Nairobi). Dual SIM phones are big in Africa, btw.

      Even when introduced imperfectly (called party pays, high cost of calling a number on another network, high cost of calling on the same network, crappy coverage and so on), mobile communications get business moving.

    4. Tim Worstal

      Re: Unwanted side effects

      "Worsthall fails to consider that mobile phones in poor countries will not work well if there are multiple carriers"

      Actually, it works the other way around. The same research shows that the more carriers there are the higher the market penetration, thus the more GDP growth there is.

  2. scrubber
    Headmaster

    "Absolute" poverty

    I know exactly what you're trying to say, but in economics poverty is definitionally a relative term, ergo we literally cannot raise people out of poverty, (Except by some strange finagling of the figures, but assuming any kind of Bell curve then no.)

    1. FunkyEric

      Re: "Absolute" poverty

      No, but we can make sure that the poor people all have 50 inch TVs, playstations and iPhones.

    2. Tim Worstal

      Re: "Absolute" poverty

      "in economics poverty is definitionally a relative term"

      'Fraid not. Which is why we have two terms, "absolute poverty" and "relative poverty" to distinguish the two concepts.

      1. scrubber

        Re: "Absolute" poverty

        Not exactly Tim. Absolute poverty is based on an arbitrary dollar income that is judged to be insufficient to maintain a living standard that someone has decided constitutes poverty. That we currently include lack of basic requirements for survival is a political choice and should we ever get beyond people not being able to meet their basic needs the dollar value will increase to include refrigeration, or lighting, or internet access etc.

        1. I ain't Spartacus Gold badge

          Re: "Absolute" poverty

          scrubber,

          I'm struggling to understand your post. Are you talking about the $1 a day figure (actually I believe it's now $1.20) used to calculate the global poverty line? Because that figure isn't used in any advanced economy, so far as I'm aware.

          I think the US use some weird number plucked out of the air in the 50s/60s and updated for inflation. Most of Europe seem to use a measure of relative poverty (60% of median income?). Although there have been various measure of absolute poverty used at least in the UK - you have to have enough income to be housed, decently fed, clothed, have TV/phone/fridge, and enough for a week's holiday somewhere cheap. That was the last one I remember hearing about and was done by the Rowntree Foundation, academics and the government. There's been quite a bit of debate in teh UK in recent years about what measure to use. It's kept the charities, think tanks, government and academics busy for a while. I've not read anything about it in at least a year, so I've no idea if they're close to reaching any conclusions.

    3. I ain't Spartacus Gold badge

      Re: "Absolute" poverty

      scrubber,

      measuring relative poverty rather than absolute is a political choice, not an economic definition. As Tim W says, economics has a definition for both, and there are times when different ones are the appropriate measure to use.

      If I were feeling cyinical I might accuse lefties of trying to rig the debate in their favour by using a definition of poverty (relative) that allows them to call for redistribution of weatlh even if society were so rich that everybody owned a Porsche... But to be fair, absolute poverty is much harder to measure. For example, should you include for not being able to afford a short holiday in a definition of poverty? 70 years ago my Mum was relatively well off, Grandad was "skilled working class", but they didn't have a fridge. Now not having a fridge would definitely count as absolute poverty.

      Twenty years ago not having a computer probably wasn't poverty, but now so much information, access to cheaper goods and government services are only availble online - that I'd argue that lack of internet and some kind of cheap PC/tablet/smartphone should count as absolute poverty. 20 years ago that might not have even been relative poverty...

  3. JimmyPage Silver badge
    Thumb Up

    There is nothing new under the sun

    Do you know what the first *use* of the telescope was ? (As opposed to the first thing it was used for, which is a subtle difference).

    For a select band of merchants, to be able to get a 2 hour preview of the incoming ships in Venice - thus allowing them to rig the prices before the customers knew the availability.

    It's certainly a debatable point as to whether this use subsidised the astronomical applications of telescopy, but it's certainly true that this was when magnification and resolution were ramped up immensely.

    1. Andy E

      Re: There is nothing new under the sun

      I think you have identified the one thing thats missing from this article. Inventions developed for one use case might actualy be used quite successfuly for something else. As well as telescopes superglue springs to mind as does text messaging which seems to have replaced pagers.

  4. TheOtherHobbes

    'Efficient markets' are pure pseudoscience. The term is utterly meaningless.

    You do realise there is absolutely no, zero, none, FA peer reviewed empirical evidence that markets are informationally efficient. But there are quite a number of papers - some from decades ago - that effectively debunk that nonsensical belief?

    See e.g. Rosenberg B, Reid K, Lanstein R. (1985). Persuasive Evidence of Market Inefficiency. Journal of Portfolio Management 13:9–17.

    Please stop passing off fishy just-so stories as useful descriptions of how reality works. You clearly know nothing about actual information science and have no business 'educating' anyone here.

    1. FelixReg

      My new market

      Dang! And here I just bought a market whose efficiency goes to 11. Now you tell me that's not true? Dang, dang, dang.

    2. Tim Worstal

      I hate to have to be the one to break this to you. But the efficient markets hypothesis, and this paper you present here, are about whether *financial* markets are informationally efficient. They're nothing at all to do with whether markets as a whole are efficient at balancing supply and demand.

      You're conflating two entirely different discussions of "efficiency".

      1. This post has been deleted by its author

        1. Tim Worstal

          Re: They're nothing at all to do with whether markets as a whole are efficient

          We did rather run this experiment. We generally call it the 20th century. Those economies that were even vaguely market oriented did rather better than those economies that were not. QED.

    3. I ain't Spartacus Gold badge

      TheOtherHobbes,

      No market is perfect. But some are better than others. In this case it's a case study of a market (with figures and everything, therefore not a "just so story"), which became more efficient when information flow was improved.

      In this case more efficient meant that the prices fell to the end users, but the producers made more profits at the same time. This was achieved mostly through cutting out waste - i.e. not delivering fish to markets (oops that word again) ports that already had all the fish everyone wanted. So instead of fish rotting on the quayside, it got eaten. Everyone was a winner, although the middlemen probably lost a bit of profit.

      No market is perfect. But you have to start modeling from somewhere. The idea that you can have a market where everyone has the same information at the same time, all consumers and producers are perfectly rational and there are no distortions is obviously impossible. Many producers don't even know their own costs fully, let alone consumers knowing exactly what they need/want. How do you balance the utility between a £1 ice cream or a can of pop and some crisps costing the same anyway? Not even the most fundamentalist libertarian could believe otherwise, so to try and say that markets aren't perfect therefore "capitalism booo!", is just a straw-man argument.

      This is some evidence to say that improving the efficiency of a market benefited almost everyone - and grew the size of the economy by a decent fraction. A good outcome for everyone. With extra side-benefits, because the extra profits paid for the phones, less fish were wasted (good for the environment), and people now had phones to talk to their friends/family or deal with emergencies. Now people living in coastal areas can get tsunami and typhoon warnings by text for example.

    4. Anonymous Coward
      Anonymous Coward

      @TheOtherHobbes

      "You clearly know nothing about actual information science and have no business 'educating' anyone here."

      I think Mr Worstal has just delivered you the academic equivalent of a wedgie, and well deserved it is, too.

      So, how about you bugger off back to the warm, fluffy pages of the Graun? Seems to be where your understanding of both technology and economics originated, to judge by your generally anti-corporate, anti-market, pro-state posts?

  5. Graham Marsden

    Ok, so...

    ... the whole point of this article is for TW to be able to go "Nar nar ne-nar, nar! Told you so!!!"?

    Possibly followed with an implication that, because *this* example has worked so well, we shouldn't to *anything* to try to alleviate poverty since the Free Market will do that so well for itself.

    Of course there's the small matter that that article was from 2007.

    Here's a quote from one written in 2012 Problems plaguing Kerala's once-thriving fishing industry:

    * * * * *

    "The state's fish production has fallen by 40,000 tonnes over the past nine years, though the volume of fish caught by mechanised trawlers has doubled to more than 2 lakh tonnes in 20 years, data from the state's Directorate of Fisheries shows. Traditional fishing fell nearly 60% during the period.

    "The state has imposed a ban on trawling during the monsoon, but it seldom takes action on illegal trawlers,'' says Peter. "Often, we are out in the deep sea for days on single-engine-driven boats,'' says Arumugam, a fisherman. He says Kerala fishermen sometimes go as far as the Gujarat coast, and even towards the Gulf, looking for a good catch.

    Kurup notes, "There has been an 80% decline in cat fish and black fish alone.'' He notes that bottom trawlers throw non-commercial fish and planktons back into the sea. "The seabed over the years will be filled with this garbage," he warns. The tropical Arabian coast is still home to at least 200 species of fish compared with Pacific and Atlantic coasts which have far less diversity.

    "We need to device our own marine management systems and support the livelihood of traditional fishermen in the country,'' says Deepak Apte, deputy director of Bombay Natural History Society. Until then, for people like Johnson, casting the net is a game of dice.

    * * * * *

    In other words the Free Market has also created conditions whereby those fishermen who had benefitted from what TW describes, now find themselves unable to make a living because big, commercial operators have moved in, over-fished the area and screwed up the eco-system.

    Again, I ask: Cui bono?

    1. Tim Worstal

      Re: Ok, so...

      "Possibly followed with an implication that, because *this* example has worked so well, we shouldn't to *anything* to try to alleviate poverty since the Free Market will do that so well for itself."

      Eh? So the person who advocates the best anti-poverty measure we humans have ever come up with, that sorta vaguely capitalist, free market, with welfare components, mixed economy sorta thing, is the person who is advocating doing nothing about poverty?

      What?

      1. Graham Marsden
        Thumb Down

        @Tim Worstal - Re: Ok, so...

        And, once again, TW cherry takes one small piece of the argument which he can pick nits from and uses that to try to imply that he's refuted the main argument instead of just ignoring it...

    2. I ain't Spartacus Gold badge

      Re: Ok, so...

      Graham Marsden,

      Your argument is a total straw man. Which I keep seeing repeated. No one sane believes in completly unfettered markets.

      Firstly it's probably impossible to have a totally free, efficient and perfect market. The foreign exchange market has been cited for ages as one of the "best" markets around for all those things - and even that turns out to have had a cartel operating for years undetected. On the other hand, they probably only had a tiny effect, becuase one of the things that made the market so hard to monopolise/dominate/rig was the sheer volume of daily transactions, and number of participants. And I can't see how information can be perfectly distributed when even though much of the data is published globally, governments know their own data in advance and are themselves actors in the market.

      One of the big arguments that free market advocates make is that you can't have a free market without property rights. Property rights by definition require government to intervene in the market. One of the reasons the Russian economy is so screwed is that they don't have good property rights. It's also one of the major risks to China's continued development, as some corrupt local party boss can just steal your business and chuck you in prison, or buldoze your house without compensation. It may be possible to have a working market economy without democracy, but it's not possible to sustain one without a mostly impartial legal system, in which it's possible to sue the government and win. And that requires at least a responsive, mostly honest and non-corrupt government, all things that dictatorships are notoriously bad at. That's why even before the Rouble crisis the Russian government was having to pay 11% interest to borrow money (with very little debt) even though the bankrupt Greek government were only paying about 7%.

      Equally governments have to regulate for externalities (such as pollution and environmental damage), otherwise someone's short-term profit motive will end up trumping everyone's long-term interests.

      In order to have properly working markets you also need government to regulate for safety standards (to stop the scumbags from undercutting the honest), minimum working conditions (ditto), and to deal with monopolies and cartels.

      None of this is controversial with almost anyone that I've read from the right of politics, or in the free-market end of economics.

      There are matters of degree of course. One man's government regulation to require minimum safety standards can be another man's deliberate attempt to block imports from their market. This is a game that is often played.

      Government is a requirement of a 'free' market. The argument is over how much intervention is needed to make society more fair, and also operate more efficiently. For example, China's economy suffers from not having social security. Because people are scared of illness and unemployment, they save more than people have to do in the West, because we can rely to varying extents on the welfare state. Thus China's domestic consumption is too low to support its industry, forcing them to rely on exports, and there's too much money sloshing round the system meanning that money is being wasted in bad investments, hence China was previously destabilising our economies and helping to cause the global crash, and is now in the middle of its own unsustainable credit boom. Hence their government is now desperately trying to deflate their shadow-banking bubble, house price bubble and local government debt to regional banks without collapsing the economy.

  6. thames

    It depends on competition

    Worstall - "More information means that markets work more efficiently to the benefit of both producers and consumers – thus making everyone richer."

    That of course depends on having a competitive market. If a few big companies collude to sew up the market, they can cream off all or most of the benefits for themselves. Ironically, many of the supposedly less developed countries have more competition and far lower prices than some of the supposedly more advanced ones.

    I think that government has a role here, but it's to ensure that the carriers and phone vendors actually compete with one another. Those companies won't willingly do that on their own, and they have all sorts of clever tools to lock out competitors.

    1. DanceMan

      Re: It depends on competition

      "to ensure that the carriers and phone vendors actually compete with one another"

      Canada is your example. We have three major cell vendors and allegedly the highest prices in the developed world. Even our corporatist goverment's genuine efforts to provoke competition by reserving part of new spectrum for a fourth party have come to naught.

      Vancouver has the highest gas prices in Canada, mostly due to taxation. But there is no price competition. Every station, of every brand, has the same price day after day.

      1. Anonymous Coward
        Anonymous Coward

        Re: It depends on competition

        But with gas you are selling an identical product, price differentiation can be hard to sustain in such a market. If you price higher, everyone simply goes for the identical product at a lower price so you are very strongly encouraged to maintain price parity. This can lead to price inertia and a reluctance to cut prices, but isn't per se evidence of collusion.

        Competition usually works well to keep prices down though nothing is perfect. It does work better than other systems though, at least any other I've seen tried.

    2. Tim Worstal

      Re: It depends on competition

      "That of course depends on having a competitive market."

      Sure. A point I make often enough elsewhere too. Capitalism, as just capitalism, pretty much stinks. It's those competitive markets that ameliorate it so much that it actually works.

      I also run the same point back the other way. Socialism without markets also pretty much stinks as a system. But socialism (ie, worker coops and all that Mondragon etc sorta stuff) in free and competitive markets works just fine. It's the markets that are much more important than who owns the productive assets (and that is the prime difference between capitalism and socialism, who owns those productive assets).

      1. thames

        Re: It depends on competition

        @Time Worstal - Back before the fall of the wall, certain eastern European economists were trying to find a way to introduce market competition into communism (or what they called "socialism", since to marxists, true "communism" supposedly didn't exist yet). If I recall correctly, the name Tibor Liska seems to ring a bell. They knew that market competition was the key to making their economies work more efficiently. There was an eastern European economist joke (a pretty niche sort of joke I agree) that went something along the lines of "when we take over the world, we'll have to leave one capitalist state around so we'll know what prices to set for everything".

        The problem these "competitive market communists" had though was that with all ownership tracing back to the state, there was no way to have genuine competition for inputs (capital, labour, raw materials). I think the root of the problem was that there was no real way for the "owners" to fail, since the owners by definition owned everything.

        This was the real reason why communism didn't work. It wasn't "because they're commies". It wasn't "because they're godless heathens". It was because there were no genuine competitive markets.

        From another perspective, the reason why monopoly in telecommunications, or software, or any other market is a bad thing today is because it inherently incorporates the worst features of communism into the economy. From this perspective, the monopolist corporate executives are at heart frothing at the mouth communists and the "hippy" open source software developers are the ruthless dog-eat-dog free market proponents.

        The problem we have in the real world is that we have things like natural monopolies which must be regulated to keep the "corporate communists" (i.e. the cable company) at bay, and we also have things like health care where the bad side effects of "allowing people to fail" (i.e. die) outrage our moral sensibilities (quite justifiably, I feel). So we can't have perfect competition everywhere. However, it's something we should be looking for as the answer to problems where it does work, which is most places.

        I think that the above is the thing which people really need to understand. It isn't "capitalism versus communism". It's "free market versus monopoly". Monopoly exercised by corporate executives is no better and no more efficient than monopoly exercised by the politburo. The communist states simply operated their monopolies on a bigger scale.

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